What is Legal Operations?

Legal operations is revolutionizing the way the world of in-house legal operates. This article is an introduction to legal ops and how it can benefit you.

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In the past, legal processes were among the longest and most laborsome in business.

With the legal team often being the point of entry and exit for business matters, these cumbersome processes created friction both internally and externally. In turn, this resulted in damaged relationships, the slow development of business opportunities, and, in some cases, blocked revenue.

However, the pace of business has been increasing over the last decade. With 70% of companies now having a digital transformation strategy in place*, there is a strong focus on building more efficient and impactful processes.

While legal teams were once left behind, the emergence of a legal specialism dedicated to streamlining legal processes and implementing effective tools has enabled legal professionals to operate more efficiently and take on a more strategic role in the business.

Introducing “legal operations”, or “legal ops” (as it’s more commonly known).

In this article, we’ll share an introduction to legal operations and what areas you need to be thinking about to improve the efficiency and effectiveness of your legal team.

In this article, we will cover the following:

Legal Operations – Quick definition

“Legal operations” describes the set of processes and tools that a business uses to execute legal work. It is all about driving efficiency and effectiveness to reduce costs and improve performance.

When you put a focus on legal operations, you’re taking action to streamline processes, embed tools and technologies that offer a high return on investment, and enhance cross-functional collaboration. In fact, legal operations professionals are often said to be the link between legal and the rest of the business. For example, priorities include controlling outside counsel costs, using technology to simplify workflow and manual processes, and focusing on internal data security.

As a result, the legal department is able to achieve more with fewer resources, deliver more impactful outcomes that are aligned with wider business goals, and the team will be able to take on a more strategic role within the company.

The rise of legal operations

As technology progresses at pace and the number of legal tech vendors expands, legal ops functions will increasingly deliver significant cost and time savings for their businesses.

While the formation of the legal ops concept is relatively new, some aspects of legal ops have been around for decades.

Pre-1990, legal teams were focused solely on risk management*. As we moved through the 1990s and into the 2000s, there was a shift towards more strategic activity. However, this work was generally executed by outside counsel as in-house teams grappled with admin-heavy internal requests.

As legal fees began to skyrocket in line with inflation and demand, businesses and their legal teams began to focus on optimizing processes and saving money. Now, in light of the harsh economic climate and endless drive for efficient growth, legal departments are establishing a culture of continuous improvement.

The rise of legal operations encourages legal professionals to strategically use technology and legal service providers to drive efficiency and reduce costs.

The core competencies of legal operations

When it comes to legal operations, your main point of reference should be the Corporate Legal Operations Consortium (or CLOC, as it’s usually referred to). CLOC is a global community of experts focused on redefining the business of law and it is one of the main driving forces behind the progression of legal operations.  

Defined by CLOC, there are 12 core competencies of legal operations. These competencies represent areas of focus that every legal department needs to manage to have a disciplined, efficient, and effective legal function. Think of these as the ingredients you need to have a well-oiled in-house legal machine. Let’s explore a summary of each.

Financial management

When budgets are stretched and, in some cases, on the decline, it becomes even more critical to effectively optimize the finances in the legal department. Where once there were discrepancies, friction with other teams, and a lack of informed decision-making, there is now a focus on proactive, intelligent financial management.

Legal operations include mechanisms to better set and manage the budget for the legal function. Legal departments need to work with the finance team to proactively spot efficiency opportunities, act upon spending trends, and explore cost savings.

Firm and vendor management

In the past, outside support was often chosen as a result of historical contracts or personal relationships. This approach often resulted in suboptimal rates and effectiveness of support.

But your portfolio of vendors needs to be well-monitored. Ensuring optimal fee arrangements with outside counsel and favorable payment options with legal tech vendors will ensure the sustainability of your legal function.

Observing the quality of output from vendors will allow you to secure a good return on your investment and deliver impactful outcomes for the business. In practice, this focus on cost and quality might look like regular reviews and the negotiation of fee arrangements.

Business intelligence

Historically, legal teams have had minimal access to data that could be used to inform decision-making. Now, thanks to cross-functional collaboration and new technologies, legal teams can now operate based on data, not guesswork.

Making use of the data and insights available both inside and outside of the legal department, you can identify trends and spot opportunities to improve the performance of the legal function. As your team grows, you’ll be able to nurture the skills within the legal department and make increasingly better use of the data available to you.

Information governance

Legal is the gatekeeper of valuable information. Yet, especially in companies that are growing quickly, it is often a challenge to maintain clean information governance. This lack of structure can put the company at risk and make it difficult to provide the right information at the right time.

Legal operations brings focus to the need for clear and comprehensive guidelines for the sharing and retention of this information. Good information governance reduces risk and creates confidence for teams internally as well as for customers and prospective clients.

Technology

Legal has been a slow, admin-heavy function for too long now. Thankfully, in an effort to manage a growing workload and drive efficiency, legal professionals are looking to legal tech for a solution. Now, 71% see using technology to simplify workflow as a high priority.

Gartner predicts that legal technology budgets will increase threefold by 2025*. Whether it’s a contract management platform, equity management software, or an entity management solution like Newton, the goal is to implement tools that will automate low-value, high-volume tasks and free up time to be spent on higher-value, more strategic activity.

