A Brief History Of A Recent Change
Over the past several years, the attention of corporate legal departments has shifted to focus more on seeking business solutions, as opposed to primarily responding to issues or managing risks. Economic pressures are the likely cause, but that change created a new opportunity and a new role, often expressed in the title: Legal Department Operations (LDO) Manager.
Interest in the position and the topic seems to ebb and flow depending on how the economy is doing. At one moment it’s trendy and gets lots of coverage in publications and on the trade show circuit; in the next, it moves to the background buzz of conversations. But, when the LDO role is supported by management and handled by a seasoned professional, the department can become a best-practice showcase of how the business of law should be run.
What’s now become apparent from a vantage point of several years is that the primary roles and responsibilities for LDO Managers remain imprecise and, some would say, largely undefined. You can still find recent articles describing LDO positions as an “emerging profession.” Even my own background has concrete examples of how expectations and work assignments can be highly variable. As a former Director of Legal Operations for almost 10 years with a major corporation, I’ve experienced the following issues:
- Advising senior management about risks tied to high dollar issues, and shifting gears the same day to help get a department printer back online.
- Running projects expected to save millions of dollars, while handling data entry on a system no one else wanted to manage.
- Trying to position the role (and myself) as a valuable thought leader and in-house consultant instead of an over-compensated process administrator tackling projects that don’t quite fit anywhere else in the department.
Although it’s unclear how long LDO occupations must stay in the “emerging” classification, I believe we’re well past the incubation stage. The profession deserves a more consistent definition and understanding of the role to keep LDO from becoming a catchall bucket for “other duties as directed.” When that happens, it undermines the potential to make a meaningful contribution toward solving pressing issues that legal departments face, which is where general counsel want LDOs to focus. It’s time for a change.
What Every Legal Department Really Needs
As a descriptive title, there’s nothing fundamentally wrong with Legal Department Operations Manager, even though it carries some baggage and confusion from the recent past.
For a completely fresh start, here’s a suggested new title that reflects the importance of the role and the charter of tackling substantive issues: Chief Reality Officer. Believe it or not, it fits quite well and is accurate enough to at least be a placeholder for this article.
Every corporate counsel faces the challenging requirement of straddling the legal profession and the business world. Successful in-house attorneys partner well with business clients, offer viable business solutions and help clients meet business objectives. That said, when in-house attorneys get too caught up in process, technology and best practices for the business of law and managing the department, they’re dealing with a potentially unproductive distraction.
Someone should be keeping the group grounded in reality and handle the practical and pragmatic aspects of operating as a legal team within a company that cares mostly about business issues. Someone needs to perform the “first responder” role and satisfy senior management’s encouragement to “do more with less” and “deliver on the numbers.” That someone is the Chief Reality Officer (CRO).
A Job Description With Substance
Being realistic, cost-savings and budgetary controls are expected to be continuing mandates in the corporate world. Those operational issues can be the starting point for defining and crafting a real position profile for the CRO, but there’s more involved in minding the legal department’s business store.
It’s an ongoing balancing act to find the correct mix of internal and external resources, the best practices and processes that will make a difference, and the proper application of technology to use as a lever. The professional who can do all that will likely have a job description covering three primary areas of responsibility: Process, Performance and Perceptions.
Each area offers ample opportunities for the CRO to add business value and complement the central legal services role of the department.
Process – Searching For Efficiency, Consistency And Economies Of Scale
To keep process issues grounded in reality, the ideal CRO would have a consulting background, or at least behave that way. Identifying improvements and new opportunities is just one part of the job requirement; being able to make those opportunities real is another, and usually more difficult.
Consider how simple it is to recognize that an alternative fee arrangement (AFA) can save money, versus determining exactly where an AFA makes good sense, selecting which fee structure is most appropriate for the situation, preparing details to negotiate successfully and then project managing the arrangement to see if the results match expectations. One part easy; one part hard.
There’s a long list of process areas where a competent CRO can add value to the legal department. Spotting inefficiencies in workflows, finding simple ways to enhance quality or outcomes, and identifying ideas for legal spend reduction are all worthwhile. Even communication is fair game in the process- improvement quest if you can increase transparency and foster better collaboration among all the stakeholders.
