The Legal Operating Model: Where are we 3 years on….

3 years ago KorumLegal took a deep dive into the legal operating model exploring some key insights and challenges that our customers face in shifting the dial for the in-house teams. In 2023, we explore if there has been any change to these challenges. Has the legal industry moved forward? Below is a snapshot of our thoughts on where we’re at.

2020: There’s no single ‘right’ model or approach for the legal operations set-up.

2023: I think we’d be in a dreamland if there was one model that all businesses could use as a blueprint for legal ops – there’s still very much a ‘design to fit your business’ mentality from both those looking to set-up/transform their teams and those who provide the expertise and consulting to support. However, as more teams establish and optimise their legal operations processes, we are getting a better picture of what works.

Have we moved forward?

I certainly think we have. There is more appreciation for the value that efficient process can have in enabling in-house teams to save money and be more strategic. The growth of the legal tech and ALSP market is a signal of the increased investment. Moreover, increased workloads and stagnant budgets is forcing teams to explore efficiency tools.

What is key to moving forward from here?

One key obstacle the industry faces is that there is still a significant mind-shift needed in the industry that a legal operation set-up is a necessity rather than a “nice to have” – we have seen legal operations teams being scrapped in recent months which is disappointing.

Here, Joao Costa, our Legal Ops Manager discusses ways to optimise your operating model.

2020: Legal departments are increasingly expected to become more of a strategic partner to the business.

2023: This is a consistent theme of conference fireside chats and legal podcasts; a topic has been discussed consistently over the last few years. So are teams becoming more strategic? If you ask me, the answer is ‘slightly’.

Why slightly?

We have answered the questions around what a strategic partner means, but I don’t think many have been able to action on this. The prime reason being the team’s capacity to do so.

You can’t expect a team, that is operating at capacity, to all of a sudden be able create more proactive relationships with the business, work at the ‘coal face’ and spend time doing that work. Either some of the lower value work has to be let go of or the team has to expand.

In a time when costs are being watched heavily, expanding teams can be a hard bargain. It therefore leaves the option of reducing the time spent on low value work.

It sounds simple, however, there is still so much work being done by legal teams that is either automatable, or more commercially relevant to outsource or insource. There is still an industry-wide nervousness to relinquish certain tasks. If this changes, we take a big step towards enabling in-house teams to be more strategic.

2020: These changing business expectations and market dis-aggregation / fragmentation mean that GCs are struggling with who to turn to and trust for advice and guidance.

2023: For me this is something that is only getting greater. Over the last few years more GCs are investing in transforming their legal teams, alternative legal services and legal tech, so there is more work out there creating greater competition and only heightening confusion of who to turn to.

There are also increasingly more players entering a growing market. Each has their own USP with many providing unique and bespoke solutions. GCs can therefore be forgiven for not knowing which new market entry or which bespoke solution they should be adopting.

One further fuel of confusion is the trend of highlighting bad experiences. This topic has been a part of conference discussions recently: ‘we implemented this tool and it didn’t work’. Yet, all the businesses out in the foyer are selling a variation of that tool. How is this supposed to settle the mind of a GC?

Finally, as mentioned earlier, there is a “design to fit your business” mentality with a lot of legal process and tech. The implication of this is that what works for some might not work for others. This is a great way to ensure you get something that is going to work for your challenges, however there is something to be said about an off the shelf product that is tried and tested. Moreover, for many legal teams they’re not at a point of sophistication to be able to fully benefit from a bespoke solution and sometimes that more generic solution that solves 75% of the challenges is a better fit for the team.

2020: The legal operating model is no longer just the domain for the multi-nationals and/or traditional regional operators. 

2023: A statement that holds up today. We are seeing businesses from start-ups to MNCs investing in legal operations, tech, and processes. KorumLegal’s work in the payments and crypto industry has seen us partner with businesses scaling rapidly and thriving, through our support, with a streamlined legal team and processes.

Similarly, the expansion of the market has led to more competition and ultimately more innovation.

It seems we are all pulling in the same direction. From 3 years ago to today there is a significant amount happening in the industry addressing changes to the legal operating model. There are still, however, some significant barriers which means we aren’t at an optimal state yet.

A question for you all: What do the next few years hold for the legal operating model?