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The Value of Legal Operations

Aired on:March 24, 2021

THE VALUE OF LEGAL OPERATIONS

In this episode of The Contract Lens Podcast, Dan Sloan, a Senior Account Executive at Malbek, talks with Colin McCarthy, CEO and Founder of Legal Operators about the value that legal operations can provide back to the business. Colin lays out the five pillars that underpin the legal operations role: process, legal tech, spend optimization, data analysis, and diversity. He talks about the ways he has seen legal operations evolve over the years and transition into a highly collaborative core function within business, touching other critical areas, like sales operations and revenue operations. Colin highlights the key problems that legal tech can help solve for legal operations professionals and shares the origin story of his own growing community, Legal Operators. So grab a glass of wine, and let's talk contracts!

Intro:
Welcome to the Contract Lens Podcast brought to you by Malbek. In this podcast, we have conversations with contract management thought leaders and practitioners about everything contracts and its ecosystem. Today's episode is all about the value that legal operations can provide back to the business. We are joined by Colin McCarthy, CEO and Founder of Legal Operators, a private and vetted community where legal ops professionals can go to seek answers to their problems. Colin is a visionary and community builder dedicated to helping legal operators understand the complete legal function and break down the silos that sometimes exist around legal operations. So, now it's time to relax, grab a glass of wine, and let's talk contracts.

Dan:
Well hello everyone. This is Dan Sloan with Malbek and thank you for joining us for another edition of the Contract Lens here with Malbek. And what a treat today, we have Colin McCarthy from Legal Operators and legaloperators.com. I know many of our clients, many of our partners are very familiar with Colin. And today we get to turn the tables a bit, right? Colin is normally in the interviewing seat, asking many of those from the legal operators community for their insights. Today, we get to shine a light on Colin and learn a little bit about his perspective on the legal operators community past, present, and future. And very excited to get started. So, Colin, how are you today?

Colin:
Dan, I'm doing great. Thanks for having me. I really appreciate it. And love the initiative that you and the leadership team at Malbek are putting together to support the community and bring this thought leadership together.

Dan:
So, let's go ahead and get started. We have all kinds of folks that dial in and listen to these. Why don't we start with the legal operations function? What is it? Why is it that so many organizations are increasingly turning to the legal operations function in their companies?

Colin:
If you're looking at the traditional legal function, it was really without a business side to it. It was more focused on risk mitigation. The introduction of legal operations has made it more operational. So, if you look at the legal operations professional internally, when the legal operations person sits in a role like this, they're really looking at solving for process. Everything that touches from the business, the in-house legal team, everything from outside the company, from the processes that come in and out from legal, are all set down by a legal operations professional. The professional will document this process really kind of understand and then set up efficiencies within these processes.

Colin:
The other value add from a legal operations stand point is the adoption of legal technology, solving for change management, create more knowledge management for the legal team to be able to function and adoption of the technologies, the onboarding and adoption of these technologies that add so much value to the legal team and the rest of the business. In traditional roles, these operations functions have existed in sales ops teams, finance op teams, and other business functions across the board. And over the years they've moved into legal and it's maturing with a lot of these functions, as I said, the process legal technology and the big one is the budget, the spend optimization for the legal team. How are you looking at your spend differently as opposed to, if I'm a traditional legal role, I'm looking at a contract, I'm looking at a particular clause and I'm looking at risk mitigation on that clause.

Colin:
Let's say I'm in the commercial team, IP team do the same thing with IP copyrights employment, that's all risk mitigation. So it's really creating the business function for legal. And I said that the four pillar in there would be analyzing everything. So having data analytics and measurement for each function that touches that legal team from your budget, your process, every touch point. And that's essentially the operations function that sits in legal. So it's creating all of these experiences, these efficiencies, understanding your budgets and monetizing. And that's where it differs from the traditional legal function.

Dan:
I'll say. It's not only just business management and running the operation, but it's being a little bit more strategic and probably finding new ways to either demonstrate that value back to the organization, or maybe even possibly create value if by legal tech or process redesign. So what are some of the ways that a legal operations professional might be able to add value and improve the way an organization leverages its legal functions?

Colin:
And it all goes back down to measuring everything. And it's giving your leadership team and your GC, it's giving them the optics of a dashboard to be able to see everything measures so they can make decisions to get new budgets in, to make new hires, to deal with outside council differently. It's like if we look at any given legal team, not to speak specifically about a company that I work for, but when I'm sitting in the hot seat, building out this function, the majority of legal spend is going for outside counsel, sometimes in the hundreds of millions of dollars. So what do you do to expedite this?

