Thanks to support from PSALA, I was able to this year’s Corporate Legal Operations Consortium’s (CLOC) Institute 2018 in Las Vegas. This year’s event was double in size compared to last year, drawing 2,000 attendees. The audience was split evenly about between legal operations executives and other members of the legal industry, like law firms and technology providers.
Industry experts have been tracking the rise of legal operations for several years. As corporate legal departments have grown in influence over the past decade, legal operations has played an increasingly important role. Legal operations functions are not restrained by the constraints of law firms, they are often driven by the business objectives of the organization as a whole, making them much more nimble and driven by efficiency, both in time and cost. Law firms have been slow to acknowledge the importance of the legal operations function, and their growing influence on outside counsel purchasing decisions. Here are my main takeaways form CLOC 2018:
#1: It’s go time for diversity and inclusion.
We’re beyond introductory conversations about why D&I is vital to business success. In one session, groups like Baker McKenzie, Oracle, and Starbucks talked about incentives for results, “de-biased” interviews that prize skills over sway, and programs that build talent pipelines early, like scholarship and work-study programs.
#2: Change management has gone mainstream.
Many sessions referenced the importance of change management—the people side of change—as a key factor in project success. Despite all the new technology on the scene, the discussions went beyond the tools. They were also about how to bring human experts along to make the best use of new tech. “Three-fourths of the effort we put into legal tech is about the people and the process, not the technology,” said Mark Chandler, GC at Cisco Systems.
#3: Technology is changing everything.
Many of the sessions featured different examples and use cases of AI and machine learning. One of the key tools that many departments are looking at is the use of AI to manage outside vendor contracts. They are also investing heavily in the use of knowledge management tools that allow them to consolidate contracts and agreements throughout the legal departments and leverage internal knowledge rather than using external counsel.
#4: Alternative Fee Arrangements (AFAs) are real and becoming more important.
For many years law firms have been approached by in-house counsel for AFAs. Most law firms pay lip service to these AFA requests without taking them that seriously. This is rapidly changing; in-house legal departments realize they have more power to dictate pricing, particularly for commoditized work. In-house legal departments are putting a lot of time and resources into creating outside counsel guidelines. Many law firms do not examine these guidelines closely enough and implement changes into their own billing systems; this causes many bills to be rejected and a lot of resources and time to be wasted internally.
#5: The relationship between in-house departments and law firms will never be the same.
As we all know, the relationship between in-house legal departments and law firms has been changing for some time and more rapidly following the 2008 financial crisis. It was very clear at CLOC that the way in-house legal departments are using external counsel is changing. They are utilizing technology, as well as other legal service providers to replace many of the more standardized tasks that they previously farmed out to law firms. They are now looking to firms to provide specific subject matter expertise only. There is clearly a cost-saving to keeping a lot of work in-house and only sending out matters that cannot be handled in-house due to lack of expertise or other resources. Firms are going to have to examine more closely the relationship they have with in-house counsel, figure out specifically what their needs are; then adapt their business models to meet those needs; its’ not an option anymore it’s a necessity for survival.