Legal ops making inroads in-house

Scott Morgan is one of a few “legal ops” professionals working in-house in Canada these days, but expect to see more like him as larger corporate legal teams realize the value someone with a financial background can bring to managing a legal team.

About 18 months ago, Morgan, who is director, legal operations, law branch with Air Canada in Montreal, joined the airline’s legal department after 25 years working in large law firms such as Stikeman Elliott LLP and Norton Rose Fulbright Canada LLP where he was chief operating officer for six years. A chartered professional accountant by training, Morgan was focused on the finance and operations aspects at those firms.

“There aren’t many people in my position in the U.S who have the law firm background, but they very often have a financial background,” he says.

Morgan says leaders of in-house departments are finding themselves where big law firms were 30 years ago — they see themselves handling a lot of important administrative work such as information technology matters and negotiating financial contracts — taking them away from their day jobs. They’re starting to see that it could be managed better if someone was focused full time on those tasks.

In a report released last week — “Thomson Reuters 2016 Legal Department In-Sourcing and Efficiency Report: The Keys to a More Effective Legal Department” — more than 40 per cent of legal departments indicated the top benefit of increasing efficiency is being able to focus on more strategic work, and many are turning to legal department operations professionals like Morgan to enable them to be more strategic in how they advise the business.

The report, conducted for a second year, surveyed 429 lawyers and operational professionals working in corporate legal departments and examines how in-house teams are managing internal and external resources to achieve greater efficiency and productivity.

“As expected, we continued to hear that corporate legal departments are doing more with less,” said Mark Haddad, vice president of the corporate segment for Thomson Reuters.

The report reveals a rise in employing legal department operations professionals. Many departments reported being besieged by the operational activities that come with being part of a corporation. Among the ways general counsel are addressing this is by employing legal department operations to foster change.

“LDOs are managing outside counsel and employing legal managed services providers, as well as identifying and deploying new technologies across the legal department,” said Haddad. “It’s an encouraging development in the legal profession. General counsel indicated a strong need to work more strategically, and bringing in LDO professionals to concentrate on business operations allows corporate counsel to focus on legal work and be more proactive and strategic in how they advise the business.”

In Morgan’s case, he deals with external counsel at the beginning of an RFP and in helping negotiate alternative fee arrangements.

“That comes from my vendor side experience and my financial administration and purchasing experience,” he says.

When he was hired, Morgan says, David Shapiro, senior vice president and chief legal officer for Air Canada, had a vision of someone who would step in on the financial side as well as handling operations such as the renovation of the legal team’s premises to create a more efficient space for a legal practice.

“We’re also in the middle of a big enterprise legal management software project,” he says. “Those are the kinds of things that were part of his vision to improve processes and efficiency with our group.”

While Canada’s big banks are also employing legal operations personnel, it is still more prevalent south of the border to see such legal opps positions in corporate legal departments.

The report found that by allowing corporate counsel to dedicate more time to the practice of law, less work has to go to outside counsel.

The report analyzes how legal departments are keeping work in-house, particularly with certain tasks related to contracts, intellectual property, mergers and acquisitions and litigation. The report also explores which matters and tasks in-house counsel still turn to outside counsel for, and the reasons driving the work to law firms, including legal complexity and jurisdictional reasons.

“By changing how legal departments partner with outside counsel, hiring LDOs and implementing new technologies, legal departments are finding more ways to adapt to cost pressures and see a greater return on total legal spend,” added Haddad.

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