April 2019 |
Lauren Chung, Managing Director, Strategy and Operations Practice Leader, HBR Consulting
HBR Consulting is proud to be a Platinum Sponsor of CLOC’s 2019 Corporate Legal Operations Institute and to present one of the educational sessions, “Don’t Gamble Your Future . . . Advance Your Operations Maturity.” In this featured session, we will combine interactive technology with expert guidance to help attendees identify their department’s position on several dimensions of the CLOC Legal Operations Maturity continuum, and will discuss strategies to advance on that continuum in those critical areas. Participants will take home a customized roadmap tailored to help legal operations teams advance to the next level. I hope you will join us!
To help provide context for our session, the HBR team will be publishing a three-part series of blog posts regarding major strategic areas in which law departments can advance in their maturity. This post will focus on the topic of resource optimization and how departments can put the right resources in place to ensure work is done in the most cost-effective and efficient manner. Resource optimization ties to the CLOC competencies of Vendor Management and Service Delivery & Alternative Support Models, and also relates to Cross-Functional Alignment and Organizational Design, Structure & Management.
Importance of Resource Optimization
Most corporate law department professionals are facing some version of the same dilemma: you are under pressure to control costs while at the same time facing rising legal demands. In fact, “cost control and cost management” was the number-one challenge facing corporate law departments last year, according to the 2018 HBR Consulting Law Department Survey The survey also found that over 80% of law departments expect their legal needs will continue to increase this year.
This pressure to deal with increased legal work while holding the reins on spending requires managers to take a hard look at their legal service delivery models and evaluate any opportunities to drive operational efficiencies. In working with our clients, we often find that a good place to start is with identifying potential resource misalignment; for example, when senior-level attorneys are spending too much time performing lower-value tasks instead of focusing on more strategic work.
Optimizing your internal and external resources creates some important benefits for your company:
- Productivity and Client Service – when the skills and expertise of your internal and external teams are properly aligned and leveraged, it directly improves both the department’s productivity level and business clients’ level of service.
- Cost Containment – there is a direct line between more efficient resource allocation and cost expenditures by the department because the work is handled by the most cost-effective resource for the level of work, rather than paying costly resources to handle work that does not require their level of expertise or experience.
- Employee Engagement – efficiently managing your legal talent is an important way to keep attorneys engaged and invested in the roles they play in the organization, boosting morale and elevating their roles.
There are three key steps that any corporate law department can take to optimize their resources and make sure they are properly aligned to maximize efficiency.
Step One: Define the Scope of Work
It is a good idea to start by identifying the tasks and matters under the department’s purview, including an objective evaluation of whether that work is properly within the scope of the legal function. Your goal here should be to empower your business clients with training and self-service options to perform the work that is non-legal in nature, so it can be managed with more appropriate resources.
For the work that is truly is legal in nature, examine the risk and complexity connected to those tasks. Is the assignment one of high risk and/or complexity? If so, it likely has the potential to impact the organization from a financial, operational or reputational standpoint, so it should be resourced accordingly. Or, is the assignment fairly routine and/or a low-risk task? If so, the potential organizational impact is likely to be minimal and can therefore be resourced more cost-efficiently.
Step Two: Identify the Proper Resource
Now that you have defined the scope of work and identified the organizational risks associated with those tasks, it is time to determine the proper resource to get the work done. One decision is whether to keep the work in-house, send it to outside counsel or leverage an alternative legal service provider (ALSP).
For internal resource allocation decisions, seek to delegate the low-risk work as much as possible to junior attorneys or legal support staff as this work tends to require minimal oversight by management. High-complexity work, such as strategic transactions, will of course require greater expertise and should be expected to be handled by more senior and specialized attorneys.
For external resource optimization, make sure you send the right work to the right law firms. While there are some matters that, because of their high risk or high value stakes, require high-end firms, whereas other, more commoditized work can be sent to firms with lower billing rates or set at volume-based pricing. It is essential to build a value-based relationship with each of your outside law firms. Limiting the number of law firms you use to a preferred panel allows outside counsel to become familiar with your business, priorities and matter history, ultimately strengthening the relationship and providing you and the business with stronger representation and better value.
Step Three: Go to the Next Level
The third key is to make resource optimization an ongoing part of the culture of your law department. This requires stretching the limits of what your available department resources can accomplish and structuring your operations a bit differently to maximize the benefits of other potential resources. For example, you may want to create centers of excellence in your department – nimble teams that effectively leverage experienced, professional legal resources (lawyers and allied legal professionals) to handle lower-complexity work (e.g., contracts) in different ways.
In addition to the internal considerations, it is also a good idea to make sure your outside counsel understand your organizational priorities as relate to staffing and are attuned with your expectations regarding proper resource alignment and staffing on the matters they handle for your company. Clear expectations, guidelines and monitoring of matter staffing help law departments better manage their budgets with outside counsel and ensure the work is handled by the most cost-effective resource and help law firms better plan, as well.
Moreover, you may want to expand the way you think about external resources beyond the use of outside counsel. The use of ALSPs for specific types of legal work is gaining wider acceptance by in-house law departments. Challenge yourself to explore some of these new models that may provide a vehicle for greater efficiencies in the way you utilize outside resources.
Resource optimization should be a continuous improvement initiative for your department, not a one-off project exercise. This means you should regularly use data analytics, risk and complexity assessments, and business planning sessions to evaluate the work in your matter portfolio and make sure you are properly aligning your resources to that work. The goal should be to apply your available in-house legal resources to the highest value functions in the most efficient way.
In the next two posts in HBR’s three-part series, my colleagues will explore: the importance of technology to support your department’s advancement on the CLOC maturity continuum; and the use of analytics to measure performance and to guide your department’s decision making.
See You in Vegas for the 2019 CLOC Institute!
Register here to attend CLOC 2019 Vegas Institute – and please join our CLOC session:
Don’t Gamble Your Future…Advance Your Operations Maturity
Wednesday, May 15th at 1:30pm
- Kevin Clem, Chief Commercial Officer, HBR Consulting
- Marc Allen, Senior Director, HBR Consulting
- Molly Perry, Chief Operating Officer, Office of Legal and Administrative Affairs, Hewlett Packard Enterprise
- Gary Tully, Head of Legal Operations, Gilead Sciences
Questions? Email email@example.com.
About the authors
Lauren Chung, Managing Director, Strategy and Operations Practice Leader,
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