Legal Operations is Hot. But Legal Culture is Lukewarm Toward It
Legal operations (legal ops) is a hot topic these days. The Corporate Legal Operations Consortium (CLOC) recently held its annual jamboree in Las Vegas, drawing approximately two thousand acolytes from around the world. That was twice the prior year’s turnout and indicative of the buzz that the organization—and legal operations generally—is generating. The Association of Corporate Counsel (ACC) also has an active legal ops membership. Both CLOC and ACC Legal Ops have created a community of ops professionals—many of whom come from backgrounds other than law—committed to sharing best practices, answering questions, and proselytizing the industry about the importance of their work.
While its visibility has increased dramatically during the past few years, legal ops confronts strong headwinds from traditional legal culture. There are several reasons: (1) law’s conservatism and aversion to change; (2) lawyer reluctance to distinguish legal practice and delivery; (3) the “lawyer-‘non-lawyer’” ethos; (4) economic and structural changes; (5) law is now more than legal expertise—it is melded with technological and business (process) acumen; (6) lawyers are no longer the sole players in the legal industry; (7) how, when, for whom, with whom, and at what price lawyers function is no longer determined exclusively by law firms—legal buyers now make those decisions; (8) most lawyers—and future ones—will “practice” differently than in the past and will collaborate with other professionals, paraprofessionals, and machines; (9) new delivery and economic models are challenging and may ultimately replace the traditional law firm partnership model; and (10) law is morphing from male-dominated, provincial guild to a diverse, global marketplace. Legal ops is both cause and effect of a gradual shift in legal culture.
Practice vs. Delivery and The Birth of Legal Operations
Legal operations sprung from the dis-aggregation of “legal” tasks—peeling away certain functions once performed exclusively by law firms and migrating them to other provider sources. The digital era produced a data explosion, rendering impractical and cost-prohibitive, law firms’ labor-intensive, protracted, expensive, ‘bespoke’ approach to all tasks and matters. Globalization, the tangled web of regulation, the astonishing speed of technological advances, and the complexity of business demanded new legal delivery options that melded legal, technological, and business expertise. Legal ops is an amalgam of human and technical resources that leverage “practice” capability to produce better, faster, more efficient, cost-effective, and risk-mitigating delivery of legal services. There’s one important caveat: the ultimate success of legal operations is dependent upon the willingness of practitioners to embrace it. That means, among other things, that legal operations professionals are accorded equal standing, status, and financial rewards as those “engaging in the practice of law.” Positive outcomes are promoted by the alignment and collaboration of practitioners and legal ops professionals.
The law firm partnership model sold one thing: legal expertise. The marketplace now demands legal and delivery expertise. Legal delivery, once solely about legal knowledge, has morphed into a three-legged stool supported by legal, technological and business expertise. Law firms were slow on the uptake; delivery expertise was not in their wheelhouse. Firms failed to acquire the new competencies (though many are now scrambling to build, buy, or lease it) because it was inimical to their labor-intensive, leveraged economic model. Firms experienced little pressure to “do more with less” until the global financial crisis. And even in the years that followed, few firms acquired delivery expertise and instead preserved profit-per-partner by internal belt-synching, not innovation.
The market void created by law firms was filled by corporate legal departments and legal service providers that focused on leveraging practice capability with delivery expertise. This is the DNA of legal operations and helps explain why legal buyers have taken control not only over legal delivery but also over the legal buy/sell dynamic. Legal operations and its first-cousin, legal procurement, operate differently than traditional law firms. The focus is on efficiency, predictability, early risk detection, metrics, and a result-driven philosophy that is the coda of business. Legal ops is guided by data, not “hunch;” and results, not reputation. Legal operations provides benchmarks that measure efficiency, outcome, and value. Buyers, not law firms, now decide the value to ascribe to a task, matter, or portfolio. Legal ops professionals manage the legal supply chain by ensuring that the right resource—human and/or machine—is assigned to the appropriate task.
The legal ops movement began on two separate but parallel tracks. One was a handful of large legal departments that recognized law firms were loath to invest in or collaborate with the expertise required to drive the more efficient delivery of legal services. These departments, many of whom were large tech companies in Silicon Valley, recognized that technology and business acumen had become as integral to legal delivery as practice prowess. Coincident to the formation of legal ops teams in-house was the growth and bundling of “business of law” functions by a handful of well-capitalized, tech and process savvy law companies. These companies were unencumbered by regulations that affected law firm structure and access to institutional investment. They invested in human resources as well as technology, focused on output (results and customer satisfaction) rather than input (hours billed and origination), and helped create a new paradigm for delivering “non-practice” legal services. Companies like UnitedLex, Axiom, Elevate, and others provided “legal ops” expertise before the term was coined.
Legal Ops: A Functional Definition
Legal operations is a widely used term in search of a commonly accepted definition. CLOC provides an excellent functional explanation: “legal operations is a multi-disciplinary function within a legal department that optimizes services delivery to a business or government entity focusing on CLOC’s 12 core competencies.”
Legal operations is agnostic where it resides. It can function within a corporate legal department (where it is most common), a law company, or an inter-disciplinary professional services organization that supports the delivery of legal services. Legal operations is not about the provider but, rather, optimizing expertise, resources, methodology, and process to improve the delivery of legal services. It is an umbrella term applied to an integrated process that results in enhanced value to legal buyers.
Legal Ops: Lots of Buzz and Plenty of Resistance
The buzz about legal ops belies the reticence that many in the legal ecosystem have towards embracing it. Even those companies that have legal operations professionals—about 40 percent according to a 2017 Altman Weil Survey—often relegate that function a secondary importance when compared to “practice” activities. Many legal ops professionals do not report directly to the General Counsel, and many are tied to one practice area. This dilutes their impact and undercuts their standing as equals within the departmental hierarchy.
Most large corporate legal departments now have legal ops teams. According to the Legal Tracker Law Department Operations Benchmarking Report, 90% of legal departments with spend greater than $50 million have dedicated legal ops teams, and those that use ops staff generally rate themselves as higher performing in terms of sophisticated management of legal spending. The Report also reveals the larger the legal ops team, the more likely the organization ranked its management of legal spending as ‘optimized’ or ‘predictive.’ The financial impact of legal ops can be enormous. Cisco has asserted that its legal ops team has saved the company $400 million over the last few years.
But not all legal departments can invest in—or have the knowledge and enlightened management to outsource—legal operations. This is especially the case with smaller legal departments and companies that operate without a general counsel. Legal ops has yet to achieve widespread adoption and remains an option that incumbent law firm providers seldom recommend. A recent whitepaper by James S. Wilber of Altman Weil reveals that only 27% of companies surveyed have a full-time legal administrator (a/k/a legal ops manager). This is a challenge and an opportunity. A better grasp of what legal operations is and what it can provide all legal buyers is a first step. Buyers should understand that legal ops capability can be achieved by different means— organically, by acquisition, or outsourcing. There are a dizzying array of providers claiming expertise in “streamlining legal delivery,” and smaller companies often lack the knowledge to make an informed decision. That will change as legal marketplaces emerge where buyers have access to more information including a provider’s net promoter score (think: an Uber driver’s rating).
Legal Ops and Legal Culture
Legal operations is emblematic of law’s transition from a lawyer-centric, brute force approach to what lawyers define as “legal” tasks to a multi-disciplinary, digitized global marketplace where legal, technological, and business/process expertise are melded and legal buyers decide what requires lawyers and from what structure they are deployed. Practice—as proscribed by law firms—defined the old legal delivery model. Legal ops, technology, new structures, a changing buy/sell dynamic, and reregulation are creating a new delivery model that is, quite literally, turning the old one on its head.
The rise of legal operations parallels the ascendancy of the global legal tech movement. The recent Global Legal Hackathon, the spike in tech investment, and the proliferation of legal tech incubators—like the CLOC Conference— foster the impression that the industry is changing quickly. It is changing, but incrementally. A new global community is emerging, but its enthusiasm and growing numbers create a false positive about the receptivity of the legal ecosystem to change. Many lawyers regard legal tech, legal operations, and procurement as existential threats to the profession. Their self-regulated, insular, tradition-bound world is being challenged by “non-lawyer” interlopers—entrepreneurs, bean counters, techies, machines, and others” who are fundamentally altering the legal industry and what it means to be a lawyer. Incumbent legal culture is changing, but not without resistance, more muscular demands by legal buyers, and an infusion of a new legal professionals with different skillsets, mindsets, and priorities.
Legal operations is an important element in the reformation of legal culture. It represents a commitment to improve access to and delivery of legal services. And while many in the profession resist it and regard legal ops an incursion on their turf, the legal industry is bigger than the profession. Lawyers would be well served to embrace legal operations because it will liberate them to work on matters that require their differentiated expertise. And if that’s not a good enough reason to embrace legal ops, here’s another one: legal buyers will accept nothing less.
Mark A. Cohen is the Chairman, Board of Advisors & Chief Strategy Officer at Elevate and a Distinguished Fellow at Northwestern University Pritzker School of Law
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