A framework for the evolution of corporate law departments

In A framework for the evolution of corporate law departments, Steven Walker contributes his second post to Dialogue.

General Counsel and law departments are in the business of providing legal services, and they are under relentless pressure to respond to the challenges of delivering the highest quality services as quickly, efficiently and cost-effectively as possible. These imperatives are now more compelling than ever. Readers may like to refer to my recently posted remarks related to that point.

If this were not enough, General Counsel and their staff are expected to walk and chew gum. Here’s why I say this and what I believe should be done to address the challenge and the opportunity.

General Counsel and their staff must respond to the challenges whilst simultaneously:

• meeting the ever-increasing daily demand for excellent services without dropping the ball;
• generating positive team engagement (or at least not disturbing existing good levels of engagement) to help to attract and retain the best talent;
• liberating staff time to spend on strategic, value-add or personal growth and development activities;
• demonstrating the value of the legal function to business stakeholders and maintaining or improving client satisfaction;
• maintaining an appropriate risk, governance and compliance posture; and
• in many cases, absorbing the impact of static or even declining budgets and be prepared to go without incremental investment in change initiatives.

This is the new normal for corporate legal departments.

For a department to thrive in this environment requires a thoughtful, strategic and planned approach to transformation and modernization initiatives. The crucial enabling pillar is a smart use of new legal technology (lawtech) to re-engineer service delivery, automate process and tasks, and digitize and intermediate interactions internally within the organization and externally with third parties. Lawtech must be deployed with care so as not to alienate users and bamboozle clients. It must be coupled with surgical, meaningful process adjustments and structured change management.

This is not to say that acquiring lawtech will solve all a department’s problems. Rather, attempting to pivot towards the next generation of legal services absent the right technology would be the in-house legal equivalent of bringing a knife to a gunfight.

The advent of Software-as-a-Service models with periodic subscription pricing for a new generation of lawtech management and business intelligence solutions architected for in-house legal teams is now within the reach of departments large and small.

Framework for the evolution of corporate law departments

Each legal department is unique, reflecting:

• internal factors: its past investments, service delivery model preferences and practices (ratio of inside to outside), risk posture, legacy tools and processes, capabilities, strengths and weaknesses, and blends of people experience, knowledge and skills; and
• external factors: forces affecting the client company, such as whether it is a small or medium-sized organization scaling rapidly in a high growth industry, or a mature, established organization with a focus on cost-optimization, or anywhere in between.

As a result, there is no universal, proven roadmap to help legal departments navigate their development. For this reason, it is more constructive to conceptualize a standard evolutionary framework which can be applied equally to all departments, which I refer to as the Digital Journey for Legal Services.

Each department’s journey will be different, influenced by the appetites, needs and resourcing of a particular department as well as its capacity to digest change (how much and how quickly). A transformation program to implement the journey may be comprehensive and ambitious impacting all or many substantial functions, operations or services of the department over multiple years, or it may be targeted and discrete with a narrow focus on quick wins around one or two key functions, operations or services by multiple mini-journeys. Most commonly, journeys are a hybrid of the two.

Because of the extended lead time for transformative projects, law departments would be well served to start their own individual journeys without delay.

The stages on the Digital Journey for Legal Services are defined below.

Capture

The journey begins with collecting data around service delivery and operations, and exerting control over workflow. Gathering data and quantitative business intelligence around key services, operations and functions is a fundamental capability for a law department. Foundational lawtech systems are those assisting financial management (e.g. tracking inside/outside spend) and capturing workload volumes across different service towers. A workflow system allows a department to assume proactive control over the routing and re-routing of matters or tasking of activities.

Analyse

The output of these foundational tools permits a law department to shine light into previously dark places. Unlike the past, in which management was predominantly accomplished by the instincts and experience of senior lawyers, a department which has invested in the right lawtech tooling can quickly and easily generate quantitative information around portfolio, operations, workload, resourcing, utilisation and cost; put simply, the department is able to harness vital data around what it does, how it does it, how long it takes, how much it costs and where it spends its time.

