Starting Point: Self-Evaluation
Before diving into specific operational considerations, it is important to first conduct some self-evaluation and determine where your department is today in order to determine where you want to go tomorrow. As Lewis Carroll famously wrote, “If you don’t know where you’re going, any road will get you there.”
A good starting point is to consider a maturity model that identifies various states of progression in the operational improvement of any corporate law department. HBR participated in the development of the CLOC Legal Operations Maturity Models that were first rolled out at the inaugural CLOC Institute in 2016 and were referenced in several sessions at the 2018 Institute. In alignment with our typical approach assisting clients with an assessment of their departmental maturity, the CLOC Maturity Models outline four major stages of development in a department:
- Under Developed
There is nothing inherently embarrassing about admitting that your department is in one of the less progressive stages. The point is to honestly self-evaluate your department and then learn what specific changes can be made to move one rung up the ladder.
However, the reality is that corporate law departments will have different levels of maturity across different aspects (or competencies as CLOC refers to them) of legal operations. This blog series will focus on six of the twelve CLOC Core Competencies and provide insights on moving to greater maturity in each.
What is your department’s current maturity across these six legal operations core competencies?
I. Strategic Planning
The Under Developed law department has little time for strategic planning because it is so often in “fire fighting” mode. There are no formal goals set or documented beyond perhaps annual budgets. Team members just keep their heads down and try to survive the day.
The Foundational law department establishes annual goals for the operational function of the department. There is likely some level of strategic planning performed and metrics considered.
The Advanced law department sets annual operations goals and tracks specific metrics they want to monitor over time. There is alignment with the broad department and corporate goals fully documented in a strategic plan. The plan is visible within the department and accountability is shared.
The Mature law department relies on a metrics-driven, multi-year plan. There is full awareness of that plan with quarterly reviews relative to goals. The planning includes elements of strategy, structure, change management and culture — and this plan is tied to team member performance objectives, which impacts compensation.
II. Financial Management
The Under Developed law department operates with a scope of activities that is undefined and ad hoc. There is little standard criteria for when to budget or forecast, undefined metrics and limited access to spend tracking. Cost management is reactive.
The Foundational law department operates with a scope that is limited to external spending. Criteria are set for when to budget and there is typically centralized access to the financials. Financial management consists of macro analysis.
The Advanced law department operates with a scope that is focused on both internal and external spending. A standard budgeting process is used that includes defined frequency and team members. Matter-level budgets are managed with enterprise software and department leaders perform both macro and micro analysis of spending.
The Mature law department operates with a scope that includes total costs inclusive of internal, external and resolution costs. The team likely uses fully comprehensive internal and external budgets and forecasts, centralized dashboards and targets for spend management, and automated scorecards with predictive insights.
III. Vendor Management
The Under Developed law department tends to have highly distributed spending on a range of vendors, unstated criteria for vendor retention and siloed decision-making. There is limited use of non-hourly fee arrangements with outside counsel and no standard process for reviewing rates nor performance.
The Foundational law department has some concentration of spending and guidelines in place for retention, as well as an approved list of vendors. The department makes use of discounts and alternative fee arrangements (AFAs), as well as implements a basic rate review process.
The Advanced law department has consolidated spending that is strategically focused on key law firms and other vendors. There are periodic RFPs issued and competitive bidding for new matters. AFAs are consistently considered and a centralized process is used to conduct reviews of rates and performance.
The Mature law department has consolidated spending to specific outside firms that employ dedicated core teams who know your business very well. A preferred provider program has been formally rolled out and is consistently adopted, with historical data driving the selection of firms, and there is thoughtful use of AFAs with quantifiable savings. Rate and performance reviews are automatic and evaluated with a simple dashboard.
IV. Technology + Process Support
The Under Developed law department has no strategic roadmap to guide their technology needs. They often use second-tier technology and have poor data integrity. Most tools are only used by support staff.
The Foundational law department has defined technology objectives and identified preferred tools, most of which are among the market leaders. However, there is often limited data quality and compliance, with very little usage of tools by attorneys.
The Advanced law department has a three-year strategic roadmap in place for technology. Core IT tools and systems are integrated into the department and there is rules-based validation of data quality. Professionals at all levels in the organization are using the core set of tools.
The Mature law department has a five-year strategic roadmap for technology, which is aligned with legal and business objectives and includes a detailed cost analysis. The core IT tools and systems are integrated with a reporting dashboard spanning all systems, each tool is a market leader and fully upgraded, and team members at all levels are using these core tools. Data quality is actively managed and highly reliable.
V. Data Analytics
The Under Developed law department has an undefined scope of metrics or performance measures. They have no access or use of industry benchmarks, use ad hoc reporting and work primarily in a reactive mode to requests for data insights.
The Foundational law department has defined metrics and performance measures, as well as access to basic industry benchmarks that may be reviewed. There is likely a robust dashboard for a single system.
The Advanced law department generates detailed reports and reviews key metrics on a quarterly basis. There is access to peer-aligned benchmarking data and robust dashboards across each core system. An established analytics platform is used as the basis for all decision-making.
The Mature law department maintains real-time access to key metrics that are updated automatically. There is widespread access and use of practice-area specific benchmarks, and there is automated and centralized reporting across all departmental data sources. Data-driven decision-making is the norm.
VI. Knowledge Management
The Under Developed law department has an undefined process to capture and manage legal department knowledge. There are no resources focused specifically on knowledge management and no defined system for knowledge management (KM).
The Foundational law department has defined processes to capture key learnings from information collected, including a specific person on the team who has this daily responsibility. There is often central open access to a KM repository.
The Advanced law department maintains clearly defined processes and expectations for the re-use of work product. There is consistent communication of new content availability from a dedicated KM professional who curates the content. End-to-end tools are fully embedded to facilitate workflow and data capture.
The Mature law department has an active and repeatable process to identify, capture and communicate best practice materials and lessons learned. There is often a dedicated team that drives KM processes and information sharing. The department leverages machine learning and AI to automatically capture and disseminate learnings.
Now that you have conducted a self-evaluation to determine your current state across these six core competencies, stay tuned to the HBR Blog for the next post in our series, when we will dive into specific insights for how to take the next step from operating as a “Foundational” to an “Advanced” law department.
HBR legal operations thought leaders will be speaking at next month’s ACC Legal Operations Conference in Chicago, June 11-13. Your Department’s Health Check: How Well are You Performing is taking place Tuesday, June 12 from 1:30 - 2:30 p.m. Hope to see you there!