Law departments are increasingly operating less like mini law firms and more like typical business units. This shift is largely due to the rise of legal operations.
Originally a reactive discipline focused on controlling spend and reducing risks, legal operations today strives to deliver value to the law department. Legal operations professionals drive innovation and emphasize the utility of repeatable, consistent processes. And perhaps most importantly, they believe in the power of data-driven decision-making.
Legal operations professionals’ relentless focus on efficiency has never been more important than now, when corporate law departments must find ways to do more with less in an uncertain environment. Here are the top 10 trends we expect to see in legal operations through 2022 and beyond.
Contents:
What is legal operations?
What are the foundations of a strong legal operations function?
What is the goal of legal operations?
Key legal operations trends for 2022
1. Growing legal operations teams
2. Formalizing the legal operations function
3. Implementing a diversity, equity, and inclusion (DE&I) program
4. Finding new ways to improve processes
5. Insourcing more work
6. Strengthening vendor management
7. Expanding the use of data analytics tools
8. Increasing technology investments
9. Strengthening the law department’s technology acumen
10. Improving data security
Final thoughts: Expect more mature legal operations in 2022
What is legal operations?
Legal operations is the application of business processes to the practice of law. Legal operations teams handle strategic planning in a variety of areas, from compliance and data to budgeting, third-party relationships, and more. Legal operations thinks through how work should be done in an optimized, repeatable, efficient manner. The idea is that legal operations professionals will run the business aspects of the practice of law, allowing lawyers to focus on their bread-and-butter work: providing legal advice.
What are the foundations of a strong legal operations function?
A robust legal operations team has business fundamentals, processes, technology, and data as its foundational elements. The Corporate Legal Operations Consortium (CLOC) divides these areas into 12 core legal operations competencies:
- Business intelligence: Making better decisions by using data to uncover hidden trends and discover efficiencies rather than relying on intuition
- Financial management: Maximizing departmental resources through a sustainable approach to financial management that connects spending to outcomes
- Firm and vendor management: Choosing law firms and third-party vendors that support the business needs, complement the legal team’s skillset, and deliver value
- Information governance: Creating and implementing policies that keep data secure while reducing risk and improving compliance
- Knowledge management: Ensuring that the organization taps into its employees’ knowledge and capabilities and prevents knowledge loss when employees depart
- Organization optimization and health: Building effective, motivated teams through sound recruiting, hiring, and development practices
- Practice operations: Encouraging specialization and focus through department-wide and company-wide initiatives that optimize departmental efficiency and lower costs
- Program/project management: Managing projects and workflows at scale without compromising work quality or losing focus or effectiveness
- Service delivery models: Assigning the right work to the right resource to optimize outcomes and reduce costs
- Strategic planning: Setting long-term department goals that align with business priorities
- Technology: Automating repetitive, time-consuming work and solving problems with technology
- Training and development: Offering targeted professional training for new hires and current employees that strengthens their skills and helps them build a career.
What is the goal of legal operations?
Legal operations professionals aim to make legal services more efficient and effective through strategic planning, project management, financial management, and technology.
With an effective legal operations team, a law department can focus purely on legal service rather than on time-consuming administrative projects. As a result, the legal team can deliver better insights and advice for the organization, increasing its value. The legal department can also optimize its spend, ensuring it’s investing in the best outside counsel and external third parties to help it achieve its goals. And it can also figure out the right key performance indicators to help it engage in a process of continuous improvement, leading to ever-better results.
10 Key legal operations trends for 2022
A series of challenges in the last few years—a global pandemic, social unrest, supply chain interruptions, and geopolitical uncertainty, among many other disruptions—has been an impetus for many corporate law departments to transform. Rapid changes have already occurred, and they aren’t done yet. Here are 10 legal operations trends that we predict will dominate the rest of this year.
1. Growing legal operations teams
Last year, six of 10 corporate law departments employed at least one legal operations professional, according to the 2021 ACC Chief Legal Officers Survey. That’s a huge leap from the 21.2% we saw in 2015. And 40% of respondents to CLOC’s 2021 State of the Industry Survey said they increased the number of full-time legal operations professionals on their staff.
As legal operations teams continue to mature, they’ll play an increasingly larger role in the law department. Given legal leaders’ demands for greater efficiency, organizations will need more legal operations staff to help them adopt technology, improve processes and workflows, and control costs.
2. Formalizing the legal operations function
In addition to growing their teams, legal operations functions are increasingly taking on a more formal structure. Half of legal operations teams are led by someone with a director or manager title. Today, the majority of legal ops leaders (59%) report directly to the general counsel, showing the increased perception of value associated with the function.
More law departments will create a formal head of the legal operations team. As these roles proliferate, they will take on a greater role in bridging the gap between the law department and its business clients, strengthening in-house lawyers’ role as corporate business partners.
Legal operations teams will also continue refining their scope of influence, defining their roles, and establishing formal processes to govern their work.
