The following article was written by Merry Neitlich, founder and managing partner of EM Consulting, for Ark Groups publication Tipping Point: Transformation and Innovation in the Legal Department.
Managing real collaboration and change
The practice of law is changing – of that there is no doubt. Legal departments – both attorneys and legal operation professionals – are doing more than simply asking outside law firms to develop a deeper understanding of their needs. After identifying the wishes of the internal stakeholders, legal departments are increasingly seeking solutions that also meet the needs of the company.
Law firm partners that embrace true collaboration find opportunities not only to enhance client relationships, but also seek ways to solve corporate business problems. Law firms can approach clients now and be innovators. Someone is probably talking to those clients about how to deliver legal services that are a win-win for the firm and legal department. A law firm doesn’t want to find out down the road they lost clients because they were late to this party. The primary goal of these meaningful conversations must focus on how to make legal engagements work better for the client. This is the nugget driving innovation and change. Clients not only want more meaningful collaboration, but also increased predictability, efficiency and innovation. These are the underpinnings of legal operations. All stakeholders must become trained and skilled at exploring issues that yield better business solutions.
For over 25 years, internationally renowned legal futurist Richard Susskind has been researching and opining on alternative ways law firms might work best with their clients. In his book Tomorrow’s Lawyers, Susskind writes: “Law firms in the coming decades will be driven relentlessly by their clients to find a better way to deliver legal services.” All his books, lectures and keynote addresses have intimated for decades that law firms must change from the traditional billable hour and become more focused on service delivery based on client preferences, creating better efficiencies, using more technologies, and offering predictability.
During the last several decades, many feel law firms were and are calling the shots. They primarily bill by the hour, grudgingly discuss alternative ways of delivering their services, and raise their hourly rates almost annually. From the legal department’s vantage point, an hourly fee-based model does not encourage true partnering; rather, it tends to focus on profitability for law firms. Creating true alternative fee arrangements generally turns out to be disappointing for in-house counsel, as typically nothing more gets offered than perhaps a 15 percent discount on the hourly billing rate. In-house counsel have been frustrated at not being able to change processes and service delivery options. They want the predictability and efficiency that is not championed by the billable hour.
And so, the term “legal operations” took on a deeper meaning.
Out of their frustration, about seven years ago a group of in-house counsel from larger corporations started to meet informally. They expressed their specific frustrations with how their departments were run and delved into issues surrounding the way legal services were being delivered from law firms. Up to this point, legal departments owned a fair share of blame for the dysfunction and inefficiencies in the system, as they didn’t know what to do to change things; they just wanted to create an easier and more productive way to work. These soon-to-be change agents started to share information, processes, and technologies such as e-billing, e-discovery, and knowledge management to create better efficiencies. In addition, they discussed how they might work with outside law firms more proactively and in a way to minimize costs, frustrations and repetitive tasks. They wished law firms would approach them to ask what would make the delivery of services better for the client. These visionary leaders became the founders of the Corporate Legal Operations Consortium (CLOC), and included Connie Brenton from NetApp, Mary O’Carroll from Google, Jeff Franke from Yahoo, Christine Coats from Oracle, Lisa Konie from Adobe, Steve Harmon from Cisco, and Brian Hupp from Facebook. In 2016, CLOC incorporated as a nonprofit trade association; it has become one of the fastest growing nonprofit legal organizations in the world. Since incorporating, CLOC has grown to include over 2000 members, 1000 member companies, two-thirds of the Fortune 100; it spans 40 states, 42 countries, and 26 regional groups.
“Everybody keeps saying the legal services industry is broken, that radical change is badly needed, but only a few – like industry thought leader Richard Susskind – were even looking at the issues industry-wide. No one had tried to set forth what true north is for this industry. Most legal departments focused on law firms as the only ones really needing to change,” said Jeff Franke, former assistant general counsel of global legal operations at Yahoo, founding member of CLOC as well as its former general counsel and corporate secretary. But the challenges the corporate legal services industry face go way beyond the billable hour, and beyond the intransigence of law firms to change their basic operating model. Franke explained, “We need lots of change with respect to the six core ecosystem players,” which includes:
Tech providers; and
Outside service providers.
