What are current trends regarding legal operations teams at large companies (not small to medium businesses)?
OVERVIEW Hello there! Thank you for your question on the current trends regarding legal operations teams at large companies. The short answer is that at least 66.6% of Fortune 500 companies have added and in-house legal operations team to their infrastructure, an overall upward trend in the employment of operations teams can be seen. Below you will find a deep dive of my findings. METHODOLOGY I began by familiarizing myself with the large companies most prominent in the industry. Next, I conducted a comprehensive search through academic databases, corporate websites, industry reports, government reports, and regulatory filings for any relevant information. In order to provide a full scope of information, I looked at trusted media sites, user forums, and review sites to develop an understanding of the opinions and trends surrounding the industry. I found the Corporate Legal Operations Consortium to be the most valuable source of information. FINDINGS Today ACC projects an estimate of at least a third of GC's at Fortune 500 has added in-house legal teams to their company infrastructure. Legal Ops are designed to be a separate entity from an in-house council. Their predominant role is to ensure that the legal department functions more like a business. At this time, 21% of respondents have an operations role within their legal department. Most GC's note that they are not ready to commit to the expenditure and manpower required. However, it is still strongly advocated to be one of the best practices to be incorporated across all legal departments.
Before the revolution in the 1980's an overwhelming number of legal professional was white and male. The demographic of legal teams are changing: "Today, women make up a significant percentage of the lawyers working in-house, including 25 percent of the GCs of Fortune 500 companies, according to a 2015 report from the Minority Corporate Counsel Association." Legal departments within companies are described to be changing in 6 crucial ways: • The size of the in-house department. • Credentials and demographics of the lawyers working inside the department.
• Relationship to, and degree of control over, outside counsel
• Internal standing, jurisdiction, and authority of in-house lawyers within their organizations.
• Professional standing of internal counsel in the profession as a whole.
• Participation and influence of GC in public policy debates.
A large company, HBR Consulting, comment to have a long-term relationship working with 90% of Am Law, 200 Law firms and 35% of Fortune 500 corporate law departments. They further informed that a law operations department provides a baseline for assessing and identifying opportunities to drive performance. Among the most useful assets are establishing actionable goals and answering "make versus buy" question. A further depiction of business value can be seen here: "It’s all about data driven decisions. The HBR Law Department Survey enables me to compare results by industry, revenue, or a number of attorneys. Sharing the HBR benchmarking metrics with my legal team validates current practices and/or highlights areas for improvement. I look forward to completing the survey and reviewing the results annually."
Here is an overview of some key statistics and quantitative information on the industry:
• ACC’s experience with the special membership division created for legal operations professionals which have grown by about 52%, resulting in over 400 members across 258 companies.
• When the ACC division launched, 2 out of 3 Fortune 500 law departments had at least one ops professional, this figure has risen far closer to 100% depicting a clear growth in the legal industry.
• The total number of legal ops in CLOC has seen a steep rise from 50 to 600 in only 18 months time.
• The number of legal operations in the United States based companies has doubled from 2015 to 2016.
• In preliminary data of 2017, it was found that 43% of 1100 GC's had a legal department, spanning across 42 countries.
• In companies with 5 to 50 people working in legal departments, the decision is largely based on budgeting issues.
Director of Global Operations David Cambrai comments to lead a "best-in-class" law department operations team. The team's function is to align day-to-day operations with business strategy. Overseeing of non-legal and tactical aspects are depicted to be especially important. Specific tasks include: "following finance, information technology, law firm and vendor management, client service and deliveries, and general administration."
Development in the IT technology field is well depicted by Reese Arrowsmith: "From a technology perspective, if all predictions are correct and the changes that are taking place come to fruition, there will be a fundamental change in the way the legal industry works from beginning to end. One example that may have an enormous impact is artificial intelligence".
This supports the overall trend of the industry into larger and more diverse teams. This trend has already begun, as for IT technology its importance is rising and funding priority in the industry should come in the near future. CONCLUSION
To summarize, I looked deeply into the legal operations department industry. There is a clear upward trend in priority and funding going towards these types of teams within large companies. Their value is well documented and the only limitation is budgeting. The teams report to the General Counsel. Trends for the future are predominantly focused on the use of artificial intelligence technologies, as such funding for IT technologies seems likely in the coming years.
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