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Legal19 april, 2024

Measuring the level of maturity of your legal function

Discussion with Alan Ragueneau, expert CLD consultant

Driving efficiency for legal departments is becoming a key objective for many global businesses. It is important to clarify that efficiency goes beyond mere operational excellence (e.g., assessing turn-around time to complete a contract negotiation or consumer claim). Indeed, it also involves navigating increasingly complex legal landscapes, managing risks and opportunities effectively. However, many organisations struggle to assess the maturity of their legal function accurately because they lack structured data relating to the activities of their teams and external partners. A study conducted by Harvard Law School reveals that an astonishing 94% of legal departments struggle to gather relevant data efficiently. For this reason, we invited Alan Ragueneau, legal advisory business consultant, to help decrypting the secrets of assessing the maturity of a legal department and the key aspects to consider identifying areas of optimisation.

Alan has extensive knowledge and insight into supporting transformation projects of legal functions. His 20 years’ experience in the legal department of large global businesses and recent work with Fortune 500 companies in various industries and countries have provided him with an in-depth overview of the recurring challenges faced by lawyers. He has developed a unique methodology to design and implement legal operating model optimisation program.

Data’s key role

“Legal departments do not have (structured) data”, explains Alan. He indicates that the first challenge that most of the organisations he is in contact with have is their lack of structured data relating to the activities of the law department.
For example, the Chief legal officer of a large international life science company had been challenged by her board of management. They asked her to reduce her team by 30% based on generic SG&A benchmark (selling, general and administration). If she started working with her team on collecting some information regarding their activities, such as the number of contracts they managed over the past year, the number of strategic projects, they did not have holistic, structured data that could help demonstrate the level of efficiency of her law department that goes beyond the number of headcounts...

Beyond anticipating the challenges from the board of management, structured data relating to the activities of the law department will enable the chief legal officer to drive her legal function like a business and over time demonstrate that time wasted by her team today on low add value work is increasingly managed by alternative cost-efficient solutions including a combination of business self serve tool, alternative legal service providers and technology.
Finally, this will help the CLO drive team engagement: her team will be able to focus on high value activities, and she will be able to grow her lawyers through a data driven strategic development plan. This will also improve the risk management as it will enable to develop the right legal competences to manage never ending new enterprise risks and opportunities such as AI and ESG.

Positioning of the legal function the right way

The position of the legal function within an organisation can impact its effectiveness.
As a matter of fact, in many cases especially outside the United-States, the Chief Legal Officer (CLO) still reports to a member of the board, typically the Chief Financial Officer (CFO) rather than the Chief Executive Officer (CEO). This reporting line often reflects the perception that the legal department is primarily a cost centre as opposed to a strategic partner that contributes to the organisation's success equally to the rest of the organisation.
A second key aspect to measure how the legal function is positioned is whether legal aspects are embedded into business processes. Observation shows that many organisations are still living in what we call business and legal isolation. Businesspeople are reluctant to welcome lawyers when they design or adjust their processes and lawyers do not see the value of contributing to business processes because they are overwhelmed with so called “core” legal activities (the more with less challenge).
Finally, there is often a lack of support from the top, such as the board of management, in driving and championing transformation efforts. Without adequate backing, it becomes difficult to secure the necessary resources and buy-in from the entire organisation and key stakeholders.

Sourcing model

To assess the maturity of a legal department, it is crucial to evaluate the legal operating model. Many legal departments continue to follow traditional sourcing models where external spend is predominantly allocated to law firms based on hourly rates. This approach often fails to optimise costs and limits the usage of alternative sourcing solutions.

Alternative Legal Service Providers (ALSPs), technology solutions, and business self-serve platforms offer opportunities to optimise legal operations. However, the level of investment in these alternative sourcing solutions remains marginal, hindering the department's potential for growth and efficiency.

Transformation expertise

Budgetary constraints often limit the legal department's ability to engage in meaningful transformation initiatives. The allocation of financial resources becomes a critical factor in the department's capacity to modernise its operations and embrace innovative solutions.
Also, there is a shortage of expertise within legal departments, and more broadly in companies, to lead and implement transformation initiatives effectively. Without the necessary data, skills and knowledge, the department may struggle to adopt new technologies, redesign processes, and implement change management strategies.

By understanding the key aspects discussed in this article, businesses can gain valuable insights into the current state of their legal departments and identify areas for improvement.
To assist organisations in this journey, Alan and Wolters Kluwer digitalisation experts have jointly developed a comprehensive maturity assessment tool to evaluate the readiness of legal departments for transformation projects.
Take the questionnaire below and get your personalised report.

Assess your legal department's maturity now

Get your maturity score and personalised insights delivered by expert CLD consultant Alan Ragueneau

Take the assessment
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