Legal departments are positioned to become as essential to business success as research and development, sales, marketing, human resources, and finance. As companies grapple with evolving, complex compliance requirements and emerging technologies, a robust legal operations function can transform legal departments from perceived cost centers and bottlenecks into strategic business partners.
The Evolution of Legal Operations
Legal departments of a generation ago primarily focused on risk management and controlling outside counsel spend. As business became increasingly global and complex, regulatory requirements and legal challenges multiplied in scope and complexity. Attorneys began working more with other professionals like statisticians, accountants, financial analysts, subject matter experts, and jury consultants. Some honed their skills in project management, while others pursued expertise in legal technology and data science, with e-discovery on the front line of it all.
Savvy legal professionals recognized that incorporating emerging technologies and business principles could dramatically improve their efficiency and sophistication. Over time, these trailblazers realized that achieving the correct combination of people, processes and technology was a comprehensive discipline that could be a force multiplier for attorneys tasked with doing more with less. The idea of running a legal department as a business became known as legal operations. Today, legal operations professionals bring critical expertise in strategic planning, change management, and financial oversight to legal practice.
Risk and Transformation
Corporate legal departments face complicated regulatory compliance requirements, and the acceleration of digital transformation has created new risk categories such as data privacy, algorithmic bias, and cybersecurity threats. Data management has evolved from a technical administrative issue into a strategic legal imperative due to privacy regulations such as Europe’s General Data Protection Regulation (“GDPR”) and the California Consumer Privacy Act (“CCPA”). The rise of generative artificial intelligence presents both opportunities and compliance challenges.
Four key strategic areas demonstrate how legal operations can improve legal departments by placing responsibility for many of the nonlegal aspects of their operations with professionals experienced, focused, and equipped to handle them. This allows company attorneys to narrow their attention to understanding the business and its goals and providing strategic legal counsel in service of achieving those goals while minimizing legal risks.
- Business Intelligence: Speaking the Language of Data
Legal departments comfortable with collecting and interpreting vast amounts of data across their functions use metrics to identify trends such as areas of inefficiency or expensive cost centers to address. Indeed, the value of data intelligence is gaining recognition throughout the legal community. Proficiency in this area allows legal departments to identify and address emerging risks, quantify the department’s impact on business objectives, demonstrate value through metrics that resonate with business leaders, and leverage predictive analytics to proactively manage risk. - Strategic Planning: Going from Reactive to Proactive
Long-term planning allows legal departments to better understand their role in the company’s success and gain recognition for their contributions. Establishing strategic plans helps legal teams align activities with company-wide goals, anticipate needs based on business growth trajectories, and shift from crisis response mode to strategic risk management. - Service Delivery Models: Optimizing for Business Speed
By building relationships with legal service providers beyond traditional law firms and strategically leveraging the right mix of talent and technology, legal departments can confidently direct work to the optimal resources when opportunities and challenges arise. Proactively designing flexible service delivery models allows legal teams to identify cost-effective, scalable, and efficient approaches for routine legal needs. Once implemented, bespoke service models let attorneys focus on providing high-value strategic guidance to the business rather than staying buried in repetitive tasks. - Technology: Enabling Business at Scale
By leveraging technology with appropriate guardrails, legal departments can strategically deploy artificial intelligence (“AI”) to help with tasks in regulatory compliance, contract analysis, and due diligence. AI tools can be trained to assist with specific workflows, such as identifying and summarizing regulatory updates and updating relevant policies and controls, or monitoring high-risk customer profiles and transactions and conducting due diligence to comply with anti-money-laundering regulations. No-code automation and contract life cycle management solutions can support self-service tools for high-volume, low-risk agreements like nondisclosure agreements. As legal departments explore deploying AI-enabled solutions, they should develop robust policies, processes, and oversight frameworks that include validation, independent verification of output, and appropriate security protocols to ensure lawyers’ ethical transition from an execution oversight role to a strategic advisory one.
Achieving Strategic Partnership
To serve as a true strategic business partner, legal departments should prioritize:
- proactively identifying emerging risks and opportunities before they impact the business
- efficiently scaling legal services in alignment with business growth
- building scalable frameworks that allow for quick, consistent decision-making across the organization
- leading strategic initiatives in critical areas such as privacy, cybersecurity, and AI governance
When legal operations functions successfully implement these four key strategies, attorneys shift from reactive problem-solving to proactive business guidance. This transition provides them the time to gain a deeper understanding of their business units’ goals and the ability to more strategically counsel on the advancement of those objectives while managing risk.
The Future of Legal Operations
Integrating legal operations within a legal department requires investment in the right mix of people, processes, and technology. Change management expertise is critical to driving adoption both within the legal department and across the business departments that interact with legal. Legal operations leaders must understand both emerging technologies and traditional legal processes. Ideally, they have a solid commitment to continuous improvement and innovation, change management experience, tenacity, and the gravitas to manage changes across the organization effectively.
Mastering emerging technologies to meet regulatory requirements and to facilitate the legal department guiding the business through legal risks remains a key component of legal operations. AI-powered tools promise to revolutionize compliance monitoring, contract management, due diligence, and more. At the same time, these advances bring new challenges in AI governance, algorithm bias detection, and ethical technology deployment, to name a few.
When leveraging new technology, including generative AI tools, legal teams must first gain a reasonable understanding of the technology and ensure that appropriate safeguards are in place, including implementing robust processes for oversight and error correction and upholding ethical obligations around data confidentiality, client communications, and security. Proactively addressing these areas allows legal departments to maintain control, accuracy, and professional responsibilities when harnessing the power of technology in creating efficient workflows.
Building Community and Standards
Various legal operations communities and organizations have formed as the area has matured. The Corporate Legal Operations Consortium (“CLOC”), LegalOps.com, Legal Data Intelligence, and others help define the industry, provide a community for professional collaboration, and set industry standards. These communities are increasingly focused on developing frameworks for data privacy standards, AI governance, and cybersecurity best practices, and they can be valuable resources for the legal operations community.
Adding a robust legal operations function to a legal department empowers the business to navigate the complex, technology-driven business landscape of today. By transforming legal from a cost center to a strategic partner, legal operations helps an enterprise to proactively manage risk, responsibly harness new technologies, and stay ahead of evolving compliance requirements. In an era of unprecedented change, the legal department’s ability to adapt and lead is not just a marker of success but a competitive necessity. Prescient organizations that invest in legal operations capabilities position themselves for long-term, sustainable growth.
