It’s too late for your firm to be an "early adopter" of legal operations ... but your firm doesn’t have to be a “late adopter” or a "laggard" either.

Awareness in the legal industry seems to be on the rise as we watch and hear the tick-tock sound of real change and innovation in the way legal services are delivered. Now in its second year, CLOC (Corporate Legal Operations Consortium) has helped an increasing number of in-house counsels and their outside law firms create more efficient and productive relationships in areas such as improved technologies, predictability in fees, and law firms generally putting more skin in the game.

During a July 20, 2017 breakfast panel presentation, “Resistance Continues but the Business of Law is in Transition,” which took place in Southern California, twenty-five different law firms gained a deeper understanding of where legal operations are headed.

Moderating the panel, I had the opportunity to draw out details as experts shared insights on how to best incorporate various legal operations strategies. Attendees learned where legal operations has come so far and where it is headed – full speed ahead. 

Our panelists included:

Stephen Balcomb, Senior Director and Head of Legal Operations at Qualcomm and CLOC member.

Mark Redmayne, VP of Elevate, a company committed to assisting legal departments and law firms improve legal operations.

Angelo Paparelli, Partner with Seyfarth Shaw

Doug Hafford, CEO pf Afinety Inc., a company that integrates technologies for law firms.

Stephen Balcomb

...shared how his role is evolving as he oversees legal operations for Qualcomm. One of the areas for which he is responsible is the engagements, and sometimes disengagements, of outside law firms which he states has become much more sophisticated in the past few years. Steve has successfully driven down costs for their significant legal spend especially in the area of litigation by analyzing the increasing amount of data Qualcomm collects from outside counsel.

Steve, like many legal operations professionals these days, is confounded that more law firms don’t proactively approach their clients to discuss how to create better efficiencies, and demonstrate increased value and results. Legal departments are increasingly using data analytics to gather information to create more reliability in predicting costs; this is just one part of legal operations.

[Steve] advises firms to become familiar with their own data and use it to innovate, not just track billable hours...

As Steve evaluates outside firms he wonders why more of them are not understanding their own data. Steve warned attendees that with the widespread use of new technology tools like eBilling (Qualcomm requires all firms to submit invoices through its eBilling system), clients now have access to much of the same data firms do. He advises firms to become familiar with their own data and use it to innovate, not just track billable hours, because clients are becoming more sophisticated in analyzing that data and using it to compare performance among outside counsel.

Qualcomm is looking for their outside firms to deliver beyond simple compliance with billing guidelines including spending their time to get to know the company, its legal history, its brand, its future needs and its corporate culture. For example, prior to any outside law firm beginning a litigation matter they must participate in training to understand how Qualcomm manages its discovery and matters. 

At Qualcomm, Steve considers all twelve of the components of legal operations when engaging outside firms:

• Strategic planning,
• Financial management,
• Vendor management,
• Data analysis,
• Technology support,
• Alternative support matters,
• Knowledge management,
• Growth and development,
• Communications,
• Records Management,
• Litigation support and
• Cross-functional alignment.

As Connie Brenton, Chief of Staff/Director of Legal Operations at NetApp and founding member of CLOC said at the 2016 Future’s Conference organized by the College of Law Practice Management, “A law firm recently told me that it didn’t know what it cost to complete a certain type of transaction that is repeated frequently. I told them that they don’t really understand how their firm operates. Firms need to get a handle on this data.”

Steve has the same sentiment. He told the audience that CLOC is working on a report card to evaluate outside law firms. Soliciting and acting upon feedback is another example of what Steve feels outside firms can do to be more proactive. Altman Weil’s recent Law Firms in Transition survey quoted a partner who said, in effect, that he didn’t reach out to his clients to ask what the firm could do to make the service between them better because the client never asked. This reminds me of a favorite adage, “Someone’s talking to your clients. Is your client listening?”

Mark Redmayne

...of Elevate, helps manage a global company that works with both law firms and corporate legal departments to negotiate and implement highly productive legal operations.

Mark stated, “At Elevate, we support legal ops, project and process management. We work with our customers on creating strategy for better pricing, predictability, and billing efficiencies. It is projected that 40% of legal departments will decrease their spend with outside counsel. Law firms that embrace legal operations and transparency improve their chances of growing client relationships and even starting new ones.”

...data analytics and knowledge management are important factors in any successful legal operations alignment between an outside firm and a legal department.

