GeoLegal Weekly #9 - GeoLegalOps!
I speak a lot about geopolitics for GCs but what about geopolitics for legal operations? The incoming president of CLOC and a host of other industry heavyweights weigh in
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This week is an ACTION PACKED issue with a number of legal operations luminaries weighing on how geopolitics impacts legalops. Seriously - Jenn McCarron, Jason Barnwell, Mary O’Carroll, Andy Krebs, Liam Brown and many others connect the dots from geopolitics to legalops in perhaps the first broad survey of operationally focused leaders on the topic.
There’s been a lot written about how a topsy-turvy world impacts the role of the GC (including by me), but little focused specifically on operations and operationalizing solutions. To find out if politics matters to legal operations at all, I asked Jenn McCarron, President of the Corporate Legal Operations Consortium (CLOC) and Director of Legal Operations and Technology at Netflix
“100%, maybe even 120%,” she tells me in a 10 minute video interview you can watch here.
OK that’s a pretty resounding YES but let’s try to understand why. Jenn continues:
“Legal ops should be designed to operationalize or execute against the vision and strategy of the legal department…So as laws and things change in the world or policies change, you can bet that some of that is going to creep and seep down into the operations of the legal department.”
To make this come alive she offered the following example:
A war such as Russia -Ukraine could impact how your company decides to do business in Eastern Europe. And I know many companies who have had legal entities on the ground in Russia or doing business there or just started with a membership base there or delivering goods or services to the consumer base of Russia. A war like that and could change the fundamental business strategy in that market, which means your leadership could come to you at any point and say, “I need data on what we're doing operationally as a legal team in Russia.” Maybe that's law firm data, engagement dollars, figures, reports. Maybe you have contracts there with businesses on the ground there and you have to be ready to analyze all of that, pull it, analyze it. And you might have to be ready to decommission data or contracts or certain vendors that you are doing business with in that market.
That’s a pretty good example. And there’s so much more from Jenn in our video that you can watch above and here.
But is it just Jenn that thinks this is important? I wanted to validate and flesh this out further with other legal operations thought leaders. I got a tremendous number of replies to my outreach to legal ops leaders, so I’ve categorized them into key themes:
Complexity
First, nearly everyone I spoke to discusses how global events create complexity for legal operations departments. Jason Barnwell, Associate General Counsel at Microsoft and past CLOC Board member, puts it well in response:
Legal Operations as a practice is foundationally about scaling our legal practices. The goal is to help us solve for volume and breadth within our constrained resources. Geopolitics is an increasing source of the complexity that creates the volume and breadth of our work. An advanced Legal Operations program tries to understand what is upstream and over the horizon. Increasingly, that is geopolitics. And if you are not curious about geopolitics you will be perpetually surprised and unprepared.
The linkage between complexity and volume of work may seem straightforward once observed by someone insightful like Jason, but it’s actually a really incisive point for operations that is often missed. When General Counsels note complexity, they are often noting that the complexity of their business is giving rise to legal issues in more regions of the world than before, or that they are being asked to weigh in on political events that may present risks more often than before.
Operations gets to manage not just those types of complexity but also the sheer volume of work that comes from politicians and regulators fiddling with the legal system. When a country wants to erect trade barriers to support domestic interests, that comes with a huge volume of compliance work. When regulators step up enforcement of consumer protections, that can lead to a large volume of legal work and embolden citizens to file their own cases. And so forth.
Political and social shifts can also raise the price of litigation and enforcement. Ask anyone in the insurance industry about “social inflation” and they will tell you how anti-corporate sentiment, the rise of litigation funding and the erosion of litigation monetary caps is driving record-breaking verdicts. So, much of this starts with the political activity as as driver and ends with corporations facing growing verdicts and a tougher, more expensive time insuring themselves - which often falls to operations to manage.
Collaboration
A key trend that came up time and again was the need for legal operations to be the connective tissue from legal to other departments, like government affairs.
