The digital transformation does not stop in the world of work either. Industrialization and digitalization are revealing new technologies and opportunities to make work structures and processes both more efficient and more effective. The term which is becoming increasingly common, especially in the legal departments of modern companies, is Legal Operations. But what exactly are Legal Operations?
An entire core area of the legal department can be classified under this designation. This is because the modern field of legal activity encompasses more than just legal advice for specialist departments and the management or the mere review of contracts. The legal department of the future must be equally concerned with the alignment of corporate goals as well as the strategic planning of tasks to be completed and the management of resources and technologies.
The goal of Legal Operations is to transform the work of the legal department. From a reactive and slow procedure to an active, forward-looking and business-oriented partner for corporate governance.
The modern legal department deals with much more than just legal activity such as, for example, the review of contracts. In addition to pure legal services, in-house counsel must focus on Legal Operations. These Legal Operations improve not only the quality and efficiency of legal work, but also effectively support the entire service. Legal Operations include project management, financial resource planning or also the research and development of new digital tools.
The use and development of innovative digital tools also play a predominant role in the field of Legal Tech. Here, as in Legal Operations, new ways of thinking and the use of modern new applications are automating internal work processes and parts of the legal service. This in turn results in more efficient work, more time for core competencies and cost savings. An example of this is automated contract review. However, Legal Tech is not only characterized by highly complex technologies, but also the use of simpler tools, such as, for example, Microsoft Excel, can be a first step towards Legal Tech and Legal Operations.
Legal Operations are there to identify structures and processes in the company that are bogged down or are too inefficient. At the same time, they serve to make services provided in the Legal Department measurable. Only by collecting key figures can the current status and possible problems in the company be identified and classified.
A large number of Legal Operations can be carried out by attorneys and in-house counsels. Some areas, however, require explicit technical expertise, that in-house counsels do not learn during their study career. An example of this is the programming or development of digital tools from the Legal Tech area.
That is why there are companies that hire Legal Operations Management specifically to perform Legal Operations. Legal Operations Managers are characterized by the fact that they have not chosen the traditional path of a lawyer, but rather often have an academic business background. Legal Operations Management delivers added value to legal departments by integrating both methodological as well as technical knowledge into the legal department, that was either not previously available or only partially available.
Another advantage of using specially trained Legal Operations Managers is that the in-house counsel has more time for their core competencies and can concentrate fully on these while they are working. The result of using Legal Operations Management is, in the best case, a noticeable increase in productivity and quality of legal work.
Likewise, programs and training courses are offered to educate and train all actors from the legal market to become Legal Operations Managers. The courses are often strictly adapted to the specific needs of the target group. Through the practical transfer of technical and methodological knowledge, the participants are trained to initiate and implement the measures they have learned independently in the legal department of their company. They act as the “right hand” of the legal department.
Legal Operations: Continue to trust the intuition of the in-house counsel
The focus of the legal department of the future is increasingly on Legal Operations and the use of digital and data-based applications. This makes processes in the company and in the legal department more efficient. However, the experience and the legal intuition of in-house counsel is still critical to building and managing a successful legal department. Only the combination of both factors guarantees a properly functioning legal service.
When the employees recognize the added value of Legal Operations and embrace the new tasks, they can raise their efficiency and effectiveness during work to a new high. For this reason, it often makes sense to consult closely with your own legal department on the topic of Legal Operations and the possible use of Legal Operations Managers to identify problems and to work on joint solutions.
Legal Operations can differ greatly from one another depending on the company and the industry. Therefore, Legal Operations cannot be classified into a specific field of activity. In practice, however, five main areas of activity have emerged that will now be considered in detail.
Vendor Management
Legal Operations also includes the procurement of external legal services. In addition to the obvious support for the Internal company legal department, a further central point is the desired gain and learning effect in terms of new legal knowledge. This is often indispensable if the case in question is a specialized legal field that cannot be handled by its own legal staff.
A further advantage is the temporary increase in qualified external personnel. This makes it possible to start larger projects which would not have been feasible without additional staff. Legal Operations is also responsible for acquiring tools and applications from the Legal Tech field. This is particularly important if your own company is not able to develop its own digital applications for company operations.
Risk Management
With Legal Operations, legal departments must constantly ask themselves what legal challenges their company is facing and must promptly capture these with appropriate reporting tools. Likewise, the in-house counsel must always stay on top of the latest developments with Legal Operations and identify upcoming trends in the legal market, including among other things:
Technology Management
Legal Operations also means identifying professionally trained personnel with IT expertise within the company, in order to develop Legal Tech applications for the legal department. If no suitable internal personnel are available for this project, the required software must be purchased externally.
In addition, it is highly relevant to program the software tools in such a user-friendly manner that they can be used in practice without any problems by all employees of the legal department. After all, this is the only way your own company can derive a positive economic benefit from Legal Tech. The topic of AI Technology can also play a major role here in the company in the future.
Knowledge Management
Knowledge is power! This saying also applies in legal departments. Therefore, it is indispensable for a company and the in-house legal department to gather legal expertise and make it available at all times, so that any eventuality can be immediately addressed legally and the company thus generates competitive advantages over the other parties. With the integration of an in-house digital Knowledge Management System, the latest laws, case law or samples and templates can be accessed by the legal department at any time.
Financial Management
Financial Management plays a significant role in Legal Operations. Whoever consistently keeps an eye on the finances of the legal department can plan economic objectives and also put them into action. By using regular financial reporting, for example, the economic status quo of the legal department can be assessed and improved if necessary.
Ultimately, it can be said that the use and expansion of Legal Operations is highly relevant for companies with their own legal department. In the course of digitalization the entire company benefits and generates competitive advantages over possible competitors. When viewed internally, the use of Legal Operations helps to reduce company risks to a minimum, to work more thoroughly and automatically control and comply with company standards, for example, by using Legal Tech. Operating costs are also reduced in the long term and the workload of in-house counsel is lightened. The free capacities that are created by expanding Legal Operations can in turn be used for other central areas or for optimized strategic planning and future alignment of the company.
With Legal Operations, a standardization of selected business processes is also begun. Standardization through Legal Operations also enables an efficient internal collaboration between the legal department and other specialist departments in the company. Thus, the expansion and use of Legal Operations can lead to profitable advantages for companies, which are competing on a day-to-day basis and have to deal with high cost pressure, in comparison to other competitors, which attach no importance to Legal Operations.
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