Why is Effective Legal Operations Management Good for Business?

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Introduction

Providing high-quality legal services at lower costs and better results is the ideal scenario for in-house lawyers. While this might seem challenging, legal operations have been a welcome change over the past few years. This is a discipline where we treat in-house legal departments similar to any other part of the business. There has been a significant increase in the legal operations positions over the years. The same has been highlighted by the 2021 State of the Legal Function report, according to which there has been a 75% increase in the number of positions since 2018. Today, more than half of legal departments spend their money on funding legal operations, with 80% of legal departments having at least 1 legal operations specialist, as per Reuters’ Legal Department Operations Index

However, understanding this concept requires some in-depth analysis of the subject matter. Let’s explore how legal operations management works and how it benefits lawyers. 

What are Legal Operations?

Being a broad term, the best way to understand the meaning of legal operations is by saying it is a management system working for a company’s legal department. The legal operations group is a division of the legal department. This group is responsible for the operations of the legal department, and its main aim is to maximise the efficient delivery of legal services in the company. This is why they directly report to the general counsel of the company. Therefore, the legal operations department could be identified as the glue that holds the practices of the legal department together by tying the performance of the legal department directly with the primary goals of the company, i.e., profitability. 

Why Do You Need Legal Operations?

One of the common misconceptions about legal operations is that it reduces the need for lawyers. However, this is not the correct understanding. The truth is that Legal Operations help in fulfilling a range of functions:

  • Designing better and more efficient contracts and legal documents. 
  • Help in running the company smoothly.
  • Take off the extra workload from lawyers to help them focus on more critical issues. 
  • Contract automation, revision, e-signing, data management, etc. 
  • Financial and budgeting issues
  • Improves productivity of the team
  • Improves company performance while keeping budget and spending in check
  • Help in increasing user satisfaction 

How Can Legal Operations Enhance Efficiency?

To understand how legal operations can enhance efficiency, let’s break down tasks into separate categories that the legal operations team can perform:

  • Strategic – This is where the legal operations team works directly with the general counsel to drive their vision for the business. This can be done by creating yearly goals and KPIs, managing succession plans, strategic plan development, and departmental operations guides. 
  • Financial – This is where the legal operations team assists in managing departmental finances through e-billing systems, budgets, reporting, forecasting, alternative fee arrangements, and other details. 
  • Operational – This aspect is the most critical part of legal operations and also takes a lot off the plate of a lawyer. Some common things included here are:
    • Staffing
    • Data analytics and metrics
    • Attorney licensing
    • Contract management
    • Program, knowledge, and records management
    • Plan legal department meetings
    • Regulatory compliance

Core Competencies of Legal Operations

There are 12 core competencies within the framework of legal operations that every legal department is expected to manage:

  1. Financial Management – Legal operations management is responsible for managing departmental budgets, tracking money transfers, identifying spending trends, and identifying potential cost savings. 
  2. Vendor Management – The team works towards the building and maintenance of vendor relationships by ensuring that regular business reviews take place. 
  3. Business Intelligence – Business Intelligence competency helps the department to utilise data and make more informed decisions with measurable outcomes. 
  4. Information Governance – This is where legal operations management focuses on designing and implementing information policies across offices and departments within the organisation. 
  5. Knowledge Management – This involves the creation of a standardised library of templates, policies, procedures, memos, and other relevant materials. 
  6. Organisation optimisation and health – The legal operations management helps in the creation of standardised hiring processes. This is done through employee encouragement schemes, such as promotions, well-being support, etc. 
  7. Practice Operations – This is where the legal operations management takes care of IP management, contracts management, or eDiscovery aspects. 
  8. Project/Program Management – This is where the company can implement projects and initiatives with trained professionals with specific skills for a specific task. 
  9. Service Delivery Models – The team is responsible for creating an ecosystem of best-suited vendors to receive the best outcomes at the best price.
  10. Strategic Planning – The team is responsible for setting long-term goals, aligning the goals to corporate strategy, and helping the team understand the big picture surrounding the organisations. 
  11. Technology – By staying up-to-date with the latest developments, the team is responsible for incorporating technology solutions such as contract management tools, eBilling, eSignatures, etc. As per CLOC, about 65% of businesses use contract management software today. 
  12. Training and Development – The team is required to target training courses where they help the employees stay compliant and effective through advanced skills.

