Legal operations – the disruptive ambitions of smooth operators

When nearly 1,000 experts in legal operations converged on Las Vegas recently, the gathering was a sign that a quiet revolution is under way in the practice of law. Yet many top commercial lawyers have hardly heard of “legal operations”, which denotes the work done by colleagues whose skills range from strategic planning to analytics, team building and beyond.

The event in Las Vegas was organised by the Corporate Legal Operations Consortium, or Cloc. The group was formed in the US in March 2010 by Connie Brenton after she moved to the West Coast to take up a post as tech company Oracle’s first legal operations executive.

One of the first tasks handed to her by the general counsel was to collect benchmarking information on how other legal departments worked. She called a few legal operations executives she knew at leading West Coast businesses and they had their first meeting at the offices of Hewlett-Packard. “When we got in the room together, we realised that we were working on the same projects with the same challenges and the same goals,” says Ms Brenton, who is now at NetApp, the data storage company. “There was an automatic click.”

That turned out to be the first of the group’s informal gatherings in the style of a book club where they shared what they were doing. Because the role of legal operations executive was so new — “disruptive”, as Ms Brenton puts it — the meeting quickly became an opportunity for them to shape a vision. “For years it was the single most asked question [about legal operations]: what is the role?” Cloc promptly published a list of the 12 areas of expertise that define it. It turns out that not all legal operations executives are lawyers: Brian Hupp at Facebook, for example, has a PhD in Italian literature but no formal legal training.

As Cloc expanded by the week, the core founders of the “book club” realised the new members were hungry for more contact and to put the organisation on a formal footing. More importantly, having devised a clearer definition for the role, they felt they could be more active in shaping the legal industry. The group became a non-profit association on December 31 2015 and within 12 weeks assembled 500 people for a gathering in San Francisco.

You send something out and within minutes 30 people will have responded

“We called it the Institute — on purpose. It is a place to learn together and create a ‘Magna Carta’ together, to be a united voice and stand arm-in-arm,” says Ms Brenton. The first conference was organised by word of mouth but helped by the fact that the core members all come from leading companies: Google, Adobe, Oracle, Cisco, Facebook, Yahoo and NetApp. Cloc’s membership, which stood at about 50 just 18 months ago, is now 600.

Cloc is not the only network of experts in legal operations. The Association of Corporate Counsel, the professional body for in-house lawyers, established a section for legal operations directors three years ago. It says the number of legal operations directors in US companies doubled between 2015 and 2016. Its data for 2017, derived from a survey of 1,100 general counsel working in 42 countries, found that 43 per cent had a legal operations director.

While the legal operations role is not new — Google hired Mary Shen O’Carroll as its first one in 2008 — it has grown rapidly in importance. “The scope and depth have changed,” says Ms Shen O’Carroll. “I started [by] looking at our spend on outside counsel and financial management. But now the role covers knowledge management and IT, systems, tools and internal process improvement and internal consulting.”

The global headcount of Google’s legal team has grown from 200 when she joined to 1,000, while her own part of it has expanded to 15 staff.

Cloc is led by working legal operations professionals and so functions as a nimble peer-to-peer, knowledge-sharing network. Aine Lyons, deputy general counsel at VMware, who is leading Cloc’s expansion in Europe, says becoming a member when she took on her first operations role was a lifeline.

“The willingness to share is what struck me,” she says. “You send something out and within minutes 30 people will have responded.” Early participation in Cloc’s “book club” days meant Ms Lyons was able to progress quickly. “It enabled me to assess vendors and talk through the challenges others had on similar projects. And then I started being able to contribute.”

In her closing speech in Las Vegas in May, Ms Shen O’Carroll described legal operations executives as a “tribe” with the potential to disrupt the legal sector. Given the purchasing power of Cloc members’ organisations — estimated by Cloc to be $50bn — the explosion of alternative legal service providers and tech companies to service them, as well as continued pressure in companies to cut costs, her predictions look a safe bet.

Law firm counterparts: a tougher challenge

While legal operations teams are wielding more power and influence in company legal departments, what is happening in the clients’ law firms?

Legal operations executives at big law firms still struggle to achieve status and reward. Not only do legal operations staff experience the professional hauteur of the lawyer, but they also face strong resistance to any of their propositions that legal expertise can be standardised. In this, they face a tougher challenge than their peers in corporate law departments.

However, the financial crisis ended law firms’ relative immunity from clients’ demands for lower costs and better service. By 2012, most of the top 20 UK law firms, for instance, had set up an onshore or offshore centre to provide some legal services at lower cost. More recently, they have linked up with alternative legal service and technology companies. Elite law firms argue that their legal work is too bespoke to standardise. But even Slaughter and May announced a collaboration in 2016 with Luminance, a tech company that uses machine learning to improve the due diligence process.

Another UK firm, Herbert Smith Freehills, recently promoted its global head of alternative legal services, Libby Jackson, to the partnership.

Allen & Overy was the first elite law firm to embrace legal operations, which now generate revenues close to £70m.

Aine Lyons, deputy general counsel of worldwide operations at VMware, says: “We have to tap, push and help the law firms in equal measure. There are a few making headway but they have the same challenge convincing people of the need to change and getting their own clients on board.”

One of the obstacles she sees to progress in law firms is their compensation systems, which tie pay to the billable hour rather than the value that is created for the business.

Cloc’s leadership team

US CHAPTER
Connie Brenton
Chief of staff and director of legal operations, NetApp; president and chief executive of Cloc

Mary Shen O’Carroll
Head of legal operations, Google

Jeff Franke
Chief of staff to the GC and assistant general counsel of global legal operations, Yahoo; corporate secretary of Cloc

Brian Hupp
Head of legal operations, Facebook

Christine Coats
Vice-president legal operations, Oracle; chief financial officer of Cloc

Lisa Konie
Efficiency and process change agent — legal services, Adobe Systems

Steve Harmon
Vice-president and deputy general counsel, legal, Cisco

EUROPE CHAPTER
Aine Lyons
Vice-president and deputy general counsel, worldwide legal operations, VMware; leads European chapter of Cloc

AUSTRALIA CHAPTER
Mick Sheehy
General counsel finance and strategy, Telstra; leads Australian outpost of Cloc