Many corporations have started making changes, and we will see more radical transformation over the next three to five years than we have in the last 20. A relatively small number of proactive law firms have taken the time to understand what legal operations means and how it can enhance client (and even potential client) relationships. By entering into discussions of a symbiotic nature, these legal departments and law firms are creating win-win outcomes.
The industry has come a come a long way from the days when GCs were seen primarily as risk managers who relied almost exclusively on outside counsel to support a corporation’s legal needs. Today, 40 – 60 percent of all corporate legal work is done in-house. As GCs have brought legal support in-house to meet the mandate to deliver strategic and efficient legal support, operations excellence has become a critical necessity. Unfortunately, historically the only way to develop that excellence was from the ground up: legal operations did not exist as a discipline. No one offered a “how-to guide” on this complex topic.
With the mandate to “run legal like a business,” thoughtful in-house operations professionals got to work defining the space. It was initially a slow evolution of legal ops. CLOC – through its members and leadership – quickly created a thoughtful, effective base of knowledge, templates, benchmarking capability, and best practice. Their efforts led to the creation of CLOC’s 12 Core Competencies for legal operations excellence. Information from seminars, conferences, webinars, templates, articles, local meetings and materials are helping legal departments and other core ecosystem players better understand what corporate legal departments need and want.
The Association of Corporate Counsel (ACC) has jumped into legal operations in a big way as well. Amar Sarwal, chief legal officer and senior VP of advocacy and legal services, spearheads the ACC Legal Operations program and has aligned it fully with the ACC Value Challenge. In addition to supporting and advancing the legal operations profession, ACC views its role as assisting the general counsel’s office to fully leverage legal operations. According to Amar, “Our role will not only make the legal operations function more coherent, but also help unify the process for its stakeholders. We help many legal departments that have previously not had a legal ops function open up to the possibilities. Wherever a department finds itself in this process, we can share concepts, leadership strategies, conferences, tools, and written guidelines to enhance the legal ops function. Both the ACC program and CLOC are committed to the success of the legal department.”
ACC legal ops focuses in two areas. It offers assistance to onboard new legal ops professionals sharing and leveraging materials and knowledge with a foundational toolkit, it’s Maturity Model. ACC also helps advance those legal operations counsels already immersed by providing continued assistance, strategies and information to get them to the next level.
What legal departments can do
Jeff Franke added, “Many in-house legal operation counsels feel a legal department might begin by defining the largest areas of frustration working with outside law firms, vendors and legal project management. Ask your law firms to step up. Invite them to visit and share ideas how you might work together to create better communication and stronger relationships. Legal ops in-house professionals anticipate more and more law firms will get the message and proactively approach them to find ways to create mutually beneficial strategies.
“As an example, we spend money just to pull stats for our quarterly reviews. It would be wonderful if law firms proactively did this for us. Come to a quarterly review with statistics. Law firms need to understand that as legal departments are tasked with running a business within our company’s business, we need law firms on board too.”
Those working in-house looking to deepen their involvement might explore CLOC’s 12 Core Competencies, selecting just a few to start the analysis process. What technologies do you already have and which ones are most important? Which will relieve your biggest frustrations and headaches with outside firms? Do you have a legal operations team in-house devoted to creating better efficiencies and partnering with outside firms? How might you start this process?
Pratik Patel – VP of innovation and products at Elevate Services – says that without a legal operations function, the result is often overworked teams and inefficient practice of law. “Legal operations can tame the chaos of running the legal department,” says Patel, who provides consulting services and technology implementation to in-house legal departments. “Without the legal ops function, lawyers are forced to design and develop the business aspects of their function in self-service models or in silos, often leading to limited or non-existent processes and fairly pedestrian use of technology.”
Pratik explains that developing a framework around legal operations and prioritizing the competency areas can build efficiencies that better align with a company’s business objectives. He recommends four simple steps to get started:
Identify the law department’s business objectives;
Gauge each core competency’s ability to influence those objectives;
Assess the overall levels of maturity in each area; and
Focus on the maturity areas most likely to “move the needle” towards your objectives.
Today, the legal operations function at major corporations has migrated from an uncoordinated disparate set of actions by individual players to a more carefully defined, cross-disciplinary profession loosely aligned across hundreds of companies and government entities. The focus is on changing not only the way corporate legal departments deliver legal services, but on the way in which the whole corporate legal services industry should function. Corporate legal departments are in the driver’s seat.
