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February 17, 2023

What Layoffs mean for Legal Ops

As the legal industry continues to face growing competition and increasing uncertainty, many law firms and legal departments will face redundancies and layoffs in 2023. Here, we provide an overview of the current state of the legal industry, the challenges, and the impact of the current climate on the legal profession across the board.

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The current economic era has brought great uncertainty, and law firms are not immune to the challenges posed by redundancies and inflation. Due to this, many law firms across the globe, from Luxembourg and Germany to the United Kingdom (UK) and the United States (US), are facing difficult decisions about how to manage their legal departments and ensure the continued success of their businesses. For law firms, the key to successfully navigating this period of uncertainty is the dual combination of good management and legal technology adoption. It’s more than possible to manage legal departments through this period of uncertainty by ensuring that a firm’s workload is well-organized and prioritized and by using technology to streamline processes and minimize errors. Legal technology can also manage an overload of work, allowing lawyers to focus on high-value tasks and reduce the time spent on routine or repetitive tasks. In this article, we’ll discuss how to navigate uncertainty, what the prospect of mass firing means for legal operations, and how legal technology can offer law firms huge advantages by reducing work overload and maximizing employee productivity.

In this article, we will cover the following:

Fears of a recession are currently very real across the markets, in both Europe and the US, with economists currently predicting that there is a 70% chance of a downturn.

However, although there may well be an impending recession, economists and experts are not in agreement about how bad the slump might be or even for how long it might last, with many believing that not only might it be relatively short and mild, there is the chance that it may not even happen at all. Given the considerable variation in the economists' opinions, it isn’t easy to discern what may happen at all.  For example, whilst both the financial powerhouses Goldman Sachs and JPMorgan Chase consider that there will be a recession. Still, it won’t be too severe or long-lasting; Barclays insists that 2023 will be the worst global economy in four decades.

Instead, there are a lot of dissents from the supposed experts, so it’s no wonder that law firms are preparing for the worst. In fact, by the end of 2022, law firms were being forced to make stealth layoffs to correct the over-hiring that had occurred during the previous growth period, in which there was a mass hiring of associates who had the privilege of selecting their chosen firm, bonuses and location. However, many such associates fear their jobs as the “stealth layoff” process strikes again. No law firm wants to make layoffs en masse, but the stealth layoff enables a firm to conceal the actual cause of mass redundancies across a firm. As those familiar with the expression will recognize, stealth layoffs would allow firms to cut employee headcount without being required to confirm that such cuts were based on financial need. Law firms frequently frame the reductions in performance review terms that coincidentally need to occur right in the midst of an economic downturn. In reality, however, it’s most likely that the cuts we’re going to see from law firms will be done by those who recruited excessively during the past period of economic growth.

Indeed, the rationale behind the stealth law off can be explained simply, as being “when a law firm wants to lay off a bunch of attorneys but doesn’t want to send a sign of weakness to clients and peer firms”.

Restructure Corporate Legal Department

The criteria for laying off employees, it seems, may well be performance-related. Still, firms may well prefer to strategically frame redundancies around performance review periods, which tends to leave those lawyers laid off questioning their professional abilities.

Unfortunately, corporate legal department restructurings are highly likely to take place in 2023.

As the Center on Ethics and the Legal Profession at Georgetown Law and the Thomson Reuters Institute’s joint 2023 Report on the State of the Legal Market reveals, the coming year will likely be filled with many difficulties and unpredictability for the legal profession.

We know that the potential for large-scale layoffs is a major concern for legal practices. This can have a major effect on a massive range of personnel, with many lawyers falling out of work and law firms losing access to their skills and experience. However, the formulation of a clear strategy for adjusting the corporate legal division and the shrewd use of the newest legal technology can help to reduce the impact of layoffs and guarantee that you can ensure your departments can continue to run smoothly and proficiently. As such, law firms must have a well-defined plan to restructure their corporate law division. A carefully designed and implemented program can help you to tackle the issues presented by an industry downturn, inflation and reduced client demand. This necessitates a comprehensive understanding of a firm’s aims, advantages, and weaknesses and a familiarity with current market trends and legal competitors.

Yet how to reduce staff numbers – how law firms can actually implement the necessary streamlining – is rather another matter altogether.

Furthermore, apart from the legal differences between jurisdictions concerning the legislative and regulatory criteria for laying off employees that must be observed by legal departments and operations, when it comes down to the issue of staff requirements for meeting client demand and firm turnover, the situation is the same from Luxembourg to Germany and the United Kingdom, across the European Union and even the United States. The fact that there is a strong downtrend is undeniable, and in London especially, law firms have reported a “daunting 2023” with both falling profits and client demand.

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In a financial climate like this, the role of legal departments and ops during a layoff is crucial. Interestingly, the same Reuters report also revealed that there had been a significant drop in lawyer productivity, whilst, at the same time, firms are being required to bear the costs of the high headcounts due to the massive hiring schemes that took place to meet client demand during the 2021 boom period. Unfortunately, as demand is no longer robust, the prospect of mass firing is moving ever closer. Although legal workers across all firm levels might expect to be impacted, firms need to remember to tread extremely carefully. Again, this is where the role of legal dep and ops during layoff can be expected to play a major part. The legal operations departments, particularly human resources departments of law firms, must ensure that they don’t – even accidentally – partake in what has been referred to as “recessionary discrimination.” That’s the rather euphemistic term used to refer to laying off staff, such as pregnant women, for example, and potentially troublesome employees who have previously raised their concerns about discrimination.

Indeed, that’s one important factor to bear in mind. At the same time, it’s also reasonable for law firms to want to ensure that they keep hold of their best people and trim the fat. The market across the board is growing much quiet, especially in corporate departments, for example, where the previous rich supply of financing and M&A work has long died down.