The portfolio of core legal services can be best tracked and monitored by a workflow or matter management platform. Data can be mined at a high level (e.g. volumetric information around how many of which types of matters) or at a granular level (e.g. turnaround times, static or trend analysis over time). Workflows can be analyzed for touchpoints and to map the movement of different types of work or related activities within, to and from the department.

For maximum data reliability, it is usually sensible to collect datasets over a period of months before drawing definitive conclusions from analyses, smoothing over early artifacts attributable to users onboarding and gaining proficiency, and to support robust periodic trend analysis (e.g. weekly, monthly, quarterly). Ideally, the department will use initial insights to concentrate on only a few essential metrics which should be tracked and reported on a consistent basis. This also helps to avoid a situation of data-paralysis, in which so much fascinating information is available that a department cannot decide what to measure, or worse still, tries to collect excessive metrics or at a level of detail which is unwieldy and unhelpful.

Data analytics may be performed by commercially available tools or, quite satisfactorily, by a skilled spreadsheet user working with data extracts. Lawtech tools frequently have useful embedded reporting and analytics functions.

Enable

Having analyzed current state and harnessed data-driven business intelligence and insights around services towers and operations, a department is then empowered to perform deep-dive reviews of specific services or functions. The objectives are:

• develop an in-depth understanding of current state service delivery, resourcing, process, and tools;
• consider opportunities for improvements and efficiencies through a better, faster, cheaper analysis; and
• identify target future state (if different from the status quo).

Reviews should draw on both quantitative data derived from the technology as well as qualitative data obtained in traditional ways, such as surveys and conversations with staff. From the perspective of return on investment, the most fertile ground to explore first is generally any service or task that is either performed at volume and repetitious, or which is associated with significant allocations of budget.

For example, the department is now able to undertake:

• portfolio analysis of volume marketing or advertising reviews, corporate due diligence or run-rate sales contracting. These activities lend themselves to a right-sourcing analysis (i.e. should all or some of the work be performed inside or unbundled and performed outside, or a hybrid) and lean process and simplification review around approval and governance, as well as task automation. Care should be taken to validate the required business outcomes so that assumptions around what is important to the business are tested, and the department adopts future KPIs and a sourcing model which collectively promote overall business success; and
• external spend analysis of subject matter areas (e.g. litigation, IP portfolio management) and competencies within those areas (e.g. discovery, patent filing) to examine spending trends over time and identify opportunities to reduce cost by Alternative Fee Arrangements, strategic insourcing through upskilling or hiring, or outsourcing to specialist suppliers for specific tasks in lower cost locations (e.g. e-Discovery or patent drafting) as well as cost control mechanisms at the billing and invoice review level.

Transform

Armed with business intelligence and data around current mode of operation and a vision for the desired target state, a department is perfectly positioned to design and implement targeted transformation projects. Projects should define measurable business impacts and track milestones, results, and KPIs which are widely reported and communicated to both business stakeholders and internal teams, fostering a culture of transparency and innovation.

All the usual rules applicable to other significant workplace change management should be applied to legal services transformation. The level of attention to change management depends upon the scale, magnitude, duration and strategic importance of the areas to be transformed. As a rule of thumb, it is prudent to spend at least as much energy and resources on the human and people components of change as the technology and process aspects. For large transformations, Human Resources and even change management specialists should be engaged to support the design and implementation of programs.

Once a department is accustomed to the Digital Journey for Legal Services, it becomes self-sustaining. The department is more agile, receptive to doing things differently, and to generating and executing ideas for continuous improvement.

 Author

Steven Walker is an experienced General Counsel turned independent consultant to law departments and law firms on legal services transformation, lawtech, new service and sourcing models, strategy, law department ops and lean process. He has a particular focus on contracting solutions. He spent eight years in private practice at major law firms and over a decade in-house with a large multinational technology company, most recently as a Vice-President and Regional General Counsel.

Six things modern GCs really want from their law firms was first published on Steven’s LinkedIn page, 27 November 2017 © 2017 Steven Walker, Gen2Law Pty Ltd