3. Implementing a diversity, equity, and inclusion (DE&I) program
Although diversity is growing in law department leadership, it still eludes the general counsel’s office. Last year, only 11.5% of general counsel were from racially and ethnically underrepresented groups, a 1.71% drop from the prior year. Problematically, only 29% of corporate law departments said they use metrics to track the diversity of their department—which reflects no change from 2021—and only 21% track the diversity of their outside counsel.
As more law departments demand diversity from their roster of law firms and other third-party vendors, legal operations professionals will feel increased pressure to turn the lens inward and consider how they can improve the diversity of their leadership through new hiring and training initiatives. Indeed, according to the CLOC 2021 State of the Industry Survey, implementing a DE&I program was a top priority for six of 10 respondents. To better manage DE&I, organizations will need to start tracking metrics that will enable them to analyze hiring and retention, development, and compensation across their team.
4. Finding new ways to improve processes
Hiring more lawyers and adding technology can help law departments combat the rising workload. However, the work isn’t likely to slow down—rather, it’s expected to further increase. Ultimately, legal operations will have to grapple with the underlying challenge: how to streamline the law department’s processes.
Too many lawyers are still spending time on recurring, manual work. As in-house counsel continue to report feeling overwhelmed by their workloads, legal operations must look for new ways to reduce or eliminate time spent on manual, time-consuming tasks by automating processes and streamlining workflows with artificial intelligence (AI) and other legal operations technology.
5. Insourcing more work
Early on, law departments outsourced some of their lower-value work to legal process outsourcing providers. They also sent some of their highest-value, most complex work to top-tier outside counsel.
Today, legal teams have begun bringing some of this work back in-house. More organizations are hiring full-time lawyers in specialty areas to get ahead of regulatory changes and reduce outside counsel spend. According to Gartner, key areas for insourcing include litigation, intellectual property, government relations, and regulatory compliance.
6. Strengthening vendor management
A recent Deloitte survey revealed that vendor management is a top concern for general counsel. Only 24% of respondents said they had accurate metrics regarding the work provided by external resources. And only 34% use metrics when they review their law firms and third-party vendors.
Too many organizations continue to rely on their relationships with vendors rather than actual data in allocating work. By doing so, they’re compromising their costs, work quality, and delivery speed, especially since they don’t have formal metrics they could use to hold firms or vendors accountable. To ensure that the right resource is handling the right work, legal operations must capture data that allows them to analyze which vendors deliver an optimal outcome at the best cost and which vendors meet their performance metrics.
7. Expanding the use of data analytics tools
Most law departments are already using metrics to track their financial performance. They’ve been studying their overall spend, matter budgets, vendor expenditures, and billing rates.
Now that their appetites have been whetted, legal operations professionals are starting to use metrics to measure the value the law department returns to the business. As a result, more teams will start moving to a predictive analytics model that facilitates more strategic decision-making.
8. Increasing technology investments
Almost half (46%) of legal operations professionals say they don’t have the right tools to do their work. Perhaps, in part, that’s why the technology budget for corporate law departments is expected to increase to 12% by 2025—three times the spending of 2020 levels.
While most law departments have already implemented eBilling, eSignature, matter management, eDiscovery, and legal hold solutions, we anticipate that more departments will implement contract lifecycle management (CLM) solutions in the coming year. Organizations have to negotiate, execute, manage, and terminate a variety of contracts day in and day out, and tracking all of the parties and deadlines is incredibly tedious. CLM technology can streamline this work and reduce the risk of errors in the process.
9. Strengthening the law department’s technology acumen
The pandemic revealed that law departments had weak adoption of their technology solutions. Perhaps that’s because many law department members don’t have sound technology skills. That problem is compounded because most organizations lack the right learning and development opportunities to support business needs.
Law departments have realized that they must offer development in data analysis and other tech-related skills if they intend to close the skills gap and enable in-house teams to fulfill the promise of legal operations technology. Unfortunately, too few departments have yet invested in training to develop skills beyond legal acumen. Continuing legal education is not enough to level lawyers up for the challenges facing the law department of the future.
10. Improving data security
Few corporate law departments have a formal information governance plan that controls their information. Not only does this put their data at risk, but it makes information harder to access.
Organizations need better tools that help them secure confidential and otherwise sensitive data. Technology can play a role here if organizations invest in the right data-classification tools and train users on how to deploy them. To date, few organizations have invested in this technology and requisite training. Legal operations can also help push the need for a data management strategy, which can help the organization shore up the security of its data and the defensibility of its information governance processes.
Final thoughts: Expect more mature legal operations in 2022
As the work mounts on corporate law departments, they’ve discovered that their current tools and processes aren’t enough to keep up. That makes it the perfect time for organizations to invest more fully in legal operations.
Legal operations professionals can help streamline in-house workflows with better, more efficient processes and ensure that the right resource handles the right work. Legal operations technology can also automate and accelerate manual processes and lift some of the burdens on lawyers so they can focus on work that adds the greatest value for the business as a whole.
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