Economists are currently arguing about how long a recession may last and whether there will be one. Some say that it will last at least two years. Others insist that there will undoubtedly be a slump. Indeed, this is already becoming evident, but the kind of stealth dismissals and mass cuts seen in previous recessionary eras are very unlikely. In any case, law firms now possess sophisticated and decisive resources in the form of legal technology that will help them to weather the storm. The current legal technology can help firms with a plethora of tasks, from automated document review to providing crucial document assembly tools and cloud-based collaboration, to name just a few. This all massively reduces the requirement for paralegals and other support staff.

By reducing costs and increasing efficiency, legal technology provides law firms with the help required to stay competitive in a saturated and ailing market.

As experts in legal technology, our task is to stay up-to-date on the tools you need to sail through this tough economic period, reduce your costs, remain competitive, and even reach out to new markets. This may be the right time for law firms to jettison former, sluggish working methods and instead focus on a new strategic vision for the future and capitalize on legal technology's incredible opportunities. Indeed, as Bloomberg law has pointed out, although there is currently a slowing of some sort in the market,

“The good news is that law firm profits will likely remain steady across the board”, with any market contractions being more likely to be “geographically narrow”

That means that although the market may well be tough right now, it is set for an imminent improvement, so wise investment in legal technology will not only reduce your firm’s overhead costs and increase efficiency – and profitability – in 2023 and also ensure your success for years to come.

About this article

Sources

Bloomberg (2023). Big Law Layoffs Look to Correct ‘Over-Hiring’ in Pandemic Boom
Bloomberg Law (2023) The Legal Industry Can Expect Robust Hiring and Practice Growth
Forbes (2023). Recession Fears 2023: What Lies Ahead?
Goss, L. (2023). City law firms may be forced to make layoffs as UK downturn hits, recruiters say
Legal Futures (2022). Law firm profitability: Surviving economic uncertainty
Patrice, J. (2023). When Biglaw Firms Set 90-Day Performance Targets, Stealth Layoffs Can't Be Far Behind
Wigdor, P. (2023). Another Round of Recessionary Discrimination Looms

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Featured Image: Photo by Ryoji Iwata on Unsplash

Published by Alexandra Singer in Legal Ops
Tags: Layoff, Technology
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February 10, 2023

How to Create a Legal Ops Budget

Creating a legal operations budget is a crucial step. We will look at the most common mistakes and avoid them to set for success.

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Welcome to this week’s Let’s talk about Legal Ops, offered by Newton. We tackle corporate legal departments, speed up processes, and career growth. Please send us your questions; in return, we come back with real insights and actionable tips.
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Creating a legal operations budget is a crucial step for any legal firm to keep costs under control. However, some pitfalls can happen if you do not take the time to plan and prepare your budget. This article will look at the most common mistakes and avoid them. Creating a good, intelligent, objective-oriented, and easily repeatable process is the final goal for success.

In this article, we will cover the following:

Preparing your legal department budget

The essential component is setting objectives for your legal department on time. The best way to do this is to create a strategic plan for your legal department. You can create your sample plan (or get one online), including a list of the expected expenses sorted by category, and the work will be almost done. Do this work in less stressful periods, for example, in August.

The main categories to include in your plan can be:

  1. mandatory education
  2. office space
  3. employee salaries and benefits
  4. external legal consultant
  5. hardware
  6. software

You can add all the categories that fit your organization, such as M&A costs, sponsorships, joint ventures, trademarks, and patents.

You can call this your “strategic plan” and then use it to guide your legal department budget through the proper steps. Creating a top-notch budget can be an excellent way to reduce friction and improve your corporate legal operations. For example, it will prevent the legal department from getting out of economic resources to carry out its activities, which can be a source of stress and pressure on work. At the same time, a well-designed budget is fundamental to building a reliable and transparent relationship with the management and financial departments, which will be aware of the resources needed by legal operations.

Consider all the costs for your legal department, including some extras such as out-of-pocket consultants, and never underestimate the possibility of buying new software tools.

Nowadays, all legal professionals know the importance of streamlining legal operations with lower costs and increased ROI. Structured businesses rely on many software, which is also helpful for the legal department. In my experience, any legal department works at least with an office suite, contract management software, a private network used by the organization, and, sometimes, a ticketing tool. All those instruments allow legal professionals to concentrate their work on billable hours. Technology is continuously improving, competition is high, and pricing differs from year to year and different solutions. Being lazy to check new possibilities on the market would lead to a loss of money. On the other hand, saving some money can positively affect the efficiency of the legal department.

The best practices also benchmark data to estimate your spending on specific line items based on historical balance. For example, the main expense through legal departments is always for external consultants, which sometimes results in out-of-pocket costs. If comparing data between different years emerge an upward trend of single paid requests, it can be an excellent solution to opting for a forfeit regime or hiring a new employee.

This can help you avoid a budget deficit, which is one of the common pitfalls. Underestimating during the budget process may result in a denial of extra resources from the management during the year because they are out-programmed resources. However, overbudgeting is a practice to avoid because it leads to blocking possible valuable resources for other departments.

Legal departments can create a budget based on revenue, growth opportunities, or perceived needs. With the benchmark approach, the legal department can cooperate with the financial department, asking for data related to the previous years or tailored reports of their economic performance. In particular, objective data related to reached results can show possible weaknesses or areas where more investment is needed. During the last years, many legal departments bought contract management software and document assembly software, also known as “legal operations technology”. With those instruments, the legal work can be done by spending less time on repetitive tasks and focusing on substantial work, such as designing a good compliance process and being informed on relevant legislative updates to the business.

Law firms should consider their cash flow and seasonality. Cash flows include payment delays, litigations, and fee payment structures during the year. Typically, legal departments are not affected by seasonality, but the business they pertain may be. In this case, it is a reasonable point programming expenses with the financial department also considering seasonality to be sure always being able to pay the amounts due.

