What if your in-house legal department could work more efficiently and drive a better return on investment from your spending on outside counsel?

What if, instead of focusing purely on legal admin, cost reduction, and risk mitigation strategies, your legal team acted more strategically, with a focus on process improvement and value creation?

That’s the idea behind legal operations, a reasonably new practice that’s gaining traction among internal legal departments and quickly becoming the standard approach for in-house teams.

In this guide, we’re going to dive deep into legal operations.

Here’s a glimpse of what we’ll cover:

• What legal operations actually is
• How the practice has changed and developed since its conception 
• What the CLOC Core 12 framework brings to the table
• What a typical legal operations team looks like
• The popular tools used by legal operations teams to work more effectively

What is legal operations?

Legal operations—commonly abbreviated as legal ops—is a set of business activities and processes that allow legal departments to more effectively serve the needs of their organization.

The term can also be applied to legal professionals who work under the legal ops banner, just as the term “sales” can be used to describe the process of sales as well as the sales team itself.

‍“The engine room of the legal function is legal operations. It adds value to the function by dealing with so many parts of in-house lawyers in a scalable manner. Instead of hiring a new lawyer, it’s best to build a process or workflow and have a contract management system that's integrated into all of your business processes.”

~ David Lancelot, ex-VP Global Head of Legal, eBay Classifieds
Embracing Legal’s Role as Business Co-Leaders

Legal operations essentially means running in-house like a business, where your sole client is the organization for which you work, and your primary goal is to improve your delivery of legal services to that organization.

To achieve this goal, legal ops leverages:

• Strategic planning
• Financial management 
• Project management
• Technological expertise
• Internal resource management
• Financial analytics
• Workflow and process optimization 

Also read: Contract Workflow: Examples + Steps for an Effective Workflow

Compared to a more traditional model of in-house legal work, legal ops represents a more effective, goal-aligned, and agile approach.

Where legal administration teams focus on routine admin tasks like legal research, document drafting, and answering phone calls, legal operations professionals look for opportunities to help in-house counsel work smarter and faster.

It's important to understand that legal ops is a fast-evolving field, with commonly used best practices changing and developing with the concept itself. 

To better understand this point, let’s take a look at a brief history of legal operations to see how we got to where we are today.

How has legal operations changed over the years? 

Jump back 50 years, and in-house legal departments looked very different.

Prior to the 1990s, in-house legal teams were primarily focused on risk management and cost reduction, with the high-level goal of reducing outside counsel costs.

This changed through the 90s and mid-2000s as legal departments became more complex and facilitated greater use of outside counsel. However, the main goal was still to keep costs low.

It wasn’t until the mid-2000s that legal operations became a practice in and of itself, spearheaded by large financial services organizations that often managed hundreds of millions of dollars in spending on outside law firms each year.

Such organizations realized that the focus shouldn’t be purely on reducing the amount of spending on outside counsel, but on optimizing the value received from this spending, through more effective internal initiatives.

While many of these tasks were already managed by legal teams, the idea of legal ops itself wasn’t a separate function yet.

“The label of legal ops is relatively new, but I have been doing the job for almost a decade before landing my first official legal operations role.”

~ Nadia Louis Hermez, Legal Ops Manager, Next Insurance, Inc.
Building a Robust Legal Ops Function

Thus, the legal operations department was born.

Legal ops teams started to focus not only on reducing costs but on the ROI these expenses delivered. They began to embrace technology like legal analytics and workflow automation, allowing teams to improve spend visibility and better analyze outside firm performance.

Also read: How to Improve Contract Visibility Across Your Organization

The concept quickly gained more widespread traction. In 2016, the Corporate Legal Operations Consortium was created, which was the first professional organization and community of legal ops professionals.

Today, legal ops teams are found in companies of all sizes, with even two-person legal teams including a Legal Operations Manager (the other person taking on the General Counsel role).

The adoption of legal ops practices has been made easier by the industry-standard framework set forth by CLOC, known as the Core 12 functions.

If you’re setting up a legal ops team today, you’ll likely be using this framework to build your processes and practices.

What is the CLOC Core 12 framework, and how is it used? 

The Core 12 framework is a set of competencies that CLOC recommends legal operations teams should master.

By breaking down the legal ops practice into 12 distinct functions, teams benefit from an enhanced focus, work more effectively and efficiently, and can even develop role specializations (more on that later).

Let’s quickly discuss each of the core competencies and what they involve.

1. Business intelligence

Legal operations teams collect business intelligence data and analyze it against the critical metrics they’ve set for success.
This allows them to access actionable insights which drive further strategic decision-making and planning.

