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Tech adoption challenges in corporate legal departments

Nayeem Syed

21 Mar 2019

Nayeem Syed is a senior technology lawyer, currently working at Refinitiv, a global provider of financial markets information and infrastructure. Each month he writes about innovation, technology and regulatory issues in the legal industry for Thomson Reuters Legal Insights Europe.

In-house lawyers today face significant challenges with increased regulatory risk, such as GDPR and business uncertainty, which has been exacerbated by Brexit. At the same time, they hear constantly about emerging technologies such as AI disrupting the tasks typically done by lawyers. This article explores how the landscape has changed for in-house legal teams and how easy it is to adopt new technology offerings to produce improved outcomes.

Changing landscape

Regulatory risk can upturn otherwise compelling business plans. Organisations are compelled more than before to be brave and take risks, but also face many new complex and overlapping regulatory and compliance questions. As leaders search out new revenues and enter many new markets, either through cross-border sales efforts or expanded operations, lawyers who are trained in one jurisdiction are expected to navigate all those foreign frameworks and still manage counterparty risks.

Additionally, there is an expectation to do more with less. Chief Finance Officers are relentlessly seeking savings, year on year. They therefore task all functional leaders to be more forensic and validate all spending. Meanwhile, law firm rates are rising and, as a result, in-house teams are required to be much more self-reliant and become even more generalist. Internal clients want immediate answers and grimace at memos. Boards are more aware of compliance hazards, and are requiring that new plans secure legal sign-off, but that puts pressure on lawyers to quickly assess risk and develop solutions to move ahead.

Technology enablers are changing risk profiles, but not evenly. It enables costs to be reduced and firms to compete more effectively. However, it also creates many new challenges (cloud security) which need to be understood to be mitigated.

Challenges to adoption

The demands on in-house teams have transformed, and the tools available to them have improved especially in relation to technology solutions over the last few years. However, there are practical adoption challenges.

Chris Fowler, General Counsel Technology and Transformation at BT, explains that a key challenge with technology adoption is interoperability: the danger with adopting a series of small or isolated or narrow solutions is that they often cannot connect with each other or with future solutions. Or, they aren’t scalable as a result. According to Fowler, interoperability is one of the biggest challenges with emerging technology, in particular. For example, there might be a discrete solution to a problem (like contract management) which is great, but will it connect well or easily enough with the overall corporate infrastructure / IT roadmap to gain sufficient value. If not, there is a risk that data is stranded or not utilised as well as it could be.

“Contract automation has rapidly moved from novelty toward commodity status”

For many organisations, adopting new legal technologies is perplexing. This is tied to the challenges of legacy processes and systems as well as competing priorities and budgets. To adopt a new approach to something as important and subjective as legal support and risk management requires many stakeholders to accept the business case for change and cost.

The benefits must be capable of being internally measured, as well as being risk managed, which are both critical to staff acceptance. It also requires being able to assure leadership of stable, smooth and predictable transition. Smaller in-house legal departments with more autonomy can invariably afford to take more risks and in this way, be more experimental. However, large, matrixed organisations require many different groups to be consulted and embrace the innovation journey. Institutionally, it can be difficult for various diverse and equally important teams to agree requirements and select the best solution.

When considering how to adopt new technology, there are three factors to consider:

(a) the actual total cost to the organisation (including opportunity cost),

(b) the range of desired organisational outcomes (not just the legal team), and

(c) tolerance for adoption risk which is comprised of timing, uncertainty, and ability to remediate.

Further, when considering which in-house legal solutions could lend itself to technology assistance or where to experiment with alternative technology-assisted support models, legal teams should consider which types of work they currently undertake and what parts of the underlying processes are most suitable to technology enhancement or automation.

Fowler explains that a holistic review is often required, adding: “After a series of good but tactical solutions, we decided that we needed to develop an overall global strategy in order to drive genuine digital transformation. At the end of last year, we developed a strategy we’re pretty happy with, but it will still take 18 to 24 months before we completely see the full realisation of the vision as we must fit within other BT wide deployments and strategies”.

Contracts automation

One of the main day to day activities of a corporate legal team is managing the review, negotiation and drafting of commercial contracts. Contract drafting is therefore one of the key areas that legal technology innovators have successfully addressed.

Over the past few years a number of products and services have entered in the market with strong acceptance. This is not surprising as it has a clear and compelling business rationale for legal teams: by improving their ability to manage, store and produce contract documents they can help their organisations operate more efficiently. If sales or procurement teams are relied on to draft documents, they are freed to spend even more time securing clients or achieving tangible savings.

The key measure is speed to signing, but the path to doing this safely is a deep understanding of legal risk allocation in order to effectively standardise processes. It should enable organisations to efficiently maintain consistency with internal policies and allow various stakeholders a common interface to track changes and progress, understand what is outstanding and what has been approved for deviation.

While few doubt that much contract work can be substantially displaced, we must recall the extent to which wider teams are ready and willing to adapt in order to adopt. While there are already many established offerings in the market, with many law firms successfully deploying this to their associates, there are still internal challenges for in-house teams.

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