For law department operations managers, 2009 may be looked upon as one of the most challenging years of their careers, but also one of the most exciting. For years, you have struggled to prove that the law department can—and should—be treated like any other business unit. Now, the economic turbulence has made the focus on the bottom line more important then ever and accelerated that change in perception. But now that you have a receptive audience, you must continue to think, act and perform like a businessperson. Your clients throughout the organization are counting on you to do what you do best, and it’s a perfect opportunity to shine.
This message is spreading throughout legal departments around the country. Amid economic uncertainties, increased regulation and growing litigation, proving your skills in developing methodic, repeatable and accountable processes and procedures that can improve efficiencies, cut costs and allow your organizations to think strategically and not just reactively has become the new normal, according to the Second Annual Law Department Operations Survey. In fact, you not only have this opportunity right now—you must seize the day to keep propelling strategic, effective ways of doing business. You must keep evolving and raising the bar for performance in the eyes of the general counsel and others in the C-suite.
Now is not the time to take a step back and relax, even momentarily. Despite the many crises that occur every day, it is important for you to keep your eyes on long-term goals and strategies. Law department managers who have the ability and the capacity to think strategically will set themselves apart from their counterparts who are more focused on operations and the day-to-day details of running the department. That edge has become apparent in the last year. “Folks who plan ahead are going to do better than folks who are flying by the seat of their pants,” says Brad Blickstein, principal of the Blickstein Group who, along with our advisory board, developed this survey.
Of course, no legal department operations manager considers the haphazard approach as an effective management technique. Most respondents find themselves somewhere on the continuum of getting constantly bogged down in the day-to-day activities of running a legal department and being a visionary. Considering the monstrous changes in the world economy over the past 15 months, it may be no surprise that driving and implementing change is by far the single greatest challenge that respondents to this year’s survey are facing—it was chosen nearly twice as often as the second greatest challenge, which was identifying opportunities for business improvement and cost savings. But now is the time to master this challenge.
Operations managers are perfectly positioned to help achieve cost savings both internally and externally by developing and implementing specific business models that seem to elude many attorneys. While most law firms are at least expressing an interest in sharing their clients’ pain and using more alternative fee arrangements, many can’t seem to think outside their long-time business model, the billable hour, according to respondents. Many operations managers say they are facing significant difficulties in implementing alternative fee arrangements, frequently citing an inability to price matters as an impediment to implementing such arrangements (see pg 8, “Law Department Managers—Thinking Strategically, Acting Programmatically” for more on alternative fee arrangements).
At the same time, more than 94 percent of respondents are using electronic billing systems. So data is being collected that can be used to force (or at least suggest) new pricing models. We live in an information society, and turning billing data into usable information more effectively than our law firms can provide legal departments with an enormous advantage.
While you have always worked under cost pressures, the recent economy has sharply highlighted the importance of working strategically. When asked to rank the most important attributes for managing the law department function, respondents considered business acumen and legal department knowledge to be equally important. This underscores the difficulties that many are encountering when it comes to bringing operational disciplines to the legal department.
According to this year’s survey, more organizations are starting to see the value that law department operations managers can bring—6.1 percent of respondents say their organizations added their positions within the past year. The move makes sense, as more than 60 percent of respondents believe that the existence of their role reduces the company’s legal spend by at least 15 percent. But on the other side of the coin, the difficult economy is hindering the ability of many law department managers to work strategically or add headcount.
Many organizations may also believe that law department operations managers belong in the realm of the largest companies, but a 15 percent reduction in legal spend easily funds the position even for a smaller or mid-size company.
For you who may be new to this role—or who are struggling with the increased demands of acting strategically—the first step lies in figuring out what type of data and information exists about the legal department’s activities. It’s possible to access at least some of this information even without extensive e-billing systems and records. You can have your law firms pull time and billing records out of their own systems, which you can use to get a grasp of how matters are being staffed. The difficulty lies in tracking the information and showing success in a meaningful way. Proving a negative is an ongoing challenge for many of you. While it may be possible to save millions on a high-stakes matter, it may well be that the CFO focuses on the money that was spent, not the money that was saved.
Despite the difficulties, the future is exciting for all legal department operations managers. You now have the opportunity to grow your power base within your organizations and change the dynamic of your relationships with law firms and vendors, as well as your businesses, in dramatic ways. A few years ago, it would have been hard to imagine the law department taking the lead on corporate-wide initiatives such as procurement of professional services or supplier diversity. But more and more companies are starting to rely on their law departments for advice in areas like these.
The reaction to bad economics has been positive for law department operations managers who are using the opportunity to push change. But you must keep pushing every day. It’s important to gain momentum while you have the attention of key decision-makers, so when the economy improves—and interest in legal costs or operations has waned—you have the right programs in place and have proven the ability of the legal department to provide real value to the company.