Legal Ops at a Crossroads: Balancing Growth and Tension in Today's Legal Departments

With artificial intelligence (AI) emerging as a game-changing force, the legal operations landscape is evolving rapidly. However, a recent study reveals a complex picture of growth and challenges within legal ops departments. While budgets and teams are expanding, internal tensions and resistance to change are hampering progress and job satisfaction.

These insights come from a new national research study of 200 legal operations professionals at U.S. companies with revenue of $250 million to over $1 billion, conducted by Wakefield Research and commissioned by Axiom. The study explored crucial aspects of corporate legal ops teams, including budgeting strategies, team dynamics, technology adoption, and career satisfaction.

Let's dive into the key findings of the study and examine both the encouraging developments and the challenges for legal ops today.

The Encouraging News: Budget Growth and Team Expansion

Despite widespread budget cuts across legal departments, legal ops teams appear to be bucking the trend. The survey found some encouraging signs of growth and investment:

1. Budget Increases

• 83% of legal ops professionals saw a budget increase last year, with an average increase of 5%.

• 81% anticipate another increase in the next budgeting cycle, with an average predicted increase of 6%.

2. Team Growth

• 94% expect their legal operations department to grow in the next two years.
• Close to half (48%) predict moderate to significant growth over this time.

3. Long-term Investment

• 77% of organizations with legal ops teams established for 10 years or more reported a slight (1-5%) budget increase in the past year.
• Nearly all (94%) of those long-established teams increased budgets overall and none reported reducing their budget.

This positive budget outlook may reflect the rising importance of legal ops as a crucial in-house partner, especially given the growing role of AI in law. It's particularly noteworthy when contrasted with declining legal team budgets overall.

The trend is even more pronounced in larger organizations and those with well-established legal ops teams:

• 59% of legal ops professionals at larger organizations anticipate moderate to significant growth, compared to 37% in companies with less revenue.
• 89% of respondents at larger companies anticipate an increase in the next budgeting cycle.

This more aggressive budgeting stance could reflect the value in-house teams are recognizing or anticipating from their legal ops functions. It may also indicate the need to invest in legal ops to respond to myriad opportunities offered by AI and other tech and talent integrations.

One intriguing question arises: If most general counsels (GCs) reported budget cuts to in-house teams overall, how are legal ops teams seeing increases? One possibility is that GCs are strategically shifting resource allocation to better support legal ops, recognizing the importance of investing in AI and legal tech—initiatives most often owned and implemented by legal ops teams.

The Challenges: Departmental Tension and Power Dynamics

While budgets are expanding, the survey uncovered significant challenges in team dynamics and decision-making processes. These issues represent a major obstacle to the success and effectiveness of legal ops teams:

1. Widespread Tension

• 100% of legal operations professionals reported experiencing tension or conflicts between their legal and legal operations teams due to power dynamics or decision-making authority.
• 41% indicated this dysfunction occurs often. 

2. Limited Influence

• Only 13% of legal ops professionals said they feel they play a crucial role in department decisions.

3. Sources of Conflict

• 60% said they feel tension due to a perceived power imbalance or lack of respect.
• 64% reported tension due to a lack of defined roles/responsibilities or overlapping skills/expertise.

This disunity exists not only between in-house legal teams and legal ops but also within legal ops teams themselves, particularly between lawyers and non-lawyers. The survey reveals an "elephant in the room"—something many legal professionals have long recognized: power dynamics and office politics fuel misalignment between lawyers and non-lawyers across the legal department.

The primary sources of tension leaving legal ops professionals feeling undervalued include:

1. Perceived power imbalance or lack of respect
2. Lack of defined roles and responsibilities
3. Overlapping skills and expertise
4. Differing priorities between teams
5. Insufficient communication

Unsurprisingly, these issues can lower job satisfaction, increase attrition, and ultimately prevent teams from functioning well and meeting their goals.

Technology Decisions: Influence and Resistance to Change

The survey also shed light on the challenges legal ops teams face when it comes to technology adoption and decision-making:

1. Limited Decision-Making Power

• While all legal ops professionals reported being involved in technology purchases to some degree, only 58% said they hold a decision-making role or are part of a team that does.
• The remaining 42% said they have some influence over technology purchases but are not primary decision-makers.

2. Resistance to Change

• 58% of legal ops respondents pointed to a lack of team leadership's buy-in or team resistance to change as barriers to implementing new resources or tools.
• 95% said the department's in-house lawyers and paralegals are not completely open to making changes based on their feedback.

3. AI Adoption Challenges

• 99% said barriers prevent them from adopting more AI tools and techniques.
• Just 37% reported their organizations have policies in place for AI use.
• Only 3% of the AI tools legal teams use have been explicitly approved for use by their legal departments.

These findings highlight a significant disconnect between the potential of new technologies, particularly AI, and the ability of legal ops teams to implement them effectively. The lack of clear policies and approval processes for AI tools is especially concerning, given the rapid advancement and potential risks associated with these technologies.

Resourcing Concerns

The survey also revealed key challenges related to resource management:

1. Law Firm Management

• The top resourcing concern was spending too much time managing law firms.
• 100% of legal ops professionals said there's at least one problem with law firms making them an ineffective solution.

2. Staffing Issues

• Not having the right amount of staffing bandwidth was the second most cited concern.

3. External Resource Management

• Spending too much time managing other external resources rounded out the top three concerns.

These issues underscore the need for legal ops teams to find more efficient ways to manage external partners and allocate internal resources effectively.

Conclusion: Navigating the Crossroads

The legal operations function stands at a critical juncture. On one hand, there's a clear recognition of its value, as evidenced by growing budgets and expanding teams. On the other hand, significant internal challenges—particularly around team dynamics, decision-making authority, and resistance to change—threaten to undermine its effectiveness.

To capitalize on the opportunities presented by increased investment and emerging technologies like artificial intelligence, legal ops teams and their organizations must address several key areas:

1. Improve collaboration and alignment between legal and legal ops teams.
2. Clearly define roles and responsibilities to reduce tension and overlap.
3. Empower legal ops professionals with greater decision-making authority, particularly in technology adoption.
4. Develop and implement clear policies for AI and other new technologies.
5. Find more efficient ways to manage external resources, particularly law firms.
6. Address resistance to change through better communication and change management practices.

By tackling these challenges head-on, legal departments can unlock the full potential of their legal ops teams, driving innovation, efficiency, and ultimately, better outcomes for their organizations.

To discover solutions to these challenges, like what’s the #1 KPI for legal ops success and how technologies like AI are influencing change in legal departments, we encourage you to read the full whitepaper. It offers deeper insights into these trends and provides strategies for navigating the evolving landscape of legal operations. Don't miss this opportunity to stay ahead of the curve in the rapidly changing world of legal ops.