Leveraging LPOs to Improve Legal Operations
In a time of “doing more with less” we see an increasing emphasis on legal operations and focus on controlling legal costs in particular. Conferences have been dedicated to the topic and new associations formed to explore the benefits of an operational approach to delivering legal services. The Association of Corporate Counsel started ACC Legal Operations as a forum for legal operations professionals and industry leaders founded the Corporate Legal Operations Consortium (“CLOC”) with the goal of “optimising legal service delivery models” to further enable collaboration among peers. A recurring theme both at CLOC and ACC Legal Operations has been the challenge of improving legal operations in a time of constrained budgets and resources.
In its mission statement, CLOC mentions “core corporate legal industry players” that can help play a role in optimising process, including Legal Process Outsourcing providers, or LPOs. LPOs have been around for more than a decade now, and leading companies in this space have developed sophisticated and mature processes as well as deep institutional knowledge of their clients and their clients’ industries. As such, they are ideally positioned to help corporate law departments in their efforts to examine the way they operate and identify solutions that can add value from both a legal and business perspective. This piece will focus on three specific ways legal departments can leverage LPOs: process re-engineering, data analytics, and legal spend management.
LPOs can add the most value when they act as consultants, using their process expertise and holistic view of their clients’ operations and organisational goals to redesign procedures and work flows for improved performance. In litigation and investigations, LPOs can help establish consistent guidelines and protocols for outside counsel, technology vendors and managed document review vendors for the most costly aspect of discovery: document review. Such standardisation formalises expectations, increases efficiency and effectiveness, and ultimately, reduces the costs associated with document review.
With regard to contract lifecycle management, LPOs work with legal departments to re-engineer the contracting process and facilitate change management. Drawing on expertise in high-volume, resource-intensive projects, LPOs help clients re-examine how they work. Assessing current contracting operations, LPOs help develop roadmaps to achieve contract management operations defined by rigorous processes that reduce logistical and administrative burdens and allow in-house counsel to focus on more strategic initiatives that demand their substantive expertise. Once these processes are established, the monitoring of policies and procedures helps enforce consistent execution across business units and geographies and the resulting standardisation not only reduces cost, but improves conformance to compliance standards, mitigating both business and legal risk.
On an operational level, LPOs can deliver data-driven analyses to drive value in the legal department and across business functions. Meaningful metrics and dashboard reports can be developed that provide actionable insight to support legal and business decisions. The operational expertise of LPOs, which requires significant process acumen and the attendant analytical insights (both qualitative and quantitative) have proven beneficial to legal departments across a broad spectrum of operations.
Contract lifecycle management is an area in which process expertise and data analytics have had significant impact, from optimising the resources needed to improving substantive negotiation positions. For example, analysis of historical contracting data against the playbook can help assess negotiation performance outliers and other trends to help calibrate acceptable negotiation positions. This can dramatically reduce cycle times and escalations to legal proceedings from the business, while improving overall compliance with corporate guidelines. The establishment of KPIs and structured reporting to identify improvements has also proven effective here.
Similar benefits accrue in the context of litigation and investigations. Some LPOs provide post-review support geared to identifying important information in produced documents and presenting it to outside counsel in an organised and “actionable” manner. These activities include helping to prepare for meet and confer sessions and Case Management Conferences, as well as for depositions and trial testimony and creating detailed issue analyses and chronologies. Leveraging insights over time, LPOs can provide analysis and reporting on issues salient to both individual matters and across matters, as well as developing continuous improvement schema, providing insights that support budgeting, and even developing predictive models improving both legal and business outcomes.
Finally, controlling legal spend, more specifically spend on outside counsel and other vendors has been a top priority for corporate legal departments. This is evidenced by the trend in reducing the number, and overall use, of outside counsel, the advent of alternative fee arrangements including fixed fee billing, and the development of detailed guidelines that specify how outside counsel may staff matters, the rates they may charge, the activities and expenses they may bill for, and even the timing and format of the bills they send. However, for large corporations, managing legal invoices for compliance with billing guidelines is complex and resource-intensive.
LPOs are assisting corporate legal departments by providing the expertise and resources necessary for complete legal bill auditing to correctly and accurately identify non-compliant legal costs, and provide the analyses needed to improve the legal department’s external spend profile. This includes devising and executing consistent and complete invoice reviews that meet all relevant department goals and which allow legal departments to moderate costs through effective billing guideline use; auditing, tracking and identifying trends in invoice data; and utilising legal spend historical data to improve insights and ultimately develop predictive models.
Improving the delivery of legal services (to both internal and external clients) while mitigating cost is a challenge for most, if not all legal departments – as it is to any line of business. LPOs have a key role to play in this process: in designing new and better ways of working in a measured process of continuous improvement, delivering actionable intelligence through data analytics, and helping to assess how spend is incurred. Companies that fully leverage LPOs will likely find that they actually can do much more than they thought, with less: less resource, less budget, and less time.