If you want to increase the compliance process, you should create a proper budget tailored to your specific needs, for example, audit expenses.

This can include spending more money on consulting firms. These agencies can help you save time and avoid overhead costs passing you the expertise to design processes and mandatory documentation. If you have never considered a scenario budget for compliance, here are some aspects you should highlight to the general management of your business:

  1. There is a growing trend of compliance requirements not only by law but also about security requirements, certifications (e.g., ISO, SOC), preventing industry crime
  2. Being compliant means that you need a complete view and understanding of different matters
  3. In a small or medium-sized company, this cause investing much working time in generating specific new knowledge to accomplish legal and technical requirements.
  4. The lack of expertise may expose the company to higher risks of non-compliance and administrative consequences such as fines.

Why it is essential to have a law firm budget

The budget should be prepared in a way that helps the business demonstrate the value of the legal department. It should also show the importance of working with other departments within the company and avoiding silos.

Developing a budget helps companies improve their productivity and reduce costs. It can also support companies to make smarter decisions faster.

The strategic plan can help the legal department identify expenses that could be avoided, for example, if you understand that the resources invested are not generating good concrete results. The business can benefit from a significant return on investment, saving money and shifting legal professional time from non-billable to billable tasks and programming payments according to positive cash flows.
Consequently, it is part of the work of the legal manager to analyze economic data together with KPIs (Key Performance Indicators). In a business context, KPIs are helpful indicators of performance and should be tailored to the specific activities of the legal department within the business organization. In truth, there are some difficulties in designing objective and measurable KPIs for legal people, but we can outline some guidelines based on my work practice:

  1. Customer satisfaction
  2. Timely answer to requests
  3. Number of internal audits per year
  4. Improvement actions for compliance weaknesses
  5. Correct budgeting

Especially the well-defined budget is significant and helps legal departments identify ways to improve their performance and ensure their resources are focused on the defined objectives.
Doing audits means you have the resources and capacity, a policy, and a process in place. Since part of the compliance is running internal audits, as a rule of thumb:

  • 0 audit, you might have some problems having under control the effective compliance of your business
  • 1-2 audits, you are on a safe path
  • 3+ audits, there is a company culture of being compliant and improving weaknesses

Avoid common pitfalls

First, you must set your goals for the coming year, plan economic resources related to them in your budget and remember that you must be realistic with the resources in place.

A budget built strategically allows you to make informed decisions. You can also leverage benchmark data from other legal departments to estimate costs. This can be done online or by talking to prospective service providers, such as big consultant corporations (KPMG, Simmons&Simmons).

The most significant aspect of your budget is likely outside counsel fees, which you might consider outsourcing to new software tools.

You can build a strong partnership with the Finance and IT Department to get this part of the budget under control. You can increase trust and collaboration by inviting crucial stakeholders to your spending review meetings and maintaining communication on further steps. Take the time to evaluate different solutions already in place in your company or through a demo of new software.

When creating a legal operations budget, you should focus on your departments/team goals. Usually, the first goal you think about is getting the best results in terms of reaching the KPI and working efficiently at the lowest cost. It is better to allocate the right amount on the right expenses, the ones that allow you to reach the KPI efficiently. A clever idea might be to include all your team or department heads in the process if your legal department is large and structured to have a general and clear overview of their requests. Make them evident in your team goals but be open to listening about needs and try to find a compromise that can fit the whole team. For example, you may discuss new hiring if the team is not able to timely answer requests or consider a software management tool if the real problem is tracking those requests.

Finally, a good practice might be introducing KPIs which help you and your colleagues to focus on the objectives and measure them objectively and analytically.

The only way to succeed is to plan, prepare and execute.

Using a strategic legal operations budget can be the catalyst for a successful legal career as a manager. It also helps to keep your eye on the revenue margin of the business, ensuring a final bonus for your department. This may seem obvious, but many legal department lawyers forget their surroundings and the company. If you are looking to grow your legal department, it pays off to consider all your options before spending. Stakeholders always want reasonable explanations for economic choices. It is best to be proactive and armed with the right tools; you can make a name for yourself in your company and your clients.

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Extra tips

Whether setting up a legal operations budget for the first time or looking to improve your current legal department, you cannot go wrong by following these key steps. Get a clearer picture of your current spending and find areas to improve and save money.
Legal ops managers analyze and manage data across several business areas. Their job is to identify areas of opportunity and streamline repetitive processes. They also work to optimize financial resources and improve the delivery of legal services.
Legal departments analyze data related to billable hours and revenue generated, reducing non-legal work. They translate the data into intelligent case-assignment strategies and best process practices. They also monitor the use of legal technology to improve business strategy planning.
Legal ops teams have been focusing on creating a digitally ensured repository for years. This allows teams to manage all their matter-related information in one place. In addition, it keeps all information secure. They can also track the progress of matters, including the amount of time spent at each pivotal point in the case and allows legal operations teams to flag cost-saving opportunities.

Use of Software

Having a legal operations budget may sound like a given, but there is no denying the growing pressure on legal departments. Legal teams have to manage contract terms and compliance policies manually. A well-thought-out and implemented legal operations strategy increases your firm's efficiency and productivity, but it should not be only more work.

A legal operations software solution can help you get there. A well-designed product will help optimize your billing, document management, and time-tracking processes. The software also enables legal professionals to track your budget spending. With modern all-in-one solutions, your legal department is more productive and reliable, investing the 70% average of non-billable hours in getting the work done.

A correctly implemented legal operations platform will help your firm meet the ever-increasing legal industry demands. You can focus on the work that matters most, only efficiently managing repetitive and collateral tasks to legal department work.