Mary O’Carroll, Chief Community Officer of digital contracting company Ironclad and former President of CLOC used complexity as a jumping-off point to talk about agility that comes from deeper collaboration with internal stakeholders like government affairs. As Mary tells me:
“Navigating the growing complexity of the geopolitical environment requires legal operations to be proactive, agile, and informed, ensuring compliance across borders while safeguarding the organization’s interests. Cross-functional collaboration between legal operations and global affairs teams can provide a holistic approach to navigating these challenges, ensuring that legal strategies are aligned with broader business objectives…GDPR, Covid, War in Ukraine, Crimea, those were all examples where legal ops had to project manage an organization wide response to geopolitical events.”
Put simply, if you’re operating in a vacuum, you can’t possibly be ready. What are the top priorities for your company’s government affairs strategies? What is the company currently lobbying on? How does political opposition to company priorities threaten to manifest through the legal channel?
Aaron Katzel, the founder and former leader of legal operations functions at AIG and SoftBank and currently an advisor on legal and compliance operations, amplified on this interface:
Mature legal and compliance functions today are responsible for a broad range of outcomes, including managing the enterprise’s legal & compliance risk, supporting commercial transactions, representing the company’s positions effectively with regulators and government representatives, managing litigation, or helping the business to understand and prepare for changes in the regulatory, legislative or geopolitical landscape that will alter the company’s legal and compliance risk profile. So the leading legal operations teams need to know the processes and resources their global affairs partners leverage to stay current on, and advise their business clients on the risks and opportunities presented by, the evolving geopolitical landscape. They also need to be familiar with the strengths and weaknesses of existing, and emerging tools that allow global affairs teams to achieve higher impact at greater scale. Ultimately, of course, these risks and opportunities become interwoven with the other functions in the legal and compliance teams, as new regulations and legislation impact how the business operates and the level of legal and compliance risk presented by ongoing business activities.
Gregory Witczak, formerly of Deutsche Bank and currently a consultant with in-house legal departments on legal operations and the implementation of AI, pointed out that when political events manifest through the legal vector - for instance, the need to rapidly adapt to shifting sanctions policies or trade controls, it is the legal department - and legal operations - who may be asked to train the entire enterprise.
Resilience
Gregory also pointed out that legal operations often serves as the Human Resources function for the legal department. As a result, it is up to legalops to make make sure the right relationships are in place for when these events happen. Do we have expertise in-house to navigate political and regulatory changes we can see from a mile away? Do we have law firm relationships that guarantee responsiveness? Do we have a crisis management team engaged just incase?
Tom Stephenson, VP of Community and Legal Operations at legal talent network Legal.io highlighted the role of ALSPs in serving as that partner.
“Given the current state of global geopolitics, legal operations professionals must be agile. They are at the forefront of driving innovation and spearheading change, adeptly harnessing talent and resources. Nearly one in four legal departments report a shift toward increased collaboration with Alternative Legal Service Providers (ALSPs), underscoring the importance of resilience. Success hinges on tapping into specialized expertise, fostering partnerships with niche providers, and maximizing resource efficiency. By anticipating risks and adapting quickly, we're seeing the profession drive enterprises forward with innovative spend management strategies, seizing opportunities even in challenging times.”
I asked Liam Brown, Founder, Chairman and CEO of Elevate, to size up the role of ALSPs in providing resilience and he provided a host of examples where ALSPs provide redundancy and back-up when things go wrong:
On 9/11, when the power went out throughout Manhattan in 2003, during the London Tube attack, when terrorists attacked Mumbai, when Russian tanks rolled into Ukraine, and when there was a siege in Manila in 2007. On all those occasions, many global 2000 corporation and global 200 law firm customers relied on their law company’s outsourced operations for business continuity, avoiding being knocked out by having all their critical operations, people, or infrastructure in one single point of failure.
That optionality is crucial and increasingly so, as the risk of shock events is on the rise.
Preparedness
Back to Greg Witczak, who I asked about shock events like the Panama Papers release in a financial institutions context. What could a bank have done to prepare? Greg notes:
Legal ops needs to make sure the department is ready for geopolitical events whether the department has explicitly been asked to do so or not. To respond [in a moment of crisis] you need command of your data - contracts, know your client, entity management. What’s the data? Who is involved? Do we do business with them? Do our entities do business with them? To respond to geopolitical risk, legal operations ensures the legal department is geopolitically ready - ensuring the data is ready to go at a moments’ notice when you have these events.
Jeff Franke, CEO of LegalOps.com, offers their reference models as a jumping off point for systematically preparing for and navigating shocks.
