Changes are being made to the way that the legal department operates, just not the way it may have been initially thought. Will Reynolds, CEO of ContractWorks, delves into the shifts in relationships between businesses and legal department operations, as well as how technology has come into play.
The past decade has seen a notable shift in the way businesses approach legal department operations. Companies are looking for ways to drive efficiency across the board, and are taking advantage of the trend of soaring technological change that is impacting every market around the world. But legal departments aren’t only looking to technology for help. Instead, they are strategically implementing specific technology solutions and onboarding new staff to optimize and enhance the way the legal department operates.
Anyone who has bought into the idea that artificial intelligence and robots will soon replace human legal professionals may be surprised (and relieved) to learn that legal departments are instead expanding in size. According to the 2018 Chief Legal Officer Survey from law.com, 73 percent of organizations cite hiring an administrator or legal operations manager as the most significant factor in driving legal department efficiency.
So where does technology come into play?
Emerging technologies are the second major force impacting legal departments, with artificial intelligence, machine learning, and natural language processing at the center of many solutions-creating efficiencies. The Spring 2019 Corporate Legal Operations survey conducted by Consero found that 58% of respondents expect their technology spend to increase over the next year, and that legal technology management is currently the highest priority for legal operations executives. While the current version of legal technology won’t be replacing humans in the near future, it will continue to help legal departments do their jobs better and more efficiently, and will only get more helpful as legal tech improves and becomes more advanced and specialized.
Where Legal Operations Has Been and Where It’s Headed Next
Over the last decade, legal departments have been trying to figure out the formula for reducing expenses while maintaining high levels of efficiency, one of the key drivers of the recent surge in legal operations roles. In the past, formal legal operations were typically reserved for only larger legal departments, but that is quickly changing. It is now increasingly common for general counsel to oversee legal ops roles across companies of all sizes, and in 2016, SimpleLegal actually reported seeing formal Legal Operations Manager titles in legal departments with as few as five people.
Initially, legal ops roles were focused solely on the efficiency of operations within the legal department. That has evolved over time, as this group is becoming more and more integrated with the rest of the business. This of course helps demonstrate the value of the legal department manager more clearly, as a cross-functional position that can help create process improvements that are felt up and down the organization.
Another trend related to reducing expenses while becoming more efficient is legal departments making an effort to reduce the amount they’re spending on outsourced legal resources. CLOC found that more than $.60 of every $1 spent on legal costs is going toward external costs, a number legal departments are working to bring down. To accomplish this, legal ops are investing in technology and software that can drive the most value from their legal processes, and are turning to solutions like contract lifecycle management software, electronic signature solutions, and e-billing/matter management software.
Legal operations departments must continue to provide value to the rest of the business, and utilizing technology to maximize efficiency and streamline operations so humans can produce more and better work is a critical piece of that puzzle. One of the areas that has traditionally been a tedious, burdensome process that requires a great deal of time to manage is contract process maturity. Without the help of technology, managing the contract lifecycle saps time and energy and leaves room for unnecessary risks and inefficiencies. Humans are error-prone and impacted by fatigue, so expecting a member of the legal team to manually track and manage a large contract portfolio will naturally lead to costly mistakes (a KPMG study estimates that inefficient contracting can cause companies to lose as much as 40 percent of value on a given deal) and wasted time that could be spent on higher-value work within the department.
Improving operations and driving efficiencies has been a focus for legal departments for the last 10-plus years, and should continue to be a priority for the foreseeable future. Finding the right balance of human support and legal tech solutions appears to be the current focus, and perhaps the winning formula for many organizations looking to reduce costs and operate as efficiently as possible.
For more on the relationship of technology to the growing legal operations field and the role of general counsel in the expanding legal department, download Legal Department Operations: A Guide for General Counsel, a free guide from ContractWorks.
Published January 3, 2020.