There is a lot to consider when implementing a legal operations solution, and it is essential to be aware of the pros and cons of your options. For example, while a legal operations solution may be cost-prohibitive, it could have a silver lining if it can improve your firm's operational efficiency and overall client satisfaction. With your legal operations budget, you can quickly determine whether to choose a tool license on a monthly or yearly basis, which usually is cheaper. Better results with technology, saving costs and time, what can be more?

About this article

Sources

Lexology (2021). How To Improve Legal Operations With Contract Management Software
Lexology The top legal operations challenges and how to overcome them
Ironclad. Legal Department KPIs: Which Ones Are the Right Ones?
Law Insider Search Legal Contracts, Clauses and Legal Definitions
Xakia. 10 Steps to a Smarter Legal Budget White Paper | In-house Legal Software
Indeed (2021). 8 Reasons Cash Flow Statements Are Important | Indeed.com


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Published by Camilla Ragazzi in How to, Legal Ops
Tags: Legal Budget
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January 27, 2023

Legal Operations: The 3 Ps of Legal Ops

Legal operations can be overwhelming. From the CLOC core competencies and the ACC legal ops maturity model, this blog distills the topic into three main buckets.

Dear Legal Ops!
Welcome to this week’s Let’s talk about Legal Ops, offered by Newton. We tackle corporate legal departments, speed up processes, and career growth. Please send us your questions; in return, we come back with real insights and actionable tips.
If you find this post valuable, don't miss the chance to check out our latest posts.

Subscribe to get access to more posts like these!

Over the last five years or so, legal operations (or legal ops) has evolved from being a buzzword to an established legal function. Yet, this fast evolution hasn’t been without its growing pains.

Despite significant conversation around the topic, many legal professionals are yet to become confident in understanding and executing legal operation activities. And it’s not surprising; the vast array of terms and the growing expectations can be overwhelming.

While there are detailed frameworks to help structure legal operations – such as the CLOC 12 core competencies and the ACC legal operations maturity model – the vast legal ops landscape has left many legal professionals perplexed about where to start.

That said, in light of the current economic climate, there’s no arguing that legal operations and its efforts to streamline processes, improve productivity and better manage costs are needed more now than ever before.

So how can we simplify legal operations?

In this article, we will cover the following:

1. People

As with most business functions, it is people and human intelligence that enable any set of business activities and processes to deliver great legal results.

When it comes to people in a legal operations context, there are no official certification requirements. While a JD or MBA might prove helpful, there are other traits that make for a successful legal operations professional. Such qualities include;

  • A strong understanding of the business and its objectives
  • The ability to translate business priorities into a legal context
  • Exceptional outside counsel management
  • A belief that the legal function can act as a strategic growth enabler

There are two areas to focus on when thinking about people in a legal operations context.

Organizational optimization

The first, organizational optimization, is centered on the legal team, both at an individual level and a team level. This involves crafting and executing a strategic plan to build a streamlined, effective legal team.

Putting a focus on organizational optimization will see you strategically thinking about your hiring initiatives, building clear and motivational career paths, and developing your onboarding and offboarding processes. It even includes planning team-building activities to support the development of team morale and strong relationships, which, as a result, aid the team’s ability to execute projects effectively.

Knowledge management

Almost 30% of legal departments identified knowledge management as a weakness that was revealed during the pandemic.

Secondly, knowledge management and information governance are critical to ensure the sustainability and value-add of your legal function. You need to capture, distribute and effectively utilise a structured knowledge asset that supports your company’s compliance and operational requirements.

Don’t let the somewhat uninspiring term “information governance” fool you. This can be a real scalability enabler if set up and executed well. Developing effective information governance is about protecting, organising and capitalising on valuable information that can help internal and external initiatives.

Information governance has the greatest impact when you use it to develop standard operating procedures and playbooks which can then be shared across the business.

In practice, this might mean creating a legal website where both the legal team and your business counterparts can access relevant information. It also might mean scoping learning and development opportunities for your team such as courses, webinars, or conferences.

2. Payments

A large portion of legal workload is centred around money in and money out;

controlling costs is a high priority for 85% of legal teams. That’s why the second pillar of legal operations is payments. Generally, payments fall into two categories.

External support

It’s rare that a legal team will operate without any external support. Generally speaking, legal departments will work closely with outside counsel to deliver their legal services.

Managing a comprehensive outside counsel program means maximizing the return on investment, improving predictability, and enhancing the scalability of the services we use. It’s important to think wider than just law firms; we need to consider vendors and other externally managed services also. We must include services that are outside the realm of traditional legal matters and consider collaborative initiatives.

For example, support to launch internal and external programs, university engagement, and developing your diversity initiatives. It might also include team development activities such as going to conferences that can help you better understand service delivery trends and how to effectively work with alternative legal service providers to optimize cost-saving measures.

Financial planning

The legal department is, of course, responsible for the legal budget and strategy. Legal operations bring financial planning and analysis to the forefront to ensure forecasts and strategies are best suited to both legal and wider business objectives.

In collaboration with legal leadership, those responsible for legal operations will plan and review the budget to ensure it complements the business strategy. Legal operations is the link between legal and the rest of the business so it is critical to first understand the company’s budget.

Check our blogpost on How to Create a Legal Ops Budget to get more insights about common mistakes and pitfalls and set for success.

Review whatever documentation is available, build strong relationships with business stakeholders, and work towards positioning legal as a strategic partner. From there, you will better understand the legal budget and how it contributed towards the wider strategy.

When building your legal budget, you’ll find that some legal spend is relatively predictable. However, adopting a legal operations mindset means that you will explore the unknown and aim to cater to the dynamic landscape through your budgeting. Having a robust spending and matter management system in place will help you track your spending, predict future costs and better manage uncertainty.

To execute this, you will likely want to set regular budget meetings with Finance and Accounting, being sure to include your legal leadership team too. You will need to create and maintain an accrual workbook, updating it at the end of every month to ensure it presents an accurate picture of legal spend to interested business parties.

Lastly, while you might assume that talent and hiring would come under the People category, it’s important to include it in your payment considerations also. Set regular talent planning meetings within the legal team and pull in the HR or talent team as appropriate. Every person that you hire or any promotions that are made will impact the legal budget and must be managed accordingly.

3. Process

Legal operations is all about establishing effective processes so it’s only natural for this to be the final pillar. Legal ops considers processes in a number of different ways.

Technology

Gartner predicts legal technology spending will increase to approximately 12% of in-house budgets by 2025, a threefold increase from 2020 levels.

This is just one indicator of the rise of technology for in-house legal teams.

Technology unlocks a legal department’s capabilities to drive performance, reduce costs, operate more efficiently, and improve cross-functional collaboration. Much of this is made possible thanks to tech’s ability to collect and analyze relevant data. Using the right tools and industry sources to track key metrics and build dashboards helps to identify and address inefficiencies, optimise spending, and better forecast.

A key part of legal operations is the management of technology and workflows. Nowadays, you will likely be making use of software, so it’s important to establish effective vendor management skills. Implementing new technology into your business will require regular monitoring of performance and a comprehensive change management approach.

What does technology and data analytics look like in practice? Well, as mentioned, you’ll develop metrics and analytics dashboards, as well as build your legal tech roadmap and ensure your legal operations are aligned with the legal and business strategy.

Project management

Legal operations has presented the opportunity for legal professionals to tap into their creativity. Establishing effective processes requires vision and the ability to think outside the box. It requires strong cross-functional collaboration in order to identify and solve problems.

The legal ops function is heavily centered on developing workflows that improve the quality, speed, and scalability of legal activities. A key foundation of this is the project management capabilities of the individual and team driving these transformations.

It’s all about finding opportunities for improvement, exploring innovative ways to address these challenges, and then developing clear and actionable steps to achieve them. One reason legal operations has seen such success over the last five years or so is due to its ability to have a significant impact without the need to spend a lot of money. For example, you might execute process improvement exercises to identify where there is currently friction in a workflow and implement either gradual or transformational changes that deliver better results.

Evidently, change management is also a foundation of project management and legal operations more broadly. The best legal ops functions improve the delivery of legal services with the controlled identification and implementation of required changes.

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Summary

By distilling the broad topic of legal operations into people, payments, and processes, we can simplify how we understand legal ops as well as improve buy-in and the likelihood of implementing effective legal ops initiatives. This better understanding will enable legal teams to set themselves – and their processes – up for success in the long term.

With legal operations being the link between legal and the wider business, it is absolutely key to embed business acumen into the legal function. Having an appreciation for business strategy and effective cross-functional communication and collaboration skills will help legal professionals overcome the top challenges present in the world of in-house legal.

Newton delivers an easy and intuitive platform to manage and automate your legal entities’ information, governance, and compliance. If your entity management processes are currently creating friction for your team (which they are for many), be sure to get in touch to explore how Newton can help you have everything you need to be in control of your entity portfolio.

About this article

Sources

CLOC (2020). CLOC Announces Updates To Its Core 12 Functions Of Legal Operations
ACC (2020). ACC Legal Operations Maturity Model 2.0
Gartner (2021). Gartner Predicts Legal Technology Budgets Will Increase Threefold by 2025
Thomson Reuters Institute (2022). 2022 Legal Department Operations Index
Gartner (2021). 2021 Legal Planning & Budgeting


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Featured Image: Photo by Headway on Unsplash

Published by Steph Smith in Legal Ops
Tags: Legal Ops, payments, people, process
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January 13, 2023

How to avoid Silos Work in Legal Ops

How to implement digitalization, service delivery, collaboration, business strategy, and business culture to avoid silos.

Dear Legal Ops!
Welcome to this week’s Let’s talk about Legal Ops, offered by Newton. We tackle corporate legal departments, speed up processes, and career growth. Please send us your questions; in return, we come back with real insights and actionable tips.
If you find this post valuable, don't miss the chance to check out our latest posts.

Subscribe to get access to more posts like these!

For companies to survive in today’s volatile economy and grow revenue, cross-silo collaboration is essential. But performance management systems discourage it. More than 8,000 senior managers across biotech, banking, consumer products, energy, and law are found to be affected by siloed performance targets.

Most companies incentivize employees to maximize short-term results, making them focus on reaching their numbers at the cost of losing sight of the organization’s larger goals. Despite this, legal operations continue to succeed.

The main reason, more companies realize how beneficial legal operations can be to their legal department and overall company. Across the globe, companies create efficient legal departments and optimize workflows every day.

This article offers tips on managing legal operations and ensuring the entire organization benefits successfully.

In this article, we will cover the following:

Legal operations ensure that the firm offers legal services efficiently and profitably to stimulate the legal departments’ growth and performance. It also involves running a law firm’s business side, which includes;

  • Increasing company productivity
  • Reducing/avoiding risks
  • Compliance monitoring
  • Handling departmental budgets
  • Implementing new technologies
  • Using legal analytics tools to analyze data
  • Third-party provider sourcing and management

Achieving operational excellence often involves focusing efforts on specific departments or teams and implementing strategies accordingly.

Any activity that keeps a business running falls under the category of operations. Aside from the items above, several departments and processes support them, such as:

  • Sales
  • IT
  • Facilities management
  • HR
  • Finance
  • Marketing

Organize Your Company to Avoid Silos Work

Divergent goals of different units of an organization can result in silos of work. In addition to being an obstacle to collaboration and leading to decreased performance, silos also make it difficult for customers to have a positive experience.

