What Is Legal Operations?

Legal Operations Is Growing Quickly

The set of activities and responsibilities that comprise legal operations management has existed for as long as in-house legal departments have existed: someone (or some group of people) within the legal team has long been responsible for managing law firm billing, keeping track of important documents, and so on. Large financial services organizations, which typically manage hundreds of millions of dollars in law firm spend every year, were the first to realize that this was a function unto itself. It was at these organizations that legal operations began to coalesce as a new function within the legal department.

It wasn’t until the early 2010s that these activities and responsibilities started to coalesce into a discrete function called corporate legal operations. Since that time the discipline has exploded. There’s a dedicated professional organization, Corporate Legal Operations Consortium (also known as CLOC), whose membership has swelled from 500 in 2016 to over 2,000 in 2021, and respondents to CLOC’s 2021 State of the Industry Survey reported an average of 7 legal ops FTEs, up from 6 in 2020.

Another way to gauge the growth of legal ops is to do a LinkedIn title search. As of September 2021, about 32,000 LinkedIn members have “legal operations” in their title—up from about 15,000 in May 2019, or more than 100% growth in two years. Put simply, legal operations has become the norm, rather than the exception.

But is the legal operations movement broad, impacting a majority of corporate legal teams, or is it concentrated in the most sophisticated organizations? In other words, what percentage of organizations have at least one legal ops FTE? To answer this question, we reviewed our internal sales data. Globally, 42% of the organizations with which Brightflag has spoken in 2020 and 2021 have at least one legal ops FTE. The percentage is similar in the United States, where 45% of legal teams have at least one FTE, but lower in Europe (36%) and Australia (35%). This reflects the origins of in house legal operations, but also the steady rise of the practice worldwide.

Brightflag’s smallest customer, a two-person legal department, consists of a General Counsel and a Legal Operations Manager. On the other hand, Brightflag’s largest customers have entire legal operations departments, led by a Vice President of Legal Operations or a Director of Legal Operations, consisting of more than a dozen team members spanning process, analysis, and even software development roles.

Specialization in Legal Operations

When a legal operations function is started within an organization, the single hire has to be a generalist: outside counsel management, contract management, e-discovery, and more. But as a corporate legal team grows, and the legal operations functions grows within it, specialization follows. Creating specialized legal operations roles within a broader team helps each individual to have a greater impact by developing deeper knowledge of the requirements, systems, and processes in each area of legal ops.

Here are the most common areas of specialization.

Legal Billing

Often the first legal operations sub-function to receive its own role, Legal Billing Managers are responsible for administering legal spend management and legal e-billing software; for refining and enforcing outside counsel billing guidelines; and for working with accounting teams to ensure that spend is tracked and reported accurately, and overall financial management is strong. This is usually the first legal ops sub-function because of the widespread use of legal e-billing software.

Outside Counsel Management

When an in house legal team achieves a certain scale, typically above $20 million in annual outside counsel spend, it’s common to create a legal operations manager role to own all vendor management. This position, often a manager or director level role, manages relationships with law firms and other providers of legal services and is responsible for organizing the panel of preferred providers and negotiating rates and fee models, often in conjunction with procurement.

Contracts

Contract lifecycle management is a fast-growing area of legal technology, and with good reason: after engagement with outside counsel, contracts are often the second-largest source of work for a corporate legal team. Contract Managers administer CLM and e-signature software, engage with business stakeholders to streamline contracting processes, and provide subject matter guidance on improving everything related to creating, negotiating, and storing contracts.

E-Discovery

Historically, e-discovery has been outsourced to third party providers like law firms and Big 4 consultants. Recently, with the rise of modern e-discovery software, more and more organizations are taking this work in house to have better control over their data, achieve cost efficiencies, and effectively manage risks. Legal Hold and E-Discovery Managers are specialists in this area of legal operations, working with IT, compliance, in-house litigation lawyers, and outside counsel to collect, retain, and review key documents and data efficiently.

How to Compensate Legal Operations

As legal operations is still a relatively new function, some organizations and HR teams struggle to benchmark compensation for legal ops roles. One way that General Counsel can think about compensation is to discuss similar operations positions with their peers in sales, marketing, and finance, all of which have had established operations functions (sales operations, marketing operations, and finance operations) for a number of years. Generally speaking, compensation across all operations functions has been increasing faster than that of non-operating positions in the last few years. Resources like Glassdoor are increasingly good resources for legal operations manager compensation, particularly if you’re looking to fill a position on the West Coast of the United States, where corporate legal operations consortium (CLOC) is headquartered and you can find the broadest adoption of legal department operations.