Advantages of Effective Legal Operations Management

The following are some of the advantages of implementing an effective legal operations management regime within your organisation:

  1. It changes how legal services are delivered since they focus on the quality of the services delivered. This is done through the help of metrics and performance indicators and by incorporating a culture of continuous improvement. 
  2. It helps in enhancing communication within the different departments of the organisation, irrespective of whether they are legal or non-legal. The legal operations management becomes the translator and facilitator of information between the departments by leveraging on the common system. This helps the organisation accelerate its workflow. 
  3. It helps in freeing up the legal department by ensuring that the roles within the legal department are clearly defined, with the employees having a pre-defined set of tasks. 
  4. It helps establish handy templates, which helps the legal department not slow down due to long review procedures. 

What Stops Effective Legal Operations Management?

One of the biggest hurdles in the middle of your journey to effective legal operations management is the conservative nature of lawyers. Most in-house lawyers prefer continuing with the status quo instead of exploring something new and more effective. Here, budgeting and allocating scarce resources is a significant concern for them. Further, there remains scepticism about the effectiveness of legal operations management in the department and the organisation. 

In their 2021 State of Legal Operations Survey, the Deloitte researchers found that while 75% of the legal departments invest in multiple technological investments, the investments lack the incorporation of essential tools to carry out responsibilities efficiently. Further, 57% of Respondents in the study highlighted the lack of adoption and change in the management of software solutions, diminishing an organisation’s return on investment in the software. 

Most of these concerns and shortcomings arise from a lack of understanding and interest in legal operations. Therefore, organisations must try to increase their ambit and explore the work of legal operations management to divide professional roles in an organised and efficient manner. 

Steps to Commence Your Legal Operations Management

If the above highlights are enough to convince you to start a legal operations group, the following are some steps that you can start with right away:

  • Read materials and explore the world of legal operations. There are various sites that are dedicated to legal operations as well. 
  • Make your case on why your organisation requires legal operations management and present your plan to the business leadership. You must focus on exploring how legal operations can improve the delivery of legal services and how it can pay for itself. 
  • Get the required budget and start with creating a blueprint for your legal operations function in the short and long run. 
  • Find the right person to head your legal operations team, preferably someone with a good financial or legal background and someone comfortable with the use of technology. 
  • Start with small automation techniques in your business, either department-level or organisation-level. Implementing e-signature technology, managing vendors, and capturing knowledge are good starting points. 

Conclusion

Effective legal operations management can generate and reap benefits for the organisation if it devises a good strategy for its effective implementation. At the same time, every organisation doesn’t need to require a legal operations professional. Therefore, while legal operations shall continue to play a vital role for many legal departments by introducing new technologies and cross-functional collaborations, organisations must make their call on the best way to go forward for their organisation. 

If you are someone who seeks clarifications and solutions related to your legal operations management, consider exploring LegaMart’s services. With an efficient team of over 2580 legal professionals spread in 128 countries, you can always trust LegaMart to provide you with trusted legal services and help your business grow and your career thrive. Connect with us today!

Frequently Asked Questions

How can legal departments measure the success of their legal operations management?

Key Performance Indicators (KPIs) can serve as a helpful tool to measure the success of legal operations management. Common indicators include cost savings, client satisfaction, efficiency improvements, compliance rates, and new technology implementation. 

What are the common shortcomings of legal operations management?

Some common shortcomings of legal operations management are maintaining data security, ensuring effective compliance, and maintaining a balance between risk management and innovation within the organisation. 

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