The Rise of In-House Legal Operations

Photo by 401(K) 2012 (Flickr/ Creative Commons)

A decade or so ago, almost nobody would have looked at legal operations (or law department management) as a hot career path. In fact, a lot of people in the law business would likely have struggled to come up with a good description of what legal operations managers actually do.

General Electric, Bank of America, Prudential and other East Coast financial industry firms had begun hiring legal operations specialists for their law departments back in the 1990s, and by the end of the decade, Cisco Systems, Inc., Hewlett-Packard Company, and a handful of other Silicon Valley firms had followed suit.  But it still took another few years for the trend to really catch on.

Now, not only are an increasing number of corporate law departments hiring operations pros, but the role they play—in managing outside vendors and contracts, and in implementing new technology and otherwise driving efficiencies and containing costs—has continued to expand.

Many GCs, such as Cisco’s Mark Chandler, have come to regard their operations teams as indispensible.  And legal industry insiders predict that the demand for savvy operations specialists will only grow.

“We feel we’re at the tipping point,” says Amar Sarwal, vice president and chief legal strategist at the Washington, D.C.-based Association of Corporate Counsel.  

A decade ago, only the most cutting-edge law departments had legal operations managers, adds Sarwal.  Today  ACC estimates that at least a third of GCs at Fortune 500 companies have added them. Moreover, as more GCs see the benefits in terms of cost-savings and quality control that operations managers bring, Sarwal predicts the hiring spree will accelerate—and that legal operations teams will be a fixture in not only large law departments, but at small and medium-sized companies, too.

“I think eventually virtually all departments will have them,” says Sarwal.

ACC hopes to get a better handle on the numbers with a survey of in-house operations managers planned for later this year. In the meantime, one clear sign that the trend is picking up steam is the proliferation of legal ops networking groups nationwide.

One example: the Corporate Legal Operations Consortium [CLOC], which was launched in 2009 by two Silicon Valley operations veterans—Stephanie Corey, who’s currently chief of staff for the U.S. law department of Singaporean electronics giant Flextronics; and Connie Brenton, now chief of staff and director of legal operations for cloud computing company NetApp.

Over the past six years the group has grown from scratch to include about 30 legal ops pros from the law departments of Cisco, Google, Adobe, Amazon, Qualcomm and other companies in Northern California and the Pacific Northwest.  Meanwhile, similar legal ops support  groups are now up and running in Chicago, Houston, Southern California, along with New York.

The responsibilities of legal operations managers vary widely from department to department, so there’s no set way to define the job. Along with managing outside counsel and vendors, some operation specialists oversee department budgeting and staffing, as well as diversity and pro bono programs.  Others have also taken take the lead on implementing e-billing and/or e-contract management systems and other technology initiatives. Whatever their specific duties, however, CLOC co-founders Brenton and Corey say that over the past decade the general trend has been clear:  Legal ops managers have been gaining significantly more clout.  That’s definitely been the case inside corporate legal departments, where they note most operations managers now report directly to GCs and many have risen to VP and other senior management slots.

“We’ve really seen the role morph,” says Corey. “It’s absolutely become a burgeoning career path.”

But the same thing could be said about the growing influence of legal operations pros on the industry as a whole. Especially given their increasing sway on department spending habits and decisions.  As Brenton points out:   “We carry the budgets for billions of dollars in legal spend.”

Cisco GC Chandler can attest to the difference a good operations manager  can make.  He notes that Cisco VP and deputy GC Steve Harmon — the law department’s operations czar — oversees a team of 40 people, including nearly 20 IT professionals, who’ve developed automated systems and tools to expedite everything from regulatory compliance to file storage to contract management.  The contracts management system alone has saved the department roughly $29 million over the past five years, according to Chandler.  He predicts that as more and more GCs catch on to the potential cost-efficiencies operations managers can deliver,  legal ops will play an increasingly significant role.

“Legal ops are scoping out the best way to perform legal services,” says Chandler, who believes that the impact of that on what sorts of services law departments purchase and how much those services cost is likely to be huge.

Like Chandler, Sarwal of the Association of Corporate Counsel believes that given their growing influence over tech implementation and overall legal spend, ops managers could well be poised to lead a real industry shakeup.  “They’re right at the heart of things,” says Sarwal. “I wouldn’t be surprised if some of the biggest changes of the next decade come out of legal ops.”

It also wouldn’t be surprising if all the talk of change might be a little unsettling to some in the industry.  For instance, law firms, who’ve done well under the traditional billable hours model and might prefer the status quo.  Sarwal acknowledges that efforts by some legal ops managers to shift to alternative billing and reduce spending on outside counsel could definitely cut into law firm revenues and profits.   “It is a threat to law firms that haven’t gotten with the times,” he says.

Lisa Damon, a longtime partner with Seyfarth Shaw, agrees that the rise of legal ops pros are definitely helping to shake things up. But though that may be bad news for change-adverse law firms, she sees it as a huge opportunity for firms that are willing to adapt.

“I think this could level the field,” says Damon, who notes that legal operations managers make frequent use of performance metrics and other data to choose their outside counsel.  She adds that that’s a definite plus for firms like Seyfarth, which she says has long used a Six Sigma-based program to try to deliver higher-value service.

Sarwal of ACC adds that other law firms are also catching on to the fact that legal ops managers have increasing clout.  Accordingly, after word got out last year about ACC’s plans to hold a roundtable discussion for legal ops pros,  Sarwal says the group was inundated with requests from law firms who wanted to attend.

“They were clamoring to get in,” recalls Sarwal.