There is no doubt that legal operations is a growing force in the competitive landscape for law firms to keep and expand client relationships. Many predict that 2019 will be a watershed year, in which we see many more legal departments and law firms jump into legal operations; for those already involved, the prediction is the level of use will significantly deepen. Legal operations is a partnership between legal departments and their outside law firms. If the steady and impressive growth of CLOC membership and legal operations professionals who take advantage of the numerous legal ops offerings from ACC continues, it will not be too many years in the future when law firms who resisted learning about legal operations will wish they hadn’t.
The successful delivery of legal operations can happen with law firms of all sizes
Legal departments, at times, want to work with law firms, of various sizes in a more collaborative fashion. But sometimes, mid- and small-size law firms wonder if companies are interested in hearing from them. The answer is yes. Numerous large law firms, even the Am Law 100 and 200 firms, are not yet using legal ops as an umbrella to grow their practices. The door is open for firms of all sizes as in-house counsels may be open to a law firm initiating the conversation about creating innovation and efficiencies. This quote from the senior director of legal operations at a Fortune 500 Company sums up her perspective on how a law firm can assist a legal department to create more successful relationships with mid-size and smaller law firms:
“It’s great that some smaller and mid-size law firms are incorporating legal operations principles. At our company, we are open to considering smaller firms. Sometimes, working with larger firms can be a turn off because of their complicated infrastructure and poor service. Mid-size and smaller firms can be more facile and easier to work with, especially if they take the time to understand our company, see where we are headed, and how they can work with us to create better efficiencies. In fact, some corporations want to try out relationships with smaller firms but finding the right firm can be a challenge.”
Consider collaborative-type questions in-house counsels might ask law firms as they explore legal operations together:
How has your firm worked with clients (and targeted non-clients) to create better efficiencies and more predictability in fees?
What technologies does your firm have that assist in this process?
Is your firm using any AI as it delivers more efficient work to clients?
How can your firm can add more value?
Do you have suggestions that will keep your initial budget on track?
How can your firm help create legal solutions that meet our corporate goals and business strategies?
In some cases, neither the law firm nor the legal department are proficient in these ideas, but an exploratory conversation can be very proactive. The conversation should be all about the pain points of the in-house counsel. Together, they can explore alternative solutions and cost-effective strategies.
Just discussing change has never been an effective strategy for making change. For decades law firms have looked in the rearview mirror and clung to the history of how things were done. These days law firms are understanding the directive from legal departments that change is needed. Conversations about legal operations can help make the positive changes legal departments are seeking.
A solution for creating more predictability in big ticket litigation
The boutique law firm of Klein & Wilson, a small trial powerhouse based in Newport Beach, CA, created an innovative solution working on significant trial matters. The firm developed a process to help clients wrap their arms around a clear path and associated costs of large cases through its Litigation Analysis Memo (LAM).
Partnering with clients to write the LAM, Klein & Wilson prepares a detailed factual background referencing key documents necessary to understand the events leading to litigation. After the client approves the factual background, Klein & Wilson prepares a comprehensive legal analysis and litigation strategy (goals identified; paths to reach goals presented; legal issues identified and resolved; anticipated discovery explained; anticipated motions identified; damages analyzed if possible; potential experts listed; strengths and weaknesses reviewed; case theme developed; and thorough budget presented based on assumptions). The client reviews the LAM and decides whether to contest or settle the case.
By thinking through a case upfront, Klein & Wilson efficiently lays out a plan that accomplishes clients’ goals and creates a meaningful budget – not just numbers on a paper nobody takes seriously. If the client-approved assumptions are correct, and the client has accurately presented the facts, Klein & Wilson’s litigation budgets are usually within 20 percent of the client’s actual expenses. Early and comprehensive case analysis leads to predictable outcomes and minimizes discovery and motion expenses.