Using customer knowledge is the best way to make decisions. But due to time pressure and lack of information, business decisions are often based on assumptions. Often, information is needed to reinforce an existing conclusion or speed up a current procedure.

Unfortunately, most companies have silos with a limited understanding of their customers instead of sharing the same knowledge across teams and adding information specific to that team. In the customer’s eyes, these silos manifest as communication breakdowns, contradictory information, poor service, or other forms of negativity.

Ultimately, success in today’s marketplace reflects the culture you promote, so it is extremely important to align your strategy accordingly.

To facilitate collaboration across departments, here are a few practical tips:

A successful digital transformation requires cross-functional collaboration. Why? Because the success of a business depends on all departments working together in symbiosis to maximize revenue.

A strong partnership with the legal department, specifically legal operations, is beneficial to the overall health and success of the company. Due to social and economic factors, organizations are re-imagining legacy technologies and processes to collaborate remotely.

Across businesses, legal ops teams have been formed as a strategic priority to ensure cross-functional alignment. In addition to compliance and risk management, legal operations are the glue that holds together the legal function and touches every department in the organization.

The legal role in a business evolves, and so must its relationships. Below are a few ways legal ops can align with other business departments.

The legal department often acts as a cost center in less innovative firms and dictates contract terms within a silo. In a 2018 study on contract management, 87% of employees said legal reviews could take up to six weeks. Often, legal is blamed for the prolonged sales cycle and bottlenecks across departments.

But a more efficient communication system, processes, and technology can help the legal department leverage its strategic positioning within a company. The legal department can lead the charge by creating best practices:

  • For cross-functional communication
  • Advocating easy information exchange
  • Making sure documents are accessible when needed

By doing so, each department and the company can run more efficiently. Moreover, businesses can thrive internally and externally by streamlining cross-functional processes and maintaining healthy workplace relationships.

Incorporating Technology into Your Business

Tech tools help encourage cross-departmental operational team collaboration in the legal department. Despite not having the biggest tech stack, legal can benefit from investment in tools that:

  • Manage vendor relationships
  • Reduce outside counsel spending
  • Manage online contracts

With digital contracting and contract management, legal ops can better understand all contracts without micromanaging their execution. These tools allow them to embark on cross-functional initiatives impacting the business significantly.

Exchange of Knowledge

Since Legal works with every department, they must provide new and innovative information-sharing methods. Legal is often the company’s compliance expert (unless there is a separate compliance department) and provides guidelines for operating with less risk for the rest of the company.

Strategic planning can benefit more than just legal ops. In this case, you might need to procure a tool with the following:

  • A robust reporting system that is accessible by all departments
  • Stores and tracks all contracts in one place
  • Provides other departments with the necessary data

Developing Standard agreements

Aside from providing strategic business input, the legal department also oversees contracting. Yet contracts tend to take up the majority of their time, which leaves the Legal department with little time to focus on:

  • On higher-value agreements, when drafting new terms for low-value contracts
  • Reviewing vendor and sales agreements before they are sent out
  • And keeping track of versions and updates for existing online agreements

However, legal ops can better organize contracts by differentiating between standardized and personalized contracts and identifying which ones to focus on. They can create pre-approved terms for other departments to add to or remove from agreements they’re negotiating and redlining, such as M&A deals.

This allows them time to negotiate and redline high-value contracts.

Developing a Strategy

A siloed legal operations department cannot form a strategy. Legal ops and in-house must be fully aware of the company’s goals and strategic initiatives and how their role contributes to them.

It is more effective for legal to collaborate with other departments in developing a strategy that aligns with and supports the goals of the individual departments and the company. Changing simple processes like contract management can improve cross-functional alignment with legal and legal operations.

It is possible to streamline legal processes and enhance the relationship between legal and other departments by implementing legal technology like digital contracting.

Making Technology Work for You

Technology is king in professional services today. Besides measuring operational efficiency, it also frees up your team from a lot of administrative work and adds intelligence to the process.

Using color-coded antiquated spreadsheets as a unified source of truth will only cause more inaccurate data across project management, legal operations, and finance.

Team members are often forced to fill out unnecessary spreadsheets used only for payroll. This slows down teams. For resource management or time registration, for example, spreadsheets or disparate systems won’t be able to move data efficiently simply because they’re not designed for this.

Let’s examine spreadsheets for a moment. Are they capable of providing answers to questions like

  • Is the project currently on track?
  • Is there an operating margin?
  • Is the project profitable?

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Spreadsheets are not the answer

They can’t be since spreadsheets can only automate a few things. Thus, if a spreadsheet is a barrier to getting your work done or tackling the core issue quickly, you should consider another way to improve your personal KPIs.

It can be challenging to track how the numbers relate to the actual operation, even after gathering the numbers. Essentially, each operation becomes a black box: inputs go in, outputs come out, and little attention is paid to how the transformation works.

This is an obvious disadvantage of using point solutions from different vendors or, more importantly, the lack of connectivity between them. To avoid this outcome, service businesses have begun to use centralized software.

Additionally, it’s always challenging to keep separate spreadsheets updated for management problems. People forget to fill them out or do not have the time to do so. There is often no way to know how the changes you make might impact the work of several others.

Software Can Help You Make the Digital Transition

An organization seeking to expand during the digital age must have an entity management system. Companies need a solution that simplifies all compliance aspects to navigate compliance and grow effectively.

With Newton’s corporate services offerings, your organization will benefit from a full-service team of professionals dedicated to simplifying your business processes and enhancing your growth.

You no longer need to worry about locating compliance documents, ensuring departments work together, or hiring an internal team as you grow. With a full range of corporate services and entity management solutions, we’re here to help. Find out how Newton can help your business today.

