The evolution of enterprise legal management

Lauren Jennings | March 16, 2021 | Articles

Enterprise legal management is the process and strategy used to manage a corporate legal department. It can also refer to the range of technologies used in enterprise legal operations.

Both the practices and tools associated with enterprise legal management entered the legal industry in the 1990s. But after that, the evolution has not been linear. To understand how enterprise legal management has developed over time, it’s better to look at how the key elements have evolved to solve problems or replace outdated processes.

Legal Ops Takes Over Tech Solution Decisions

Before enterprise legal management became commonplace, technology decisions were not handled by a single person in corporate legal departments. According to Brad Blickstein, a co-founder of the Law Department Operations Survey, the decision-maker “could be anyone . . . . It could be an attorney with a computer science background. Or perhaps it’s the paralegal who someone noticed knew how to unjam the copier.”

The lack of a key decision-maker made finding the right tech solution difficult. Without a go-to person, legal departments either defaulted to what outside law firms used or left the decision to someone who wasn’t close enough to the day-to-day work (like the tech-savvy paralegal Blickstein mentioned). Either way, the decision-maker didn’t know what to look for. What legal departments needed were tech solutions that gave them a closer look at who was billing (associates, partners, etc.), when they raised rates, where the documents were stored, and so on.

Decision-making gradually shifted to the legal operations role as a cost-saving measure. By 2008, corporate legal ops gained more authority over tech-purchasing decisions, enabling them to select only the technology that suited their specific needs instead of always accepting the systems that outside law firms preferred. Enterprise legal management solutions evolved to address these needs.

Matter Management Replaces Paper Files

Up until the 2000s, many legal departments still relied on paper filing systems. When SaaS began taking off, legal teams moved away from low-tech systems and leaned into matter management.

Matter management provides a system of record for all legal work and associated documents. For large firms with a high volume of in-house work, matter management was a game-changer. Enterprise legal management solutions put a heavy focus on matter management, so thousands of paper files could be digitized and organized in a central location.

But matter management solutions did so much more than reduce the reliance on bulky filing cabinets. Legal departments gained visibility into matters throughout the process because matter management solutions provided a single source of truth for all data, documents, and notes associated with each individual matter. Thanks to those additional insights, legal departments were better prepared to distribute workloads and plan for future staffing needs.

By 2008, 96% of legal departments were using some form of matter management. However, most early solutions did not integrate with other systems such as e-Billing or spend management.

E-Billing Replaces Manual Invoicing

When law departments and law firms began using e-Billing in the early 1990s, there were still a lot of issues due to a lack of standardized invoice formats. So, in the late 1990s, an informal group of legal professionals created the Legal Electronic Data Exchange Standard (LEDES) format.

The goal of the LEDES format was to keep invoices simple and unambiguous so law firms and legal departments could work together more effectively. Around the same time, the American Bar Association created UTBMS code standards to further categorize costs on invoices. Over the next few years, LEDES files evolved to provide more data. Legal departments could specify which type of LEDES formats they wanted (LEDES 1998, 1998BI, XML 2000) depending on the data they required.

Early e-Billing significantly sped up the invoicing aspect of enterprise legal management. However, e-Billing only provided data after the fact—it didn’t help with proactive budget management. And, even though the invoices were electronic, spend tracking was still handled manually in spreadsheets.

Spend Management Replaces Spreadsheets

The financial crisis of 2007–2009 affected many corporate department budgets, and legal was no exception. Before the economic decline, many legal departments didn’t have to prove their value or track spend. Legal costs were considered part of business and rolled into the budget without much question. But with budgets tightening across the board, legal ops teams needed a way to track past spend and more accurately forecast future spend.

Tracking spend in spreadsheets was time consuming, error-prone, and difficult to analyze. Enterprise legal management solutions with spend management solved those issues by tracking spend automatically.

Automated spend monitoring gave legal departments visibility into past spend and active matters. With historical data readily available through enterprise legal management software, legal ops teams could keep an eye on a wide range of metrics such as spend by matter, average timekeeper rates by firms, etc. Greater visibility led to better cost control.

Robust Reporting Replaces Guess Work

As enterprise legal management software evolved, legal ops teams gained insights into their everyday processes. With that additional oversight came more detailed reports that supported data-driven business decisions. In 2021, legal ops teams increasingly rely on robust reports to run their departments and prove their value to the company as a whole.

Matter management reports monitor timekeeper rates, matter-level expertise, average timeline of different matter types, and more. Spend management reports then feed off matter management and e-Billing data to break down spend by matter type and practice area, which helps forecast budget and resource allocation needs.

Some enterprise legal management systems dig even deeper with business intelligence tools that allow legal departments to narrow in on outliers, evaluate outside counsel performance over time, and make data easier to interpret for people outside of the legal department.

Legal AI and Automation Further Optimize Workflows

In 2021, legal AI and automation are major drivers of digital transformation in legal ops and one of the top trends influencing the industry. Updated enterprise legal management solutions now leverage machine learning, natural language processing, and automation to minimize manual admin work.

Automation supports matter management with automatically generated matter templates and automated tracking of key performance metrics for each matter. AI tools parse through legal text in seconds, saving legal and sales teams from lengthy back-and-forth contract discussions. Automated enforcement of legal billing guidelines prevents law firms from billing under unauthorized UTBMS codes, double billing, or submitting late invoices.

Find the Right Enterprise Legal Management Solution

Much like enterprise legal management, the evolution of legal operations is not linear. If you’re considering new legal technology, it’s important to think about where your team is in its own development. Remember: Enterprise legal management evolved to improve outdated processes—it cannot improve what does not exist.

Before you choose an enterprise legal management solution for your legal department, think about what processes you hope to improve. Focusing on your pain points will help you find the tools that will have the greatest impact on your department. Not sure where to focus? Sign up for a SimpleLegal demo to talk through your goals.

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