“Whether we are talking about addressing your typical annual strategic planning process or creating a technology roadmap or addressing an ongoing or a major one-off geopolitical event, the approach is the same from a legal operation perspective: what does the activity/event mean for how we think about what we are doing in each of the fifteen Legal Operations Management Practice Areas. We analyze the impact and our then define our response looking at Service Delivery Solutions, Communications plans, Technology implementations/roadmaps, etc. Go through each one of the fifteen.”
In effect, Jeff is advising conceptualizing the work of legal operations in full in advance and then using that basis as a guide for preparing and responding. This isn’t an act in isolation - as Jeff continues: “Overall, because geopolitical events could require input from the compliance, privacy, litigation, commercial, intellectual property, tax or other teams (including teams outside of legal), it’s best if the legal operations team works with the team’s legal professionals (and other corporate stakeholders) to assess each of the fifteen Practice Areas together and determine next steps.”
Compliance and Data
As Jenn highlighted up top, a core area where the geopolitical rubber hits the legal ops road is on data and compliance. Andy Krebs, legal operations industry leader and formerly Head of Legal Operations at Twilio tells me:
“One quick example where these external forces have a potential impact is on the organization’s compliance program. Everything from sanctioned countries/companies/ individuals to new and ever changing government regulations greatly impact operations….there are many potential downstream issues to be addressed. How do you consume and sort through all the new and proposed government regulations (add global to the domestic and it becomes complex quickly!) How do you screen customers on sanctions lists? How do [you] audit compliance to policies? There are areas the legal operations team works with their legal colleagues [to] better understand the need, establish policy, and develop a process to manage and audit the policy. This is a work for the company but an opportunity for legal ops [to] on work to close the gaps and create an automated / auditable process or system. ”
Back to Aaron Katzel:
“In a parallel vein, it’s important for legal operations professionals to appreciate, and factor in, geopolitical developments in the delivery of the substantive services within their area of responsibility. Understanding, for example, how evolving regulatory or geopolitical risks can impact the legal and compliance department’s technology stack, for example in the areas of where and how data is housed and transported, cybersecurity and IT provider stability risk, and the impact on business interruption / resiliency plans, is critical to being a reliable ongoing partner to the legal and compliance team.”
Gregory Witzcak points out that a big opportunity for legal operations is also in using technology to automate regulatory monitoring as well as implementing sanctions screening tools and compliance checks.
Horizon Scanning
Matt Rossman, Legal Procurement Category Director at the Hartford, points out that horizon scanning is one way legal operations can increase its value to the legal function - and increase the legal function’s value to the business.
"As an extension of the General Counsel, Legal Operations professionals have played a role in supply chain risk management, which historically has been reactionary rather than proactive. By increasing awareness of emerging political, human rights and environmental issues (actual and as perceived by the market) Legal Operations can increase its value to the general counsel and the organization by shifting Legal away from its traditional role of putting out fires and advising on decisions already taken by the board and evolving into a more strategic asset. Enhancing Legal's visibility and effectiveness as a key driver of profitability will only, in turn, make Legal Operations more valuable, thereby increasing investment in the function."
Back to Aaron Katzel, who astutely observes:
“Technology, including emerging generative AI resources, allows today’s global affairs teams to stay informed of emerging geopolitical and legal developments in a period of rapid and hugely impactful change, to understand how those risks interrelate with their business’s geographical and product footprint, and to report on that evolving landscape and advise their clients on the range of risks and opportunities they present. What was 10 or 15 years ago an intensely manual effort with inevitable gaps and significant reporting and latency challenges, is now evolving into an area where global affairs teams can, like their counterparts in other areas of legal and compliance, leverage automation to allow them to showcase their judgment and expertise and focus more fully on higher value services that allow the business to avoid geopolitical pitfalls and emerging compliance risks.”
There are a host of ways to do this horizon scanning - and it goes beyond regulatory monitoring into truly understanding the way that politics manifests through the legal vector of risk. I’m spending a lot of time thinking about how to use technology to do that - be in touch if you want to collaborate with us at Hence on solving this puzzle.
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My head is literally spinning from all the great insights these legal operations leaders shared and I hope you found it useful. I’ll leave it there for the week other than to say - please tell a friend if you thought this was valuable!
-SW