About a year ago, I wrote two articles for Corporate Counsel about the 2017 CLOC conference—one article appeared in advance of the meeting to discuss what registrants might expect; the other was published after the conference ended to offer up some concluding thoughts and explore top takeaways. Since the 2018 Institute starts on Sunday, April 22, I thought I’d revisit the ideas and energy of last year’s event and take a look at the promise and deliverables anticipated for this year’s meeting.
A quick introduction for those of you who don’t know about CLOC: CLOC is the Corporate Legal Operations Consortium—a volunteer-driven group made up of legal ops professionals (both lawyers and professional staff) who carry the full-time and multidisciplinary responsibilities of law practice management in legal departments; there’s also a robust group of interested parties that orbit around the CLOC membership community—ALSPs (alternative legal service providers) and law firms, consultants, legal tech innovators, and managed service companies; the collective group that many CLOC-ers, led by co-founder Connie Brenton, refer to as their partnering “ecosystem.”
The 2018 Institute returns to Las Vegas on April 22-25, and will once again be the largest gathering of the legal operations “ecosphere” in the world. CLOC hosted its first large-scale conference of this kind in 2016 and surpassed even their own expectations with the 2017 show and participant engagement; anticipation for 2018 must be both thrilling and daunting for the leadership. The recognition paid to the sophistication and accomplishments of the legal ops community, the growth in sheer numbers and status of the ops function in the last few years, and the rising importance of networks like CLOC (which can actually sway legal leadership thinking and put legal tech, product and service vendors on the map), continues to grow at a breathtaking pace that is unusual for any market, but is especially notable in the normally glacial change environment of the legal profession.
So the question is whether CLOC and its members can keep the energy alive and continue to drive the market toward even higher performance and improved results, given the grinding drag of a legal profession that is loathe to change?
Those attending will remember that the 2017 conference ended on a high note with a call to action from CLOC co-founder Mary O’Carroll of Google, promising that the mission going forward included a commitment to support both CLOC’s members in legal departments who are exploring and driving the hard work of change, as well as the larger professional ecosphere of law firms, legal service providers and law schools looking for ways be more valuable to their corporate clients who are demanding improved performance, accountability, and value from their extended CLOC family. Those attending will also remember CLOC leader Jeff Franke’s push to create a “Magna Carta” for legal ops leadership, designed to codify the principles that will define the changes needed in the legal industry and the path required to reform it.
As the leadership calls this year’s meeting to order, I offer the following thoughts, which represent my take on some of what’s been percolating over the course of the last year that has and continues to impact on CLOC’s ability to deliver on those goals. Where possible, I’m offering my opinions on what’s been accomplished and what’s yet to be done. I look forward to hashing over these issues and the many more I can’t address in a single article with colleagues at the meeting.
Last year: Unbridled Growth, Unabashed Excitement and Overflowing Optimism for the Future
This year: Legal Ops growth may be peaking, optimism may be losing some of its shine, and some gains may be lost as the legal services market adjusts, especially in larger departments; nevertheless, CLOC persists … and by doing so, shows its emerging maturity and determination to be in the game for the long haul.
Large law departments generate a lot of attention—we examine their practices and solicit their perspectives … and I get why we do that. But the fact that a law department is large and has significant resources or a large portfolio of important work is not a guarantee of the efficiency of its legal operations or the sophistication of its preferred business model. Many of the top legal ops functions reside in larger departments, but many of the largest law departments have no (or no meaningful) operations functions or leadership. CLOC’s website, as of this article’s publication, notes only 151 members who hail from Fortune 500 companies out of the 676 companies represented by their 1,335 members. And if you look at the registration list for this upcoming meeting, you’ll see relatively few large departments represented among the many hundreds of companies that CLOC attendees represent.
That doesn’t mean that what large law department teams are doing isn’t terrific; it means that you need to look past the largest legal departments by size, both on the CLOC reg list and in the profession at large, to see many of the more interesting, creative, scalable and sustainable practices hiding in plain sight in smaller and medium-sized legal departments. They don’t get the press, but they are the ones that are pulling the weight in this industry, to my mind, and will be the wave of the future change marketplace. Their projects may not be as news worthy as a Fortune 10 announcing a change-up of its outside counsel lineup or the decision to automate or offshore a formerly lawyer-intensive process, but most of what small to midsize departments are doing—even if not sexy—is focusing on sound improvements to their business and operational management practices (which I’d suggest will have a longer term impact on improving the health and value of the corporate legal profession than any single behemoth company’s decision to re-order or discount the cost of work for its portfolio of AmLaw 25 firms.
