Legal transactions have been around longer than you think. Before the role was defined, some functions were performed by an office manager in the internal legal department. The technology was not widespread, so the task focused primarily on making sure the day-to-day operations of the legal organization ran efficiently. The role has evolved since then, allowing legal professionals to reinvent themselves over the years to become highly respected and strategic business partners.
More than ever, corporate legal departments are scrutinizing where their legal department stands and trying to find the right tools to deal with any uncertainties that may arise in the near future. According to CLOC’s 2020 Industry State Survey, corporate legal departments in companies of all sizes are seeing an increase in legal transactions, increasing both the number of employees and investments in technology to meet the high demand for legal services.
In this series of three articles, we’ll explore the importance and immediacy of understanding your legal process. We answer important questions like:
- What do legal operations look like across the continuum?
- Which tools are critical based on the maturity model phase?
- What is the Legal Ops Industry in store?
Excellence in legal operations consists of several phases on a spectrum. The secret, however, is that maturity is not a journey that you have to go through in order to achieve ultimate success. Rather, the key is to determine the legal maturity level that is appropriate for your business. Whether this creates transparency in your operation, uses insights to change company behavior, or something in between, depends on the size of your department, your legal costs and other factors.
Reaching the right level of maturity requires preparation, a plan, patience, and perseverance. Nobody reaches their ideal maturity level for legal operations overnight, but with the right guidance, getting there doesn’t have to feel like an uphill battle.
A new approach to a Legal Operations Maturity Model
There are certainly other maturity models that have been created by industry organizations such as CLOC and ACC that companies can and should consult. However, this redesigned model was developed based on years of practical best practices working with more than 200 corporate legal departments. It defines five different levels of legal transactions and aligns them with different fitness activities. But remember: these levels of maturity do not represent a journey that has to be fully completed. While Level 5 (categorized as “Marathon”) represents final operational maturity, it may not be the ideal level for every company. The aim is to find the place in the spectrum that is best suited for your individual organization. Whether you are running, jogging, or running long distances, any exercise is good exercise.
Stage one: the power walk
Let’s start at the beginning. At the threshold of maturity are companies with a Solo General Counsel and no dedicated legal remedy. Typically, the company’s legal costs are less than a million dollars.
The main goal at this level is to gain transparency and see what’s going on with the spending. Typically, matter management at this stage depends on law firms classifying matters, and supplier management consists of leveraging contacts on your network.
At the beginning of the due date model, legal expenditure data is captured by companies electronically submitting invoices to a system. From there, companies develop an understanding of what companies or subsidiaries pay for legal services.
Stage two: the 5K
Companies in the next phase of the maturity model have slightly more resources to devote to legal work. Typically, the General Counsel is accompanied by an executive assistant or a commercial contract specialist and a part-time legal resource – although there is no dedicated full-time legal practitioner. The company’s legal costs typically range from $ 750,000 to $ 8 million.
The main goal here is to not only know what your spending is, but also to control it by increasing your understanding of your basic financial information, matters, and providers. This involves creating a centralized list of different topics and finding specific expertise from the vendors rather than just relying on contacts.
Organizations are beginning to take control of spending by reviewing resource allocations for specific issues, determining whether costly resources are being used properly, and developing strategies for managing and tracking budgets. This phase creates a solid foundation for further growth, if that is the company’s goal.
Stage three: The 10 km
It is in the middle of the maturity spectrum that companies really begin to effectively manage legal operations. During this phase, the General Counsel is supported by a small team of up to 20 employees plus a full-time, dedicated Legal Ops employee who has additional support. Legal costs range from $ 5 million to $ 25 million.
The main objective in stage three is to manage operations through integration with third party systems such as patent management or AP systems to reduce manual data entry and human error. It does this by examining your existing tech stack and determining what is missing, what is out of date, and where integration opportunities lie.
The company will also begin controlling the activities of its lawyers and law firms. In this middle phase, the collaboration with companies is expanded so that they can submit budgets for strategic or costly matters and use a process for taking matters in so that other business units can use more complex processes than email to connect with legal questions and manage their requirements can . Matters management defines processes by area of activity, and the department can set a cadence for supplier reviews to better manage supplier relationships.
Fourth stage: the half marathon
It is at this stage in the spectrum that companies really begin to increase efficiency through insight. The legal department usually consists of 70 to 80 employees, the size of which depends on the respective focus areas and the corresponding requirements. There is an up-to-date Legal Ops team with several dedicated full-time employees. Legal fees typically exceed $ 20 million.
The main goal of Legal Ops in this phase is to create more efficiency. The department manages spending to ensure that legal decisions are not only reactive but also proactive. Matter management develops from the definition of defined processes to the construction of structured workflows that are tailored to specific areas of activity. The company’s provider network is being consolidated to make operations even more efficient.
Fifth stage: the marathon
At the top of the Legal Ops maturity spectrum, companies achieve full operational excellence. While the legal department often exceeds 200 people at this stage, achieving the right team size is a balance between using outside consultants and keeping certain work in-house to create a larger, more cohesive team. There is still a team of full-time, dedicated lawyers, and legal costs typically exceed $ 50 million.
A key goal in this final phase is to become a strategic business unit that will ultimately change behavior by using data to demonstrate the operation and effectiveness of the legal department. Business decisions should now be proactive rather than reactive. There are well-engineered workflows that span the entire material lifecycle for all areas of activity, and the company has set up a formal supplier management program.
In the fifth phase, the legal department has reached a state where everyone involved understands how to use the system and they do so continuously to manage their own workloads and gain insight into their areas of responsibility.
The hallmark of full maturity is operational excellence in every step of the process. However, it is important to remember that not every company will or should reach this stage. The key is to find the right level in the spectrum so that your company can achieve its goals.
Here you can find out more about this maturity model and the various maturity levels of Legal Ops. In the next installment in this series, we’ll focus on the tools and reports that correspond to each stage of the maturity model. We also provide an overview of the maturity of legal operations through the lens of departmental initiatives.