A Magna Carta for Corporate Legal Services? Legal operations group sets about transforming a system in dire need of change

Friday, May 5, 2017 - 21:52

Listening to Jeff Franke talk excitedly about the second annual CLOC Institute brings to mind Martin Luther and the 95 Theses. By nailing his grievances with the Roman Catholic Church to the door of All Saints’ Church in Wittenberg, Germany, the 16th Century theologian triggered waves of profound change across Europe – the Reformation – and his own excommunication.

Not that Franke, a key player on the executive leadership team of the Corporate Legal Operations Consortium, in any way resembles the theologian. Nor does he appear to be in any immediate danger of excommunication. He does, however, have a world of issues with law firms, law schools, in-house legal departments, and other players in the corporate legal services ecosystem.

“We have all sorts of grievances,” he says.

Next week, some 1,000 participants in that ecosystem – double last year’s number – will gather at CLOC’s 2017 Institute to share best practices on the basic blocking and tackling of legal operations, as well as air and seek solutions to those grievances. One major goal of the Institute is to have a big, broad conversation that advances the reformation of a system in dire need of change. How delicious, then, that the CLOC gathering is taking place this particular year, which marks the 500th anniversary of the decision in 1517 by one of the biggest change agents of them all to stick a thumb in the eye of the Pope. It promises to be a high-energy affair that generates as much light as heat.

“What distinguishes CLOC and this Institute is that it is a coalescing of a lot of disparate players, many of whom are competitors but all of whom favor major change and large conversations,” Franke says. “It’s not a group of finger pointers or talking heads. These are people who are serious about change. They are people with a track record for making things happen – for getting things done. If there’s one thing that sets CLOC apart, it’s that its leadership, members and ecosystem supporters execute.”

Franke, chief of staff to the GC and assistant general counsel of global legal operations at Yahoo, played a leading role in developing the Institute’s 75-session agenda. It is designed to work at two levels: micro and macro.

At the micro level, one centerpiece session, called “Legal Operations Department Maturity Model: How do you Rate?,” focuses on the 12 core competencies that CLOC uses to define legal operations. They highlight how legal operations is a “multi-disciplinary function focused on optimizing legal services delivery.” The competencies cover a wide range of disciplines – from strategic planning and financial management to communications and cross-functional alignment. Franke, who is leading the maturity model session with Kevin Clem of HBR Consulting and Pratik Patel of Elevate Services, elaborates:

“The core competencies are a reference model that sets forth what ops professionals need to be able to execute on day in and day out, and the Maturity Model session expands on that reference model by looking at what legal ops teams should do and actually do and in what order as they develop the function,” he says. “The corporate legal services industry is very nascent. There was no standard before CLOC. And Elevate and HBR have contributed a lot of great content and benchmarks to the Maturity Model session so that it serves as a litmus test for functional maturity.”

Because the 12 core competencies span such a wide sweep of topics, he says, it’s pretty much impossible for one individual to have the background and experience to cover them all. How do you build budgets? What e-billing solution is right? How should you handle e-discovery? When and where should I leverage LSOs and other alternative staffing models – and what provider should I use for what? The list goes on and on.

CLOC is trying to address that by capturing best practices to build a core curriculum around the competencies. “Ultimately, CLOC’s goal is to create and provide new and experienced ops leaders with a repository of actionable knowledge to educate, inform and explain exactly how to deliver on all of the core competencies.”  

The flip side – the macro level – is the Magna Carta session. If that sounds a little grandiose, well, that’s because it is a little grandiose. The group’s goals are nothing short of profound, root-and-branch transformation of the entire entrenched corporate legal services ecosystem. Given the magnitude of the task – fixing a system rife with change-averse stakeholders – it will require some seriously BIG thinking.

“The industry is broken and needs change,” Franke says. “There are six core participants in the corporate legal services ecosystem – corporations, law schools, law firms, regulators, technology providers, and LSOs/other non-law firm service providers. Four or five of them are doing a horrible job. They are participating sub-optimally.”

He singles out the law schools for using the Socratic methods and such set forth 100 years ago to churn out ill-trained graduates saddled with mountains of debt still in need of years of apprenticeship to actually practice. He does not spare the companies themselves – the clients – who he says have plenty to do to get their own houses in order. They are among the biggest contributors to industry dysfunction. And while he goes a bit easier on industry regulators, he is critical of the guild mentality reflected in the strictures against the unauthorized practice of law (UPL) and alternative business structures (ABS).

