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{{a|work|}}A tremendous new wheeze for rent-seeking from [[legal eagle]]s. Legal operations is a [[second-order derivative]] [[Rent-seeker|military-parasitical complex]] that feeds off the direct first-order rent-seeking of those already in the in-house legal profession. The history of [[Inhouse counsel|inhouse legal]] is interesting, by the way.
{{a|work|
{{image|Twiki|png|The inhouse legal of Tomorrow, yesterday.}}}}{{d|Legal operations|/ˈliːgəl/ /ˌɒpəˈreɪʃənz/|n}}<br>Recursive rent-extraction ''from the consummate rentiers''.


It works like this:
Legal operations are industrialised [[second-order derivative|second-order rent-seekers]] who feed off the direct, ''first''-order [[rent-seeking]] of those members of the legal profession who, shipwrecked on the sacred voyage from pupil to partner, found themselves washed up on the deserted shores of a [[Legal department|in-house legal department]].


Once upon a time there were deals, and banks who did them would engage law-firms to do the legals. Each one of these deals — [[Merger|mergers, acquisitions]], equity offerings, [[bond]] issues, syndicated [[Loan|loans]] — involved transferring lots and lots of ''[[money]]:'' not millions, but ''tens'' or even ''hundreds'' of millions of dollars. Every now and then, even ''billions'' of dollars. 
The history of [[Inhouse counsel|inhouse legal]] — how it went from “sleepy backwater for awkward, work-shy, typo nuts” to “military-forensic complex in need of taming with extreme prejudice by [[management consultancy]]”  in twenty short years is [[The history of inhouse legal|interesting]], by the way.


Now, observe two rather self-evident things: firstly, if you are firing hundreds of millions of dollars around the financial system to random third parties, things can go wrong quite easily, and when they do go wrong, they go ''badly'' wrong. Just ask [[Citigroup v Brigade Capital Management|Citigroup]]. Secondly, a very small percentage of “a couple of hundred million dollars” is still a very large amount of money, even if you charge out at £400 per hour.<ref>In 1990 pounds. The going rate at the time of writing, displaying a sustained immunity to gravity and the general principles of mean reversion, is more like £1,000.</ref>
== What the MBAs bring to the party==
Now MBAs are not known for their imagination, but they do have a long suit in reductionist analytical rigour and they do love an over-arching metaphorical schema.  Management consultants are keen on publishing these, and they will throw [[Microsoft PowerPoint|PowerPoint]] thought pieces around at the gentlest invitation. Lacking the [[subject matter expert]]’s deep grasp of the market, the “in-house legal problem” may be impervious to front-on attack, but they can ''analyse'' it into submission.  


Therefore bankers, who themselves might collect as much as ''seven'' percent of the value of a deal, would quite happily expend say ''one'' percent of the value of the deal, on decent firm of lawyers. After all, the lawyers wind up doing most of the hard yards, churning out thousands of pages of [[verbiage]], often much of the time running down quixotic ideas, accommodating spurious considerations and regularly working through the night generating needless “turns” of the documents to accommodate some artificial deadline imposed by uncomprehending analysts who would then, when it was met, routinely ignore the draft for the next 48 hours.
You do this by breaking down the intractable whole into [[Legibility|legible]], familiar components that already exist in the MBA toolkit. Each becomes its own little sub-domain, with its own [[LinkedIn job descriptions|workstream lead]]-led [[workstream]], going out and gathering evidence and, basically, getting in the way of the lawyers who are busily trying to execute on their own time-worn business model.


So was born the [[Magic circle law firm|magic circle]], which has been with us since at least the time of the [[First Men]], and even before them to the primordial pagan era where the [[Children of the Forest]] roamed the [[Bretton Woods|Woods of Bretton]]. The game was this: we will over-turn heaven and earth to document whatever you require us to document, by whenever you want us to document it, with two considerations: firstly, our opinion will disclaim all practical responsibility for any of the stupid things you made us put in the documents, and secondly, and more importantly, you pay us handsomely, by the hour for doing so. Our service is blood, sweat, toil and tears in the pursuit of whatever entertains you. Yours is to pay us through the nose for it.  
Perversely, [[Workstream lead|change manager]] interference only further slows down the lawyers  even — every other day they are fending off a call from a well-meaning analyst asking for feedback on some innovation or other they didn’t ask for and have little interest in using — while the size of the legal operations team grows, and it foments its plans to entrench itself into the legal team.


