Legal is an increasingly crucial success factor for companies. Not just due to its high-end input for major transactions or contracts, but also – or perhaps primarily because of – the day-to-day legal work it handles. This leads to a growing demand for a dedicated legal operations role.
An interview with Hans Albers, Head of worldwide legal operations, Juniper Networks
Legal operations has only recently become a familiar concept in continental Europe. Which isn't surprising, since expenditure on legal services is a lot higher in the US and UK. Legal procedures in the English-speaking world are far more comprehensive and take longer, and the US legal system – in relation to patents, for example – generates numerous claims and cases involving costly document discovery processes. So, pressure to boost the efficiency of legal processes is far greater in the English-speaking corporate world. But the concept of a dedicated legal operations role is also gaining ground in continental Europe. Hans Martijn Roos (Legadex) asked Hans Albers (Juniper Networks) to explain why. Albers is Juniper's Head of worldwide legal operations, reporting directly to the firm's General Counsel in Silicon Valley. Juniper Networks makes network equipment and software for internet providers and the wholesale market. Its head office is in California.
Roos: "What does your legal operations role involve?"
Albers: "Operating out of our office in California, my team and I use efficient legal processes and the right automation tools to provide a full legal housekeeping service to company lawyers worldwide. For example, we draw up all their standard contracts, such as distribution agreements and simple NDAs, arrange pricing agreements and e-billing with law firms and organise their corporate housekeeping and legal entity management. We do this with a team of nine for around 85 people in Legal, including 38 company lawyers worldwide. But it's obvious to me that a dedicated legal operations role will be relevant for anything over 40 legals."
Roos: “It sounds as though your role covers a great deal."
Albers: "Yes, it's a very wide-ranging brief. I see it as a legal business management role to improve the full delivery of legal services throughout the company. In my case, that includes responsibility for recruiting, training and managing a diverse – primarily legal – staff, rationalising legal vendors and making cost-savings, introducing process management and evaluating the growing number of legal tech tools."
Roos: “How does the need for a legal operations role arise in companies? What's the trigger?"
Albers: "It usually starts on the cost side, with CFOs increasingly pressured by shareholders to use limited resources more efficiently. This often prompts them to call in external consultants, including for Legal. These consultants then show the CFO and the GC external benchmarks and ask critical questions about their legal spending. For example, is Legal buying in the right services? What is Legal costing the company as a percentage of its overall turnover? And why are they hiring an expensive law firm without first negotiating the price? Or issuing a call for tenders? Are costly internal staff members tied up on basic tasks, which could be outsourced more cost-effectively?"
Roos: “Is the rise of alternative legal service providers fuelling this growing interest in a dedicated legal operations role?"
Albers: "Yes, this change in the supply-side is certainly also a driver. Alternative legal service providers (ALSPs, ed.) understand company legal processes much better than traditional law firms: in fact, they've structured their business operations accordingly. ALSPs are thus a good middle way between the two extremes of hiring an expensive law firm and outsourcing work to India. The second option is often suggested by CFOs, since Finance is used to outsourcing its own standard processes to India. But standard financial processes aren't the same as legal ones, which involve dealing with different jurisdictions and linguistic areas. In any case, Juniper's standard legal processes aren't big enough to justify outsourcing them to India. So the cost benefit of outsourcing is limited, whereas the added value of an in-house legal operations team, supported by ALSPs, is very clear. A third driver behind the rise of the legal operations role is that Legal is having to take on more and more work. Recruiting extra staff isn't the answer, since before long there'll be too much work for them as well. Automation and the introduction of more efficient processes, on the other hand, is."
"The rapid rise of legal tech is a fourth driver. The supply of this technology is growing so fast there's a danger of legal departments losing sight of the wood for the trees. Lawyers don't always understand IT, while IT departments rarely possess legal knowledge. A legal operations team can play a crucial bridging role between them."
Alternative legal service providers understand company legal processes much better than traditional law firms
Roos: "What persuaded you to take on this new position?"