In addition, it’s important to remember that having a small and midsize law department does not necessarily mean that the client is a small or midsize company. Many of these smaller legal teams work for large and high-brand recognition companies, proving again what the demographics of law departments have shown for years: that many of the largest companies have small legal teams because they live by the values of a more carefully-sourced service management philosophy for cost centers in the company.
Why is that important to this discussion? In the last several years, pretty much every survey out there—including CLOC’s own 2018 State of Corporate Law Departments survey (with Thomson Reuters and Acritas)—has shown a pretty dramatic increase in law department hiring, salaries, and size of department relative to the size of the company for the last several years. Even though a majority of most legal budget is still spent on outsourced services, most departments surveyed have shown an increase in internal headcount and/or the plan to add more team members and more budget again this year—often paired with the growth of their client organizations. While CLOC can rightly demonstrate that their corporate members represent the more profitable than average corporate clients, suggesting that the rise of the legal ops movement corresponds and is a support for improved corporate performance and profitability, it’s important to take a look at what the numbers are telling us about all this growth and its impact in the larger marketplace.
Interesting research from my friends at ALM Intelligence suggests that the last few years of surging growth within legal departments—in terms of staff numbers, salary size, and budget as a percent of corporate gross revenues—may have peaked, and in the way of all things cyclical, the economics of the marketplace might soon lead to what might be described as a “natural market correction.” See, to this point, Hugh Simons’ and Gina Passarella’s February 2018 Corporate Counsel article on “The Rise (and Fall?) of In-House Counsel.”
Patrick Fuller, vice president for Legal Intelligence at ALM notes the following:
“The data suggests that the percentage of U.S. private sector attorneys working in-house has increased over the past two decades from roughly 7 percent to 21 percent total. While this seems to suggest that a regression to the mean is imminent, the increasing use of artificial intelligence and similar automation tools, along with increased use of alternative service providers, makes it much more difficult to predict the future, both for law firms and legal departments. … The one prediction I will make is that this continued confluence of technology, business, and law will further entrench legal operations professionals as a core element of law departments.”
While in-house growth has cycled up and down over the years as is typical of most industries’ pendulum swings between insourcing and outsourcing, our most recent growth surge (over the last 7 to 10 years) was uncommonly large and fast-paced, with the result that some law departments suddenly find themselves too expensive for the work they currently perform (based on the market value of the work) and others may find themselves too ungainly to be agile in responding to market service offerings (where they previously could have insourced or outsourced work based on emerging and shifting needs).
As Fuller notes, this is especially true in a market that is for the first time open to an active marketplace of rising ALSPs (alternative legal service providers). Many ALSPs offer services formerly provided only by law departments or law firms, that help clients solve legal and business problems “better/faster/cheaper” than law departments and firms; they specialize in developing legal technologies/automation, staffing inexpensive and swift cost centers to perform routinize-able tasks, and offering sophisticated expertise to deliver solutions via managed service offerings that can solve client problems or help advance their clients’ businesses: all for a fraction of the cost and with a quantifiable level of consistency and competence. So it’s no surprise that a recent and significant survey co-sponsored by Georgetown University Law School and Thompson Reuters provides data suggesting that as ALSPs’ market share goes up, it’s not only law firms who will see their previous workload shifting to ALSPs … it’s also law departments. A prime example of this advent is the recent decision by DXC and its general counsel Bill Deckelman to join with ALSP UnitedLex to restructure and “re-badge” its in-house team and deploy over 250 United Lex senior level professionals, in what the two companies label “the largest-ever managed services transaction in the legal industry.”
So what does this mean for CLOC and its members, who are the vanguards for encouraging their clients to push for greater efficiency, deploy better business practices and service models, and pursue relationships with ALSPs that drive better results for the corporate client for certain portfolios of work or department functions? Does it mean that legal ops leaders will become the leaders of an in-house downsizing movement in legal departments? Not necessarily. I think it more likely means that legal ops success will ultimately have to be pinned on something more valuable and sustainable than the argument that ops functions help law departments deliver better results by driving ROI based on increased staff and budget. The new wave of success practices will need to focus on those clever, successful and effective operations successes that arise in the tighter resourced/closer knit collaborative teams in mid- and smaller-sized departments.
