Legal Ops Software: How CLM Helps Legal Ops Functions Achieve Maturity

Legal ops is the efficiency hub of the legal department. While in-house counsel is focused on protecting the business from risk through contract review, legal operations are responsible for making legal processes more efficient and cost-effective. They help in-house counsel with more practical skills like vendor management, technology evaluation and acquisition, and strategic planning. And legal operations software helps make it happen.

Over the last few years, the legal industry has been making a concerted effort to change the reputation of in-house legal teams, which are notorious for being both a cost center and a department of "no." The legal ops introduce technology, process efficiencies, and standardized metrics that legal teams can use to become a strategic business unit contributing to revenue goals. 

Contract Lifecycle Management (CLM) software enables legal ops teams to carry out their role efficiently and manage one of the most time-consuming aspects of the legal function — operating contracts.

As a result of innovation in the field, the legal department is able to do more with less, thanks to legal ops. Legal operations have grown in popularity as a result of the work of the Corporate Legal Operations Consortium (CLOC), which has essentially defined the legal ops function for the last decade or so. 

While legal teams are notorious for being behind the curve of tech advancements, the introduction of legal ops into the modern legal department has accelerated tech acquisition and legal ops software implementation. As a result, we see significant development in the realm of legal operations technology in all sorts of tasks, like e-discovery, contract analytics, knowledge management, e-billing, and contract management. While more and more businesses are implementing legal ops, their level of maturity depends on how well they adhere to the CLOC Core 12.

CLOC's Core 12 outlines functional areas that legal ops teams need to master to achieve operational success. This competency model aims to outline areas of concern for legal teams and map innovative solutions that change the way legal departments provide legal services. Legal ops teams can use these to achieve operational maturity and improve the legal function as a whole.

CLOC's Core 12 principles include:

Even though contracts aren't specifically mentioned in the Core 12 model, they are a powerful undercurrent of the success of a legal department. This is because legal teams run on contracts. An effective knowledge management program, gleaning accurate business intelligence, and managing legal programs require efficiently managed contracts that are centrally stored and easily accessible across the business. CLM should be an integral part of the legal ops software stack.

Here are five ways that contract management can help legal ops improve their function:

Highly successful organizations use data to make crucial decisions. From comp planning and hiring decisions to budgeting and forecasting, data is the linchpin in most business strategies. Unfortunately, most legal teams lack the technology, processes, and infrastructure to track and manage data properly.

Notably, contracts have some of the most fundamental business data — i.e., who you do business with, average contract value, and the number of executed contracts per quarter or year. This data can provide performance benchmarks that measure the effectiveness of legal ops initiatives.

Using a CLM, your team has access to crucial data that can help them make smarter decisions. Even better, if your CLM integrates well with other data systems across the business, that opens you up to more robust data sets and bolsters cross-functional alignment, which has historically been difficult in the legal department.

It is common for legal teams to run small, utilizing legal operations automation to streamline their processes and maximize efficiency. In fact, according to Legal Dive, the median size of an in-house legal team is six members, which is even bigger for larger companies with higher revenues. Regardless of the team size, all legal teams engage with vendors and outside counsel in some way.

Law firms operate on billable hours, so their fees can end up being way higher than initially anticipated. If not managed properly, these costs can add up. Likewise, if you don't remain mindful of not just the cost of legal service vendors but how well they perform their assigned roles, you can quickly end up overspending and not getting the promised return on investments.

CLM, along with legal operations automation, can help you track obligations and establish metrics to measure vendor and outside counsel performance. Even more, CLM provides powerful contract data that can help you establish benchmarks and track new department trends, empowering legal ops to make smarter decisions about engaging with alternative legal service providers (ALSPs) and still come out on top. By leveraging legal operations automation, you can optimize your legal team's efficiency and allocate resources strategically, ensuring optimal results and cost-effectiveness in all your legal operations.

One of the biggest challenges in-house legal professionals face is a lack of access to historical company knowledge. As companies bring on new employees, it can be difficult for them to speed up in a timely manner if there is no central, easily accessible source of information where they can see what's been done before.

For most companies, this information lives in the brains of the CEO or other long-term employees rather than in onboarding documents. As a result, new hires have to ask around for everything, sometimes even unsure what to ask for or what best practices are. 

Since a CLM is a cross-functional tool, legal ops teams can use it to keep track of historical contract data and other business agreements. This way, if someone needs to know how long someone has been a customer and what standard practice around their account is, the information will be centrally and efficiently available inside your CLM instance. It can become even more powerful if you integrate other essential business tools into your contract management software.

The biggest benefit of using legal ops is allowing in-house counsel to focus on protecting the business. Because legal departments tend to run lean, team members often end up taking on more than they have a capacity for. This can lead to burnout of top professionals and diminish the business' ability to prioritize high-value initiatives that will significantly impact the bottom line.

Legal ops can use CLM to take some of this off their plate. For example, CLM can automate contract creation and enable contract workflows that require less human intervention to move it through the pipeline. CLM helps take care of repetitive, time-consuming tasks and frees up counsel to do more impactful work.

Since any legal team is expected to be a strategic business partner, it needs to participate in its organization's goals and planning. But without the necessary tools or processes, it can be easy to fall behind.

In fact, without the infrastructure for looking forward or measuring success, legal teams can easily fall back into the practice of being reactive and short-sighted. Without legal ops (or the necessary technology), the legal department can be so busy focusing on the flame in front of them that they don't see the fire raging everywhere.

With CLM, legal ops can set and measure against broader business goals and strategic priorities. For example, you can design your contract workflows, approval processes, and post-signing tasks based on your business goals and needs. 

Legal ops teams are the cornerstone of a successful legal department. While in-house counsel focuses on the company's risk profile and determines the contract language that will keep the business safe, legal ops take care of the small but important things, such as making sure that the data in your tech tools is clean, the handoffs are seamless, and the legal department is cost-efficient.