Colin:
You need as much information as possible to get these efficiencies. And it's running RFPs, which are existing panels, but also exploring the market. You're looking at predictive analytics on lawyer's behavior if you've got a big litigation suit coming in and be able to really understand, harness that information and get the best outcome or bang for your buck, as they say. So one of the ways the legal operator can do is set these processes down early, looking at these efficiencies, working in time memory GC. And as you said, like laying down that strategy early on, but you've got to build to it. It takes time to get there.

Dan:
That's right. And as you're saying, it takes more than the legal function. And historically 20 years ago, 30 years ago, before legal ops even was around, probably fell upon the GC and the legal team and maybe some other folks in the organization to do this. How have you seen the legal ops role evolve over the years? You have the advent of technology. You have this more strategic viewpoint. What have you seen throughout your career?

Colin:
You're spot on. It definitely has evolved over the years. And a lot of it is just a transfer of talent. Legal folks that were traditionally doing it but were not skilled for it, but now they're so aware with it. They're touching every part of the business now, that's not just contracts or IP, it's product development. And there's a lot of more touch with GDPR and these functions coming in privacy issues crossing the board, they're really knowing their customer. So the evolution's allowed legal teams actually cause attorneys to go into legal ops. It's not just the paralegal from before that was doing a couple of legal projects and legal tech projects coming in, it's now bringing a whole host of people in and talents. That could be project managers, it could be IT folks.

Colin:
Some of my friends, big companies like Facebook, that IT backgrounds are build in legal ops functions. It definitely is evolving, it's a whole big picture, but it's telling that story of the whole business now, the business operates. It's not just a legal function anymore, it's a business function within legal and a strong talent from everywhere. And I feel like that's the main evolution. It has become a more awareness around the different issues that are involved, not only legal technology, there's a lot going on with an adoption of the technology or laying down the process. It's the change management aspect so it's like you're hiring for a unicorn, getting somebody with all these different talents, being aware of IT, being aware of business, and then getting somebody that can navigate all these change management challenges and lay down business processes and interact with outside counsel and manage for spend optimization.

Dan:
Absolutely. And you touched on something because, with the advent of legal tech and the growing importance of the access to the data, that data, the insights, the analytics, the risk, that's all contained within the data in these contracts. This is not just for legal function anymore, sales is going to be very keen on gaining access and eliminating some of the friction with their deal flow. The finance organization, very keen on the data, the access to the contracts. So that would suggest that legal operations really needs to maybe interface with sales ops, revenue ops, other departments. What are some of the ways that you seen legal operations work with some of those other groups?

Colin:
I'll give you an example of some of the companies I work with, like startups, you're in crazy mode right? So you're building with sales ops and that situation, your revs ops they're sitting alongside you. You haven't built out your team so you're working directly laying down a process that works for the whole company. But in a bigger company, like most recently Twitter, one of the things that I would look at is process intake triage, what's coming in towards legal? Where's it coming from? It's coming from the sales team. And some of these touch points to the legal team are usually from a commercial standpoint, are usually starting in the systems. Like Salesforce went into a contract management system and then launching the negotiation and legal well, how it worked with sales ops teams and rev ops teams, there's all different approval processes that you got to build in and mechanisms based on dollar amounts, location, all these different things that you've got... Data points that you've got to guest in place.

Colin:
So you're constantly working with these teams to see what their best processes are. Timelines, what system they're using outside of your legal system? How are you getting this information? How are you sharing this? And for the legal team, the folks that are reviewing these contracts, these sales teams are their customers. So you got to build that bridge for them. The revenue team and our customers as well. These touch points is a good way of legal really kind of get involved in the whole business and just having... Instead of just reviewing contracts, they're a part of the whole story of the business.

Dan:
Absolutely. So what are some of the specific problems that legal tech then solves? Certainly there's pre-execution with contract lifecycle management, there's post execution, and some of the analytics, the commitment tracking, the exposure to the data. How would you describe maybe to somebody new to legal tech some of the problems that legal tech some of these systems can support?

Colin:
So, I'd say, first of all, imagine sitting in an office and looking at a team that are usually sometimes on-load as they get bigger. So you'll have a commercial team, a product team, a procurement team, an IP team, litigation team, compliance teams, et cetera. And all these are sitting around you and you're responsible for every one of these functions. So I would say about legal tech in this situation where the big value add is like processes, laying down, dealing with no code solutions. Just being able to build the workflows that support all of these different units that tell a story and get approvals and the rest of the business letting down a Q and A feature where empowering the rest of the business to interact with legal and measuring every data point along the way.