Thus, it’s no surprise that at this year’s meeting, it looks to my eye like CLOC is presenting a program line-up that looks more closely at what those small to midsized teams are doing. While many large departments look to legal ops teams for efficiency and ideas for doing more with in-sourced resources that cost less money than law firms, that’s a strategy that places their teams in direct competition with ALSPs, which can effectively demonstrate to executive management that they offer less expensive and more flexible outsourcing arrangements that provide more efficient, agile and effective solutions for cost conscious companies. Law departments that are already “leaner” (in terms of set internal costs and headcount) aren’t just looking at doing more with less; they’re getting smarter about figuring out how to do more with never enough. And that’s the only strategy that creates a stronger value proposition for law departments in what is likely to be the next downward cycle of the industry marketplace.
So for me it’s a sign of the times that CLOC and other groups, such as ACC Legal Ops, are making massive inroads into departments beyond the super-big and super-sophisticated high-tech companies, and that those every-day departments are lining up to take a lead in developing a new line of better and stronger legal/business solutions for their clients using their in-house smarts (even if they lack as much in-house heft or leverage as the bigs). While it’s often harder for those teams and leaders to find the time to participate in market-driven/CLOC-driven change, the resulting bounty of practices they offer up is likely to have much more impact on improving the profession and service to our clients in the next few years.
My assessment: This is a good thing for the longer-term interests of CLOC and its members, and means that there is room for growth and scalable practice management solutions for departments of all sizes—it’s no longer a large-law-only game. And this also means that it’s no longer about the hype that can surround a giant-name company’s decisions to change direction. CLOC is democratizing and expanding its reach and relevance.
So the big question marks that remain are: will a market correction/decline in at least the growth of internal headcount or budgets in legal departments mean a corresponding decline in the ops sectors of larger law departments? or a decision by smaller departments to put off hiring an op leader as they consider gearing up? Will general counsel facing cutbacks in headcount look to downsize their staff employees before they cut into the lawyer ranks, or follow the old “last in-first out” rule of hiring and layoff for recently enlarged legal ops teams?
Or might an industrywide reduction in department size actually lead to even greater growth for the ops community (given that many of us would argue that one really good ops person added to a legal team can exponentially multiply the output of 10 lawyers doing great legal work; the addition of another lawyer to that department simply adds a lawyer to the team, making them an 11-lawyer department). Will general counsel decide that a $150,000 investment to add an ops leader is a better use of their budget than not addressing multi-million dollar waste in unnecessary outside counsel expenses that currently consume the majority of their spend and won’t be addressed without an ops leader to make that charge?
Last year: CLOC leaders were pushing legal tech companies to surge forward, while an eager marketplace of tech providers was listening closely for guidance.
This year: Legal tech companies are getting better at demonstrating value and some are having the kinds of success that means that they can be confident about their futures. But the risk of “pushing the rope up the hill” has shifted from CLOC to the ecosphere, and that means tech companies are responsible for pushing their clients to adopt and adapt technology that has been created specifically with their needs and capacities in mind. And so, nevertheless—and against the odds of a tech-resistant profession—the ecosystem persists.
One of the most inspiring themes of the 2017 CLOC conference was the on-stage recognition that law departments don’t need to sit and wait/hope for legal tech and service solution providers to figure out what departments need and how to deliver it. And that they don’t need to settle for slightly adjusted law firm services to be re-cast as law department solutions. CLOC was the place where everyone in the audience became electrified by the idea that law departments could drive tech companies to solicit the advice and direction of their clients to build what clients actually want. We all left the room with great expectations of the radical changes to come. And then we sat by the phone waiting for the tech firms to reach out to drive it.
The result? We got a lot more advertisements and promotional boasts. But as to products that had been created with the active engagement of clients? I gotta score this a resounding “Meh.”
Don’t get me wrong—the pace of new product and service offerings from legal tech companies and the improved performance of the products they’re bringing to market is staggering and seems to be expanding at an exponential rate. But a lot of these products and services still suffer from the problem of being “created-with-the-skill-level-and-insight-of-our-experts-because-we-know-best-and-this-is-a-super-nifty-product!” It’s rare to see tech providers offering solutions to the practical user experience and change problems that have plagued departments for decades.
So my score on this item is mixed—I’ve seen a few companies really grabbing hold of the potential value of what legal ops leaders seem to be offering (if you build it with us, we will come!), but even more that are still simply promoting what they’ve already created. So my response to those many tech companies is exactly what I also tell law firms trying to re-invent their wares: it’s not what you want to sell (which is the 73rd e-discovery system on the market), but what clients want to buy (and, if they’re honest, most still really don’t know what that is).
