What I learned at CLOC 2024
This week I attended the premier legal operations conference. Here's what I heard.
This week I had the chance to attend the biggest legal operations conference, CLOC, that was held in Las Vegas from May 6-9. It was such a fun conference, as you may have seen on social media (see wrap up post here, and a fun Tik Tok skit I made here). On Friday I immediately summarized my observations in a short form post which some of you may have seen. In today’s article I’ll be expanding on those observations and incorporating some of the great feedback I received in the comments.
In case you missed it, here’s my CLOC recap from last year.
1 - Is Legal AI worth it?
This was the big question that kept coming up throughout the conference. Yes people are still curious about how to best use generative AI in their legal departments. So demand for programming was still very high. However, I got the sense that the legal ops pros were more sophisticated about evaluating AI vendors this year—which was consistent with what others saw:
Part of that can be explained by the increasing sophistication of enterprises. I heard more than one person mention that their companies have rolled out enterprise instances of ChatGPT. The question then becomes how to use legal specific LLMs to gain efficiencies.
I think this question is kind of playing out in real time beyond the legal ops community right now. For example, some startups are getting a ton of hype right now. But will they be the ultimate winners? Will it be some other upstart that gets less press? Or will it be the giant players like Microsoft who ultimately win? I don’t think the answer is obvious, at least not right now.
This is especially true in light of the massive interest in upgrading tech stacks. As one observer noted, it’s not enough for legal departments to simply rely on legacy software.
2 - Strong interest in process change topics
By now it’s obvious that there are a ton of solutions out there to help legal departments gain efficiencies. But how exactly do you convince stakeholders to use the technology? That was a big question among the attendees that I heard in my conversations. It’s not enough to choose the right vendor; you have to also make sure everyone is open to using them if you want to be successful.
Ever since the rise of legal tech SaaS that started around 2016, I’ve noticed a pattern. Some hot new technology will come out, and legal department buyers rush in to acquire it. Unfortunately, implementation fails—not for lack of trying—but because the rank and file aren’t bought in. The expensive technology then sits out there used by just a small group of people without widespread adoption.
In the past few years I’ve noticed a second order effect of this pattern: the growing interest in ALSPs that help with implementation. These ALSPs often take the form of individual consultants, small services providers, or arms of large global companies have all seen sharp growth as the demand for technology “helpers” skyrockets. This is especially true as the most successful software vendors start cutting back on ancillary services to boost their margins.
3 - Consolidation and M&A
There were a ton of acquisition announcements during CLOC, including Docusign acquiring Lexion and Reveal acquiring Onna. This is incredibly exciting news for the founders and shareholders of the target companies. What it means for their customers? I’m not exactly sure.
What I do know is that these financial “exits” entice investors to fund new startups in this space. The funding then attracts would-be founders. Which is why every year at CLOC we see so many new vendors in the same categories, like contracts or these days, general legal AI. In fact this year, one well funded startup went all out, leaving a bags of swag on my hotel room door.
Which I found odd. Maybe because I’m totally not the target audience for that startup. (Don’t get me wrong—I was pleased because the swag bag included a little stuffed animal I could bring back to my toddler.) Apparently they weren’t the only vendor to leave swag bags. Some startups had a list of rooms that were in the conference hotel block and were just leaving it with people.
To me this all suggests that some resource-rich startups are still unclear about where they should spend their money. Which brings us to my next topic.
4 - Vendors pulling back on marketing
One other major difference I noticed between this year and last year is that there were far fewer “big” vendor-hosted parties. Instead, most of the legal ops attendees I spoke to said they would be going to vendor hosted dinners instead. I understand why.
In 2022, I attended Ironclad’s party which was huge and well attended by many in the legal ops community. In fact it was so popular that there was a huge line that formed outside the venue. Many people couldn’t even get in. Due to the success and popularity of this event, in 2023, many vendors tried to replicate the “party” playbook. It seemed like everyone was hosting a party.
Problem was, now—one year later in 2023—the supply / demand balance of attendees and parties was completely thrown off. Also, many vendors decided to host their parties in presidential hotel suites to save money. I showed up to several lavish social events that were completely empty. The word obviously got out, and this year there were far fewer “open” parties. Vendors instead opted to host smaller intimate dinners with customers and key prospects, which probably had stronger ROI.
There were a few other factors that probably played a role too. First, many of the larger tech companies are in the later stages of growth where margins and profitability matter. As a result they care more about efficiency and ROI than they do about “getting their name out.” Which means smaller, targeted events vs. big blowout parties. Second, this year CLOC decided to host its own event on Wednesday evening—which is usually when the biggest parties take place. Seems like no one wanted to really compete against them.1
Speaking of which, I did notice this year that there were fewer vendor attendees than last year. Apparently CLOC leadership received feedback about that and this year restricted the number of people vendors were allowed to send to the conference. As a result, the relative number of actual legal ops professionals attending the conference was far more favorable this year.
5 - Legal department hiring slowdown
The last observation I had to piece together from several different sources, but basically there seems to be downward pressure on adding headcount to many legal departments. It appears that over the past year many companies cut their staff due to organization wide layoffs. There are significant macro headwinds, and when coupled with the perception that legal is a cost center—you see a ton of resistance to growing headcount for in-house legal.
The hiring slowdown explains why so many legal ops professionals announced new roles in the past six months. They are veterans of larger organizations that are joining mid-sized companies to take over as a head of / director of legal ops. I totally get it. I made a similar move myself, when I left Ironclad to join Latitude as CRO.
I believe these career moves are a welcome trend. The new legal ops pros will likely evangelize best practices to legal departments that thus far haven’t really found ways to work efficiently. I heard one say that his move to a new company was wildly successful because he just focused on some “low hanging fruit” and within a couple of months quickly generated savings greater than his own salary.
5a - Implications of headcount limitations
However that doesn’t change the fact that legal departments will be constrained by their inability to add headcount in the near to medium term. Especially at a time when more work needs to be done. Which means it’s more important than ever for them to find creative ways to do more with less.
This isn’t a new problem for legal executives. Do more with less has been a mantra for years. The challenge this time around though, is that there are so many opportunities to gain ROI in creative ways. Whereas before, there were probably just a handful of providers you needed to vet—now there’s a wealth of options. And even if you find a great provider, how will you handle the change management aspects of adoption and implementation?
The headcount constraints facing legal departments represents a big opportunity. Because it forces them to rethink the way their entire function is set up from first principles. What kinds of AI vendors *should* they work with? What type of work *should* be given to law firms vs. other providers? How many full time employees vs. contractors do they really need?
These are all important questions that I expect to be addressed in future CLOC conferences.
Conclusion
Overall it was a fantastic conference, and a great way for me to catch up with old friends. It was especially eye opening this time around, as I saw it from the lens of a Chief Revenue Officer and potential sponsor of CLOC. I’m still processing what I saw and heard, and considering which conferences to partner with as a sponsor for next year. Would love to hear everyone else’s feedback!
Having said that, there were some events that still took place. For example, I stopped by the Legal Operators Villa event, as well as the Mitratech party. Both were well attended which makes me wonder if party / social event effectiveness is somewhat cyclical.