By Heidi Rudolph, Managing Director, Morae Global

I was a bit taken aback when I saw Corporate Counsel’s recent article Legal Departments See Cost-Controlling Value in Technology. As someone who managed legal departments for decades – my title when I joined Sears in 2002 was director of legal operations – I was shocked. The article reads exactly like so many articles from 1998 or earlier when DuPont first started touting its outside counsel management (though it’s now called “spend management”). I keep reading about the “rise of legal operations,” but I wonder how much we’ve learned over the last two decades. It’s fascinating to see these same topics again and again. Managing budgets, vendors and spend – that’s Legal Department Management 1.0.

So here are some Legal Department Management 2.0 concepts I hope to see the industry talking about over the next few months and years.

Know your numbers. Knowing your numbers means much more than just your budget and spend. (Those are a given.) The key is understanding what’s driving your cost and what value you are providing to the business. Make the numbers tell a story to ensure you are the best steward of your company’s resources. Also, there continues to be much talk about the billable hour, but if you know your numbers – and therefore what projects should cost – you can make budget decisions and optimize your spend, whether or not you are working under an AFA.

Know what’s coming. Legal should be a “no surprises” business – and not just in terms of the bills. You may not know whether you will get sued tomorrow, but you should have some idea what it would cost if you do. When a matter arises and is in process, communicate with the client. Make sure the people there know what they’ve spent, and make sure they know how much they will have to spend. Forecast for the rest of year and update regularly. Business clients want to know what it will cost, how it will affect their operations and how many people will be distracted for how long. It is unusual for them to want to know all of the legal intricacies. Focus on what matters to their business. Knowing your numbers comes first, and then you need to know how to communicate them to help the business understand the future. Lots of spreadsheets with tiny fonts are rarely the best means.

Leverage your assets. Our clients are now frequently using project-based resources, and these can be critical in getting the best result at the best cost. Law firms can set the direction and advise on programs, but it often makes more sense for alternative resources to do the lion’s share of the work. For example, we recently had a client update its code of conduct. The drafting of the code itself was done at the highest levels in house and included numerous internal stakeholders. Big law firms were consulted for risk-specific updates and content. But the client then leveraged our resources to roll out the new code of conduct program, including communication and training. It got the highest value by limiting its valuable internal time and the expensive law firm work to what was absolutely needed and relying on more appropriate – and lower cost – project-based resources to do the rest. It’s not just about managing vendors; it’s about choosing the right type of vendor to provide the right value.

If you’re looking for help re-inventing your law department around some of these issues, my colleagues at Morae Global and I are happy to help. And look for more fairy dust from the Godmother of Legal Ops to make sure your legal department does not turn into a pumpkin at midnight.

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