2. Financial management

Financial management in the context of legal ops includes the following:

• Creating budgets
• Planning legal spend
• Reviewing actual figures against budgets
• Implementing and monitoring e-billing for legal services
• Forecasting expenses
• Managing accruals 

Also read: How Are Contract Management Systems Useful for CFOs & Finance Teams?

3. Firm and vendor management

This practice focuses on the management of relationships with outside counsel, encompassing a variety of tasks:

• New vendor onboarding processes
• Performing due diligence and risk assessment
• Contract management processes
• Uncovering opportunities for work improvements
• Rate negotiations 

Also read: Vendor Contract Management: How to Optimize Your Relationships and Maximize ROI

4. Information governance

Legal ops teams work on information governance policies with the objective of reducing corporate risk.

This function involves creating policies, communicating them to employees, as well as managing compliance and data security.

5. Knowledge management

Knowledge management refers to the creation, distribution, and management of documentation related to internal knowledge.

This includes building and maintaining an internal knowledge hub to prevent knowledge loss as staff leave or change roles.

6. Organization optimization and health

For this competency, legal operations shifts its view toward human resources, creating a vision for hiring, developing team culture, and maintaining a talent pipeline.

7. Practice operations

Practice operations relate to the allocation of tasks based on skill level and availability, with the goal of making legal ops more efficient. 

8. Program and project management

There is an intersection here with practice operations, where legal ops teams design project management processes, programs, and workflows, and leverage software platforms to improve project efficiency. 

“It's all about project management while being effective and efficient in managing process policies and technology. It’s not so much that the general counsel reports to the legal ops leader but to the person who does the job of leading the legal function. Leadership is the key skill, and business leadership involves operations. You can have a great idea, but if the ops falls down, the business will not succeed. So, ops is the future.”

~ David Lancelot, ex-VP Global Head of Legal, eBay Classifieds
Embracing Legal’s Role as Business Co-Leaders

9. Service delivery models

Legal ops teams structure and define how relationships with vendors operate. At the same time, they seek out opportunities to reduce reliance on more expensive external law firms.

“Companies are not advised by their law firms that it's better to have somebody in-house who really understands the business and is embedded with the leadership team, because it's not in the best interests of the law firm.”

~ David Lancelot, ex-VP Global Head of Legal, eBay Classifieds
Embracing Legal’s Role as Business Co-Leaders

10. Strategic planning

Strategic planning involves creating and communicating team goals that align with the overall vision of the company, as well as the priorities of external stakeholders.

11. Legal technology

Under this competency, legal ops teams strive to improve their use of legal software, such as through the use of automation and artificial intelligence, to remove the need to work on repetitive tasks.

“There was always a goal to get rid of the low-value work that's repeatable and is not being done as effectively as it needs to be done, while moving up the chain until I found lawyers in different markets who were business people with legal skills. We were very successful in doing that. It was my proudest moment there; having these great people shine.”

~ David Lancelot, ex-VP Global Head of Legal, eBay Classifieds
Embracing Legal’s Role as Business Co-Leaders

12. Training and development

The last of the core 12 competencies involves creating long-term plans for career development.

This includes creating onboarding processes and training resources for new hires, as well as collaborating with human resources to develop career plans and employee development trajectories. 

What does a legal operations team look like? 

The team members in a legal ops department can differ from company to company, driven most obviously by the size of the organization.

Below are some of the most common roles and specializations you’ll find.

“The job requirement of legal operations managers varies from organisation to organisation. However, keeping close ties with IT, Engineering, and Sales teams can help you stay prepared for any conflicts in the future and keep data handy as and when required.” 

~ Nadia Louis Hermez, Legal Ops Manager, Next Insurance, Inc.
Building a Robust Legal Ops Function

Legal operations manager 

The legal ops manager (sometimes called the director) heads up the legal operations team and supports them with tasks like vendor management, staffing, and long-term strategy.

They typically report directly to the General Counsel and oversee high-level tasks like resource allocation and process creation and optimization. 

Also read: What to Do in Your First 100 Days as a GC

For non-legal team members, the legal operations manager is the point of contact for budget questions, reports, and project status updates. 

Legal operations specialist 

Smaller organizations are likely to be more concerned with hiring a generalist who can head up the operations side of legal and start building efficiency.

However, as the legal ops team grows, an opportunity to bolster the department’s abilities with specialists emerges.

“Fast-growing companies have a ton of areas where they need value addition. Legal teams are often kind of a sneaky secret weapon, where you've got folks who are strategists, great communicators, and good operationally. They can plug in in a lot of areas. Both a risk and an opportunity is that legal teams could be doing everything. But at the end of the day, if we don't cut back, we are doing nothing effectively.”