Preparing a LAM at the outset of a case is one of the reasons Klein & Wilson has over a 90 percent win rate at trial. The Klein & Wilson LAM has impressed clients and adversaries alike. After Klein & Wilson settled a large case for a small client where the future of the company was at stake, the Fortune 500 defendant (which paid the settlement) asked Klein & Wilson to represent it in future matters. There was one condition: the Fortune 500 Company wanted to see the LAM Klein & Wilson prepared which had been so devastating. The LAM notebook had been on the table at every deposition and hearing. The firm's small client was so thrilled with its settlement that it not only gave permission to, but actively encouraged, Klein & Wilson to show the LAM to the former adversary. At one point in a deposition, a frustrated witness answered in response to a question: “If it is in your damn notebook, it happened, OK?”
It should not be surprising that an innovative firm like Klein & Wilson uses a LAM to plan case strategy and develop a meaningful budget. The real question is why other firms do not prepare similar support documents. Firm partner Mark Wilson commented, “We plan case strategy with our trial opening statement in mind. By keeping our eye on the critical points we need to win the trial, we save our clients a substantial amount of money. Cases are won and lost on pivotal issues, not minutiae which distract many attorneys.”
Some law firms are equipping their partners with legal ops professionals who can either support on specific matters or generally assist with advancing the legal operations conversation. This is a change that an increasingly large number of firms are considering.
MassMutual implements successful legal operations: a case study
Christine Juhasz, legal operations leader for MassMutual (a mutual life insurance company), meets quarterly with many law firms that the company does business with to help improve legal operations collaboratively. These meetings are sacred to the legal ops professionals and the law firm partners. Additionally, MassMutual and key law firms collaborate in strategic process improvement sessions. This typically involves an all-day process to assess the end-to-end flow of work and information resulting in improvements for both the firm and MassMutual and a demonstration of how legal services and legal operations can mesh to create innovation and lasting, sustainable change.
MassMutual assesses many factors in selecting outside counsel. Of paramount importance is the integrity, values, skill, quality and diversity of the team handling the work. Past experience and strong endorsements from colleagues are always helpful, as well as access to data and analytics. Firms that demonstrate the ability to think outside the box and willingness to create more predictability and efficiencies based on the needs of the company and the legal division are key.
“We successfully started our journey into legal operations by listening and learning from our internal clients, understanding the end-to-end stream of work, and identifying opportunities to close strategic gaps. The need to build, store, retrieve and use our knowledge base was a real opportunity for us. We looked deeply into the capabilities of the legal division to understand how we could improve the efficiency with which we deliver advice and counsel to the company. This information helped us transform from process improvement to deeper legal operations,” Christine stated.
Christine continued, “From my observations, one of the biggest areas that law firms can focus on to become more effective and efficient is to not overlook legal ops professionals in their work with attorneys. Our legal ops team is a hub of information and expertise in collaboration with legal professionals and business teams.”
Making it a win for your internal clients: a case study
The legal department of a Fortune 500 company was reviewing their legal operations practices and interactions with their internal clients. Under the leadership of their senior vice president and general counsel, the department of 35 attorneys decided to ask their internal clients at the company how their services were being viewed and what could be done to improve upon them.
During the first quarter that year, 30 company executives and high-level managers were interviewed regarding their opinions on the services delivered to them by the legal department. The majority of interviews were held in-person at corporate headquarters. Several of the interviews were conducted by telephone. The participants filled out a 14-question short answer continuum-based questionnaire. This information was transferred into graphs which allowed the attorneys to visually see their service strengths and weaknesses at a glance. The in-person feedback reports combined with the statistical data provided a deeper level of knowledge.
The overall feedback was quite positive. The interview process yielded specific areas in which the services were perceived as very strong. The results also highlighted areas that needed improvement or increased communication.
Over 90 percent of the respondents offered complimentary comments such as, “The legal department…
provides strong business advice with pragmatism.”
is very proactive.”
is hard working.”
is very responsive.”
adds great value.”
provides exceptional levels of service.”
is comprised of well-respected attorneys.”
Almost to the individual, respondents reported that the attorneys in the department were caring, friendly, and concerned. The attorneys were also perceived as providing valuable information while being dedicated to their clients’ individual projects. Legal services were viewed as having significantly improved over the last five years.