Albers: "At the time, I was General Counsel EMEA. It was a fulfilling role, but I nevertheless felt it was time for something different. At that very moment, we got a new General Counsel who wanted to do things more efficiently. Because I had a strong affinity with process thinking and automation, I put myself forward. The change management aspect also appealed to me, since for legals the introduction of process thinking and efficiency represents a fundamental change. Take the drafting of RFPs or requests for fixed fees, for instance: this is a completely new way of working with lawyers, and will change companies' relationships with law firms. These relationships will as a result become more businesslike, and sometimes call for a tougher stance. Even after two years, they're still not used to it. Company lawyers often ask me, for instance, how they can be sure they're not paying too much when they negotiate a fixed fee. Yet the same applies – perhaps even more strongly – when you're charged a retrospective hourly rate. A fixed fee at least gives you some predictability. Although of course it's always customised work."
"Legal operations takes company lawyers some getting used to. Requesting a fixed fee, for example, will change companies' relationships with law firms”
Roos: "You've been Head of Legal Operations for two years now. Have you managed to make any changes yet?"
Albers: "Yes, mainly with regard to e-billing and the external auditing of our lawyers' invoices. The initial quarterly reports are now showing a saving of approximately 4% – with an external spend of several tens of millions, that's far from insignificant. I've also reduced the number of law firms we worked with from two hundred to one hundred. And recently, we issued our first RFP for an IP claim. Five law firms responded, with a difference of seven million US dollars between the highest and lowest bid. And yes, I did go for the lowest, since they all satisfied the minimum requirements. So that saved us a lot of money. We've also made the lives of company lawyers easier by removing some of their more repetitive tasks. All the standard NDAs worldwide are now drafted by our team. Around 70% of these are fully processed through our online self-service NDA tool, with no lawyer intervention. More complex, non-standard NDAs are dealt with by one of my paralegals, or occasionally by the company lawyers. That way, we retain the knowledge we acquire in-house."
Roos: "As well as all the benefits, are there any risks attached to setting up a dedicated legal operations organisation?"
Albers: "Very few. The only one I can think of at the moment is if there's too wide a gulf between the business and legal. If, for example, you professionalise processes to the extent that the business has to submit its requests for legal assistance in the form of a ticket to a counter or service desk, then things have gone too far. Personally, I believe you should be able to simply collar someone informally over the coffee dispenser. If, for example, a sales manager has to attend a complicated meeting the next day, he should be able to ask a company lawyer to accompany him at the last minute. If you create too much distance, there's a risk that the business will no longer recognise the added value and relevance of a dedicated legal operations role. It will then try to resolve things itself, with all the associated risks. After all, the success of anything still depends on interaction between people."
Roos: “What advice would you give to companies wanting to set up a dedicated legal operations organisation? What's the best thing they can start with?"
Albers: "Start by gathering data, especially about your external spend on lawyers and related professionals. Then consider what else you know about your legal department. How many law firms are you currently working with? And what's your average spend on their services? How long does it take them to process a contract? Only when you know what you've got can you begin to make adjustments. For example, we had a particular type of contract here that took several weeks to process. After a little detective work, we found that it spent at least two weeks lying on a colleague's desk in Finance. That might prompt us to think about skipping this stage of the process. It's important to use the data you've gathered to identify the bottlenecks in your organisation. And to improve your processes on the strength of it. This is known as Legal Process Improvement (LPI). Make sure the savings on your external spend lead to rapid results, since this will substantially boost the added value of legal operations in the eyes of the business. You can then reinvest the money you've saved in tools or automation. On the other hand, don't be too easily swayed by impressive-looking systems. Maintain your focus on the underlying processes."
Use the data you've gathered to identify the bottlenecks in your organisation and to improve your processes
Where does your organisation lie in the maturity scale?
The Association of Corporate Counsel distinguishes four phases in the maturity of corporate legal departments and their legal operations delivery:
- Before legal ops: high external spend, paper invoices, limited in-house team, working on spreadsheets
- Early stage: heavy external spend, 75% e-billing, law firms leveraged, designated legal ops head
- Advanced: 100% e-billing, internal and external benchmarks and data, dedicated legal ops team, use of Alternative Legal Service Providers, contract and IP management
- Modern: analytics and scorecards, value-based fees, legal project management, in-house lawyers focused on high-value work, outside counsel on high-complexity work, outsourcing of commodity legal work, automation, smart mix of in-house and external providers, centralised dashboard and analytics
You can download the full ACC maturity model at the bottom of this page: www.acc.com/maturity
Want to know more about Legal Operations?
We've written a white paper on the subject, entitled Legal Ops. You can order it at firstname.lastname@example.org or by calling (+) 31 20 820 83 96.