Are there examples of success? Yes, and here’s what it looks like: think about how “law companies” like Elevate are spending time working directly with their customers on how to build exactly what the customer needs from a wide array and scope of service and product offerings. (Full disclosure: I’m aware of Elevate’s focus because I’ve joined their advisory board—there are a number of companies out there providing a range of technology services that could be used as great examples, too.) Elevate’s VP of Innovation and Products, Pratik Patel, explains Elevate’s approach this way: “Our goal is to help our customers find practical solutions that improve both their efficiency and results. Usually a customer needs more than a service agreement to have some technology delivered to their front door (even if they think they just want to buy some automation): they need a team that helps them to understand their current business needs and their legal service strengths and gaps and how this product will fit into that larger picture; they require help pulling together the internal resources and data to populate the initial system or set it up to perform in a manner that’s well-aligned with their workflow; and they require support going forward to help assure that the products and services we’ve provided are driving the results they’ve targeted and are able to grow with their changing needs. This is a start-to-never-finished customized user experience that’s a lot more than just tech, and thus, is not something that a tech start-up with only a clever product will succeed in providing.”
No doubt, with this year’s Institute placing more effort on offering organized “demos” for product and service providers and registrants, CLOC is looking to continue to help facilitate not only stronger tech adoption by its members, but better relationships and more opportunities for tech leadership and success among its vendor pool.
Last year: There was a strong push to build multidisciplinary ops teams, made up of lawyers and ops leaders with business, tech, executive management and other disciplines/skills; and to have those teams fully capable and responsible for driving change and delivering service.
This year: While ops teams are indeed of diverse composition and include those with many disciplines who work well together, I’m still not seeing lawyers take the mental and emotional leap toward overruling the predominate legal class system—both in departments and in the larger profession via regulation—that discriminates between the roles and value of “lawyers” vs “nonlawyers.” It seems that legal professional bias—nevertheless—persists.
Having been involved in working on multi-disciplinary practice issues for decades at ACC before CLOC was even formed, I have a full understanding of the magnitude of this problem and the seeming impossibility of solving it anytime soon. The commentaries about the inequities and irrationality of the legal class system at the 2017 CLOC Institute were fast and furious: from Richard Susskind’s explanation about the importance of the ABS rules (alternative business structures) in the U.K. in breaking down walls to allow new ways for lawyers to collaborate and share accountability (and profits) with professionals from other disciplines and professions within the same workplace, to the battle cry so clearly articulated by Lucy Bassli (then of Microsoft and now of InnoLegal Services), demanding that we remove the term “nonlawyer” from our daily conversations and certainly from our value playbooks.
I think that the passion persists, but so does the problem. From my perch, little demonstrable progress has been made in changing anyone’s mind or heart: those of us who want to see lawyers recognize the value of other disciplines in delivering legal work continue to harp on it. Those who are in control of law departments, law firms, professional regulatory structures, as well as the media, persist in viewing the world though a lens which suggests that while “non-lawyers” are helpful to legal work, their contributions and roles are not as important as the ones played by lawyers in providing excellent client service and results; professional staff on legal ops teams remain second-class citizens, at least in the eyes of many lawyers.
We could debate the nuances of this issue ’til we’re blue: I’ll still argue that most of the dysfunction in the current legal system and the disconnects between legal service teams and their clients stems not from the presence of too many “nonlegal” professionals, but from the deployment of too few of them. That which we lack to transform our lagging profession into one that is better aligned with and more valuable to our clients isn’t legal expertise, it’s business, finance, tech, talent, leadership, compliance and risk management skills. That doesn’t make legal acumen unimportant: it makes it only half of a successful client service equation.
We need to not only collaborate with those leaders who bring different skills to the table as our other halves, we need to respect and learn from them. How strange our profession’s arrogance is, given that 1.) it is experience in a legal work environment that grew our ability to provide outstanding legal service to our clients, not our law school education or pedigree, 2.) ops team professionals speak the language of business and thus are aligned with the “majority” skill sets that clients value (because business, not legal, acumen pays the in-house counsel’s salary), and 3.) it is “nonlawyer” ALSPs which are experiencing the greatest growth in the legal market today, as our clients begin to vote with their feet and tire of lawyer inefficiencies.
