Legal Operations

Part One: Finding and Plotting the Ideal Technology Path for Your Organization.

Legal operations has existed for longer than one might think. Before the role was defined, some functions were performed by an office manager within the in-house legal department. Technology wasn’t prevalent, so the job was primarily focused on making sure the day-to-day operations of the legal organization ran efficiently. The role has since evolved, allowing legal operations professionals to reinvent themselves over the years to become highly respected and strategic business partners.

Now more than ever, corporate legal departments are reassessing where their legal ops stand and are looking to move forward with the right tools to thrive through whatever uncertainties might arise in the near future. According to CLOC’s 2020 State of the Industry Survey, corporate legal departments across organizations of all sizes are seeing a growth in legal operations, increasing both headcount and investment in technology to meet the high demand for legal services.

In this series of three articles, we will explore the importance and immediacy of understanding your legal operations. We will answer key questions like:

  • What do legal ops look like across the continuum?
  • What tools are critical, based on the maturity model stage?
  • What lies ahead for the legal ops industry?

Excellence in legal operations exists in multiple stages across a spectrum. The secret, though, is that maturity is not a journey you have to complete in order to achieve ultimate success. Rather, the key is finding the level of legal operations maturity that works for your organization. Whether that’s gaining transparency into your operations, capitalizing on insights to change organizational behaviors, or something in between will depend on the size of your department, your amount of legal spend, and other factors.

Achieving the right level of operational maturity requires preparation, a plan, patience, and persistence. No one achieves their ideal level of legal operations maturity overnight, but with the right guide, getting there doesn’t have to feel like an uphill battle.

A New Approach to a Legal Operations Maturity Model  

While there are certainly other maturity models created by industry organizations like CLOC and ACC that companies can, and even should, consult, this reconceptualized model has been developed based on years of hands-on best practices working with more than 200 corporate legal departments. It lays out five distinct levels of legal operations and aligns them with different fitness activities. But remember this: These maturity levels do not represent a journey that must be completed in full. While Level 5 (categorized as “the Marathon”) may represent ultimate operational maturity, it may not be the ideal level for every company. The goal is to find the place in the spectrum that works best for your individual organization. After all, whether you walk, jog or run long distances, all exercise is good exercise.

Stage One: The Power Walk

Let’s start at the beginning. At the threshold of the maturity spectrum are companies with a solo general counsel and no dedicated legal ops resources. Typically the company’s legal spend is under one million dollars.

The primary goal at this level is to gain transparency and see what’s going on with spend. Typically at this stage, matter management depends on law firms classifying matters and vendor management consists of leveraging contacts in your network.

At the beginning of the maturity model arc, legal spend data is gathered by having firms submit invoices electronically into a system. From there, companies evolve an understanding of what business entities or subsidiaries are paying for legal services.

Stage Two: The 5K

Companies at the next stage of the maturity model have slightly more resources to dedicate to legal operations. Typically, the general counsel is joined by an executive assistant or a commercial contracts specialist and a part-time legal ops resource – though there is no dedicated full-time employee in legal ops. The company’s legal spend is usually in the range of $750,000 to eight million dollars.

The main goal here is to not only know what your spend is, but to control it by improving your understanding of your basic financial information, matters and vendors. This involves creating a centralized list of distinct matters and searching for specific vendor expertise, rather than simply relying on contacts.

Companies start to gain control over spend by reviewing resource allocations for matters, determining if high-cost resources are being properly leveraged, and developing strategies for managing and tracking budgets. This stage creates a solid foundation for further growth, if that’s the company’s goal.

Stage Three: The 10K

The middle of the maturity spectrum is where companies really start to effectively manage legal operations. In this stage, general counsel is joined by a small team of up to 20 employees, as well as a full-time, dedicated legal ops employee who has additional support. Legal spend ranges from five million dollars to $25 million.

The key goal in stage three  is to manage operations by integrating with third-party systems, such as patent management or AP systems, to reduce manual data entry and human error. This is achieved through surveying your existing tech stack and determining what’s missing, what’s outdated and where opportunities for integration lie.

The company will also start to control the activities of its attorneys and law firms. This middle stage sees an extension of the collaboration with firms, allowing them to submit budgets for strategic or high-cost matters, and leverage a matter intake process to allow other business units to connect with legal and manage their needs via more sophisticated processes than email. Matter management progresses to defining processes by practice areas, and the department is able to establish a vendor review cadence to better manage vendor relationships.

Stage Four: The Half Marathon

This stage of the spectrum is where companies really start to drive efficiency through insight. The legal department is typically a team of 70 to 80 people, though the size will be dependent on its specific areas of focus and their corresponding needs. There is an actual legal ops team with multiple full-time, dedicated employees. Legal spend usually exceeds $20 million.

The primary goal of legal ops at this stage is to create more efficiencies. The department manages spend to ensure that legal department decisions are not just reactive, but proactive. Matter management advances from simply having defined processes to starting to build structured workflows tailored to specific practice areas. The company’s vendor network is consolidated to gain even more efficiency in operations.

Stage Five: The Marathon

The apex of the legal ops maturity spectrum is where companies achieve full operational excellence. While legal department sizes at this stage often exceed 200 employees, achieving the correct team size is a balance between using outside counsel and keeping certain work in-house to create a larger, more cohesive team. There’s still a team of full-time, dedicated legal ops professionals, and legal spend is usually more than $50 million.

A key goal in this final stage is to become a strategic business unit that ultimately changes behaviors by using data to demonstrate legal department operations and effectiveness. Business decisions should now be more proactive than reactive, there are mature workflows built around the entire matter lifecycle for all practice areas and the company has created a formal vendor management program.

At stage five, the legal department has reached a state where all stakeholders understand how to use the system and do so on an ongoing basis to manage their own workloads and gain insights into their areas of responsibility.

Conclusion

The hallmark of complete maturity is operational excellence at every step of the process. It’s important to remember, though, that not every company will, or even should, reach this stage. The key is finding the right stage on the spectrum for your company to achieve its goals.

You can learn more about this maturity model and the different stages of legal ops maturity here. In the next installment in this series, we’ll focus on the tools and reporting that correspond with each stage of the maturity model. We’ll also provide an overview of the arc of legal ops maturity through the lens of departmental Initiatives.

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