Meet the Catalysts of Legal Operations

Corporate legal operations professionals have diverse backgrounds. Many are current or former attorneys or paralegals; others are consultants, technologists, or finance experts. What’s common across all legal operations teams is a focus on constant improvement and transformation; indeed, they are the catalysts of modern legal department. We’ve published featured profiles of a number of these catalysts as part of Brightflag’s ongoing efforts to advance the legal operations community.

Brenda Hansen began her career as a paralegal before joining a multinational biotechnology company as its Compliance & Legal Operations Lead, where she served for almost 11 years. Now a Senior Legal Operations Consultant with UpLevel Ops, a Brightflag partner, Brenda focuses on how to make lasting changes in legal operations. It’s a topic on which she is uniquely qualified to speak.

Stéphanie Hamon has spent her entire career on how to reposition relationships that surround legal operations, first in client relationship and business development roles at Am Law Global 200 law firms, then as Head of Commercial Management for one of the world’s largest banks, and now as Head of Legal Operations Consulting for Norton Rose Fulbright, a member of the Am Law 100 and a Brightflag partner.

And if you’re thinking of getting started with legal ops, consider watching our webinar with Sheila Dusseau, Head of Global Legal Operations for Ferring Pharmaceuticals, also a Brightflag customer. In it Sheila shares five lessons from her first year in legal operations, ranging from the relationship between legal and finance teams to implementing legal technology to setting goals and KPIs.

As you can see, legal operations person can come from anywhere. This diversity of opinions and experiences is exactly why legal operations teams are driving unprecedented change and disruption in modern legal departments.

Legal Operations Software

The market for legal technology is exploding. In 2018, investment in legal technology exceeded $1 billion; in 2019 that level of investment was achieved by the end of September, implying a 33% year-over-year increase. There’s software for in-house teams to manage their bills, entities, and more. There’s also software for law firms, helping them to track time, bill clients, and understand staffing requirements. And then there are categories of software used by in-house teams and law firms equally, such as contract management, document management, and e-discovery. G2, the world’s largest tech marketplace, lists more than a dozen categories of legal software.

In its 2020 State of the Industry Survey, CLOC found that 76% of legal departments are using legal e-billing software—by far the most widely adopted category. There are a number of reasons why this is the case. First, outside counsel typically is the largest expenditure for legal teams and therefore represents the greatest area for potential improvement. Second, cost savings generated by using legal e-billing software can be used to fund additional legal technology projects. Finally, the category is well-established, with a community of consulting firms in the legal industry that implement and support the software.

Of course, there have been many developments since e-billing software was first introduced, including the introduction of in-house legal operations, the rise of alternative fee arrangements, widespread adoption of the cloud, and accessible big data and artificial intelligence technology. Today’s legal teams are taking a more proactive approach to managing outside counsel spend using next-generation software. Brightflag’s legal operations software is underpinned by category-leading artificial intelligence (AI), providing legal operations professional with advanced technology to drive strategic change within their organizations. Brightflag was the first company to apply artificial intelligence and machine learning to legal operations management and has invested more than 100,000 hours in its development, representing a modern, user-friendly, powerful solution for legal department operations.

Brightflag is the #1-rated software on G2, the world’s largest marketplace where businesses can discover, review, and manage the technology they need. And in a recent third-party research study, customers rated Brightflag’s service, support, and responsiveness a perfect 5 out of 5. You can read verified, unbiased Brightflag reviews on G2’s website. Brightflag has also been recognized as a Hot Legal Tech vendor by Legal Operators, a leading expert community of legal operations professionals.

What’s Next For Legal Operations

Legal operations aligns with broader business transformations like the move to the cloud and the adoption of data as a foundational element of every business function. As such, it’s natural that legal operations role is changing quickly. Here are a few changes that are anticipated to take place in the coming months and years:

• Increasingly, the second hire in a legal department will be legal operations specialist, rather than a practicing corporate counsel. There’s a growing recognition that a legal ops hire can make the General Counsel, or first legal hire, so much more productive, and put the foundation in place for a future larger in house legal team, that this prioritization creates more legal department’s value than would a second practicing lawyer.
• Paralegals have a clear path to become legal operations team members. The saying used to be that behind every high-performing in house lawyer was an equally high-performing paralegal; nowadays, the paralegal is in a legal ops role and is just as visible as the practicing attorney him or herself.
• Technology is becoming increasingly central to a legal department’s operations. Software is no longer a nice-to-have; it’s a critical component of the foundation upon which legal departments deliver value to the business.
• As we showed earlier, in house legal operations is going global—and increasingly has responsibility for supporting legal leadership and practicing lawyers across a wide variety of geographies, jurisdictions, and time zones. As part of this responsibility, legal ops will lead the charge in helping the rest of the legal department to adopt remote communication and collaboration tools, such as internal chat and video conferencing, that are already commonplace in other business functions.