Our third and final installment in the maturity model series tackles the future of legal operations. In our first piece we introduced the maturity model concept, defining the five distinct operational levels that legal departments may achieve as they strive to meet the needs of their organizations. The second article discussed departmental initiatives based on maturity model stage and the tools that are critical for each of those initiatives.
Now we will take an in-depth look at how the industry is evolving and what legal operations professionals need to do to stay ahead of the curve.
Decisions Based on Data, Not Intuition
Gone are the days of guesswork and a qualitative approach to legal operations. The future is data.
Legal operations departments now have the technology to collect large volumes of data, allowing them to speak quantitatively about their department and measure productivity through lenses such as total legal cost, cost by matter or practice area, internal vs. external spend, and more. Part of this quantitative approach is proactively proposing business process improvements, including the use of legal technology to align and integrate with core business processes, ensuring closer collaboration with other key departments such as finance.
The most critical information for legal operations to have on hand is a line-by-line analysis of where their department is spending money. You want to be able to demonstrate that every dollar has a traceable return on investment, whether that’s through mitigating important risks to the company or actually driving revenue through contract management.
Armed with this data, legal departments now have a real opportunity to differentiate themselves from traditional stereotypes and lead in areas that were once out of reach for the legal team. A great example of this comes from one of our customers, a medical device company. As we entered the current period of economic uncertainty, their leadership team asked them to cut spending. The legal operations team was able to rely on technology that provided visibility into spend for the next several months, empowering them to immediately view outstanding accounts receivable, decide which reports to run, look at the necessary universe of invoices and decide which data to share and with whom.
No Need to Initiate Processes
The future of legal operations is already happening in operationally mature legal departments, because they have mature systems in place. Previously established processes for defined activities are happening day-in and day-out, without the need for human input.
For example, consider the hiring of outside counsel, a task that spurs many companies to adopt legal ops software solutions. In a highly mature department, the company likely has already issued a Request For Proposal (RFP) and identified a handful of firms they exclusively work with. Why do this? As with all processes, it makes hiring repeatable and consistent, something that can be tracked and measured against. As a legal department grows and matures, it’s often called upon by the CFO to contain costs and possibly meet procurement requirements. That process only runs smoothly if the department already has the right tools and reporting in place.
For one of our most operationally mature clients, legal operations software made it possible for legal ops to develop a convergence panel for the selection of outside counsel. The ultimate goal was to have all the data in one panel, showing what kinds of firms were needed as well as their geographies. The company created the panel through the RFP process, and it’s now where the majority of their legal work is allocated, being used on a daily basis to determine which firms the department should hire. All of the data the attorneys and paralegals need is easily accessed in the legal operations software, allowing them to make data-driven decisions and maintain consistency across hiring.
Untangle Complex Management Systems for Better Data
Proper technology management is required to ensure platform adoption while building a connected legal technology stack that benefits the entire legal department. In the very near future, technology management will become a top priority for legal operations professionals.
E-Billing and spend management software are now essential tools for today’s legal department to meet growing pressure to cut costs and operate more efficiently. Implementing these tools is often the first step toward creating a more data-driven department, because they collect so much useful data for the company.
In-house legal operations teams are too often saddled with onerous workarounds, custom-built from enterprise financial software. For the medical device company we mentioned above, moving to legal operations software after years of pulling various reports out of an ERP’s financial system made getting a handle on company spend easy. After making the switch, they never again had to go back to vendors to ask what they were billed for a particular matter, which saved a significant amount of time on tasks that previously placed a direct burden on the attorneys. This highlights one of the biggest benefits of mature legal operations – lawyers are free to be lawyers, while the legal ops team is free to work on projects that create value to the organization.
E-Billing software isn’t the only technology revolutionizing legal operations. Secure file sharing is a valuable tool for legal departments as they deal with a significant number of documents – emails, contracts, invoices, memos, filings, and more. Contract management solutions further help to effectively manage the large volume of contracts that organizations handle today. Without a dedicated software solution, manually managing all the contact terms, renewals, and compliance policies across hundreds or thousands of contracts is inefficient at best, and at worst can be incredibly costly and significantly increase risk.
Whether you have one individual team member spending part of their time on legal operations or a full department with multiple, dedicated legal operations staff members, the basic facts are the same. All along the continuum, legal operations thrives when the right tools are in place.
When these tools are used effectively, the legal department can reap the benefits of the insights they generate. Efficiencies are created, there is clear insight into data, and lawyers can rest assured that administrative duties are handled so they can focus on the critical job of actually practicing law.
When systems are in place to operate the business of law and decision-makers have the data they need at their fingertips to make decisions, lawyers are finally free to practice law and legal operations practitioners can focus on projects that create value. This is what mature legal operations looks like.