For many years, this state of affairs was all fine and capital: everyone clipped their tickets, lived prettily, maintained nice homes in the stock-broker belt to and from which they commuted in late-model German cars.  It was the corporate end-clients who paid for it, after all, and since their executive teams were commuting from the same stock-broker belt in the same sorts of cars, they weren’t bothered.
The legal work catalog, comprises the following components and opportunities:
*Strategic planning
*[[service delivery|Formulating models for legal service delivery]]
*Project management
*[[Triage|Triage management]]
*[[Operationalisation|Practice operationalisation]]
*Organisational optimisation
*[[Knowledge management]]
*Information governance
*Vendor management
*Finance management
*Business intelligence
*[[Continuing professional development|Training and personnel development]]
*[[Legal technology|Technology infrastructure management]]


As the roaring nineties wore on, the deal pipeline grew ever fatter. [[The Jolly Contrarian:About|Aspiring young contrarians]] started arriving in London from all sorts of far flung places, wanting a piece of the action. Law firms hired them without question, supposing (for the most part rightly) that they would work like Spartans for a couple of years, expect a pittance in [[compensation]], and bugger off home to spend the rest of their lives pleasure-boating on Auckland harbour and kicking the crap out of the rest of the world at Rugby Union.
Suddenly, the business of being an in-house lawyer is worthy of a modern military-industrial complex to support it.
 
The bankers did start to wonder whether they couldn’t rationalise that legal spend: “the less we spend on legals,” they reasoned, “the nicer our German cars will be.”  One obvious touchpoint was the hand-off between the bank and the law-firm. “Why don’t we hire some lawyers to manage that legal relationship? If they filter out all the stupid questions, and head off the wild goose chases, we won’t burn so much in legal fees. We will encourage them to work for us by paying them an investment banking bonus, and letting them go home at 6pm.”
 
So began the modern in-house legal team. This worked very well for everyone: deals were executed more efficiently, the embarrassing sensation of seeing your firm’s name mis-spelled in the final prospectus disappeared from the commonplace and the banks started to structure ever more elaborate deals, as the cost and capability of practical legal structuring inside their organisations mushroomed. The [[legal eagle]]<nowiki/>s started to do more than just steer instructions to law firms, translate banking gibberish and check the [[football team]]. They started to ''add value''.
 
But at the same time, the [[Legal|legal department]] started to get really ''big''. Teams that had numbered a handful in 1995 were running into the hundreds ten years later.
 
With the encroaching modernist orthodoxy of management by margin grew, it was inevitable that the bean-counters would get involved. And so they did, a bit tentatively  after the dot.com bust and the [[Enron Corporation|Enron]] collapse, but they started to find their line and length in the wake of the [[global financial crisis]].
 
“We seem,” they wryly noted, “to be spending a ''shit''-ton of money on lawyers, and it doesn’t seem to have done a lot of good. We now have an internal team of three hundred legal eagles costing us one hundred million dollars all told and, added to that, we are spending half a billion on external legal firms. And everything still seems to be blowing up. Can we not ''do'' something about this?
 
So began the great retrenchment of inhouse legal. But it didn’t happen, as you might expect, by asking the difficult questions the credit crisis plainly posed. Instead, management consultants got in on the act.


{{Sa}}
{{Sa}}


* [[Magic circle law firm]]
*[[Magic circle law firm]]
 
*[[ISDA ninja]]
* [[ISDA ninja]]
*[[Ultimate client]]
* [[Ultimate client]]
*[[Look, I tried]]
* [[Look, I tried]]
*[[OneNDA]]
{{Ref}}
{{Ref}}

Latest revision as of 10:20, 15 September 2022

Office anthropology™


The inhouse legal of Tomorrow, yesterday.
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Legal operations
/ˈliːgəl/ /ˌɒpəˈreɪʃənz/ (n.)

Recursive rent-extraction from the consummate rentiers.

Legal operations are industrialised second-order rent-seekers who feed off the direct, first-order rent-seeking of those members of the legal profession who, shipwrecked on the sacred voyage from pupil to partner, found themselves washed up on the deserted shores of a in-house legal department.

The history of inhouse legal — how it went from “sleepy backwater for awkward, work-shy, typo nuts” to “military-forensic complex in need of taming with extreme prejudice by management consultancy” in twenty short years is interesting, by the way.

What the MBAs bring to the party

Now MBAs are not known for their imagination, but they do have a long suit in reductionist analytical rigour and they do love an over-arching metaphorical schema. Management consultants are keen on publishing these, and they will throw PowerPoint thought pieces around at the gentlest invitation. Lacking the subject matter expert’s deep grasp of the market, the “in-house legal problem” may be impervious to front-on attack, but they can analyse it into submission.

You do this by breaking down the intractable whole into legible, familiar components that already exist in the MBA toolkit. Each becomes its own little sub-domain, with its own workstream lead-led workstream, going out and gathering evidence and, basically, getting in the way of the lawyers who are busily trying to execute on their own time-worn business model.

Perversely, change manager interference only further slows down the lawyers even — every other day they are fending off a call from a well-meaning analyst asking for feedback on some innovation or other they didn’t ask for and have little interest in using — while the size of the legal operations team grows, and it foments its plans to entrench itself into the legal team.

The legal work catalog, comprises the following components and opportunities:

Suddenly, the business of being an in-house lawyer is worthy of a modern military-industrial complex to support it.

See also

References

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