This is one of our greatest failings as a profession: we continue to exhibit a professional arrogance holds us hostage from our future—no other profession has been so short-sighted or ill-advised. I’ll be interested to see if the issue of professional stratification rises again at this year’s meeting or if CLOC attendees are able to report that those without a law degree are experiencing higher levels of acceptance, recognition, collaboration, authority, and integration within corporate legal teams.
Last year: The message was “big change and innovation are upon us.”
This year: The message is let’s focus on implementing tightly scaled wins first, so that we can grow greater comfort and competency in managing change and adopting new practices before we go big on the innovation stuff.
Bill Gates once said: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10. Don’t let yourself be lulled into inaction.”
It’s easy for me to pick on that which hasn’t happened the intervening months since the last CLOC meeting in 2017. Basically, whatever concerns I’ve raised have been in the mode of “we were really excited then, but what’s happened since wasn’t as impactful as we hoped.” But that doesn’t mean that we’re not experiencing significant shifts and progress toward a transformed legal profession over the longer haul. It may be more appropriate to assess the progress the legal ops community and CLOC has made since 2017′s Institute in 2027, rather than 2018. I don’t want the fact that we didn’t solve the biggest problems CLOC leaders sketched out in 2017, or the fact that the possible solutions we identified haven’t come to fruition by this meeting to make you any less optimistic about change. And more importantly, Gates’ last sentence of his quote—“Don’t let yourself be lulled into inaction”—is especially important to remember.
Here’s how I see it: There are a bazillion possible and existing model practices and business solutions out there for legal departments to play around with as they redefine their value and re-engineer their roles. These resources can fuel your efforts. But nothing and nobody can make you change the way you and your team work … except you and your team. NewLaw practice ideas are a dime a dozen, but change is really hard, extremely rare, and often expensive: in terms of cost, time, attention, and most importantly, in the currency of leadership.
In the world of change initiatives, you will not win if you assume you can click your heels and be instantly transformed or magically transported to some kind of Legal Land of Oz where change has already occurred and poppies smell fine. Change is long, slow, hard and disruptive; you will not win it if you assume you can implement change by mandating it, or by trying to speed from zero to 60 in one year, or via one change practice. Change will not be so easily cheated.
We have to crawl before we walk, and likely fall before we run. And that’s OK. Like those leaders from CLOC who are on this path, you will likely learn more from the fails than from the easy successes. Because you’re in this for the long haul. So to help you along the road, there are at least 100 programs, demos, networking sessions and events at the 2018 CLOC Institute that will help show you the way and give you a bit of good company as you get over the terror of those inevitable first fails and develop the resilience to get back up and keep working on it.
By creating a movement that’s not just about innovation, but about first adopting better business practices for delivering legal services, CLOC is providing us with the tools, confidence and benchmarks for success that will season us for more progressive change projects and, eventually, the legal innovation we will build someday on the promise of augmented intelligence and predictive data, as well as legal practice and lawyer transformation. But make no mistake: better business practices are not innovative to anyone other than lawyers who still don’t seem to understand that their clients have been deploying most of these technologies, managed service tactics, and practice management techniques for decades. What looks like innovation to most lawyers is really only a accepted business practice to a business person—such as a skilled legal ops professional.
Legal ops leaders—whether they are lawyers by training or project managers or technologists or business executives—are the leaders, guides and co-workers law departments need to help to help them make the 10-year journey (and beyond). Don’t confuse the industry’s bewildering focus on seemingly insurmountable professional concerns or undecipherable magical AI innovations with what should be your first steps toward understanding the basics of your department’s (or law firm’s) better business practices. Just make a commitment to improve and get started.
Even if you move forward with resolve, in the company of others who are also making this path by walking, and yes—by persisting, I doubt that I’ll be able to report next year that finally everything has changed and we’ve conquered our problems and re-invented our profession. But I will bet that I’ll be able to celebrate, along with you,—and because of the disciplines involved in each year’s CLOC Institute—a more inclusive, valued and valuable profession by 2028. And in the meantime, I get to exercise my need to be over-enthusiastic each year, while enjoying the company of my colleagues—the “persistent” ops leaders attending and organizing each year’s CLOC Institute.
Susan Hackett is a law practice management consultant, who works with legal departments (and the service providers who support them) on change and value initiatives. Prior to opening her consulting practice in 2011, Legal Executive Leadership, LLC, Hackett served for more than two decades as the senior vice president and general counsel of the Association of Corporate Counsel (ACC).