It is only in the past 10 to 15 years that legal departments began to ponder ways to reduce spend and maintain a high level of efficiency in their departments and from their firms, though they didn't use the term “legal operations” to describe what they were doing.

Catherine Moynihan, the associate vice president of legal management services at the Association of Corporate Counsel in Washington, D.C., says that when she started working at the ACC there was a concerted effort to convene and chief operating officers of legal departments to find ways to cut down costs.

“These people seemed to be prevalent in companies that are heavily regulated. If you think of legal operations as being focused on people, process and technology; the other piece that drives operations is regulation,” Moynihan explains.

Now, several internal legal departments in the U.S. have expressed the necessity of having a robust and mature legal operations function. The maturity of legal operations in the U.S. has led to groups like ACC adding a legal operations group and the formation of groups solely focused on legal operations like Corporate Legal Operations Consortium, or CLOC. Both groups have traveled outside the U.S. to evangelize the importance of the function.

Getting started

Sheldon Renkema, the general manager of legal at Australian conglomerate Wesfarmers, says a culmination of three factors brought him from a full-time practice in mergers and acquisitions, a practice he still maintains, to working in legal operations.

“I had for some time been a keen observer of 'newlaw' developments in Australia and the (slow) change of traditional law firms to respond to these market developments,” Renkema, who is based in Perth, Australia, explains in an email to Corporate Counsel. “I felt strongly that this created an opportunity that I should explore to help the legal team at Wesfarmers to better handle a growing workload, be more efficient, measure the contribution we were making and to allow us to focus on the work that our experienced lawyers were most suited to doing—work of high complexity and most aligned with the strategy of our company. Second, my manager, our Group General Counsel, had learned of CLOC and been invited to participate in a CLOC group in Australia and, knowing my interest, she encouraged me to be part of it.”

In September, CLOC officials found that legal operations in Australia was still in the early stages, however, there has been an eagerness to grow.

“A key observation from the CLOC Institute in Australia in September 2018 was that legal operations among Australian and New Zealand organizations are generally relatively immature compared to the U.S. or when assessed using the CLOC maturity model,” Renkema says. “Legal operations as a stand-alone function is therefore relatively new in Australia and still in a growth phase. With the relatively smaller sizes of our in-house legal teams it seems unlikely that the number of legal operations professionals in organizations will reach the scale that we are seeing in many U.S. organizations.”

Perhaps siloed and learning lessons from larger markets which have more mature functions, companies in African countries are also beginning to form their own legal operations functions. However, they are years away from maturity, Rian Hancock, a legal operations and technology consultant in Johannesburg, South Africa, says.

Hancock started his career as a barrister, where one of his struggles was the technical value that he was bringing to his clients. He then became a solicitor, and says those same problems he experienced as a barrister are even worse for solicitors and thought there must be a better way to deliver services for his clients. Hancock then went in-house for an insurance company and, while there, worked on his MBA. The research of his MBA, very specifically, focused on how corporate counsel make decisions to buy legal services. After a stint working as the manager of legal management consulting for Deloitte South Africa, Hancock will be shortly opening his own legal operations and technology consulting company.

He says right now the major markets in South Africa, Kenya and Nigeria are about three to four years behind countries with more mature legal operations functions. One of the current challenges, he explains, is the implementation of technology.

“There is a big drive towards digitization and implementation of effective legal technology but the price points are not viable for the African market,” Hancock says.

Hancock says that, in his experience, the cost of implementing sophisticated legal technology in Africa is approximately 14 times of what it is in Africa. “That is one of our biggest problems; the need to find systems that are affordable for the local market,” Hancock says.

Having learned from the U.S. and other markets has been a benefit to the growth of legal operations in Africa, Hancock says; particularly when it comes to change management. “We know change management must be a major focus on any implementation,” Hancock says. Looking outside at legal operations outside of Africa means legal operations professionals “can find better ways to help bring lawyers along with us on the journey,” Hancock says. “These are things that the U.S. market learned as they went along,” Hancock says. “We can take these kinds of things and make sure the things we're implementing are able to be integrated. That gives us almost an immediate advantage on the markets that have had to make these mistakes over time.”

Varying methods of operation

In the U.S., the priority of legal operations leans heavily on curbing legal costs and finding ways to get the biggest bang for the legal department's buck. That is not the case for everywhere else in the world.

Hans Albers, the president of ACC Europe and the head of worldwide legal operations at Juniper Networks in the ­Netherlands, says that regulation, rather than cost savings, is a key driver of legal operations in Europe.

“It is definitely something that started in the U.S.,” Albers says. “It is only in the last couple of years that legal operations has made its way across the pond through large, multinational companies.”

Albers says one of the key differences between legal operations in the U.S. and Europe, with the exception of the U.K. which is more similar to the U.S., is that U.S. companies tend to be more concerned with their outside counsel spend because of a higher level of litigation.

While in Europe, there is some degree of controlling spend because of litigation costs, Albers says legal operations are more focused on helping the business grow. “We're looking at ops as a way to add value,” Albers says. “We're trying to look at how efficiently the organization was run. Legal was more regarded as a biz function.”

Meanwhile, Renkema says while that is a concern in Australia, it is not the main focus. He explains one area he views Australia in being ahead of the U.S. when it comes to legal operations is that legal departments in Australia are more likely to take advantage of “a more competitive external legal service provider environment.”

“When I compare Australian lawyers to the U.S. lawyers I have briefed, external lawyers here are more open to fixing or capping fees, competitive pitching for work on a matter-by-matter basis or other fee arrangements,” Renkema says. “External providers also provide value adds that are of substantial worth to us such as professional development, [key performance indicator] reporting, project management, technology assistance and advice.”

Renkema notes there also appears to be more of a willingness to use new kinds of technology in Australia.

“I think that we probably have more opportunity to, and do, take advantage of the competitiveness of the Australian legal market—both among traditional law firms and alternative legal service providers, as they compete aggressively for the legal spend here,” Renkema says.

Speaking for what he's seen in Africa, Hancock says corporate counsel tend to do 70 percent administrative tasks while only spending 30 percent of their time on complex legal matters. “A lot of what I look at is how we can flip that utilization rate,” Hancock explains. “That may not be a cost savings, but there is a value increase.”

The future of operations

As far as the U.S. and Europe are concerned, there isn't much legal operations professionals can do from one country to influence another, seeing as operations in both the U.S. and various countries in Europe have matured over the years, according to Moynihan.

“I don't see one side influencing the other side anymore,” Moynihan says. “In the U.K. there are some interesting developments regarding the vendor community and law firms, but that is because law firms can only be owned by lawyers in the U.S. Multinationals are probably experimenting more with that I think will be influential over here.”

For Renkema, he says there will likely be a boom in legal operations in Australia over the next year.

“I've seen an increasing number of people appointed to dedicated legal operations manager roles in the last year or so. I expect this will accelerate in the coming year. This will be very important for the ongoing development of legal operations in Australia,” Renkema says. “Also, the general level of maturity of legal teams when it comes to legal operations is lagging and this needs to improve so that corporate legal teams can better do what they are mandated to do. Third, I would like to see CLOC in Australia continue to grow its reach and influence.”

Hancock, who has started his own legal operations consulting firm, says he is hopeful for more mature legal operations in Africa.

“I think legal is still the last bastion of process improvement,” Hancock says. “With the increase of artificial intelligence and the digitization of legal functions, you start getting more and more access to data. The value of legal operations kicks in with the access to data.”

Dan M. Clark is the Albany reporter for the New York Law Journal. He covers the state Court of Appeals, the state legislature, state regulators, and more. Email Dan anytime at [email protected].