About this article

Sources

Harvard Business Review (2022). Performance Management Shouldn't Kill Collaboration
StartMyLLC (2023). Contract Management Statistics 2023 – Everything You Need to Know
Forecast app (2021). How to Improve Operational Efficiency: A Start-to-Finish Guide
CLOC (2019). What Is Legal Operations?
BCD.CA. MakingTechnology Work for Your Business – A Guide for Entrepreneurs
Asana (2022). 6 ways digital transformation can improve your business


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Featured Image: Photo by airfocus on Unsplash

Published by Dena Standley in Legal Ops
Tags: Challenges, Legal Ops, Silos Work
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December 30, 2022

What is legal operations?

Legal operations is revolutionizing the way the world of in-house legal operates. This article is an introduction to legal ops and how it can benefit you.

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In the past, legal processes were among the longest and most laborsome in business.

With the legal team often being the point of entry and exit for business matters, these cumbersome processes created friction both internally and externally. In turn, this resulted in damaged relationships, the slow development of business opportunities, and, in some cases, blocked revenue.

However, the pace of business has been increasing over the last decade. With 70% of companies now having a digital transformation strategy in place*, there is a strong focus on building more efficient and impactful processes.

While legal teams were once left behind, the emergence of a legal specialism dedicated to streamlining legal processes and implementing effective tools has enabled legal professionals to operate more efficiently and take on a more strategic role in the business.

Introducing “legal operations”, or “legal ops” (as it’s more commonly known).

In this article, we’ll share an introduction to legal operations and what areas you need to be thinking about to improve the efficiency and effectiveness of your legal team.

In this article, we will cover the following:

“Legal operations” describes the set of processes and tools that a business uses to execute legal work. It is all about driving efficiency and effectiveness to reduce costs and improve performance.

When you put a focus on legal operations, you’re taking action to streamline processes, embed tools and technologies that offer a high return on investment, and enhance cross-functional collaboration. In fact, legal operations professionals are often said to be the link between legal and the rest of the business. For example, priorities include controlling outside counsel costs, using technology to simplify workflow and manual processes, and focusing on internal data security.

As a result, the legal department is able to achieve more with fewer resources, deliver more impactful outcomes that are aligned with wider business goals, and the team will be able to take on a more strategic role within the company.

As technology progresses at pace and the number of legal tech vendors expands, legal ops functions will increasingly deliver significant cost and time savings for their businesses.

While the formation of the legal ops concept is relatively new, some aspects of legal ops have been around for decades.

Pre-1990, legal teams were focused solely on risk management*. As we moved through the 1990s and into the 2000s, there was a shift towards more strategic activity. However, this work was generally executed by outside counsel as in-house teams grappled with admin-heavy internal requests.

As legal fees began to skyrocket in line with inflation and demand, businesses and their legal teams began to focus on optimizing processes and saving money. Now, in light of the harsh economic climate and endless drive for efficient growth, legal departments are establishing a culture of continuous improvement.

The rise of legal operations encourages legal professionals to strategically use technology and legal service providers to drive efficiency and reduce costs.

When it comes to legal operations, your main point of reference should be the Corporate Legal Operations Consortium (or CLOC, as it’s usually referred to). CLOC is a global community of experts focused on redefining the business of law and it is one of the main driving forces behind the progression of legal operations.  

Defined by CLOC, there are 12 core competencies of legal operations. These competencies represent areas of focus that every legal department needs to manage to have a disciplined, efficient, and effective legal function. Think of these as the ingredients you need to have a well-oiled in-house legal machine. Let’s explore a summary of each.

Financial management

When budgets are stretched and, in some cases, on the decline, it becomes even more critical to effectively optimize the finances in the legal department. Where once there were discrepancies, friction with other teams, and a lack of informed decision-making, there is now a focus on proactive, intelligent financial management.

Legal operations include mechanisms to better set and manage the budget for the legal function. Legal departments need to work with the finance team to proactively spot efficiency opportunities, act upon spending trends, and explore cost savings.

Firm and vendor management

In the past, outside support was often chosen as a result of historical contracts or personal relationships. This approach often resulted in suboptimal rates and effectiveness of support.

But your portfolio of vendors needs to be well-monitored. Ensuring optimal fee arrangements with outside counsel and favorable payment options with legal tech vendors will ensure the sustainability of your legal function.

Observing the quality of output from vendors will allow you to secure a good return on your investment and deliver impactful outcomes for the business. In practice, this focus on cost and quality might look like regular reviews and the negotiation of fee arrangements.

Business intelligence

Historically, legal teams have had minimal access to data that could be used to inform decision-making. Now, thanks to cross-functional collaboration and new technologies, legal teams can now operate based on data, not guesswork.

Making use of the data and insights available both inside and outside of the legal department, you can identify trends and spot opportunities to improve the performance of the legal function. As your team grows, you’ll be able to nurture the skills within the legal department and make increasingly better use of the data available to you.

Information governance

Legal is the gatekeeper of valuable information. Yet, especially in companies that are growing quickly, it is often a challenge to maintain clean information governance. This lack of structure can put the company at risk and make it difficult to provide the right information at the right time.

Legal operations brings focus to the need for clear and comprehensive guidelines for the sharing and retention of this information. Good information governance reduces risk and creates confidence for teams internally as well as for customers and prospective clients.

Technology

Legal has been a slow, admin-heavy function for too long now. Thankfully, in an effort to manage a growing workload and drive efficiency, legal professionals are looking to legal tech for a solution. Now, 71% see using technology to simplify workflow as a high priority.

Gartner predicts that legal technology budgets will increase threefold by 2025*. Whether it’s a contract management platform, equity management software, or an entity management solution like Newton, the goal is to implement tools that will automate low-value, high-volume tasks and free up time to be spent on higher-value, more strategic activity.

Training and development

Where once the legal department operated in silo, it is increasingly acknowledged as a valuable business partner. After all, legal is a business topic; it’s not just for lawyers.

