Legal departments and law firms are not monolithic entities; they are collections of people. In past years, those people were predominantly lawyers. Headed by the general counsel, legal departments were filled with former law firm attorneys who worked directly with current law firm attorneys. The lawyer-lawyer relationship was symbiotic. Legal departments fed a steady stream of work to outside counsel, who gained years’ worth of institutional knowledge with which to protect the client.
Today’s legal departments are far more complicated. The general counsel is now expected to be a strategic advisor for the company’s management team. They must bridge the gap between legal and business matters stemming from the Sarbanes-Oxley Act of 2002.
As it relates to outside counsel relationships, the biggest change has been the rise of the legal operations role, which embeds business-oriented individuals into the legal department in order to apply non-legal process rigor to the department.
Just ten years ago, the legal operations role was an anomaly. However, the Association of Corporate Counsel reports that 48% percent of companies now employ legal operations — double the percentage a year ago.
The injection of professionals with MBAs seeking to apply technology, innovation and metrics to the previously opaque legal space is disruptive to an industry that values the status quo. It is also a unique opportunity to view the industry from an objective lens.
A similar evolution is taking place in parallel with law firms. The shift to incorporate pricing models beyond hourly billing has necessitated the rise of the pricing director role. Leveraging data and project management experience from careers outside the legal industry, pricing directors (or equivalent) bridge the gap within the law firm between lawyers, management and clients to build a profitable business. Similar to legal operations, pricing directors are responsible for affecting change and must first contend with the old-world attorney mentality.
Yet, despite having the tools to apply sophisticated business processes, many legal departments continue to interact with law firms on a strictly lawyer-lawyer basis. Fees are often negotiated lawyer-lawyer; matters are managed lawyer-lawyer. Invoice analysis might involve non-lawyers, but approvals and final decisions are still left up to attorneys. In short, legal operations and pricing directors are often still viewed as non-core functions, capable of opining on strategy but not necessarily driving it.
However, law firms and legal departments benefit from expanding the avenues of communication and democratizing ownership of the relationship. Legal operations can find counterparts in pricing directors in a similar fashion as in-house attorneys have counterparts in outside counsel. No individual owns the relationship with outside counsel which, admittedly, equates to some loss of control for attorneys.
However, by encouraging collaboration on various levels, legal departments can identify areas of innovation and build coalitions of stakeholders to actually implement change. Perhaps more importantly, it fosters an environment where experimentation and even occasional failure is embraced without risk of damaging the attorney to attorney collaboration, already in place around legal work.
For more information on fostering better relationships with outside counsel, download our eBook, “Common Ground: A Guide to Better Relationships Between Corporate Legal and Outside Counsel”