The impact of legal tech

In one sense, Legal Tech is nothing new. Most of us have seen a number of changes over the years brought about by developments in technology, which have impacted the way we work and our working environments. After all, if you go back far enough, most lawyers were working with a quill and ink!

Why all the excitement then? Perhaps it’s the sheer pace of change that surprises us as new technologies seem ever more powerful and capable.

No sooner do we get used to working in new ways than a game changing development appears on the horizon.

In this article we look at some of the ways in which technology has made it possible for in-house lawyers to work differently and more efficiently. We also consider what newer technologies could become mainstream and whether there may be any downsides to this technological revolution.

Where technology helps

In-house legal teams often report that they’re under increased pressure to do more in a shorter timeframe. Organisations are rarely in steady state; they’re looking to survive and prosper in ever more competitive and regulated environments and changes in the nature and scope of what the organisation does can seem pretty much the norm. And change often results in increased demand for legal services.

We know that many organisations have increased the size and scope of their in-house legal teams as they look to control the cost and responsiveness of legal services. And there’s little doubt also that many in-house teams now play a more pivotal and influential role in organisations than they once did as legal and regulatory issues and risks have increased.

But being more pivotal brings its own challenges. The days of the legal team being tolerated for its quirky, non-mainstream methods are long gone. While lawyers undertake a unique function in any organisation, they’re expected to not only adopt standardised systems of delivery and reporting but to also consistently look at how they might respond more efficiently, without sacrificing quality.

And this is where technology can play a big part. Here are five areas where technology can (and is) helping legal teams’ work smarter:

1.            Contract and document management automation

With most in-house legal teams having a role in the drafting, reviewing and negotiation of contract terms, contract management systems have enabled organisations to automate the management of their contracts’ lifecycle thereby providing increased visibility, certainty and control. So, systems that aid contract creation, negotiation, clarity of obligations, compliance, enforcement, amendment, renewal and termination not only help reduce lawyer time but also strengthen the management of contract risk.

Similarly, even basic automated document management systems are able to facilitate search, storage, version control, generation, reporting and integration with other systems (such as email) as well as functions such as tagging and metadata. Increasingly, functionality also allows for cloud storage which can enhance business continuity and disaster recovery and control storage costs. While lawyers have understandably been cautious about some of the security aspects of the architecture, many organisation are adopting cloud based services and functions.

2.            Matter Management

At one time the only real choice for in-house legal teams looking to adopt an automated system to manage workflow and standardise tasks was to buy and adapt a private practice case management system or build your own – neither of which was attractive or viable. Things have moved on and matter systems are now able to capture many, if not all, of the different functions undertaken by the legal team thereby allowing for a more complete picture of what the lawyers do and the demand for legal services across the organisation. Depending on how sophisticated the system is, there may also be scope to add or integrate other functions such as triage, project management and dashboard reporting.

3.            E-billing and Spend Analysis

Given the need for GCs to control and justify legal spend, having automated tools to interrogate and report on spending, errors and trends is pretty much a necessity for any legal team using external providers and/or with internal cross charging arrangements. Apart from time-saving, these systems can arm the GC and legal managers with more granular information around which they can plan more strategically for budgets, performance, targets, KPIs, and external relationships.

4.            Data Security

This has moved to, or near to, the top of many GCs risk maps and not just in those organisations that process large volumes of personal and sensitive data. Concerns about cyber attacks as well as general GDPR compliance, for example, with their potential for real financial and reputational damage, have emphasised the need for robust and resilient systems and processes to not only provide real time protection but also certainty and confidence in the organisation’s ability to protect its data and react quickly to problems when they occur. In this context, look for more tech developments that offer enhanced security, including in relation to mobile held data. The trend of increased use of cloud storage is also likely to continue.

5.            Smart contracts   

While Blockchain is most often referred to in the context of new crypto currencies (e.g. Bitcoin), it has application in other areas including smart contracts. The potential for smart contracts lies in the automation of the monitoring, execution, compliance and enforcement of agreements without the need for legal input. The technology would recognise when conditions are fulfilled and, for example, automatically transfer assets as agreed and register the transfers. This would make the technology attractive in relation to, say, repeat transactions where standardised terms work well – for example, in residential property transfers or some financial services transactions. Wider and more intelligent application depends, however, on the development and connectivity of the Blockchain technology on which smart contracts sit.

What about artificial intelligence?

It’s much talked about and there are a number of interesting developments in the field. But how relevant are they to in-house law? While we’ve seen, over the last decade or so, technology being used to automate process and provide increasingly sophisticated analysis of legal data, the technology is now increasingly focussing on automating more cognitive tasks i.e. analysing data not simply to structure and analyse but also to offer solutions at a more sophisticated level. Thus it has application across those automated systems already in use but with the potential to significantly increase the technology’s ability to carry out more complex tasks such as highlighting risk, validating compliance, recommending best practice and predicting outcomes.

The rise of legal operations

While GCs and their lawyers clearly require an understanding of how and what technology can help them in their roles and in providing legal services to their organisations, few will have the time or expertise to plan and execute technology change without specialist help - hence the rise of the legal operations specialist. We’ve already seen major organisations appoint Heads of Legal Technology and Legal Operations and associations like CLOC (Corporate Legal Operations Consortium) have grown significantly over the last 2-3 years. Of course, not all legal teams have the scale or budget to appoint legal operations or technology specialists but as technology evolves and becomes more accessible, no GC will want to ignore the benefits of automation and smart technologies, in whatever context. As such we can expect to see the continuing rise of the legal ops professionals working with in-house teams from inside or outside the organisation.

Where are we headed?

While not every new technology or upgrade will have mainstream use, the introduction of different technologies has already brought about significant changes in the way that in-house lawyers work and in the way they interact with their in-house clients. Of course, not all change or innovation is technology led but the sheer pace of technological change is likely to bring more, and faster, change over the next few years. With legal tech increasingly having the potential to automate more process, analyse and interrogate more and more data and predict increasingly complex outcomes, all on integrated platforms, we may well see legal tech becoming a key part of the architecture of in-house legal teams. This could well impact the structure of many larger teams as legal ops specialists become an integral part of the senior legal management. For smaller teams, having access to the technology and to the expertise, (provided by law firms or specialist external providers if not available in-house) may well move from being a nice-to-have to become a necessity.

The pros and cons

So what are the advantages and pitfalls of technological change? Used well, technology can, and does, drive better performance and enhance the quality, reliability and accessibility of legal services, while controlling its cost. Its smart use provides GCs and in-house legal teams with a great opportunity to evaluate and evolve the way they work and underpin their value to their clients and organisations. But integrating technology into the in-house function requires knowledge and strategic planning by GCs and senior in-house lawyers who may also need to make the case for its adoption. And technology can bring change and disruption requiring good people and change management skills. But there’s little doubt that lawyers will need to be increasingly tech savvy in identifying the benefits and downsides of technology solutions.

Reference material

The legal department of the future: How disruptive trends are creating a new business model for in-house legal. Deloitte 2017

CLOC Institute 2018: A countdown of the 5 key takeaways. Lexology USA May 23 2018

Five In-House Legal Tech Trends to Seize in 2018, Mike Wong, Neota Logic. CCBJ January 11 2018

Barclay Simpson – 3 legal technologies that are revolutionising in-house departments. Amelia Johnson 28 April 2017        

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