Welcome to the second part of this three-part series, which discusses the maturity model for legal operations. In the first article, I introduced the concept of the maturity model, explained how we got here, and outlined the details of each phase.
Today we’re going to discuss departmental initiatives based on the maturity model and tools that are critical to each of those initiatives.
Understand spending tools and gain transparency (Level 1)
Organizations in the early stages of the maturity model generally do not have a dedicated resource for legal operations. For the most part, the General Counsel acts alone with the aim of achieving transparency in spending. It does this by ditching spreadsheets and using technology to keep track of expenses and track monthly legal costs for errors and redundancies.
E-billing and expense management software are essential tools for meeting today’s growing pressures, reducing costs and working more efficiently by making data usable. Implementing these tools is often the first step in creating a more data-driven department as they collect a range of very useful data.
E-billing systems are more than just a way of streamlining the verification of statutory invoices and receiving duplicate bills. Modern e-billing solutions extract and analyze extensive data in these invoices and generate detailed reports that would otherwise be incredibly time-consuming to create by hand. These reports provide deep insights into legal expenses, average hourly rates, law firm efficiency, budget compliance, progress on monthly accruals, and more.
A good example of this is a medical technology company I worked with that was in the early stages of the Legal Ops maturity model. A leading paralegal ran legal ops. Instead of having a formal spend management system in place, the company took an ad hoc approach to determining their numbers. However, as the economy changed, the pressure to show where the money was going increased. After trying to get reports from Oracle for the first time and being disappointed with the cumbersome process, they realized they needed another solution. With e-billing and expense management software, they were able to get full control of expenses and improve legal processes.
Control of legal costs (level 2)
After the medical technology company had a deep dive into spending, the next stage was to use tools to control those spending. There are a number of ways to accomplish this control, including implementing and enforcing policies for outside attorneys, negotiating tariffs with companies, implementing fixed fee agreements on merchandise matters, and analyzing invoices to identify outliers, all using of software for legal operations can be performed effectively.
Legal operations tools make a huge difference in how a legal department works. Since expenses are tied to different topics, your overall understanding of costs is significantly higher. This is especially important at a time when departments are increasingly being asked to make decisions based on cost savings. Understanding the pending and processed invoices is critical to the department.
Two tools that are particularly useful at this stage of the maturity model are the intuitive workflow, which can be used to write custom rules for systems aligned with external attorney billing guidelines, and enforcement at an approved timer rate. Using these tools, legal teams have made department-wide improvements and efficiency gains.
Effectively manage operations (level three)
As the legal departments hire dedicated legal operations professionals and as the maturity model matures, so too will the tools necessary to effectively manage legal operations. The first step is to implement boundary management and integrate it with third-party systems such as patent management or AP systems to reduce manual input and human error. At this stage, legal teams must also pull matters out of emails and legal service requests so that all business functions can connect with the law and track their needs.
In this phase there is also a shift from qualitative to quantitative data. Legal departments should consider expanding the data items they are currently collecting and implementing standard monthly reports on issues, identifying issue expenses and the average time it takes to review invoices.
Increase efficiency through insight (level four)
Equipped with data, the legal departments are deeply analytical in this later phase of the maturity model. They have implemented systems to provide feedback to outside law firms and to assess diversity-related engagements not only within their firm, but also to allocate various resources for matters.
A deeper insight into the data also allows you to analyze budget estimates over time and determine whether they are correct from the start, whether your assumptions are correct, and how much the first and last budget estimates vary.
A large multinational increased efficiency through insights by creating a new convergence panel that identified the preferred law firms that would receive most of the firm’s legal work. With all the data now in a system, lawyers can now use that data to drive decision-making. This leads to the final stage of legal maturity and the achievement of operational excellence.
Achieve operational excellence through behavior change (level 5)
The final stage of Legal Ops maturity is for a company to proactively create mature workflows and change operational behavior for maximum efficiency and efficiency. This is the time to analyze resource planning on similar topics from different companies and identify best practices that may be implemented in the future. In addition, this phase evaluates key closed matters to learn lessons from answering a critical question: Was there a clear strategy for the company?
In the final stage of maturity, the department makes effective decisions about internal or external sourcing issues, supported by board-provided slides that demonstrate the operation and effectiveness of the legal department. Everyone involved understands how to use the system and does so continuously in order to manage their own workloads and gain insights into their areas of responsibility. With workflows for things like invoice approvals, the Legal Ops team no longer has to manually process year-end accruals or other time-consuming tasks.
There are many resources that can help legal departments be more efficient at all stages of the maturity model. However, there is no single approach to when legal ops are due. The tools that are great for one team may be excessive for another team. It is therefore important to evaluate the current stage of your department and include the appropriate tools for your position in the maturity spectrum.
When choosing tools, focus on those that solve the department’s most pressing problems, and then future-proof those choices by choosing modern tools with an API that integrates with other systems inside and outside the legal department . With the right tools, productivity and efficiency can be maximized while redundancy and unnecessary expense can be minimized. This ultimately saves the department a lot of time and money.
In our third and final installment in this series, we’ll look at the future of legal transactions and how the legal departments will affect how the legal department continues to develop.