What is Legal Operations? An Overview
It’s a common term, but what does Legal Operations really define? Legal Operations is basically a term that encompasses in-house legal processes and practices that should function in a businesslike way. But it specifically focuses on areas such as financial management, service design, and analytics to make the legal department (more) efficient for modern corporations.
Not all companies have a formally titled, specific department focused on Legal Operations. Sometimes the General Counsel takes on the responsibilities, and sometimes the responsibilities are spread out among attorneys, paralegals, and analysts.
With COVID-19 turning the whole world upside down, there are many areas that Legal Operations has to focus on that were previously less of a priority. Across industries, organizations have to had to adapt quickly, with legal departments dealing with sudden changes that have been ushered in by pressures to perform profitably and productively. This has always been a challenge, but it now faces a new level of urgency brought on by the pandemic.
What legal software scalability can do for you today in support of such change is crucial, but adopting any new tool or practice must stem from a more fundamental understanding of what Legal Operations can do, should do, and how you can make it do the very most it can. And once we have that down, perhaps the most important question – how can you make that happen without spending huge amounts of money?
The COVID-19 pandemic and Legal Operations
Let’s face it: Currently, all businesses are struggling with the pandemic and its repercussions to varying extents. When it comes to Legal Ops, however, this is a direct impact that needs to be addressed, as the move to working from home (or remote work) resulted in a new slew of legal matters that need to be addressed. The use of new tools like ELM and legal process automation software has shifted from a “nice-to-have” to a “must-have” virtually overnight.
Before we explore the new concerns, however, let’s run it back and look at what Legal Operations really means – and perhaps more importantly, how CLOC is involved.
The rise of Legal Operations
What is CLOC? The Corporate Legal Operations Consortium, better known as CLOC, self-defines itself as having…
“…introduced the Legal Operations role as an industry recognized profession and continues to drive Industry innovation and positive change through its global reach…As departments, and the role of the legal operation professional evolve, CLOC’s global community will continue to lead and support the Legal Operations professional in running legal department’s like a dynamic, scalable business.”
CLOC defines 12 core areas that Legal Operations professionals can use as the industry-recognized benchmarks for what comprises an effective Legal Operations function. These range from foundational levels to mature, advanced levels. Every organization that chooses to align with CLOC can use these competencies to understand Legal Operations, to define the extent of its own success, and invest in the competencies accordingly.
The Core 12 allows organizations to identify which competencies need the most investment to achieve their objectives. As many businesses face the same challenges as they try to optimize for excellence in these areas, CLOC provides guidance to support in-house legal professionals throughout the world.
Those core competencies are:
- Cross-functional alignment
- Data analytics
- Financial management
- Vendor management
- Knowledge management
- Technology & process support
- Service delivery & alternative support models
- Organizational design, support & management
- Litigation support & IP management
- Information governance and records management
- Strategic planning
The core functions & benefits of Legal Operations
Improve Operational Efficiency
As mentioned above, increasing efficiency is the fundamental reason Legal Operations departments exist. Some of the ways they can drive efficiency throughout the organization include:
- Strategic planning, particularly in collaboration with the General Counsel
- Financial planning, both internal and with outside counsel and vendors
- Operational/analytics, such as e-discovery and staffing
- Technology, including rolling out and implementing new technologies throughout the department
Manage Legal Spend
Of course, every organization is focused on ROI and profitability, and a large part of this comes down to spend management. Legal Operations oversees legal spend, including visibility and reduction, and the department budget.
Introduce Automation & Standardize Processes
Legal Operations will standardize and automate repetitive tasks across the board – especially administrative tasks such as invoice review. Automation is key to freeing up valuable time for your employees to spend on tasks that yield a higher return.
Improve Productivity and Profitability
Legal Operations optimizes law firm performance to ensure that you’re getting the maximum value possible for your money (so really, the most bang for your buck). All of these factors work together to increasing your organization’s productivity levels and bottom line profit. As we’ve mentioned before, McKinsey estimates that a whopping 23% of work done by lawyers today can be automated by existing technology!
Understanding the true value and impact of a Legal Operations team goes beyond just measuring departmental (or even company-wide) cost savings. One of the greatest benefits that is not quantifiable is the ability to strengthen relationships across business units like Finance, HR, and IT
Adopting Legal Operations technology
According to the Global Legal Department Benchmarking Survey 2021 Report by KPMG International, top priorities for legal professionals in the coming years are information extraction from documents (55%), document automation (54%) and data analytics (45%).
Tools for automatic decision-making (10%) offer high potential but are rarely used in legal departments at the moment. The newer technologies are the ones that organizations seem hesitant to adopt, indicating that legal professionals may be waiting to see how successful they are before jumping on the wagon.
According to KPMG, 33% of surveyed companies have a budget set aside for legal tech applications. The average total amount of legal tech budget is US$248,041, which represents an average 13% of overall legal department budget. A budget’s limitations may be a challenge to Legal Operations, but one that can be changed as organizations realize the benefits that legal tech can offer.
What is Legal Operations? The wave of the present, not just the future
Once a novelty, pioneered by a few corporate visionaries, Legal Operations is spreading globally. At first the province of large legal departments, more mid-sized and even small legal departments are taking advantages of its benefits.
They’re increasingly adding a range of Legal Operations solutions to help their legal departments operate at peak efficiency. From workflow automation to automate repetitive manual processes to legal hold solutions that give you end-to-end management of a legal hold process in a defensible, consistent, and reportable manner, there are technologies available to support the burgeoning growth of this now-essential part of corporate legal departments.