Areas for improvement
Most of those interviewed felt that the attorneys were as thinly stretched as possible. This caused some to request that the legal department explore options to improve response time to better handle their questions and matters. There were numerous comments from individuals requesting more time with the attorneys to conduct planning and brainstorming sessions. There were a variety of responses that addressed the need to improve the department’s public relations and communications. A common theme from most respondents was the desire to create more predictability in fees from their outside law firms. Some commented there was redundancy and inefficiencies in the legal work delivered. They wondered how their outside law firms could get more focused on the business needs of the company. More than a few wished the attorneys would work with their outside firms to help them get a better perspective of the company’s goals.
Although most respondents felt the attorneys worked to structure win-win solutions to legal problems, more than a few wished the attorneys would continue to expand their knowledge of their particular operating group’s needs. Some interviewees wished their legal department lawyers would increase their knowledge of where the company was headed they could be more proactive in helping to achieve identified business goals.
Based on the feedback, the legal department developed the following areas in which to improve upon the delivery of their services:
Better internal communications
The legal department considered implementing mechanisms to increase communication with all of its clients. Strategies included:
Creating an internal listserv to keep all apprised of new initiatives and the state of current projects;
Meeting with each operating group to develop strategies to create a more global, big picture understanding of their needs;
Obtaining more feedback from each operating group to plan future services and budgets;
Creating an electronic mechanism to delineate the areas of expertise of each of the attorneys. This communication piece will also offer suggestions for streamlining services; and
Making a presentation to each operating group to share the findings on how this client feedback process may impact each specific operating group.
Better workflow options
Many comments were received indicating that the attorneys were “very stretched” with regard to their time restraints. Being conscious of budgetary issues, the department reviewed the attorneys’ time allocations and usage and explored options to provide more time for individual clients.
Relationships with outside law firms
The legal department examined how it interfaced with its outside law firms. They developed an educational program inviting select law firms in to discuss the broader business goals of the company and also to find processes to streamline work flow and the delivery of product from the firms.
Conclusions and next steps
The results of the client feedback interviews were very positive. The overwhelming majority of the feedback was highly complementary and demonstrated that the legal department was serving its clients well. The feedback also allowed the legal department to examine areas that needed to be improved upon and several areas that needed strong follow-up.
One month after the interviews were delivered, the legal department (staff, paralegals, and attorneys) participated in a half-day retreat. We evaluated the results of the Client Feedback Assessment Program and planned appropriate follow-up steps.
The legal department received positive feedback from the corporation’s executives due to the strong and specific follow up that occurred. It became apparent that the department was perceived as a true value-added service to this corporation.
Why are there frequently problems with the implementation of legal ops, and what can be done to tackle them?
The reasons generally have little to do with the merit of the program. Rather, the resistance to change, or keeping the status quo, has to do with concern over actually using the new innovation. Questions as to how individuals will be evaluated on their effective use of the innovation, and when significant competency of the change is expected, are often the real culprits of resistance. Oftentimes the legal department or law firm will provide training, practice and a breakin period for the innovation to be learned. Why, then, don't these factors eliminate the struggle in accomplishing the innovation?
Concepts such as corporate culture, history, inertia and levels of concern over the new change and varying levels of effective use may all come to play as to why the innovation is producing more negative feelings than positive outcomes.
In many instances, a legal department or a law firm may try to rush through this process without the assistance of training and research. An innovation might seem urgent and justified to a committee and it is pushed into being. This can dramatically raise the level of concern of participants. When a department steps back and explores individual concerns, the probability of a shortened and successful implementation greatly increases.
How the CBAM Model creates successful change
In the musical The Music Man, actor Robert Preston plays the part of the swindling salesman selling band instruments in a small town around the turn of the century. Preston tells the parents that, in order for their children to master a piece of music, they need only use the Think Method – aka, simply thinking about that particular composition. If only change was so easy!
A better strategy might be to use a successful research-based change model such as the CBAM Model, which is an acronym for the Concerns Based Adoption Model, a change process model copyrighted by the Research & Development Center at The University of Texas at Austin. Change is hard and requires long-term commitment; leaning on research-proven methods to successfully launch change can be the difference between “We talked about it” and “We did it!”
In order to create a positive transition, department-wide implementation plans should begin early in the process. Clearly stated expectations and a safe learning environment will greatly enhance the probability of success. Deal with cultural issues such as:
What are the frontend concerns of each individual that the innovation affects?