Colin:
Contract management is probably one of the hottest teams. Every company needs it, they need at least need a repository that every company that exists sends out NDAs. So you're going to need those processes in place. You're billing with outside counsel, you're going to probably have a new billing system and matter and management system is very, very important. And then an RFP tool is always really good for your outside counsel to benchmark. You're getting the bang for your buck with these attorneys, if one attorney is charging on a particular matter, a particular price, you should be able to benchmark across the board and be able to see this. But there's so many different tools out there in legal tech that can bring so many... They bring a host of challenges, but they can bring so much value to your team as you're building off.

Colin:
And some of the problems that need to be solved, mention it's, we always go back to the word efficiency, but the main thing is being able to measure what you're doing. Otherwise, it's just become a continuous vacuum that builds up and you're getting no data or you can't make any actionable decisions on. So, it's laying down a system that connects to other systems, not so desperate that you're just getting flaky data appliance, but you're actually getting something that tells the story of the whole business. That's important but it's a challenge to get there. So it's got to be built incrementally. I would say to somebody new to legal tech how to get in there and really understand the ecosystem and where the value adds are.

Dan:
So that's a really great point because I think if you were to go back 10 years or even five years ago, legal tech would have been doing quite well, if it was just supporting some of that operational efficiency, maybe improving some of those cycle times. And like you say, allowing the organization to say, "Okay, where's my contract, or where are my bottlenecks?" But with the advent of AI and some of the newer technologies, there's kind of a bright new future, you can get into a deeper level of analytics. You can get into auto review and drafting and understanding where your risk is and your language and being able to look at trends probably in ways that we never would've thought of as recently as three, four or five years ago. So I guess the question is, where do you see the industry going with legal tech? What are some of the horizons that are out there that those in the community can look forward to?

Colin:
Dan, you touched on it. Just to give you a backstory on this. When I was starting out, I think there was about a hundred or so legal tech companies in existence. Right now, fast forward a decade and there's 40,000 or more, and they're popping up left right and center-

Dan:
You don't say.

Colin:
So competition is fierce. I remembered one of the tools that I used back in the day, on three different companies, at this, we're probably one of the first to market and enterprise. And they had a lot of gaps all over, but they had no competition and they run rough shot over the market. They're ran Salesforce, they're ran in... And then you've seen the emergence of companies coming up and getting major funding and just getting catapult this because they were solving these challenges whether it was with AI or there were more... It was easier to adopt them number one. But they were solving a challenge off Salesforce. And then you have an emergence of tools like... I'll speak to Malbek, love you take the very best of what Optus did and you would make it workable which word feature that I've seen recently. And I don't think there's anybody quite on the market being able to do that yet-

Dan:
Thank you.

Colin:
... before you guys thought of really executed that one. And the folks in my community that talked to that is like, this is the best feature hands down. They've seen a legal tech and point is it's evolved so much that... You're right with these AI tools, like now you can just... Whereas I'd be doing offshore projects, literally like do quality assurance on every document that's signed up. Now you have AI that can instantly review it that 97 to 99% accuracy on any particular clauses. And then I just got to do manual checks which creates massive efficiencies and it speeds up the work cycles. Technology has definitely evolved, it's definitely getting more competitive, the features, the benefits, and it's a very, very exciting time for a buyer especially in the times we're in now, we're working from home and the use of this technology it's ramping up. And it's an exciting time to buy technology.

Dan:
Well, it's an easy buy if you know what you need, know what you want, know what you want to measure to your point. And so that begs the question, there must be some good organizations out there, associations that support the community with some of the best and brightest talent, the networking, some of the latest trends. Tell us about Legal Operators and what a fantastic opportunity. I know you've got over 600 members at last check, over 3000 discussions going on with the community. It's absolutely fabulous what you're doing for the industry. Tell us a little bit about the group.

Colin:
We have about 1500 members signed up on our platform. And we started off Dan, we started off as really a grassroots movement where just a bunch of friends got together. We had a basement in San Francisco in the normal days where we had a company out of the UK, a law firm that was doing some business development said, "Hey, we'll give you this space. We'd like to learn more about what legal operations is." So they gave us a space and then every month we'd have like... I think the first one we had 12 folks show up. By month three we had 85 coming regularly every month. And then I'm like, "Wow, we need to move this down to LA." So we moved to LA and Santa Monica. I moved in between both. And we were getting 50 a month coming between the two of those. We moved into Chicago, 90 people there, 350 people register for an event up Bloomberg law's headquarters, where I'm on their advisory board. Got a bit of support there and along comes COVID.