Technology should be a big leverage point in addressing process issues. With a full-featured enterprise legal management solution supporting the CRO and department goals, you can accomplish the following:
- Automate invoice processing to simplify reviews and approvals, and capture instant cost savings from electronic auditing of charges, more efficient data entry and less paper handling
- Standardize department procedures for tracking matters, reporting on case status and collaborating with internal and external parties
- Compile details needed for financial reporting, budget forecasts and reserve and accrual management
- Have the data readily at hand to make informed decisions – based on reality instead of guesswork – about vendor management, resource utilization and key metrics
All of these contributions have a direct bearing on measuring your performance and keeping you on track, which is the next primary area of responsibility for the CRO.
Performance – Analyzing How Well You Measure Up
It’s impossible to assess how the department is doing unless someone takes ownership of the metrics and measurements. Tracking the numbers and being the champion for data-driven decision-making are critical parts of the CRO’s business of law focus, and right in line with the overall charter of keeping the department grounded in reality. It begins with having a well-defined set of key performance indicators for the department, and sharing related metrics with the multiple stakeholders: in-house attorneys, internal clients, outside counsel and senior management.
Since many performance indicators have a financial component, it makes sense to collaborate with the different stakeholder groups to establish budgets and estimate how matter costs and legal spend will occur during the year. Once they’re aware of expectations, outside counsel can do their part to improve spend predictability. In similar fashion, financial transparency will help internal clients understand cost and risk factors so they can support case decisions to settle or defend.
Without question, ELM technology simplifies the entire task of collecting details, analyzing data and sharing information. From a performance standpoint, the solution should go far beyond monitoring simple spend-versus-budget calculations and extend to assessments that achieve the following:
- Evaluate which outside firms and lawyers are delivering the best value
- Determine if the right internal or external resources are being deployed against activities given different cost, risk and experience factors
- Benchmark performance versus your historic metrics, and those of comparable departments of similar size in your geography or industry
- Include reports for others to readily understand business of law issues, performance and progress so they can support decisions and take action
In many regards, the reporting capability is doubly important, serving as a key part of performance activities and also making a major contribution to the CRO’s final area of responsibility.
Perceptions – Influencing Those Whose Opinions Matter
While no one doubts the significance of the corporate legal department’s work, not everyone judges the contribution as strategically important to the company. Most individuals in the C-level suite or managing an internal client group spend their days focused on business issues, not legal matters. Who better to help change this historic misperception and make the legal-to-business connection than the Chief Reality Officer?
The feasibility of accomplishing this task is largely dependent on how well the CRO handles the other process and performance aspects of the job. Consider how conversations progress between the general counsel and senior leadership when there’s an individual dedicated to doing the following:
- Making certain the legal department has goals, activities and key performance indicators that align with the company’s strategic imperatives
- Issuing regular reports showing – in operational terms and measurements instead of legal ones – that the department’s metrics are moving in the right directions
- Capturing hard data as unbiased proof points to validate efficiency gains, performance improvements or cost savings
- Leveraging advanced technology as an enabler for the department’s operational needs and a host of business of law concerns
When perceptions catch up with reality in this way, the general counsel is better positioned to talk about where they’d like to take the department next, and to ask for executive approval to take action now.
An Opportunity That Shouldn’t Be Ignored
Each general counsel gets to choose who’s looking after the business side of law: a Legal Department Operations Manager, a Chief Reality Officer, a Highly Compensated Administrator of Miscellaney or some other composite position.
Position titles aside, the reality suggests that the topics of Process, Performance and Perceptions are too important to assign as “extra duties” to people already tasked with full-time jobs handling legal matters. Someone should be managing these business and operational activities as a dedicated responsibility, with decision-making authority, the backing of the general counsel, and a position of visibility and importance to the entire department.
That’s a charter worth signing up for and one that’s almost worthy of the lofty title: Chief Reality Officer.
Published November 18, 2013.
