Right-Sizing Your Legal Operations For Scale

- Right-Sizing Your Legal Operations For Scale

Many general counsel (GC) are acutely aware of a disturbing trend: the resources available to their legal departments are not increasing at the same rate as the demand for legal services from their businesses.[1] As a result, GCs are looking for strategies to scale their legal team so they can manage the exponentially growing need for legal services from their businesses with only incrementally growing resources in legal. They are solving this challenge with three strategies:
  1. Investing in legal operations[2] (described as a team of strategic leaders in the legal department who manage the business of law so that legal professionals can focus on their specialty – the practice of law)
  2. Improving processes (which, of course, is highly dependent on the existence and effectiveness of the legal operations team)
  3. Leveraging technology (the effectiveness of which is, again, highly dependent on the legal operations team)

Thus, many GCs are no longer asking whether to invest in legal ops. Instead, they are looking to understand (a) how much to invest and (b) what outcomes to expect.

HOW MUCH TO INVEST

The recent Thomson Reuters Legal Tracker™ (formerly Serengeti Tracker™) Market Watch survey provides insights into key criteria that either cause or correlate with the size of a legal operations team. These criteria include:

  • Outside legal spend
  • Number of legal department staff
  • Number of law firms actively working on company matters
  • Annual company revenue

This survey data, coupled with Legal Tracker experience with leading legal departments, produced the following table for current best practices for sizing a legal operations team:

[1] The Legal Tracker Market Watch Survey, produced April 2017, included 161 corporate legal departments and a diverse group of participating small, medium, and large legal departments. According to the survey, 53% of legal departments reported an increase in the percentage of work handled in-house. However, only 28% of legal departments reported an increase in the number of in-house staff during the same time period.

READ  Judge delays fraud trial of former Sutherland partner to determine competency

[2] According to the Legal Tracker Market Watch Survey, 51% of legal departments reported that they have a legal operations function. Note that 90% of large legal departments (more than $50M in spend and 51 lawyers) have legal operations.

- Right-Sizing Your Legal Operations For Scale

A few comment regarding these factors:

  • Many small legal departments begin their legal operations team with an e-billing specialist who typically focuses on administering the spend/matter management system used by the legal department
  • The greater the outside legal spend and number of law firms, the greater the need for a legal vendor manager who develops programs, policies, and procedures for procuring and managing outside legal services. As a general rule, this resource tends to become needed when legal departments exceed $50M in outside legal spend and 200 law firms.
  • Legal departments with large staff tend to add a business analyst (for greater focus on process improvement), technology specialist (for management of legal technology), and legal operations manager/director to drive strategic initiatives for the legal operations team
  • While annual company revenue is likely a corollary to the size of the legal operations team rather than a direct causal factor, it is an insightful metric for benchmarking size of a legal operations team
  • Some businesses may need larger legal operations teams based on unique factors to their business

EXPECTED OUTCOMES

The Corporate Legal Operations Consortium (CLOC) has identified twelve core competencies for legal operations.[1] These core competencies are based on needs within most legal departments and should drive the expected outcomes for a legal operations team.

  • Strategic Planning: Create a long-term strategy, aligning yearly goals and corresponding metrics
  • Financial Management: Manage the departmental budget. Track accruals and forecasting. Work with finance to identify spending trends, potential cost savings, and efficiency opportunities.
  • Vendor Management: Create a vendor management program to ensure quality outside counsel support at the right rates and under optimal fee arrangements. Hold regular business reviews. Negotiate fee agreements. Drive governance of billing guidelines.
  • Data Analytics: Collect and analyze relevant data from department tools and industry sources, define objectives to provide metrics and dashboards, drive efficiencies, and optimize spend, etc.
  • Technology Support: Create a long-term technology road map, including tools such as e-billing/matter management, contract management, content management, IP management, business process management, e-signature, board management, compliance management, legal hold, subsidiary management, etc.
  • Alternative Support Models: Drive departmental efficiency by leveraging managed services, LPOs, and other service providers
  • Knowledge Management: Enable efficiencies by creating seamless access to legal and department institutional knowledge through the organization and centralization of key templates, policies, processes, memos, and other learnings
  • Professional Development and Team Building: Deliver improved GC staff and overall team performance by globalizing the team and creating a culture of growth, development, collaboration, and accountability
  • Communications: Work collaboratively across the legal ecosystem to create consistent global processes, from onboarding to complex project management support. Publish regular departmental communications, plan, and execute all-hands.
  • Global Data Governance / Records Management: Create a records management program, including a record retention schedule, policies, and processes
  • Litigation Support: Support e-discovery, legal hold, and document review
  • Cross-functional Alignment: Create and drive relationships with other key company functions, such as HR, IT, finance, and workplace resources
READ  How To Get A ‘Great’ Legal Job

These core competencies and expected outcomes should form the basis of a business case for developing, expanding, and managing performance of a legal operations team.

CONCLUSION

The solutions for many of the challenges facing corporate legal departments today can be found in legal operations. As a result, many corporate legal departments are investing in legal operations, and this field has grown from a handful of individuals in 2009 to thousands of professionals today. With the right amount of investment, clear expectations and measurements, and empowering legal operations to influence legal department strategy, many legal departments are scaling their operations to increase service levels, reduce risk to the business, and deliver better outcomes with limited legal resources.

For more on legal operations best practices, visit www.legaltracker.com.


[1] The Legal Tracker Market Watch Survey, produced April 2017, included 161 corporate legal departments and a diverse group of participating small, medium, and large legal departments. According to the survey, 53% of legal departments reported an increase in the percentage of work handled in-house. However, only 28% of legal departments reported an increase in the number of in-house staff during the same time period.
[2] According to the Legal Tracker Market Watch Survey, 51% of legal departments reported that they have a legal operations function. Note that 90% of large legal departments (more than $50M in spend and 51 lawyers) have legal operations.
[3] https://cloc.org/what-is-legal-operations

Be Sociable, Share!
FacebooktwitterredditpinterestlinkedintumblrFacebooktwitterredditpinterestlinkedintumblr

Follow Us!
FacebooktwitterpinterestlinkedinyoutubeFacebooktwitterpinterestlinkedinyoutube

Author: Edward Lott

Edward Lott, Ph.D., M.B.A. is president and managing partner of Allentown-based ForLawFirmsOnly Marketing, Inc., a local search and digital marketing agency that offers clients lead generation, local seo and Google Maps Domination. Ed has been a digital entrepreneur since 1994, having discovered very early the opportunities the Internet offered. After having spent over two decades helping attorneys grow their practice, Ed joined the staff of ForLawFirmsOnly Marketing as President and Managing Partner, where he is expanding the agency’s cutting-edge services to the legal market. A true marketing futurist, Ed's vast experience working directly with attorneys has given him a unique perspective on law firm marketing not found in many other digital marketing agencies. Ed has reshaped the offerings of ForLawFirmsOnly to focus on growing law firms through a holistic approach to digital marketing evident in the reformulated lead generation processes now in place. Want to learn more about ForLawFirmsOnly Marketing, their lead generation programs, or just talk to Ed about his visions for helping law firms grow? Call him at 855-943-8736.

Scroll Up