As the legal industry continues to evolve and clients’ demands and needs are changing, legal departments are striving to improve their work processes as well. In the recent years, the role of the legal operations managers has emerged and gained significance in the legal sector. This article takes a closer look at the challenges that legal departments are facing, and how the Legal Operations role can help legal units increase their efficiency and effectiveness.
Challenges of Legal Departments
We often hear people in the industry say that the legal industry has never been more complex. The expectations of globalised clients have never been higher in terms of the quality of external legal advice as well as the cost efficiency for these services. This stems from economic pressures on companies worldwide as well as incentives for legal departments to reduce their spending on external legal consultations. Furthermore, the entry of legal technology tools as well as NewLaw firms competing with traditional firms is shaping today’s legal sector.
An additional challenge that legal departments are facing is that businesses have become increasingly regulated. Companies often need to manage and comply with local and international regulations. As a result, the workload of legal departments has increased correspondingly. Even though legal issues are very complex, legal departments are expected to increase their efficiency while cutting costs at a similar pace than other business units inside the company. This means that corporate counsels are expected to manage their departments like a business. In this context, the term legal operations has emerged.
The Legal Operations Role
The legal operations position is still not clearly defined. Overall, it includes all business activities and processes applied by individuals who are responsible for optimising legal departments or law firms. The legal operations unit can consist of one or more employees usually integrated into the legal team of a company. Legal operations provide strategic project management techniques and technological expertise to identify opportunities inside of the legal department for increasing efficiency and productivity as well as delivering high-quality results. These legal project managers work closely together in a team with attorneys at the intersection with clients or other business units. They usually report directly to the general counsel.
Legal Operation Managers benefit the in-house team
As legal operation managers take over non-legal tasks inside the legal department they enable lawyers to focus on delivering high-quality legal solutions. Some say this increases the quality of the legal work as corporate legal counsel do not spend time and energy on other business-related assignments.
Legal operations managers are responsible for analysing priorities within a project and managing internal resources. They further offer financial competencies and analytical skills and tools to achieve the goal of efficiency and as a result, serve modern business needs. Consequently, the overall aim of legal operations is to ensure that clients or legal departments have added value through more efficient and smooth processes. This can lead to reduced costs through automated tasks and the implementation of innovative technologies. Legal operations should not only decrease the spending of legal departments but further enable them to deliver high-quality results that are measurable through data analytics.
They further aim to improve the overall decision-making processes through leadership strategies as well as measuring the success of different initiatives. In this context, short-term as well as long-term, objectives are formulated, measured and evaluated at the end of certain projects by legal operation managers.
Collaboration and Integration of Expertise
Another focus area of legal operations is the integration of business strategies and expertise into the legal practice by offering specialised services and smooth processes. Therefore, the legal operations individual or team should have knowledge and an understanding of the practice of law next to business skills. They have to be able to manage a variety of stakeholders while delivering innovative solutions to increase the efficiency of the legal department.
A general trend towards digitisation of legal departments and law firms is largely driven by industry changes and structural optimisations inside of other business units. Consequently, competencies in the area of data management have become more crucial for legal departments. They not only offer relevant insights into clients and business processes but further create transparency about the performance including successes and failures. In this context, knowledge management and how to preserve relevant information and data is also important.
Large legal departments that include legal operations managers, therefore, consist of a balanced mixture of legal professionals with business experts. For instance, IT-professionals can take over the implementation of legal technology. Finance experts are responsible for budgeting and pricing issues. They not only monitor the overall budget of the department but also predict the companies spending on external legal counsel and are in charge of the control over expenses of outsourcing processes. Next, legal operations also often consist of business development managers for outsourcing panels and other procurement processes.
However, legal operations teams are not only improving internal processes. They are further involved in external structures as they analyse the outsourcing process by estimating the benefits of external legal counsel. In this context, they continue to consider alternatives to traditional legal consultation providers such as NewLaw firms. They are basing their decision on factors such as efficiency, flexibility and alternative billing models. This increasingly makes NewLaw firms relevant for their legal departments and their outsourcing process of legal work.
NewLaw firms
Similar to the approach of legal operations, NewLaw also looks at the law firm from a business perspective. These firms differ from traditional law firms in the manner of acquiring new clients, the manner in which the legal work is done and the manner in which the firm is run. They further replace the pyramid partnership structure and thereby move away from billable hours and instead create incentives to drive efficiency in order to make a margin. This includes alternative pricing methods on a project basis or a fixed fee system. As a result, the clients are paying less for quality services and can predict their expenditures on outside legal counsel better. NewLaw firms further stress the reinvestment of their capital in technology, while improving their processes and exploring new ways of remote and flexible working.
Find out more about NewLaw firms, their origin and characteristics, take a look at our NewLaw Guide Blog series.
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