IT Briefcase Exclusive Interview: How Technology is Changing the Role of General Counsel and the Rise of Legal OperationsAugust 7, 2018 No Comments
“Technology” and “Law” haven’t traditionally evolved hand in hand. The world of law is conservative by nature and evolution to new technology and approaches is often measured over a longer period of time. As the industry changes, so does how it adopts technology. Over the past several years, General Counsels (GCs) have digressed from their traditional responsibilities, extending their role within organizations and incorporating a data-driven approach to optimize their value. As a result, in-house legal teams have emerged as one of the most efficient and effective business units within a company.
In this interview, Nathan Wenzel, founder and CEO of SimpleLegal, will discuss the changing role of GCs. He’ll also outline the importance of Legal Operations, a growing function within modern legal departments, and share how legal teams can best leverage technology to amplify their work.
- 1. How has the role of General Counsel changed over the past decade?
GCs have always been responsible for providing legal advice to help their company grow and to ensure their company is in compliance with the law. That hasn’t changed; GCs and the legal department must be good legal partners to the company. One thing that has changed is that the scope of that responsibility has expanded given today’s global regulatory and compliance environment and the data-centric approach companies are taking. GDPR was a well-publicized example of new compliance requirements protecting personal data. Canada also has the Personal Information Protection and Electronic Documents Act that covers collection and processing of personal data. Less publicized but just as important was the Notifiable Data Breaches act in Australia that took effect earlier this year covering a company’s responsibility to protect personal data with fines of over $1M for failure to comply. GCs have a global responsibility to be proactive rather than reactive.
On top of their responsibility to be a good legal partner, GCs must also be a good business partner to the company. Legal is no longer immune from financial pressures faced by other departments. It’s no longer okay to simply throw money at expensive litigation or M&A diligence. For the General Counsel to be seen as a peer to the rest of the company leadership, they must be able to speak to department budgets and business metrics and harness the same data their counterparts utilize. GCs have to become or hire business analysts and budget managers. The growing field of Legal Operations is the key to helping the General Counsel be a business leader.
To enable the GC to manage across a global environment and be a business leader, they must take advantage of technology to collect data and be proactive in proposing business process improvements. Finance, marketing, sales, and HR leaders live in a quantitative world. They can share a metrics-driven evaluation of their performance. These leaders can report from memory, gross margins, click-through rates, customer acquisition costs, employee retention rates, and more. Forward-thinking GCs must now use metrics to objectively measure their productivity. As a start, GCs might track the total legal costs, cost per matter by practice area, internal vs. external spend, and individual matter budgets. But, to showcase their contribution to the business outcomes, they should track metrics like average days to review a new sales contract or number of contracts handled per legal team headcount. To solidify their place on the leadership team, they should track department level budgets with a target to improve the ratio of legal expense as a percent of company revenue. That conversation with the CFO and CEO will enable the GC to take proactive measures to improve business operations.
- 2. Legal Operations is a term we hear more about than ever. What does Legal Operations entail?
Legal Operations is the set of business activities, processes, and people that maximize an in-house legal team’s ability to protect and grow the company. It requires a wide-ranging combination of skills including strategic planning, financial management, vendor management, technology management, and legal data analytics. Legal Operations is replacing enterprise legal management (ELM) as the skills and tools needed to run a legal department.
A Legal Operations leader usually reports directly to the GC serving as a Chief of Staff, helping legal departments get the most out of their budgets, vendors and technology. They bring the MBA skill set to help the JDs get positive returns on their million- and billion-dollar budgets. In the past, only larger legal departments had a formal Legal Operations team. But now, given the scope of responsibilities of a GC, they’re much more common and hired much earlier in a legal department’s lifecycle. For anyone interested in learning more about Legal Operations, there are some great groups and events that can offer support, such as CLOC and ACC Legal Operations.
- 3. What are General Counsels applying from the tech industry and vice versa?
GCs should embrace the rise of data science within the tech industry. By leveraging existing data and deriving actionable insights from that data, GCs can better translate their value to the rest of the business. They can also gain more insight into their legal spend, make more strategic decisions and better manage costs. It would also be great to see legal embrace new innovations and business models the way the tech industry has historically.
As far as what the tech industry can learn from GCs, I’d say they could better emulate our careful adherence to privacy regulations! The tech industry has a long way to go regarding enforcing data privacy and fine-tuning how consumer data can be used effectively while still respecting the user. It’ll be interesting to see how the new GDPR regulations help in this matter, both in Europe and globally.
- 4. Are there any synergies between how in-house counsel and law firms approach their operations?
Absolutely. In general, the rise of data-driven operations has led to increased transparency. Whether it be an in-house, corporate department or an external firm, more and more legal teams are viewing numbers and data not as a point of contention, but as a way to initiate conversations about value and better achieve specific business goals. For instance, both GCs and law firms are increasingly using data to measure performance, evaluate prospective partners and/or employees, and ensure they are selecting the best in-house and/or third-party resources for their business. Hiring the right people is the most important thing a business leader can do. Selecting a firm to work with is essentially hiring a team of people.
- 5. Is there a communications gap between in-house legal counsel and the rest of a company’s C-suite? How can this be overcome operationally?
There can be. However, today’s corporate legal departments must be closely aligned with their C-suite colleagues in order to be successful. Metrics, budgets, and clear expectations can help here. Thankfully, widespread availability of legal technology, such as a comprehensive legal operations platform, have made measuring and communicating legal performance and requirements with the C-suite a lot easier. For example, by being armed with key metrics (as mentioned earlier), GCs can proactively connect to broader corporate initiatives and make more informed decisions at the executive level.
Legal technology advancements have also made it easier for other departments to collaborate with legal. In fact, there’s now technology that can make requesting support from legal teams a lot easier and quicker. Despite being stereotypically known as a siloed, distant department that says “no”, legal teams now serve as more strategic business partners, aligning their systems of record or legal operations platforms with core business processes to more effectively serve the entire organization. By tracking company level financial budgets and metrics, the GC will show alignment with every other C-suite leader in their focus to grow the company.
Nathan Wenzel is the founder and CEO of SimpleLegal, makers of the legal operations platform for corporate legal departments. SimpleLegal is currently used by over 250 companies including consumer brands, $B financial institutions, pre-IPO tech startups and large, publicly traded companies.SOCIAL BUSINESS