What is Legal Operations?

Legal operations is an umbrella term for all the activities and processes that support and empower a company’s in-house legal team. For many businesses, the legal department no longer consists of a general counsel overseeing all the company’s legal affairs. Now, there is an accelerating trend of legal operations teams taking charge of many of the key functions surrounding the company’s legal concerns.

Understanding legal operations

Before we delve into legal operations in depth, let’s try to understand some basics of legal operations: what it is, why it’s important, and what it seeks to accomplish.

Definition of legal operations

Legal operations (legal ops) combines business activities, processes, and professionals that enable in-house legal departments to serve their companies more effectively. It encompasses a variety of activities that do not require a license to practice law, such as strategic planning, project management, financial management, and technology implementation and management. This wide array of covered activities means that legal ops also covers many disciplines, including finance, analytics, marketing, and digital technology.

Why is legal operations important?

The ultimate goal of legal operations is to maximise the bottom-line positive impact of the company’s legal department. Not only does legal ops seek to free up in-house lawyers to focus on legal work, but it also allows for data-driven strategy and financial planning for the legal team as a whole.

Legal operations have become especially important over the last couple of decades due to the faster pace of business and increasing legal costs for companies. Since many areas of business have become more cost-conscious and data-driven, in-house legal teams are under pressure to do the same. In addition, legal ops teams take over duties that lawyers are not naturally inclined to handle (such as technology implementation and data analytics) that are nonetheless vital for success in the modern business world.

Evolution of legal operations

As long as there have been in-house legal teams, there has been a need for the tasks and responsibilities fulfilled by legal operations. However, legal operations has only been recognised as a discrete function since the early 2010s. To understand why, we must look at the history of in-house legal teams within three generally recognized historical periods: pre-1990, 1990 to the mid-2000s, and from the mid-2000s to the present day.

Pre-1990

Before 1990, most legal teams dealt with fewer complex legal issues and mainly focused on risk management and managing outside counsel. While legal teams would try to reduce outside legal costs, there was less cost pressure than today.

1990 to mid-2000s

Companies in this era had to deal with legal issues of increasing complexity, often due to regulatory and international issues. This resulted in even heavier use of outside counsel and an increasing emphasis on cost control.

Mid-2000s to today

Beginning in the mid-2000s, there was a sea of changes in legal operations that led to a focus on legal ops as a discrete function within the company. With the use of newer technology and automation capabilities, companies could now break down costs and return on investment (ROI) in more detail than ever before. This led to the formation of legal ops teams that could use strategic insights to manage outside counsel and increase the efficiency of the in-house legal team.

In today’s world, the legal ops team can deal with a number of business and strategic matters. Generally working as part of the legal team, legal operations can oversee staffing, contracts, intellectual property, and more.

The use of legal technology is one critical aspect of legal ops. Technology implementation and management are generally not within the wheelhouse of most in-house lawyers, but they are vital for keeping your legal team working efficiently and collaboratively.

Key functions of a legal operations team

While legal operations teams at different companies will have different functions, there has been an effort to set industry standards on this issue by the Corporate Legal Operations Consortium (CLOC). The CLOC is a member community of legal ops professionals and others seeking to promote the field of legal operations. The CLOC Core 12 is the organisation’s guidelines on the 12 main functional areas for legal operations, which are as follows:

1. Business intelligence

Business intelligence is the use of technology to analyse business data and provide actionable insights for company leaders. Legal ops provide this function for legal teams, allowing Legal to spot trends and patterns in the same way other company departments do.

2. Financial management

Legal ops can manage the budget for the legal department, often working with the company’s finance department. Similar to law firm financial management, this generally includes tracking accruals, forecasting, identifying spending trends, and finding cost-saving opportunities.

3. Firm & vendor management

This function includes the selection of outside counsel and other vendors, negotiating contracts and rates, and onboarding new vendors quickly when needed. Instead of relying on personal relationships and a “this is who we use” mentality for managing outside counsel, legal ops can provide a data-driven approach.

4. Information governance

By implementing guidelines for sharing and retaining information, legal ops can reduce risk to the company. This includes managing access and security for all confidential or restricted information and communicating all policies to employees in the legal department.

5. Knowledge management

The legal department needs to be able to collect and preserve expertise in a way that is accessible to the entire legal team—and, very often, the entire company. This might involve creating knowledge hubs and templates to ensure consistent responses on commonly encountered topics. Knowledge management is especially important as companies scale in size and deal with the inevitable personnel departures and shifting roles.

