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Legal operations: how to excel at financial management

Legal operations is so important, we’re writing an eBook on how to make it work for your company right now, with experts exploring its key competencies.

Jameson Monteiro, Head of Legal Operations at Assurant, shares his experiences with in-house financial management in this preview post. For early bird access to the full eBook before its launch in September, get in touch. Don’t forget to follow us for the latest insights. The views in this article are the author's own, and do not represent the views of Juro nor those of CLOC.

It’s safe to say that the influence of financial pressures on legal since the global financial crisis has caused profound changes in what we do, and how we do it. The first change to note was that the instruction from finance to make budget savings was now a concern that applied to every team. The prevailing wisdom had seen legal as the tail wagging the dog: a passive participant in its own budget conversation, usually told to reduce expenses regardless of what it needed. The development of legal operations as a discipline has allowed us to challenge that assumption, and emerge as a genuine business partner, due to the value we can bring to the table. The cost pressures remain, but we have a voice: where before we were told what to do, now we’re asked.

You need friends

This all means that the legal operations function is empowered to take control of legal’s budgeting and financial management. In my case, my internal customers are all the direct reports of the GC: the head of litigation, the head of government relations, the deputy GC, the head of corporate legal. I take budgeting and spreadsheets off the plate of these lawyers and let them focus on what they’re really here to do. Lawyers neither need nor want to analyse every line of a complex budget - therefore it’s our job in legal operations to understand that detail at the ground level, and know which details need to be reported up to the key decision-makers at the top.

I take budgeting and spreadsheets off the plate of these lawyers and let them focus on what they’re really here to do

To do this successfully, you need friends. It’s vital to network with the right people around the business: senior financial leadership under the CFO, and the financial stakeholders for each business unit. Understanding the financial operations of each business unit, at a granular level, will help you align with them - do they budget quarterly, or to an annual timeframe? To the calendar year, or the fiscal year? Is their business unit (and the company as a whole) in a growth phase, or non-growth? Is it preparing for a sale, or an acquisition? As well as aligning on these issues, you need to align your systems - do they manage budget with enterprise software? Do they use SaaS providers? Can you get a login to their dashboards? Access to the right people and the right systems will help you collect the data you need to make informed decisions, and report on those decisions at the right level - but you need stakeholders around the business to trust and buy in to the process before you can do this.

Accurate forecasting

The number one external spend for legal departments is always outside counsel, and colleagues in the business often struggle to understand how those costs break down. Using an e-billing / matter management solution is a great way to cultivate a historical dataset, against which you can forecast future matters, whether that’s a lawsuit or a response to a new regulatory issue. Once an external law firm is attached to a legal issue, we can analyse their previous costs and project several billing scenarios - usually high-end, middle and low-end - and present those back to the business. With historical data to refer to, we can show them how each scenario would likely affect various financial and operational metrics in the business, and they can choose their preferred approach.

For legal to try and declare with any great certainty which will be the big-ticket legal costs several years from now is probably futile

Not only does this bring predictability, but it gives business units ownership of legal matters - they can prioritise the various legal investments they’re prepared to make, based on their risk appetite and the consequences they’re prepared to accept. However, it’s important not to try and forecast too far ahead; it makes sense for the business to work to three- and five-year plans, but for a legal function to try and declare with any great certainty which will be the big-ticket legal costs several years from now is probably futile. The current calendar year, plus the year that follows, is a sufficient time horizon to bring valuable insight, and stop short of analysis paralysis. Spending six months building a five-year legal budget plan, only to see the company sold a few months later, would be a frustrating outcome for any professional.

This preview is an excerpt from Jameson's chapter in our forthcoming eBook on legal operations. For his tips on comms with finance, and the importance of reconciliation, stay tuned for the full eBook. For early bird access, get in touch. Don’t forget to follow us for all the latest.

Jameson Monteiro

Jameson Monteiro

Jameson Monteiro is Head of Legal Operations at US insurance giant Assurant, and Adjunct Professor of Business at Broward College.

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