“They're inhibiting change,” he says. “The UPL and ABS regulations drive huge inefficiencies in the market and cause major problems that cascade to a myriad of other areas. We’re not getting the plethora of different shapes of legal services providers that we need.”

CLOC gets it that UPL and ABS play an important role in the provision of legal services to consumers, but Franke says the implications and benefits associated with those rules drive the wrong outcomes in the corporate legal services space. “They drive market inefficiencies without commensurate benefits. And that doesn’t even speak to the downstream implications for access to justice issues for the rest of society on the consumer side.”

The second day of the Institute is framed by two macro-level sessions that together comprise something called the “Magna Carta Big Thinker Program.” The first is a morning panel featuring Ralph Baxter, the former leader of Orrick who now serves as chair of the Advisory Board of Thomson Reuters Legal Executive Institute; Scott Westfahl, director of Harvard Law School Executive Education, who teaches courses on innovation at the law school; Mark Ross, Integreon’s global head of Legal Process Outsourcing; Andrew Perlman, dean of Suffolk University Law School, who served as vice chair of the American Bar Association’s Commission on the Future of Legal Services; and Lucy Bassli, assistant general counsel for legal and corporate affairs at Microsoft, where she provides legal support to the central procurement organization globally. 

The second session is an in-the-weeds workshop designed to make progress in forging a set of “grievances” and the tenets of a “new Magna Carta that would address clients’ concerns and lay the cornerstone for a better system of corporate legal services.”

As if that’s not enough, well-known technologist, author and all-around superstar legal visionary Richard Suskind will participate in a lunchtime interview centered on his new book, “Tomorrow’s Lawyers: An Introduction to Your Future.”     

In the end, Franke says, these and the more than 70 other sessions are designed to drive CLOC’s central mission: “bring order to chaos.” Given the backdrop of a system in a profound state of disarray, Franke is surprisingly upbeat – ebullient even – about the ecosystem he is working so hard to strip down to the studs and rebuild.

“There isn’t any reason to be downbeat about the legal industry,” he says. “Change is going to mean that various players are going to be doing things differently, and there will be winners and losers, but corporations are not going to need less legal services and guidance. Globalization is by no means done. The regulatory environment across geographies is as disparate as ever and changing constantly. We will need as much or more legal support for many years to come.  The key here is bringing down the cost a bit. The inefficiencies in the system make it just too expensive right now. With slightly lower price points, demand will increase radically.”

Moreover, he says, in-house lawyers enjoy a special vantage inside their companies – a vantage that gives rise to exciting possibilities. Compared to a CFO, for example, who takes a narrower view of the world, lawyers, like CEOs, have a 360-degree perspective that encompasses virtually all corporate functions: marketing, HR, IT, product and service development, public policy and more. In-house lawyers’ ability to “connect the dots” is increasing their value as trusted internal advisors and business partners.

“The executive staff and their teams are leveraging our lawyers more than ever,” he says. “I’m bullish about the opportunities for lawyers. There’s a huge opportunity to deliver more service – better – and cheaper.”  

He admits, however, that it has not been easy for him or the other CLOC leaders working on the Institute. They all have demanding days jobs that entail wrestling with the very challenges plaguing the ecosystem they are hellbent on reforming.

“CLOC is different from other nonprofits,” he says. “We don't have the typical executive director organizational model. It’s just a group of people with a lot of support from others in the ecosystem who are passionate about this stuff. This year’s Institute does not even start until next week, and yet we’re already looking forward to new initiatives in the second half of this year, as well as CLOC’s 2018 Institute.” 

Only time will tell if CLOC’s attempt to create a Magna Carta for the corporate legal services industry will bring about a Martin Luther-esque Reformation of the corporate legal services industry, but if it doesn’t, it won’t be for lack of enthusiasm or effort.

Martin Luther himself once said, “You are not only responsible for what you say, but also for what you do not say.” CLOC’s work seems to operate from a parallel premise.

“We are not only responsible for what we do, but also for what we do not do,” Franke says as we wind up our conversation. “If we want to change the industry, we have to define that change and act upon it. Working with a group of the willing from across the ecosystem, CLOC is going to try to provide the platform and leadership for at least some of that change.” 

Stay tuned. This should be fun to watch.