6. Organisation optimisation & health

Many in-house legal teams are assembled without a clear overall vision, focusing on short-term hiring needs and neglecting the career development of legal professionals. Legal ops can remedy these shortcomings by designing an optimal hiring process, incentivising in-house lawyers, and investing in their professional growth.

7. Practice operations

Legal teams can get bogged down when in-house lawyers have to spread themselves thin by working on low-value tasks. Legal ops can create specialised teams that are well-trained in specific areas that require a high volume of repetitive work, such as electronic discovery or contract management. This frees up lawyers to focus on high-value activities.

8. Project/program management

Often, a business needs to implement company-wide initiatives or projects, or the legal team will need to do the same on a department-wide basis. The legal operations team can take care of this project and program management, allowing in-house lawyers to focus on legal work instead.

9. Service delivery models

Instead of sending all legal work to a default law firm or legal vendor, legal ops can create and maintain an ecosystem of vendors. As a result, each component of a company’s legal work can be routed to the best-suited firm or vendor, allowing for higher efficiency and lower overall costs.

10. Strategic planning

Long-term strategic planning is critical for in-house legal departments. Legal ops can provide this planning while ensuring the legal team is in alignment with company-wide priorities and the needs of business stakeholders.

11. Technology

Instead of relying on time-consuming manual processes, legal teams can use technology to automate processes and digitize tasks. Legal ops can create a technology roadmap for the legal department while implementing time-saving tech solutions such as electronic billing, contract management, and legal project management software.

12. Training & development

This function involves onboarding new hires for the legal department, as well as providing ongoing training and skill-building for members of the team. Instead of relying on HR or an overburdened general counsel, legal ops can take over this vital role.

Building a strong legal operations team

To build a strong legal operations team, you must first understand the needs of your company and legal department. At the smallest level, some companies may simply need a single legal operations manager to complement the work of their general counsel. Larger companies with more complex legal requirements—and, thus, larger legal departments—might require dozens of legal ops employees to handle all the diverse functions listed above.

As for the required training and skill sets, it is best to not limit yourself to employees with law degrees. Legal operations professionals come from many backgrounds. While some are former lawyers or other legal professionals, many others have experience in technology, financial management, or consulting.

Be sure to empower your team, no matter how large or small, with the right legal operations technology. When a legal ops team is first established, some core functions tend to be areas such as legal billing, contracts management, and vendor management. None of these areas can be handled effectively without the appropriate technology for reporting, analytics, and automation.

Career opportunities in legal operations

Legal operations is an expanding field with abundant career opportunities. While there are many potential roles on a company’s legal ops team, they tend to fall into one of three categories: manager, specialist, or analyst.

Legal operations manager

This role provides management and support for the entire legal ops team. In the absence of a director of legal operations, this person could serve as the head of legal ops and report directly to the general counsel. The legal operations manager will likely be the company-wide go-to source for project status updates and productivity reports for the legal department.

Legal operations specialist

The legal operations specialist will assume the responsibility for more hands-on tasks than the manager, often within discrete areas. Accordingly, a specialist might handle coordination with stakeholders in other company departments, creation and improvement of legal team processes, cost control, or other domains of expertise.

Legal operations analyst

When a legal ops team reaches a more advanced level of maturity, they can hire specialists to track and understand analytics for the legal team. This means they will also need to be highly tech-proficient in order to utilise the tech tools necessary for these tasks.

Benefits of embracing legal operations

Embracing legal operations will benefit the legal department and the overall company in a number of ways. By employing data-driven analytics, legal ops can demonstrate the tangible value of the legal team to the company. In addition, they can build strategic partnerships with other company departments, such as Finance, HR, and IT.

By automating processes and allocating resources effectively, legal operations can free in-house lawyers from mundane, repetitive tasks that take time away from higher-value legal work. Onboarding, training, and career development–often left by the wayside in traditional legal departments–can now be focused on front and centre by a dedicated team. Hiring and management of outside counsel and other legal vendors will also improve with legal operations in place.

In today’s business and legal landscape, an in-house legal team no longer needs to act within its silo, cordoned off from the rest of the company. Consider building a legal operations team to support and complement your legal department, making it a true driver of business success.

We published this blog post in July 2024. Last updated: July 10, 2024.

Categorized in: Business