Please enjoy the blog written by Andrés Jara Baader, Founder and CEO, Alster Legal.
Spanish version available here.
As consultants for internal legal departments, we have identified that one of the major problems these business units have is related to the question of “how can we be more efficient and measure such results”. The latter is a key factor when we understand that in house teams need to become strategic partners within the business.
A lot has been written about the environment conditions legal departments face today. The increase of internal work that was traditionally carried out by external legal resources; limited resources and budgets; pressure for reducing expenses and costs; requirements for management and technology skills; budget predictability; more complex regulatory environment and a desired digital transformation are all issues to take care about.
According to Thomson Reuters 2019 Legal Tracker LDO Index Benchmarking and Trends Report, 68% of legal departments have an increasing demand for legal work, and it is a trend that has emerged strongly in recent years.
In addition, according to the same report, 90% of legal departments have described as high priority the control of the costs incurred in their area, aspects that make the road to efficiency complicated. Therefore, the tasks and expected functions of the legal department increase, while staff and resources generally remain unchanged.
It is in this adverse environment where global entities such as CLOC, Corporate Legal Operations Consortium, and ACC, Association of Corporate Counsel, promote the optimization of legal service delivery models, emphasizing the example of the legal ops functions and maturity models as key toolkit for decision making and professionalization of the internal legal team.
But what is "Legal Operations" and how is related to maturity models?
In simple terms, it is a multidisciplinary profession that has experience in finance, marketing, data analysis, engineering, administration, management and processes support, and that within a legal department, can be embodied in a role or several, which focuses on people, processes and technology, allowing:
- Greater efficiency and productivity, since it works on those non-legal issues, allowing lawyers to focus on activities that bring legal value to the company.
- Implement new technologies to automate processes and improve productivity, such as document management and knowledge management. Tools that lead to greater efficiency of the department since they reduce the time of search for information, knowledge, templates and forms.
- Have a multidisciplinary vision with strategic planning, financial management and projects management.
- Define business processes, activities and professionals, which allow legal departments to serve their clients more effectively by applying business practices and techniques for the delivery of legal services.
A research carried out by Thomson Reuters in 2017 showed that:
- More than 40% of small legal departments (those with up to US $ 4 million of external expenses) had at least one person in Legal Operations.
- This increased to 48% in medium-sized legal departments (those with up to US $ 15 million of external expenses).
- 93% for large legal departments. Which concludes that not only the large legal departments have a Legal Operations team.
- Moreover, according to a survey conducted by the Association of Corporate Counsel (ACC), 50% of the internal legal departments that participated, had at least one person assigned to the Legal Operations role, which results in a significant increase compared to 20 % from the previous year.
To boost performance, productivity, profitability and efficiency organizations must incorporate the “Legal Ops” role and be able to assess the maturity status of the internal legal department through maturity models, so they can continually evaluate processes and discover opportunities to rationalize and deliver value that meets the needs of their customers.
Operational excellence in internal legal departments is measured by two characteristics: organizational and functional maturity. For this same reason, it is that both CLOC and the ACC have developed maturity models that allow assessing the state of health in which the legal departments are. By delivering guidelines to put together a strategic plan that allows them identify opportunities, legal departments will be able to prioritize and understand the right time to take the right decisions.
These maturity models are based on basic competencies that each “Legal Ops” should look for and that are aligned to the maturity level of the organization, allowing them to classify into 3 levels: foundational, advanced and mature.
The definition of the state of maturity in the operational model of the legal department constitutes a good starting point to identify ways of action that allow developing capabilities and initiatives that may lead to success.
Modern legal departments
It is a fact that today modern and avant-garde companies have found in this role of “Legal Ops” and in maturity models the opportunity to professionalize their legal departments, build much more efficient support areas within their companies and consolidate the position of the legal department within them as key pieces, without envying anything to the commercial, financial and business development areas.
Today, it is almost unthinkable to lack, for example, metrics and KPIs that allow measurement and bench-marking of processes for continuous improvement; standardization and automation of administrative or repetitive tasks so that, in this way, the team can focus on the work that brings greater value; support technologies and processes; stronger, transparent and data-based relationships with suppliers and external consultants to maximize the value of these links.
The invitation is to use the available maturity models and identify the level at which your legal department is in order to determine the opportunities for improvement that will allow you to think about strategies and actions to be taken to achieve efficiency and quality service, meeting goals and positioning your internal legal team where you dream.
Spanish version available here