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Guest article: The Path to Legal Department Business Alignment

by Bill Young*

Today’s legal departments are expected to run like a business. While this mandate is tried and true, it alone doesn’t enable the legal function to maximize its value and fulfill its purpose within the organization. A narrow focus on running well implies that the primary purpose of the legal function is to further its own goals of cost containment and resource efficiency. While these are necessary and worthy, the focus should not be on the means but rather on the end – moving away from being a reactive responder towards a position that is proactive and fully aligned with business goals and priorities. After all, a business-aligned legal department is one where the people, processes and technology all work in harmony to further the primary goals of the company.

Legal departments need to determine where they fall in the Law Department Maturity Model in order to become fully business aligned. Start by performing some simple diagnostics to gain an understanding of your current position on the maturity curve, and then identify tactics to establish a realistic action plan for achieving success.

Understanding the Law Department Maturity Model
Every law department fits somewhere on the maturity curve, and each stage in the Maturity Model is reflective of an increasingly sophisticated understanding and utilization of three key levers of success: People – Process – and Technology.

Reactive Departments: The tyranny of the urgent
Generally speaking, a reactive legal department is one that is striving to provide quality legal support, but is relegated to the role of order-taker. Underlying causes often include poorly defined or understood roles and responsibilities, limited visibility into assignments leading to a sense of being over-worked and under-staffed. Often, reactive departments have few, if any, defined processes, and prioritization of effort is largely based on urgency, resulting in high outside counsel spending with firms setting the engagement terms. Technology is often limited to email and storing documents in shared drives.

Emergent Departments: Seeing the forest for the trees
The emergent legal department is one that has begun to gain control over its time and resources. They have some visibility into attorney assignments (via manual tracking or a basic matter management systems) and they are beginning to gain control over who should be doing what. Roles and responsibilities are more clearly defined. Outside law firms are used in support of priorities rather than urgencies and are selected and managed based on data-driven estimates of cost-versus-value.  Finally, while legal technology such as matter management, e-billing, document and contracts management may not be fully implemented, such systems are providing the benefits of data capture and automation.

Proactive and Efficient: Master of your domain
A proactive and efficient legal department is one that has taken control of the drivers of performance and optimized them in a way that ensures smooth departmental operations and high levels of service delivery and client satisfaction. Workload is managed and anticipated, rather than received and reacted to. Tasks are assigned based on defined roles and responsibilities and with an eye toward future needs. The mix of internal and outside resources is purposefully managed and best practice methodologies are used consistently in the areas of law firm selection and oversight (e.g. Panel Firms or Preferred Provider networks are utilized to maximize buying power and control). Additionally, sound processes have been established and tested and metrics and Key Performance Indicators (KPIs) are utilized to provide diagnostics of performance and to give guidance on course corrections.  Finally, fully adopted technology is in place that has enabled these efficiencies.

Business Aligned: Fulfilling the purpose
At this stage, building off of the benefits of being proactive and efficient, attorneys function as active business partners rather than order-takers.  Strategic insights are provided and solutions are presented. Legal resources face-off against corporate priorities and formal programs exist for legal to gather feedback directly from the business. KPIs and metrics incorporate measurements of how well legal is supporting business priorities, not just how efficiently legal is operating. On the technology side the legal department goes one step further, offering the benefits of legal technology directly to clients. This can take the form of providing (limited) direct access to systems for status updates, reports sent directly and automatically to clients via email, self-service tools for building contracts, etc.

A Brief Diagnostic
By gauging your answers to a few simple questions, your legal department can get a good measure of where you stand on the maturity curve.
·         Can we easily determine who is working on what tasks at any given time and what resources are available to perform the new work coming in?

·         Have we clearly defined the roles of inside attorneys, paralegals, and support resources so that both legal staff and clients are clear about whom to go to in a particular situation?
·         Do we use law firms strategically, choosing them to support priorities rather than as emergency staffing?
·         When hiring law firms, do we set the terms of the engagement and require them to adhere to our guidelines regarding staffing, budgeting, expenses, etc.?
·         Do we have sound, repeatable processes that enable us to manage our workflow effectively rather than in an ad-hoc manner?

·         Do we educate the business clients on how best to use the legal department?
·         Do we understand the company’s goals and align our efforts to support them?
·         Are we leveraging the benefits of technology (such as matter management, document management and electronic billing) to support our processes, improve efficiencies and enable attorneys to work more productively?

·         Do we have real-time access to decision-support information and reporting?
·         Are we capable of sharing matter and spending information directly with key clients and outside firms?

Moving up the Curve
If your answers to these questions point to being reactive more than proactive, there are a few basic, foundational steps that your department can take to begin the journey to business alignment.  Start by performing some simple benchmarking to determine where you stand in relation to peers on items such as staffing ratios, Outside Legal Spend as a percent of company revenue, and internal/external spending ratio to quickly ascertain how effectively you’re utilizing your resources. From here, you should establish a workload allocation and outside counsel management process that sets general guidelines for the types of work that are best handled internally versus externally. Also, you need to establish a mechanism for ensuring that outside firms are hired based on company needs, not urgency or personal preference.

Clarify and communicate roles and responsibilities of attorneys, paralegals, and support resources and consolidate certain types of work into a panel of pre-selected firms with pre-negotiated favorable arrangements. The next step is to establish a formal communications program that details KPIs and metrics in support of business priorities, then work with key clients and stakeholders to establish Service Level Agreements and formally gather performance feedback. Complimenting and enabling all of this, the department should leverage legal technology.  Review your current technology usage and establish a prioritized road map for new systems then ensure user adoption and by keeping the end goal in mind throughout the process. After all, if a system is too complex it won’t be used.

Reaching the Pinnacle:  Business Aligned
To ensure that a highly functioning, proactive and efficient department can align with the business, the law department must be fully plugged into the company’s direction and vision for the future, and be in constant communication with its business clients measuring and seeking feedback on performance, and actively and visibly committing to providing a level of support above and beyond responding to requests for assistance. It also must establish a culture of alignment from top to bottom, ensuring that the internal clients view their legal support resources not as a roadblock but as a resource to assist them in finding viable solutions to legal obstacles or issues.

Essentially, each strategic decision made within the legal department regarding the best way to assign resources, design or improve process, and utilize technology should be made with the same fundamental question in mind; will this help us support the goals and priorities of the organization? If it does, then you’re already moving up the maturity curve and helping realize the full potential of your legal department.

* Bill Young is Product Line Executive/Law Department Operations of Bridgeway Software, the most recommended provider of legal enterprise resource planning (ERP) solutions. For more information contact the author at or visit the company at