How might this affect each individual?
What is expected from each person and over what time frame?
Does this process negate or put into question some basic givens about the department’s culture?
Perhaps the legal department and its internal clients might schedule meetings to deal with individual concerns. Discuss the training format from orientation to mechanical use to routine use to full integration. Allow participants to verbalize anticipated stumbling blocks and concerns. The training and implementation process might need to be reexamined and refocused several times during this process. This will effectively decrease the level of concern and increase the effective level of use of all participants.
The change process in any organization, according to the CBAM research, is fairly constant. By giving more meaningful planning time to this process, we can expect to greatly:
Reduce training and implementation time;
Reduce the level of concern of all participants regarding the innovation;
Increase effective levels of use; and
Create comradery and a sense of pride and accomplishment through the successful implementation of the innovation.
How the CBAM Model works
As more and more legal departments and law firms delve into changes designed to increase relationships with clients and potential clients, many are discovering they share concerns in implementing real and lasting change. Once internal feedback is received and assessed, a close look at how any needed changes will occur is essential.
The needed changes can grind even the most innovative idea to a pulp if proactive planning is not adequate. Those who are involved in the delivery of changes continue to discover that repairing the damage of a poorly planned innovation is costlier and more time-consuming than a carefully planned proactive approach.
The CBAM research attempts to understand (1) how people change in both their feelings about their use of new programs, and (2) what processes and characteristics of individuals and settings facilitate or inhibit the change process. The Model points out that "change is a process" by describing the process’ four phases. Within every phase, there are characteristics of an effective innovation change program.
CBAM assumes that individuals grow in both their feelings toward and their use of new programs and that, in order to enhance that growth, one must tailor assistance to specific developmental needs. Individuals involved in this process usually move through three global stages in their concerns about the new approach:
Self-concerns manifest during introductory phases (How will this affect me?);
Initial use is characterized by concerns about management of the program (Will I ever get it all organized?); and
Only when these prior concerns are resolved do concerns about impact on learners take over (Are they learning what they need?).
Research on the CBAM has identified six stages of concern about any innovation that reflect this general trend.
Stages of concern
Stage 0 . . . . . . . . . . Awareness
Stage 1 . . . . . . .. Informational
Stage 2 . . . . . . . . . . . .Personal
Stage 3 . . . . . . . .Management
Stage 4 . . . . . . . . Consequence
Stage 5 . . . . . . ..Collaboration
Stage 6 . . . . . . . . . Refocusing
As individuals become more familiar and comfortable with an innovation, they became more skilled and coordinated in its use, and more sensitive to its actual impact on the firm.
The levels of use of the innovation are the second aspect of the change process which describes individuals’ actual use of the innovation.
Levels of use
LEVEL 0 . . . . . . . . . . . . . .. NON-USE
LEVEL 1 . . . . . . . . . . ORIENTATION
LEVEL 2 . . . . . . . . . . PREPARATION
LEVEL 3 . . . . . . . MECHANICAL USE
LEVEL 4a . . . . . . . . . . . . . . ROUTINE
LEVEL 4b . . . . . . . . . .. REFINEMENT
LEVEL 5 . . . . . . . . . .. INTEGRATION
LEVEL 6 . . . . . . . . . . . . . .. RENEWAL
Using the concepts from the level of concern and the level of use, we can view the change process in four phases:
Orientation and preparation;
Legal department and law firm innovations will be successful if development, training and support activities are designed according to the developmental needs of the participants. Initial activities should be directed at informational and personal concerns. Handson skill development training should occur next, followed by specific and timely problem-solving.
Finally, selfanalytical and learneroriented application activities should be recognized and held in high regard. The continuous support of participants, monitoring of progress and needs, and firmwide administrative support all greatly increase the likelihood of a truly successful innovation. Leaving out any one of these steps greatly reduces the chance for a successful implementation of the innovation.
The conclusion about legal ops
Legal departments have made it clear that the practice of law must, and in fact, is changing. Law firms and legal departments are teaming and collaborating to create and deliver better services that match the business needs of the legal department and company. Legal operations is an umbrella term used to set the stage for increased predictability, better technologies, more efficient legal services and innovation. And all of this is to create win-win legal solutions.