3 tips from legal ops experts for collecting data to level up your legal department
One of the most pressing reasons for methodically collecting data is to “justify the cost of the legal department” and “demonstrate the value.”
So said Jenny Hacker, the Head of Legal Operations for Royal London at a recent roundtable discussion we hosted. She was joined by Nick Cranfield, ex Global Director of Legal Operations at Dyson.
Justifying those costs is traced to knowing, with precision, what the legal team is working on, Jenny continued. For example, if the legal department doesn’t have the “capacity or capability” to staff a service request, “we’ll need to go external.”
Going external requires a budget, which is when the business starts asking questions such as:
- “Why can't you do it internally?”
- “What is the legal team doing?”
- “Why do you need so many lawyers?”
- “Why are you spending so much budget externally?”
The legal team must be able to answer those questions with data right away. Legal departments that struggle with these answers feed the perception that legal doesn’t have a handle on its work and costs.
At Royal London, which had a smaller legal team at the time, the need for data to justify spending became urgent when the company initiated a 40% cost-cutting challenge across the board for all supporting functions including legal.
For Dyson, it was simply an internal desire of the leadership team to get a better handle on the department’s legal work. The team had grown organically to “about 170 people around the world doing legal, IP and compliance work” – and there were relying on status reports from key leaders. However, those reports tended to be long – 10 pages or more –which only added work and didn’t even provide the right data to get a good snapshot, according to Nick.
Both legal teams turned to data. Below are some of the lessons Jenny & Nick shared that stood out to us during the roundtable discussion.
1. Be “purposeful” about the data you collect.
“That's one of my top tips – to be purposeful,” said Jenny. She notes her team wasn’t purposeful when they started the project. This meant the legal operations team “spent a couple of difficult months trying to analyze data that just wasn't right.”
Eventually, they realized the data they collected wasn’t helping and resigned to start over. This was frustrating for the lawyers on the legal team, who felt like they had already provided the answers to the questions legal ops was asking again.
There is an upside though: once they were able to get the right data, in the right format, they were quickly able to make sense of it and draw some conclusions.
2. Consider existing sources of data.
Nick said Dyson began its data collection by asking this question: “What data might already exist that currently isn't being extracted and analyzed that we can use?” The answer for them turned out to be the company’s procurement and HR systems.
The data gleaned was eye-opening too. The legal ops team had polled the leadership as to how many law firms they thought Dyson engaged around the world. The answers ranged “from about 30 to 100,” but the data showed it was precisely 115.
That finding opened a new line of thinking – was that number an appropriate number of firms? What work were they sending and where? Did they have the right firms doing the right work?
Royal London had a similar experience. They asked their law firms to provide spend data in a spreadsheet – and then compared it to payment data pulled from their financial system. Surprisingly, the numbers didn’t match.
What was happening? Some business stakeholders were instructing law firms directly – and were responsible for incurring legal expenses. This spend was outside the purview of the legal department – and the solution was to route all legal work through the legal department.
This is a fairly common problem in financial services. In fact, survey research shows centralizing all legal spend (49%) through the law department is one of the top 10 techniques used to control legal cost.
3. Be transparent about the goals of data collection.
When legal ops start asking questions and collecting data, it can sometimes leave the legal team uncertain about the potential consequences. In other words, lawyers wonder if it will require them to change how they work, what their role is, and potentially leave them out of a job.
Nick said Dyson was very open and transparent about the goals of the project. The team size had grown such that restructuring was a possibility, but not a certainty. However, leadership emphasized three key points to the team:
a) data will drive the decision-making, but we will be compassionate and treat everyone fairly;
b) participating is your chance to shape the findings; and
c) change could be good – leading to a happier workforce and a better environment.
At Royal London, Jenny said the legal ops team stressed the goal of the project was to improve the efficiency of the legal department. In other words, it would (and eventually did) free the legal team of the rote tasks – like NDAs – and refocus on strategic legal work like M&A transactions. That appealed to the lawyers.
Jenny also noted when the data analysis was complete, they had one of their outside law firms review the data with the legal team. This was done in a workshop that looked at the business strategy, how well legal work aligned with that strategy, and provided a chance for the team to weigh in on the analysis and influence the resolution. The law firm served as a neutral third party which alleviated fears and built trust.
Legal becomes finance’s favorite
Nick noted the data project at Dyson changed the perception the finance department had about the legal team. They went from being the “least favored function” that couldn’t articulate where it was spending money to the “most favored business support function.”
Likewise at Royal London, this went even further, according to Jenny. The finance team was so impressed that it promoted the idea of investing more in legal tech.
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Note: Jenny’s tips on data collection stem from a large legal department innovation project, which she shared in a co-written article for The Docket by the Association of Corporate Counsel: How Royal London’s Legal Operations Team Used a Data-Led Approach to Improve Decision Making.
Image credit: Pixabay