Mark and the Elevate team has been working closely with CLOC leadership to help make their vision of better legal operations a reality. CLOC members are starting to see a closer alignment between actual pricing, budgeting and final invoice. Technology continues to be a driving force creating efficiencies and more customization to meet legal department’s needs and demands. Mark reported that data analytics and knowledge management are important factors in any successful legal operations alignment between an outside firm and a legal department.

We learned from Mark that Dorsey & Whitney LLP and Gowlings WGL have developed some great legal project management programs utilizing the Elevate Project LPM application. The platform offers transparency for the firms and in-house counsels to know, at any time, what is happening with their matters from creation to budget to actuals and timing. The app offers a dashboard and mobile view to track all users, task codes, and phases.

Mark relayed a story about an outside firm that gave a fixed fee of $250K to their client but sent a final invoice for $500K. When the in-house attorney questioned the bill, the law firm partner said, “Well, you are happy with the result, right? Then all is well.”

All was not well and the firm was not hired again.

Angelo Paparelli

...partner with Seyfarth Shaw, told us about the firm’s extensive commitment to Lean Six Sigma, which has created greater relationships with current and new clients. Angelo said, “Key incentives were implemented with a major client to improve efficiencies. The client had $10M from major projects that it shared with two outside firms, Seyfarth being one of them. After we implemented the changes we were able to secure all of that work.”

“We have frequent conversations with our clients to see how we can change things for the better at little or no cost. These can be simply the obvious, such as a client telling the firm that their employees are drowning in emails. How can we cut this down?”

We have frequent conversations with our clients to see how we can change things for the better at little or no cost.

To Angelo and Seyfarth, legal operations is mostly about strategy and enhanced communication. Seyfarth has its own team of project managers taking a pro-active stance to legal operations. He noted that more than a few small firms have taken legal ops to heart and are winning larger corporate clients by developing “smart contracts” and other advanced AI efficiencies.

Doug Hafford

...CEO of Afinety Inc., an IT company exclusively for law firms, provided us with insights into how machine learning (AI) is now a part of everything. He stated, “At Afinety, we are a people process tech company aligning all of a law firm’s technologies so they can play together in the sand box efficiently and thoroughly. We at Afinety, are the sand box. Artificial Intelligence is only artificial until it figures out how things work. Then it is just smart software that helps to pull the pieces together.”

Doug’s company uses various technologies to enhance the sophistication of time and billing systems. “Our job is to listen to all of the constituents and get every part of the puzzle efficiently communicating. Our clients all want a competitive advantage. If we can cut down on the time a law firm has to interact to create better efficiencies that firm will have satisfied clients and lower bills,” said Doug.

“All clients want the latest protection in the area of cyber security. It’s a major aspect of better legal operations. Because of the moving target in security these days, we recommend Cloud technologies as the safest way to operate. Links can’t always be trusted even if password protected,” Doug added.

...many firms still have a cumbersome document management system which many times, are simply unmanageable.

Data integrity is another area Doug highlighted as a potential problem. He told us that many firms still have a cumbersome document management system which many times, are simply unmanageable. Have you ever seen an attorney hold up a document to his assistant and say, “Can you find this in the system?’”  We need to get beyond these types of basic issues moving on to better and more comprehensive legal operations.

Conclusion

Legal Operations are here to stay and the number of firms taking a proactive stance to use them with clients and targeted potential clients is steadily, albeit slowly, increasing. Many companies have stated that they are open and willing to embrace conversations about how to create better and more efficient relationships with their law firms.

To learn more visit www.CLOC.org website, read some of the myriad of articles about legal operations out there, attend a seminar, or maybe plan to attend the next CLOC Conference. The first CLOC Conference took place in 2016 and sported 500 attendees. The 2017 Conference had 1,500 participants. And CLOC is predicting attendance numbers of over 2,500 for their upcoming April, 2018, Conference.

Law firms should consider taking a more proactive approach with their clients to ascertain how they might like to receive the delivery and technical aspects of legal services. Sooner may be better. It’s too late for your firm to be an “early adopter” of legal operations, to use the descriptive words from the theory of Disruptive Technologies, but your firm doesn’t have to be a “late adopter” or a “laggard” either.

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[Merry Neitlich is managing partner of EM Consultants located in Irvine, CA. She can be reached at merry@EMconsults.org or 949-260- 0936.]