Legal operations propose the creation of quality, tailored training around legal matters for colleagues both inside and outside of the legal team. Whether you run a session on new legislation that’s coming into play or develop a section for the onboarding experience of new staff, delivering to the training requirements of the business will better ensure compliance and engagement.

Strategic planning

In today’s economic climate, all business functions must align and work towards the same overarching goals. Thanks to legal tech, in-house legal teams can now free up time to focus on more strategic work that helps to position them as business advisors.

To deliver better outcomes, you must set goals that serve the needs of the legal department and that are also aligned with wider business objectives. Legal leaders and their teams must take a more holistic approach to the design of their legal strategy, ensuring it supports the company’s longer-term vision.

Service delivery models

As we’ve all experienced, there are instances when historical processes can go against us. For legal departments, assigning work to a particular service provider by “default” can be surprisingly costly and have a negative impact on delivery.

The vendor ecosystem has become increasingly complex to avoid wasting time and delivering subpar work, build and monitor your vendor portfolio over time. Understand which vendors best deliver different types of work—and whether the costs align with your expectations—and route projects accordingly.

Project management

Project management is a critical aspect of legal operations. Often one of the most time-consuming yet impactful parts of legal ops, project management sees legal teams designing and implementing initiatives to make the legal team and wider business more efficient and effective. These are often complex projects that require competent change management skills.

Practice operations

Legal professionals are highly skilled individuals. Yet, many in-house legal teams are continually bogged down with a high volume of low-impact but necessary tasks. This results in wasted talent and money as an unengaged team.

The practice operations focus aims to enable legal professionals to focus on legal matters. By implementing automation and streamlined processes, lawyers can spend less time on operational tasks and more time on practice-specific matters such as entity management, eDiscovery, and contract management.

Not only will your legal team be more engaged in their work, but the business will reap the benefits of putting their skills towards higher-value tasks.

Organization optimization and health

For too long now, heavy workloads due to expanding job scope and lack of strategic responsibility offered by executives have resulted in legal departments being mostly reactive with no clear vision. Without a vision, it’s nearly impossible to adequately prepare for the future, meaning there will be an inefficient allocation of resources, and important aspects of the employee experience—such as career opportunities and skills development—will be overlooked.

Optimizing the legal department is all about building a high-performing and motivated team. You need to understand the legal department’s strategy (which must be aligned with the wider business strategy). From there, you can hire individuals with the right skills and diverse perspectives to encourage continual improvement and support career growth.

By supporting the individuals in the legal department to work towards their personal ambitions, you’ll create a sustainable, enthused team that delivers better business outcomes.

Knowledge management

As a result of a high volume of historically manual yet necessary tasks, legal teams have a significant workload. Often, this means there has been no time to define and implement best practices. However, as your team and function scale, it’s crucial to have processes in place that ensure consistency and quality while mitigating risk.

Effective knowledge management sees the centralization of knowledge. By centralizing documentation, insights, and best practices, you can create a more even playing field that empowers all team members. Moreover, when there is a clear understanding of procedures, the legal team will deliver more consistent service to other teams, ensuring standards are maintained.

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The formation of your legal operations function is unique to your business. It will also evolve as your team and company mature. There are generally three different ways that legal ops can make its way into your legal department:

  1. Legal ops as part of a wider job description
  2. A dedicated legal ops professional
  3. A dedicated legal ops team

For smaller companies, perhaps with a sole in-house lawyer or external consultant, legal operations may be one part of someone’s job description. For slightly bigger companies, perhaps with a legal team of three or more, you may have a dedicated legal ops professional. Some very large companies have a whole team to focus on these topics, but for the majority of small to medium-sized businesses, it’s likely that it will sit within the core legal team.

Legal departments of all sizes are under increasing pressure to mitigate risk while also understanding the risk appetite of the business. They have a responsibility to protect the company while also now enabling growth and advising on strategic matters. Not to mention, they need to manage outside counsel and ensure budgets are adhered to.

Reducing the time spent on low-value, high-volume tasks so legal teams can spend more time on high-impact, strategic work is exactly where legal operations come in. And it can benefit all businesses, no matter the size or stage.

But it’s not just about the team. To truly drive efficiencies and enhance performance, legal teams need to be equipped with the right tools and technology. As listed above, technology is one of the 12 core competencies of legal ops.

If you want to take your legal function to the next level, you need to assess your current situation—including business priorities, resource plans, budget, and most importantly, current pain points—and explore what technology will be able to drive efficiency in your company.

Where does Newton fit into all of this?

Newton delivers an easy and intuitive platform to manage and automate your legal entities' information, governance, and compliance. If your entity management processes are currently creating friction for your team (which they are for many), be sure to get in touch to explore how Newton can help you have everything you need to be in control of your entity portfolio.

About this article

Sources

Forbes (2019). 100 Stats on Digital Transformation and Experience
CLOC (2020). What is legal operations?
Gartner (2021). Gartner Predicts That Legal Technology Budgets Will Increase Threefold by 2025
Thomson Reuters Institute (2022). 2022 Legal Department Operations Index


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Published by Steph Smith in Legal Ops
Tags: CLOC, Legal Ops, Legal Ops Definition
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We at Newton pride ourselves on providing helpful resources to facilitate legal entity management. We are not lawyers and don't give legal advice, so always check with your own attorney, advisor, or tax consultant if you have unanswered questions about your entities and compliances.

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for Legal Ops

SOLUTION FOR

Corporate Governance

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© Newton 2023  |  Imprint  |  Privacy Policy  |  Cookie Policy

We at Newton pride ourselves on providing helpful resources to facilitate legal entity management. We are not lawyers and don't give legal advice, so always check with your own attorney, advisor, or tax consultant if you have unanswered questions about your entities and compliances.