Defining Legal Operations and Assessing Maturity

by | Apr 23, 2015

Defining Legal Operations and Assessing Maturity

No job in the world can prepare someone in advance to take the helm as CEO of a business – except, perhaps paradoxically, the job of being CEO.  Most CEOs grow up in one part of the business and while the experience is useful, there’s little that prepares a CEO to “own everything.”

That’s the analogy D. Casey Flaherty likens to the role of general counsel (GC) and it’s a key driver behind the need for legal operations – especially as the size of a legal department scales.

To me, legal department operations is the professionalization of management within the legal department,” said Mr. Flaherty. “Peter Drucker viewed management as a vocation onto itself.  It’s about bringing together people of diverse talents to accomplish a common goal.”

He points out that specialization is a “hallmark of sophistication.” Legal departments will have a range of talented legal professionals that rise through the ranks in specialties such as litigation, contracts, IP, and real estate.  Organizing intelligent, successful, autonomy-loving professionals around common goals and values is a specialty unto itself.

Mr. Flaherty is quick to point out that being a lawyer is not a prerequisite to being an effective manager of legal operations. “No one person has all the skills,” he says, to develop the “systematic approach to legal quality and legal spend management” required of effective legal operations.

The theoretic threshold for adding a dedicated legal operations function is where productivity gains for existing headcount can have a greater impact than the gains from adding headcount. 

Beginning of the Middle for Legal Ops Maturity

“Efforts go back more than a decade to create a formal national legal operations group,” says Mr. Flaherty, noting the notion isn’t new, but progress has been gradual.

He points to the relatively new legal operations section within the Association of Corporate Counsel (ACC) as a “good indication we are in the beginning of the middle” in terms of law departments ascending the CounselLink Legal Department Maturity Model.

When does a GC need to consider adding a legal operations, and perhaps more importantly what should legal operations set out to accomplish?

The size of the legal department matters, according to Mr. Flaherty.  The theoretic threshold for adding a dedicated legal operations function is where productivity gains for existing headcount can have a greater impact than the gains from adding headcount.  More concretely, most departments begin to have a need for a legal operations role somewhere between 15 and 30 employees. If one person can improve the productivity of 20-people by an average of 5%, the role pays for itself.

But Mr. Flaherty is also quick to point out that different departments will have different needs at different times.  In terms of scope, most new legal operations teams will focus first on outside counsel because that is where the majority of the legal spend resides. Operations won’t make the decision as to which firms are retained or put on a panel. But legal operations is responsible for creating a systematic process that leads to those decisions – from RFPs to reverse auctions As the department and the team matures, their outward focus will expand (e.g., vendors, LPO) and turn inward (e.g., analytics, information governance, and process automation).

Like the CEO and GC, no one person, or attorney, has all the skills to be the perfect legal operations manager. Perfect, however, is not the objective. Better is the objective. Continuous improvement is part of the job description.

* * *

Note:  This is the second in a series of posts stemming from our conversation with Mr. Flaherty leading up to the 2015 CounselLink Annual Customer Conference themed “Showcasing the Value of the Legal Department.” He will be the keynote speaker and addressing the topic of legal operations in more detail.  The first post can be found here: Metrics Strengthen Inside and Outside Counsel Relationships

If you enjoyed this post, you might also like:
The New and Evolving Legal Department Operations Role 

Photo Credit:  Flickr, Highways England Command, Ltd. (CC BY 2.0)

Contributing Author

Contributing Author

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