The Fascinating Future Of In-House Legal Departments
Over the past several years, unprecedented disruptions have been dramatically changing the face of the legal sector and specifically, in-house legal departments.
Any attorney who has ever worked in a corporate legal department knows this to be true. The title “in-house counsel” takes on a new meaning of late. The in-house legal counsel no longer needs to be solely focused on the law, but rather the focus is also on other non-legal tasks and on making sure that all these tasks are done, whilst simultaneously improving the legal processes and making the service more productive and cost-efficient.
Economic environments, globalization, mergers, governance concerns and business competition influence the way the legal function is seen, utilized and led. Accordingly, aside from the different areas of the law, an in-house counsel needs to deal with - and to be an expert in a long list of issues, such as:
Cost effectiveness and ROI (Return on Investment)
Data and knowledge management (including BigData)
Reporting and analytics systems and metrics
Security of information and data
New (legal) technology / LegalTech
Effective human resources management
Legal project management
And becoming a trusted business partner in the company, alongside the entire management team - board of directors and leaders of major functions and operations throughout the enterprise.
What will an in-house legal department look like over the next few years? After looking at the trends and rapid changes affecting in-house attorneys and general counsels, it is clear that many factors are influencing their position and capacity.
Here is a glance at the factors that will affect in-house departments:
- Technology - like other corporate functions, such as procurement, operations, HR and finance, legal departments are experiencing technology disruption. Such disruption will likely shape the future legal department and will deal with the following issues:
Automation and digitizing of processes, information and data (including e-billing, digital signatures and e-processes);
Artificial intelligence (AI) and machine learning (in simple or routine negotiations/redline processes);
Analytics of data (Big Data), processes and performance;
Using current and future technologies to predict or prevent exposures and risks (instead of dealing with the retrospectively).
- Provision of “legal services” and sharing “legal” knowledge – the current changes in the business world, including the globalization, sourcing/outsourcing of services, accessibility of “legal knowledge” on the internet, the growing demand for saving costs and providing “professional legal advice” in many areas of the law without spending resources and time on outside counsels and internal legal professional needs will dramatically change the structure of the legal department and its operations.
Although local jurisdictional knowledge is required for particular legal matters, legal services can be delivered effectively across the globe (subject to applicable laws and regulations). In addition, the demand for expertise in many areas of the law is rapidly growing, among others due to cross-border business transactions - while one can easily find access to “legal information” on the net.
We already see a shift to lower-cost legal services providers and alternative legal solutions, as well as strategic use of outside counsels for specific and unique legal matters. There is also a move towards insourcing more legal work where possible and to explore opportunities to centralize knowledge and internal functions in shared service centers (crowdsourcing).
As in-house counsels become a real business partner in the company, more and more legal departments (and even law schools) are focusing on training lawyers in areas beyond traditional law, such as business, finance, process and program management. Legal departments are also beginning to focus on efficiency, productivity and cost saving, and at the same time - still protecting and defending the company from risk and liability.
- Operations – it seems like the most transformative change will be in this area. In-house counsels become aware of, and understand the increasing need for, the reliance on legal operations. The evolving role of legal operations professionals, the changing role of the traditional in-house legal counsel to a business partner and the increased demand for knowledge management, transparency and analytics of the legal services, are just a few examples of such a trend.
Not only can one easily see more legal operations professionals than ever before - both internal and external - but there is also growing focus on the overall legal sector as it relates to legal operations.
With the growing demand of legal operations professionals and expectations relating to their knowledge and skills, the face of the legal operations profession is also changing. The “new legal operations professional” should not only understand the traditional issues, such as processes, cost saving and internal communications - but also have a deep knowledge in the emerging legal technology (LegalTech) and have a deep understanding of the “legal aspects, risks and profession”. Only by doing so, the legal operations professional can help legal to better understand the business and to help the business better understand legal.
The demand for knowledge management is evolving and growing. The legal counsel is no longer the only person who understands the “legal language” and the “potential risks” in a specific issue, but rather the entire management team would like to understand such issues and to be able to make the right decisions. In addition, there is a growing demand to “measure” the legal department like any other business unit and make sure that it is a true business partner. Besides such internal purposes and communications, there is a growing demand to learn and communicate both with other internal corporate functions and outside organizations - and their legal departments. Among others, there are plenty of lessons learned, practices and operational aspects that can be gained from other corporate functions or even other (similar) companies.
Mission impossible? How can a legal department / in-house legal counsel achieve progress - without affecting the quality of the legal advice
As anyone can easily see, there is a constant demand to deal with all the “non-legal” issues, while dealing with all the legal issues. Simultaneously, there is a growing demand for “handling as much as possible” internally with no additional legal costs. Such demands make this mission (almost) impossible.
Accordingly, legal departments and their managers will have to find a solution to overcome and deal with all these challenges.
This is exactly where Legal Operations comes to the rescue!
In a nutshell, Legal Operations (LO) it is the set of business processes, activities and experts that optimizes the delivery of legal services to an organization and maximizes an in-house legal team's ability to protect and grow the company. Each solution is customized and will vary depending on the size of the company and legal team, their strategy and needs.
Legal Operations is working by focusing on different legal and non-legal aspects, such as: financial and vendor management (including alternative support models), data management, analytics, legal tech / new technology, communications (internal and cross-departmental), strategic planning, team development and mentoring.
By doing so, legal operations enable in-house counsels / departments to do what they do best: practice law. In addition and as a “side effect”, they make the legal team a trusted adviser to their business clients, reduce unnecessary pressure on the in-house counsel (specifically with respect to “non-legal” issues) and make sure that at any point the legal department uses minimum costs in order to provide maximum services.
While there is a growing trend to recruit in-house legal operations professionals, this author thinks that it might become a catch 22 situation.
In order for the legal operations professional to point out “problematic” issues and to solve them, one needs to be free of any constrains and influences and be unbiased. In some cases, such “problematic” issues relate directly to the way the legal department and/or the organization is managed.
In such cases, it would be (almost) impossible for the professional to point out such issues, and take the risk of losing him/her own position, therefore they might “think twice” before pointing out critical issues. Needless to say, that an outside legal operations professional will have no such constrains and will be able to provide unbiased advise and solutions.
To sum it up, legal departments and their managers can determine if and how they choose to embrace new technologies, new models for provision of services and operational efficiencies. However, in order to stay relevant and successful, “ignoring” such trends and disruptions and continuing to “operate” in the same way is simply not an option in today’s legal-business climate. Accordingly, and this is a warm recommendation, legal departments and their managers will need to start forming a strategy today for how to get to the future.
About the Author Adv. Edo Bar-Gil is head of the Legal Ops department at LawFlex – an international legal operations solutions company https://www.lawflex.com/.
Prior to this position, Edo was General Counsel of AppsFlyer, Chief Legal Counsel for SundaySky, Legal Counsel at Orange and attorney at the Israeli law firms of Tadmor Yuval Levy & Co. and Pearl Cohen, specializing in Hi-Tech, M&A, Multi National and Complex Transactions, Cross – Cultural Negotiations and Commercial Law.