Part two: critical tools for the five stages of the legal ops maturity model

This article originally appeared on Law Technology Today.

Welcome to the second installment in this three-part series discussing the legal ops maturity model. The first article I introduced the maturity model concept, explained how we got here, and outlined the details of each stage.

Today we will discuss departmental initiatives based on maturity model stage and the tools that are critical for each of those initiatives.

Understanding Spend Tools and Gaining Transparency (Stage One)

Companies in the early stages of the maturity model generally don’t have a dedicated legal ops resource. General counsel is largely operating in a solo capacity, with the goal of gaining transparency into spend. This happens by ditching spreadsheets and leveraging technology to achieve visibility into spend and track monthly legal expenses for errors and redundancies.

E-billing and spend management software are essential tools for meeting today’s growing pressures to cut costs and operate more efficiently by making data actionable. Implementing these tools is often the first step toward creating a more data-driven department, because they collect quite a bit of very useful data.

E-billing systems are more than just a way to streamline legal invoice review and catch double billing. Modern e-billing solutions extract and analyze rich data within those invoices and generate detailed reports that would otherwise be incredibly time consuming to build by hand. These reports provide deep insights into legal spend, average hourly rates, law firm efficiency, compliance with budgets, progress against monthly accruals, and more.

A great example of this is a medical technology company I worked with that was in the early stages of the legal ops maturity model, with one lead paralegal managing legal ops. Instead of having a formal spend management system, the company took an ad-hoc approach to looking at their numbers. However, as the economy changed, there was increasing pressure to show where the money was going. After first attempting to pull reports from Oracle and being frustrated by the cumbersome processes, they realized they needed a different solution. E-billing and spend management software allowed them to get a full handle on spend and improve legal operations.

Controlling Legal Spend (Stage Two)

After gaining deep insight into spend, the next stage for the medical technology company was to utilize tools to control that spend. There are a number of ways to achieve this control, including implementing and enforcing outside counsel guidelines, negotiating rates with firms, implementing fixed fee arrangements on commodity matters, and analyzing invoices to identify outliers, all of which can be done effectively using legal operations software.

Legal operations tools make a huge difference in how a legal department functions. With spend tied to different matters, your overall insight into cost is significantly greater, which is especially critical in a time when departments are increasingly asked to make decisions based on cost savings. Gaining visibility into what invoices are outstanding and what has been processed is a game changer for the department.

Two tools that are especially beneficial in this stage of the maturity model are intuitive workflow, which can be used to write custom rules for systems to align with outside counsel billing guidelines and enforcement with an approved timekeeper rate. By utilizing these tools, legal teams have seen significant department-wide improvements and efficiencies.

Effectively Managing Operations (Stage Three)

As legal departments bring on dedicated legal operations professionals and maturity model stages become more advanced, so too do the tools needed to effectively manage the legal department’s operations. The first step is implementing accruals management and integrating with third party systems like patent management or AP systems to reduce manual entry and human error. This stage is also where legal teams need to get matters out of email and into legal service requests to allow all business functions to connect with legal and track their needs.

The shift from qualitative to quantitative data also takes place in this stage. Legal departments should consider expanding the data elements currently captured and implementing standard monthly report cards for matter leads, identifying spend on matters and average time to review invoices.

Driving Efficiency Through Insight (Stage Four)

Armed with data, legal operations departments in this later stage of the maturity model are deeply analytical. They have implemented systems to provide feedback to outside law firms and evaluate firm assignments related to diversity not just within their firm but are assigning diverse resources to matters.

Deep insight into data also allows for analyzing budget estimates over time and determining if they are accurate from the start, whether their assumptions hold true, and how much the first and last budget estimates vary.

One large multinational company drove efficiency through insight by creating a new convergence panel that determined the preferred law firms that would receive the majority of the company’s legal work. With all of the data now in one system, the legal operations professionals are now able to use that data to drive decision making, which leads to the final stage of legal ops maturity, achieving operational excellence.

Achieving Operational Excellence By Changing Behaviors (Stage Five)

The final stage of legal ops maturity is when a company is proactively building mature workflows and changing operational behaviors to achieve maximum efficiency and efficacy. This is the time to analyze resource planning of like matters from different firms to determine best practices that can be implemented moving forward. Additionally, in this stage, significant closed matters will be evaluated for lessons learned to answer a critical question: was there a clear strategy for the firm?

In the final stage of maturity, the department makes effective decisions about internally or externally sourcing matters, supported by board-ready slides demonstrating legal department operations and effectiveness. All stakeholders understand how to use the system and do so on an ongoing basis to manage their own workloads, as well as to gain insights into their areas of responsibility. With workflows for things like invoice approvals, there is no longer any need for the legal ops team to manually handle year-end accruals or other time-consuming tasks.

Final Thoughts

There are many resources that can boost efficiency for legal departments at all stages of the maturity model. However, there is no one-size-fits all approach to legal ops maturity. The tools that are a great fit for one team might be overkill for another, so it’s important to assess your department’s current stage and incorporate the appropriate tools for where you are on the maturity spectrum.

When choosing tools, focus on those that solve the department’s most pressing issues and then future-proof those choices by opting for modern tools that have an API that can integrate with other systems inside and outside the legal department. The right tools can maximize productivity and efficiency while minimizing redundancies and needless spending, ultimately saving the department a significant amount of time and money.

In our third and final installment of this series, we will address the future of legal operations and how legal departments are affected as legal ops continue to evolve.