This article by Tariq Hafeez, President and Co-founder of LegalEase Solutions, and Patrice Asimakis, Director of Legal Services at LegalEase Solutions, was published on November 8, 2022, on Virginia Lawyers Weekly
Companies, more than ever, are striving for an edge in today’s uncertain business environment.
As organizations brace for the possibility of a recession, calls from the C-Suite to cut costs and improve profit margins are mounting pressure on legal departments.
To rise to these demands, general counsel and their colleagues must provide more than sound counsel on pressing or emerging issues. They have to show they can furnish high-quality service with contract lifecycle management, NDA reviews and other essential but routine and redundant tasks with streamlined resources and headcount.
The solution to this predicament lies within the bones of the business. Legal departments must delve into their processes and tools and assess ways to deliver more with less. GCs looking to maximize their capabilities should turn to legal transformation, an area replete with possibilities but filled with misunderstanding.
With better clarity on legal transformation, legal departments can demonstrate their value and help their organizations become more cost-efficient and profit-minded.
Legal transformation defined
Legal transformation is often associated with or viewed as strategic technology adoption. True, technology process innovation and new delivery models can be key change agents for streamlining and simplifying the drudgery and costs involved with in-house tasks.
However, it would be a mistake to conflate legal transformation with just onboarding new technologies. Technology and vendor management form part of the picture; people management and process-based enhancements make up the rest.
It’s better to view legal transformation as a physical process and a technology-driven journey where client centricity is your North Star. The most successful organizations approach this path in two stages. The first is a whole-body examination of the entire business — including its tech-driven and labor-driven parts — for assessing cost-cutting and profit-generating opportunities. The second is implementing the strategies and tools required for the company to deliver on its potential.
As the legal function is often the costliest department in any enterprise, GCs and legal-compliance ops teams can make a substantial impact by modernizing the department’s capabilities and processes. Even incremental changes, be it using dashboards to streamline project management or reorganizing a routine contract review workflow to reduce hands-on involvement from associate counsel, can go a long way toward closing more deals while cutting costs.
At the same time, they can reduce costly haggles, decrease time spent on low-value tasks, and minimize the likelihood of mistakes, oversights and inconsistently drafted agreements.
Using legal transformation to improve operations
When a company starts its legal transformation journey, it has to identify and work through the kinks of its processes and how it interacts with customers.
To do this effectively, organizations should determine their objectives and the questions they want answered from their legal transformation process, which will help guide important process improvement and vendor decisions.
From there, they must examine to their data sources, pulling key information from standardized forms the company stores or organizing unstructured narratives and observational information into data points the legal department can leverage.
Once legal departments have identified important data and stripped away redundant or extraneous information, they should find a strategic legal technology vendor or partner to organize it for them. Most legal tech providers will offer this bundled with the quote process for their service and software packages.
After completing these steps, legal departments and other enterprise stakeholders can start enjoying the fruits of their exploration and bring the legal transformation journey to its apex by fostering and furthering change — and, of course, profits.
While plentiful benefits accrue from legal transformation, many organizations will see notable differences in the following areas:
Visualizing and identifying cost-cutting opportunities: Through dashboards and process mapping, GCs can assign key projects, monitor turnaround times and maximize the value of their blue-chip associate counsel talent. Simultaneously, GCs can quickly identify and fix bottlenecks in their review workflows, which helps with important decisions regarding outsourcing research and review tasks to outside counsel or other providers.
Legal departments can also present visual-based business intelligence reports to stakeholders covering the revenue loss and profit opportunities they ferret out, helping the company’s C-Suite members and decisionmakers better visualize the legal function’s value.
Using CLMs to facilitate workflow improvements: An advanced contract lifecycle management, or CLM, system and robust reporting tools can help stakeholders monitor key contracts and make strategic changes with the C-Suite’s input.
With the proper reporting settings enabled, teams can see at a glance all executed agreements the legal department worked on, the value of those contracts, deal turnaround and review times and associated contract costs and values. With this type of reporting, CFOs and GCs can collaborate on ways to optimize the value of the enterprise’s agreements, plan out quarterly budgets and use performance metrics to determine whether to invest in appropriate legal technology tools based on the legal department’s performance.
Dashboards, alert systems and other CLM features can also help GCs better respond to due diligence inquiries, regulatory updates and the like based on how these programs corral and summarize key agreements, liabilities and obligations.
Augmenting the legal function: While lawyers bring experienced perspectives to any corporate transaction, they can enhance their capabilities and strengths with artificial intelligence.
Lawgeex, in fact, pitted its AI software against a group of lawyers with decades of experience to spot legal issues in five standardized NDAs. The result? The lawyers posted an 85% accuracy rate in identifying contract flaws, while the AI program had a 94% accuracy rate.
With AI, an in-house legal team can review and redline agreements more effectively without increasing headcount. Legal teams, therefore, can use AI to assess whether clients violated their agreements, auto-negotiate terms from preapproved playbooks, and summarize key liabilities in lengthier agreements.
While the solutions companies unearth will not replace the lawyers on their payroll, the aims of these are the same: achieving improved results at reduced cost and greater efficiency.
With a complete understanding of legal transformation, organizations can weather through today’s uncertain business environment — and emerge more robust and profitable than before.