~ Megan Niedermeyer, Chief Legal Officer, Apollo.io
Aligning Legal's Limitless Potential to Business Goals

These are four of the most common legal operations specializations.

Legal billing

Legal billing is commonly the first sub-function of legal ops to receive its own role.
Specialists in this role are responsible for the following:

• Administering spend management
• Managing and maintaining e-billing software
• Creating and enforcing outside counsel billing policies
• Collaborating with the accounting department to accurately track spending

Outside counsel management

Once your team reaches a certain scale (around $20m in outside counsel spend annually), it's a good time to bring in a specialist to own all supplier management.

This person is often at the director or manager level and owns relationship management, supplier risk assessments, and vendor contract and pricing negotiations, often working closely with the procurement department.

Contracts

This legal operations specialist is focused intently on contract lifecycle management, using CLM and eSignature software to streamline contracting processes, create templates and pre-approved clauses, and provide export subject matter guidance.

Also read: Simplified CRM Contract Management: Practical Approaches & Tips

E-discovery

Historically speaking, e-discovery is something that has been outsourced to third-party providers with deep expertise in the function.

However, modern e-discovery software (something we’ll talk about shortly) is becoming more prolific, allowing legal ops teams to take on this work in-house.

E-discovery specialists work closely with compliance, IT, and in-house litigation lawyers, as well as outside counsel, to review and analyze key legal documents and data.

Legal operations analyst 

When a legal operations team wishes to really leverage its tech suite to track key metrics and interpret analytics, the legal ops analyst specialty becomes a necessity.

This person is responsible for the following:

• Maintaining data analytics tools and dashboards
• Interpreting results and reporting to the legal ops director
• Identifying areas to better allocate resources
• Spotting opportunities for process improvements 

Also read: When to Hire for a Legal Ops Role?

What are some popular legal operations tools? 

The most effective legal operations teams take advantage of modern legal tech to optimize processes, cut costs, and dive into performance management.

Here are a few of the most popular legal ops tools and categories.

Legal operations software - Legal Tracker

Legal Tracker from Thomson Reuters is a widely-used legal operations software platform. For many organizations, such tools act as the central hub for legal ops management, offering key features:

• E-billing
• Benchmarking analytics
• Invoice storage
• Over-budget spend alerts

Matter and spend management - Clio

Clio is another legal software platform, one which many legal ops teams turn to for matter and spend management.

With spend management tools, legal ops teams can set up custom reporting dashboards to track where the budget is being spent and the return it's generating from service providers.

“The one metric that I love is legal spend over time versus revenue. The spend may go up, but it won't go up nearly as fast as revenue. Finding a group of companies, getting the data on who works there, how much they spend on external counsel, lawyers per billion, etc., is a difficult task. But once you put that hard work in, you can show your legal leaders what your total legal spend versus revenue over time versus benchmarks was. That's the kind of thing that makes your CFO smile.”

~ David Lancelot, ex-VP Global Head of Legal, eBay Classifieds
Embracing Legal’s Role as Business Co-Leaders

Contract lifecycle management software - SpotDraft

SpotDraft (that's us) is a powerful contract lifecycle management software platform that helps legal operations teams utilize automation and editing tools to build effective workflows, enhance productivity, and accelerate repetitive contracting workflows.

Learn more here: SpotDraft, The Co-Pilot for Legal Teams

“Start with agreements that are easy to compile, such as NDAs. Gather as many attorneys as possible to test the tool and take some time till every attorney in the system gets used to the interface of the CLM. Then, start building out more complicated agreements, such as third-party contracts. Finally, move on to using the tool for templatising sales contracts.”

~ Nadia Louis Hermez, Legal Ops Manager, Next Insurance, Inc.
Building a Robust Legal Ops Function

E-discovery software - Everlaw

Everlaw is an AI-powered software platform designed to support in-house teams with the e-discovery process.

Teams can pull data from multiple sources, leverage advanced analytics, and collaborate on data collaboration to create and communicate narratives.

Knowledge management software - West km

West km is another product from Thomson Reuters, and this time focused specifically on legal knowledge management.

Think of it as a document repository for SOPs, policies, and legal ops processes.

Streamline legal operations with SpotDraft 

While legal ops teams have a wide focus and operate within a number of disciplines (12, if you’re following CLOC’s guidelines), the big goal is efficiency.

By building more efficient work processes, legal operations can drive more ROI from both internal and external spending.

SpotDraft’s intuitive workflow builder helps legal teams optimize contract management workflows and help secure more value for outside legal counsel spending.

Leverage deep reporting, legally-binding eSignatures, and contract templating starting today. Book a demo with one of the SpotDraft team.