Training and development

Where once the legal department operated in silo, it is increasingly acknowledged as a valuable business partner. After all, legal is a business topic; it’s not just for lawyers.

Legal operations propose the creation of quality, tailored training around legal matters for colleagues both inside and outside of the legal team. Whether you run a session on new legislation that’s coming into play or develop a section for the onboarding experience of new staff, delivering to the training requirements of the business will better ensure compliance and engagement.

Strategic planning

In today’s economic climate, all business functions must align and work towards the same overarching goals. Thanks to legal tech, in-house legal teams can now free up time to focus on more strategic work that helps to position them as business advisors.

To deliver better outcomes, you must set goals that serve the needs of the legal department and that are also aligned with wider business objectives. Legal leaders and their teams must take a more holistic approach to the design of their legal strategy, ensuring it supports the company’s longer-term vision.

Service delivery models

As we’ve all experienced, there are instances when historical processes can go against us. For legal departments, assigning work to a particular service provider by “default” can be surprisingly costly and have a negative impact on delivery.

The vendor ecosystem has become increasingly complex to avoid wasting time and delivering subpar work, build and monitor your vendor portfolio over time. Understand which vendors best deliver different types of work—and whether the costs align with your expectations—and route projects accordingly.

Project management

Project management is a critical aspect of legal operations. Often one of the most time-consuming yet impactful parts of legal ops, project management sees legal teams designing and implementing initiatives to make the legal team and wider business more efficient and effective. These are often complex projects that require competent change management skills.

Practice operations

Legal professionals are highly skilled individuals. Yet, many in-house legal teams are continually bogged down with a high volume of low-impact but necessary tasks. This results in wasted talent and money as an unengaged team.

The practice operations focus aims to enable legal professionals to focus on legal matters. By implementing automation and streamlined processes, lawyers can spend less time on operational tasks and more time on practice-specific matters such as entity management, eDiscovery, and contract management.

Not only will your legal team be more engaged in their work, but the business will reap the benefits of putting their skills towards higher-value tasks.

Organization optimization and health

For too long now, heavy workloads due to expanding job scope and lack of strategic responsibility offered by executives have resulted in legal departments being mostly reactive with no clear vision. Without a vision, it’s nearly impossible to adequately prepare for the future, meaning there will be an inefficient allocation of resources, and important aspects of the employee experience—such as career opportunities and skills development—will be overlooked.

Optimizing the legal department is all about building a high-performing and motivated team. You need to understand the legal department’s strategy (which must be aligned with the wider business strategy). From there, you can hire individuals with the right skills and diverse perspectives to encourage continual improvement and support career growth.

By supporting the individuals in the legal department to work towards their personal ambitions, you’ll create a sustainable, enthused team that delivers better business outcomes.

Knowledge management

As a result of a high volume of historically manual yet necessary tasks, legal teams have a significant workload. Often, this means there has been no time to define and implement best practices. However, as your team and function scale, it’s crucial to have processes in place that ensure consistency and quality while mitigating risk.

Effective knowledge management sees the centralization of knowledge. By centralizing documentation, insights, and best practices, you can create a more even playing field that empowers all team members. Moreover, when there is a clear understanding of procedures, the legal team will deliver more consistent service to other teams, ensuring standards are maintained.

What does a legal ops function look like?

The formation of your legal operations function is unique to your business. It will also evolve as your team and company mature. There are generally three different ways that legal ops can make its way into your legal department:

1. Legal ops as part of a wider job description
2. A dedicated legal ops professional
3. A dedicated legal ops team

For smaller companies, perhaps with a sole in-house lawyer or external consultant, legal operations may be one part of someone’s job description. For slightly bigger companies, perhaps with a legal team of three or more, you may have a dedicated legal ops professional. Some very large companies have a whole team to focus on these topics, but for the majority of small to medium-sized businesses, it’s likely that it will sit within the core legal team.

Time to embrace legal ops

Legal departments of all sizes are under increasing pressure to mitigate risk while also understanding the risk appetite of the business. They have a responsibility to protect the company while also now enabling growth and advising on strategic matters. Not to mention, they need to manage outside counsel and ensure budgets are adhered to.

Reducing the time spent on low-value, high-volume tasks so legal teams can spend more time on high-impact, strategic work is exactly where legal operations come in. And it can benefit all businesses, no matter the size or stage.

But it’s not just about the team. To truly drive efficiencies and enhance performance, legal teams need to be equipped with the right tools and technology. As listed above, technology is one of the 12 core competencies of legal ops.

If you want to take your legal function to the next level, you need to assess your current situation—including business priorities, resource plans, budget, and most importantly, current pain points—and explore what technology will be able to drive efficiency in your company.

Where does Newton fit into all of this?

Newton delivers an easy and intuitive platform to manage and automate your legal entities’ information, governance, and compliance. If your entity management processes are currently creating friction for your team (which they are for many), be sure to get in touch to explore how Newton can help you have everything you need to be in control of your entity portfolio.

About this article

Sources

Forbes (2019). 100 Stats on Digital Transformation and Experience
CLOC (2020). What is legal operations?
Gartner (2021). Gartner Predicts That Legal Technology Budgets Will Increase Threefold by 2025
Thomson Reuters Institute (2022). 2022 Legal Department Operations Index

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