“Mayday, Mayday, Mayday.”
Writing in an article in Corporate Counsel last week, Dan Currell, director of client solutions at Novus Law and Aaron Kotok, legal practice leader at CEB, assessed the state of legal department operations.
Their conclusion? The current operating model for legal operations is on a collision course with failure.
“The operating model for most of today’s legal departments is outmoded, lagging behind, and rapidly reaching the limits of capacity.”
Drawing a parallel between the pressures that necessitated the overhaul of the air traffic control system in the 60’s and those impinging on legal departments today, Currell and Kotok argue that given the increasing demands placed on legal departments, the “high-touch, direct service” model under which general counsel and their legal teams have traditionally operated is clearly unsustainable – and headed for an impending tailspin.
Rather than “supporting more decisions,”(old model) the authors say, Legal should equip the enterprise “to make better decisions overall” (new model).
“Legal can no longer think of itself as mainly providing direct support to the business. Instead, it needs to embody the goal of increasing the business’s capacity to make, learn from and reduce the cost of legally informed decision-making.”
Transitioning from the old model to the new will require fundamental changes in a legal department’s service portfolio, delivery model and sourcing model, according to the article’s authors.
- Service Portfolio
Currell and Kotok recommend that “Instead of expanding service menus in response to new and different business partner demands, focus on the comparative advantage that Legal provides versus other alternatives both within the beyond the company.”
- Delivery Model
The days of providing “dedicated, tailored advice” are numbered. Enabling business partners to take advantage of “self-service tools” that provide access to legal information is the new model, the authors say.
- Sourcing Model
Matching legal workflows with the appropriate external providers (lawyers as well as non-lawyers) is key to freeing up internal resources to tackle more higher-value, strategic work.
We concur with the three-pronged approach to model change that the article suggests. And we think that technology can play a crucial role in helping an in-house law department get its transition off the ground.
As a matter of fact, to help legal department’s analyze their current operating model and to develop a practical plan for improvement via technology tools, the LexisNexis CounselLink team has developed a legal department maturity model that covers six corporate legal imperatives including: knowledge management, communication, matter governance, budget oversight, and pricing and vendor management.
The model provides a framework for corporate legal departments to benchmark their own operations. The analysis covers technology, process and analytics, helping departments chart a course toward improved operational maturity, increased efficiency and better legal outcomes.
The model identifies five levels of corporate legal maturity, including:
- Manual Processes. This represents the lowest level on the spectrum and generally indicates a legal department has only the most basic levels of efficiency in place.
- Deployed Technology. This level indicates that the legal department has some technology systems in place such as standard reporting, billing guidelines, matter journals and documents and an RFP processes.
- Integrated Information. The legal department has some more sophisticated levels of efficiency in place such as: legal dashboards, matter calendars, comprehensive matter visibility and aggregated budgets for example.
- Data Driven Decisions. The legal department is on its way to reaching full maturity and indicates the legal department has some of the following key efficiencies in place: analytics, standard key performance indicators (KPIs), matter project plans, variance analytics and law department scorecards.
- Predictive Results. At this, the full maturity stage, corporate legal teams typically have the following efficiencies in place: scenario modeling, real-time alerts, collaborative decisions, data-driven forecasts, law firm optimization and win-win
A white paper on the topic titled, Legal Department Optimization: Leveraging a Maturity Model to Achieve Operational Excellence, is available for free download with registration here: