Scott Forman spoke with An Trotter, senior director of operations at Hearst and a pioneer in strategic legal operations.
A decade ago few companies of any size had operations professionals working in their legal departments. Today nearly all large organizations, and many smaller ones, employ teams of experienced executives to bring financial, technical and other operational expertise to evolving law departments.
And as those professionals demonstrate their ability to drive value, the legal ops movement will only continue to grow. In my role at Littler Mendelson I collaborate with in-house legal ops teams every day. To take a step back and help shine a light on the changes they’re fomenting, and on what it means for both inside and outside attorneys, I spoke with An Trotter, senior director of operations at Hearst and a pioneer in strategic legal operations. We talked about the evolution of legal operations and how law firms can adapt to best serve clients. Here are highlights of our conversation.
Q: It’s no secret that the legal market has fundamentally changed and that the drive for efficiency has put pressure on law firms to evolve how they deliver legal services. In addition to these market shifts, what do you see as the key factors driving the rise of legal operations?
A: There are many ways to bucket the factors, but I’ll focus on four. First, cost considerations. Law firms have been imposing price increases well above measures of inflation for decades, which has increased the pressure on legal departments.
Second, disruptive technologies have driven two waves of change. The first was new communication technologies that allow legal advice to be given from anywhere—with few exceptions, we’re no longer tied to the notion of local practices. Later, the incursion of technology in the legal space gave rise to a need for greater understanding of those technologies and the ways they impact operations.
Third, new competition. Law firms now compete directly with corporate law departments for business. At Hearst, for example, roughly 60 percent of our legal spend is in-house. In addition, there are now alternative legal service models coming out of a variety of industries, including tech, accounting, consulting and staffing. So the share of external spend captured by firms has dropped significantly in the last 10 years. That’s why law firms with foresight are unbundling their services and creating new business lines to experiment with alternative operating models. Littler is a good example of this mindset, including being an early adopter of alternative staffing models. Creating the FlexTime Attorney position that is aided by technology as part of the Littler CaseSmart platform, streamlines the process of managing litigation and improves efficiency.
All three of those factors contribute to the fourth: A sea change in client expectations for communication, convenience and technology tools. In 2017, I conducted a number of RFPs and was shocked when asked what tools they would use to intake inquiries, four out of five firms’ responses began and ended with “you’ll have the partner’s cellphone and email address.” Who is willing to pay the partner rate for what is essentially a call-center function? In contrast, all the finalists offered baseline information-sharing tools like case management, collaboration platforms and shared document repositories. The eventual winners also offered data analytics, project management and/or machine learning tools, plus online research beyond the client alert or newsletter level.
Q: As corporate legal departments increasingly operate more like other business departments and enhance operational efficiency, how do you think law firms should change the way they operate to align with these goals?
A: To coordinate seamlessly, firms need careful process management and close communication that ensures a smooth handoff. I’m a former dancer, so my favorite analogy is the choreography of Merce Cunningham. Traditionally dancers followed the music, taking their cues from the conductor.
Cunningham believed that dance and music should exist independently of one another, and in his choreography the movement would be executed smoothly without reference to musical cues. It required extremely close observation of the other dancers and timing within a tenth of a second—an outcome of relentless rehearsal.
In a similar way, in-house attorneys are no longer simply taking their cues from their outside firms. So firms have to be exacting and prepared to move and react with their clients, and with all the other players involved in a project. That means erring on the side of over-communication, emphasizing brief in-person contact over written correspondence, checking in before doing work, and accurately projecting how long work will take and when it will be delivered.
As an example, Littler has developed a technology-based platform to help clients better manage responses to employment-related legal inquiries and to centralize the pertinent information (business location, players, type of issue, etc.) on a dashboard. This allows human resources and legal to monitor the matter, as well as the overall trends of the business, thereby mitigating risk while also using the data to produce reports that are rich with insights for the company.
Q: I’ve long said that law firms need to stop viewing themselves purely as professional service providers and start operating like businesses to respond to client needs and market conditions. At Littler, one of the ways we’ve tried to do this is by creating positions like mine that focus on the corporate side and working with clients to provide solutions that maximize value. Do you think it’s important that law firms have dedicated operational roles to parallel the rise of operations in legal departments?
A: Absolutely. It makes a world of difference when law firms have ops-specific leadership positions—COOs, CTOs, project management directors, pricing directors and frankly even well-trained and retained support staff, such as billing specialists. It’s also critical that the firm puts those personnel front and center and in direct contact with clients, as opposed to keeping the operations professionals behind the curtain and insisting all client communication go through the relationship partner. Let the people who speak the same language converse directly, without a partner-pay intermediary.
Q: Some law firms may be reluctant to ask clients how they can do things differently and improve efficiency because they’re afraid it could ultimately result in fewer billable hours. How do you address that tension with your law firm partners?
A: Two things come to mind. First, those firms need to get over it. Other service providers are asking these questions, and taking a slice of the pie from law firms every day. Firms have to learn to segment their service offerings and try different models to become attractive at different price points.
Second, most law firms have difficulty articulating the value they bring to their clients. For example, many rate increase requests are justified by saying something like, “We haven’t requested an increase in a year or more.” If the justification was more like, “We deserve a price increase because we reduced your incidents by X percent resulting in savings of Y dollars, so we are asking for a modest portion of the savings,” the client would be receptive to paying you more.
Q: At Littler, we believe in using scale to benefit our clients. We can invest in things like technology and scale them across clients, whereas a corporate legal department may find it harder to justify the expenditure just for itself. Do you see more firms taking advantage of that?
A: I certainly wish more firms would. One of the key advantages in using outside counsel is the broad context and knowledge they bring from working across multiple clients. It’s even more valuable when they have the ability to analyze data across the industry and give you metrics that help make strategic decisions. For instance, the Littler platform I referenced earlier provides metrics for legal departments to bring issues to the c-suite. It’s easy for leadership to dismiss potential issues when they seem anecdotal in nature, but by using data analytics to track legal matters, operations teams are in a better position to identify areas of risk and get the resources they need. They can also generate metrics that show company leaders how the ops team is delivering value and mitigating risk.
Law firms that are willing to make these types of investments and decisions based on the bigger picture will be in a much stronger position moving forward.
Scott Forman is a shareholder with Littler Mendelson, the world’s largest employment and labor law firm representing management, and founder of Littler CaseSmart. He focuses exclusively on developing technology platforms that re-engineer the delivery of legal services and enhance collaboration with clients and within the firm. Forman can be reached at firstname.lastname@example.org.
Reprinted with permission from the June 11, 2018 issue of Corporate Counsel. ©2018 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.