Target Operating Models (TOM) Design: Why TOM is Critical for Legal Departments (2024)

“Design is not just what it looks like and feels like. Design is how it works” - Steve Jobs.

Over the last 25 years in the legal industry, I have worked for great companies in private practice, in-house and for alternative legal service providers (“ALSP”) in the US, UK and China. Within that time, much has changed, particularly regarding technological advancements, but much has remained the same. Some persistent aspects of legal services are valuable and enduring – such as a relentless focus on quality and client service. Others are not – such as inefficient processes and lack of formal operating models. These challenges lead to higher costs, reduced work quality and delays. Technology alone cannot resolve these issues and never will.[1]

A holistic view of the entire legal operating model is necessary, including maturing critical capabilities such as training, process, staffing and technology. This multi-dimensional approach is far superior to a tech-first strategy and helps avoid the rampant technology implementation failures of recent years. This article will provide an overview of a 360-degree view considering seven critical attributes of a target operating model (the “7 Attributes”). We will follow this article with subsequent articles for each of the 7 Attributes.

Background of Operations Management

Operations management (“OM”) is a professional discipline focused on enhancing the provision of products and services.[2] It involves the systematic direction of processes in sourcing, production and delivery. OM takes a holistic view, emphasizing cost management and assuming that technical aspects are handled by specialists.[3] OM applies to the complete chain of activities in producing and delivering products and services. Though it originated in manufacturing, it now applies to non-manufacturing industries like marketing, finance, IT, healthcare, utilities, distribution, retail and hospitality. Operations disciplines first entered the legal industry as “legal operations” between the 1990s and mid-2000s.[4]

Delivering legal services involves interconnected processes transforming tacit knowledge into customer value. OM principles coordinate these processes, including operating model design.[5] An operating model is the integration and standardization necessary for delivering goods and services to customers.[6] In Operating Model Canvas, Andrew Campbell defines a target operating model (“TOM”) as the integration and standardization of "business processes, organizational structure and information systems…to realize [a] strategic vision and [associated] operational capabilities."[7] TOM represents the ideal state of operations, leveraging best practices and process automation to enhance efficiency, quality and consistency. Integration and interoperability between attributes determine success.

The 7 Attributes

Based on decades of combined legal operations experience, my colleagues and I identified seven critical attributes for legal services TOM that drive value and performance. These 7 Attributes represent best practices in legal service operations and apply to any legal operations area, including contract management, litigation and compliance.

The 7 Attributes are:

1. Scope and Remit: Clear scope, roles, and responsibilities for legal departments and business stakeholders requesting legal support.
2. Staffing Model: A well-designed staffing model to ensure legal department resources spend most of their time at their highest and best utility.
3. Artifacts: Effective and well-maintained documentation for organizational memory and accountability.
4. Training Program: Robust training to empower and enhance an organization’s most valuable assets – its people.
5. Process Life-cycle: Refined process life-cycles to encourage operational excellence.
6. KPIs and Reporting: Transparent and effective KPIs and status reporting to support strategic decision-making.
7. Technology: Effective use of technology to enable human capital.

Each Attribute has multiple sub-components and capabilities that must be matured to improve operations.

Applying the 7 Attributes. Applying the 7 Attributes is intuitive. Here are key activities for applying the 7 Attributes:

1. Express Each Attribute: The 7 Attributes describe “what good looks like” across each dimension. Each Attribute can be expressed as a present state, goal or desired end state. For example, applying Attribute No. 1 would read, “scope and remit are clearly understood by service delivery personnel and requestors, with a documented process for any changes in scope and remit.” Immaturity in this area leads to misalignment, delays, low-quality outputs and personnel attrition.
2. Conduct Maturity Assessment: Start TOM design with a current state assessment against the 7 Attributes to determine gaps. This process measures current operational capabilities, identifies areas for improvement and establishes KPIs. Practitioners should assess each individual Attribute for maturity and then aggregate those scores to determine overall maturity, typically categorized into three stages:

• • Early: Capabilities are underdeveloped or missing, leading to inefficient, manual service delivery. Resources are under or over-utilized, untrained and not contributing their highest use.
  • Intermediate: Operations are moderately mature across some Attributes, with many opportunities for enhancement.
  • Advanced: All necessary Attribute sub-components are fully implemented. The resource model is optimized, ensuring resources are well-utilized, with senior members focused on strategic initiatives.
  • Through maturity assessment, we gain insight into operational strengths and weaknesses, guiding TOM design decisions and the roadmap to achieve them.

3. Conduct Impact Analysis: Maturity assessments identify constraints or failures that must be resolved to achieve TOM. For example, one of our clients suffered from resource attrition due to issues with scope and remit (Attribute No. 1), lack of artifacts (Attribute No. 3) and lack of training (Attribute No. 4). Low maturity in those areas allowed contract managers to be overwhelmed by support requests, leading to high-volume escalations, extended cycle-times and internal client dissatisfaction.
4. Develop Key Performance Indicators (“KPIs”): KPIs measure progress towards overcoming constraints discovered during maturity assessment and impact analysis. For instance, low maturity in Attributes 1, 3 and 4 lead to extended cycle-times. Accordingly, a target cycle-time or cycle-time improvement would be an appropriate KPI. Other KPIs include customer satisfaction, employee retention, engagement, cost, quality, risk exposure, and resource utilization.

TOM Case Study: A Holistic Approach Led to Holistic Improvements

A publicly traded global biotechnology company with nearly 4,000 employees and a greater than $40 billion market cap was experiencing growth in product pipeline and clinical trials but lacked a scalable study start-up legal operating model.

After an assessment, we found low maturity across all 7 Attributes. There were scope and remit breakdowns between the legal and clinical development departments. Resources were responsible for multiple tasks critical to clinical trial set-up but were not properly staffed or trained to manage each task. Lack of real-time reporting led to conflict regarding matter status.

We helped the client develop and deploy a scalable TOM to increase site-start-up velocity including region-specific artifacts, augmented staffing to allow each team member to focus on their highest utility, formal training to enhance contract negotiation capabilities, better technology integration for automated workflows and real-time reporting.

Outcomes: By maturing all 7 Attributes, we aligned the legal and clinical development departments and reduced contracting cycle-times by 70 percent.

Case Study Insights:

1. Staffing model, training and artifacts can either inhibit or enable resources. Operational challenges typically arise from integrations and interdependencies between operating model elements. It is critical to understand and coordinate the dynamics between operating model elements. For example, clinical development teams responsible for negotiating clinical contracts had little contracting experience, an ineffective staffing model and no training or artifacts to guide their efforts. This not only impacted operational performance but also reduced employee engagement.
2. Low maturity in scope and remit can cause strife between departments. There was consistent friction between the legal and clinical operations departments regarding scope of responsibilities. This caused excess escalations to the legal department which eroded trust between the groups and reduced operational effectiveness.
3. Mature KPIs and reporting can align interdependent departments. Clinical contracting cycle-times were critical. Once the legal and clinical development departments had reliable reporting and KPIs, they could see each other’s impact on cycle-times which reduced questions on accountability for any delays. That clarity helped reduce tension between the groups and increased productivity.

The Bottom Line: As Andrew Campbell wrote, “things work better when everything works together, on purpose.”[8] Operational effectiveness hinges not only on individual operational capabilities but how those capabilities work together. This is especially true for legal operating models where, unlike manufacturing environments, quality is subjective, variability is persistent and human skills, knowledge and interactions drive customer value.

The 7 Attributes model helps identify and improve critical operational capabilities in an integrated way that enhances operating model performance. We will next publish on Attribute No. 1: Scope and Remit, with practice tips to improve this Attribute in your environment.