Colin:
So I'm like, "Okay, we need to keep this momentum going. And it's like we don't want something so special to die out so soon." So we moved in-person events to online, and we did 78 events as last March online. 50 of those sponsored and kind of tailored around the four topics that I've been really excited about in legal ops, like process, legal top technology, spend optimization, data analytics. And just added a fifth one, which is... It should have been there from the get-go, but this is how we're learning and growing. But diversity and empowerment, I feel like the empowerment goes far beyond inclusion. So what we're trying to do is empower our community, the members in our community. We really want to offer members of our community education initiatives, empowerment initiatives, and execution, all done through content community, and collaboration, where we have a Slack lab platform where all our members share ideas and thought leadership and latest technologies.

Colin:
In addition to that, we do the webinars. We're building out a legal technology hub and a legal tech directory is coming soon, where folks will be able to check out profiles let's say, of Malbek, what Malbek is doing, your testimonials and all that stuff. And be able to get a good compass on what legal operations is about. And the real focus is lifting up the legal operator that sits in their function at work, and sometimes have blinkers on. But there's a whole world outside whether you get support from the big four, ALSP providers, everybody that I brought to my community. I was probably the first to do this, but I brought folks from the big four ALSPs law firms, partnership level and below, but just so they could be community voices and help folks that had questions.

Colin:
So we could all help each other because we don't know what we don't know. My advice to people is, come to me, we're your eyes and let's learn together. And if you're going to stumble, stumble forward and we'll be there. So, it's a real community initiative. It's grown crazy. Like last year I've had... In one year of being in an existence, I had 10,000 folks on my websites. I'd 5,000 viewing my online videos. And as I said, I had like a 2,500+ unique attendees to webinars as well. So it's got a lot more attraction than I thought. So this community thing is very, very special. I can't say enough about the value that I tried to bring it to them, but they bring to me as well. It's just really, really unique.

Dan:
That's very exciting to hear, because obviously process optimization and legal tech, spend optimization, data analytics critical to the enterprise. Now you're talking about the community. Legal operators is now becoming a vehicle for change it sounds like. And that's really tremendous and something that certainly, we wish you the best of best of luck on that and success, we'll be watching very closely. How do folks get involved? How can folks come to know you and your organization?

Colin:
So we can communicate directly at Colinlegaloperators.com. If you've been displaced because of COVID, I'm going to offer you a free membership right now. If not, I try to charge my members a nominal fee to be involved just so you have some skin in the game. But reach out at www@legaloperators.com to get involved. We'd love to hear your story or Colinlegaloperators.com. Like one of the big initiatives that we're pushing forward right now and problem we're trying to solve is with the top 200 law firms. We want to serve at every one of them and we want to house all the survey information so anybody in our community can come by, get this information and download it and have it instead of... The issue is law firms. Each law firm has responded to 300+ surveys every year. Sometimes they're not responding.

Colin:
So we're trying to solve the law firm problem. And we're also trying to solve the community problem where anybody that's in-house can come to us, download this information free. And what we do is, we go beyond the peal. We go beyond the American Bar Association Survey, which falls short on origination credit on attrition details and on diversity scoring. So for instance, where we differentiate ourselves is, we'll tell you where the origination credit comes from and who's getting credit? Is it a person of color getting credit? Is a person underneath diversity categories getting credit? Or is it the same old partners in law firms that are just taking credit for everything? So is it a Hunter versus Kendall model? Or is it an equity shared leadership?

Colin:
And these are some of the important questions that the community is looking at. Every year right now, or by annually, what we're trying to do is make these data points available throughout the year as well. So it's not just one sort of a every year that law firms are scrambling to put together, sometimes not responding to some of my community members. What we'd like to do is build that bridge between the two and make that offering available. And that's an initiative that we're working on under our diversity and empowerment pillar. We got some big names to support that initiative.

Dan:
It's terrific and very, very exciting to be able to have the effect, not just in the legal community, but the larger community as a whole. And so very best wishes of success on that. The website, just for those listening, wwwLEGALOPERATORS.com. And Colin, it's been an absolute treat to be able to spend this time with you today. So many of us here at Malbek, and like I mentioned, in the opening with our clients and our partners are dialed in to the Slack channels and the different conversations that you and your group brings out. And we're so grateful for all of your efforts. It sounds like it's a very exciting time, not only for legal operations as a whole, but certainly your group is as you've just outlined for us. So just want to say thank you very much and I hope that you stay very safe and well, and very much appreciate your time this afternoon.

Colin:
Dan really appreciate it. I love you guys over at Malbek and I wish you the best of success in the future. You've got a phenomenal team over there and leadership team. You're doing great things in our industry, and we look forward to hear more about you at Legal Operators.

Dan:
Very welcome. Please stay safe and well, and we'll be in touch shortly. Thank you so much.

Colin:
Thank you so much man, bye-bye.