How Legal Departments Can Leverage Tech And Data To Become Value Centers Within Organizations

First Reviewed : November 29, 2021
Last Reviewed: November 29, 2021

This article by Tariq Akbar, LegalEase Solutions, was published on November 29, 2021 on

In most companies, the legal department is valued for its strategic input, risk management, compliance navigation and its general ability to put out legal fires. However, many view the department more as a cost center and not as a value center. I’ve heard general counsel members being referred to as “second-tier members” of the C-suite.

One way this perception and its ensuing reality can change is with the right technology. In-house counsel can gather and use the business intelligence that their department constantly captures to positively affect growth and increase productivity. This process is what we are going to term legal transformation. Some ways that in-house counsel can leverage technology for this purpose are listed below.

Contract Management Software

Contracts are the bedrock of information for business transactions. Mismanaged agreements cause significant internal inefficiencies and cost impacts such as unaccounted-for inflation and unintentional revenue leakage. In fact, according to an IACCM study, about 50% of buy-side negotiators viewed internal process improvements as their biggest challenge. Even more fundamentally, companies that are not in control of their agreement workflows risk damaging their reputations and repelling business opportunities.

Using contract life cycle management software (CLM), departments can reference automated playbooks of pre-drafted and preferred contract language when analyzing agreements for redline opportunities. Using these playbooks can help reduce agreement template haggles, which 56% of contract negotiators report being a pain point.

Of course, the effectiveness of your playbooks will depend on the quality and quantity of the contracts on which they rely. Therefore, general counsel should hold meetings with key stakeholders to identify the specific issues and pitfalls these playbooks should address to satisfy departmental goals and concerns. Once legal resolves these issues, automated playbooks can help bring all sides closer to finalizing and executing key agreements, avoiding prolonged contract negotiations, which have a larger chance of falling through.

Departments should also consider AI for flagging terms and inserting necessary language. Indeed, AI programs will inevitably require time, copious contract examples and other data to train. However, in-house counsel can work with IT personnel and onboard the right talent internally to help develop these programs to achieve their organizations’ objectives. Overall, effective AI programs can lead to more efficient contracting, help save on annual revenue and keep deals from losing as much as 40% of their value.

Litigation And Matter Software

The pandemic has also spurred matter workload bottlenecks for in-house counsel. Research indicates 71% of in-house counsel felt the pandemic increased their internal workloads. Furthermore, about a third also faced outside spend reductions and accelerated technology adoption.

Since companies allocate $5.8 million on average toward outside counsel fees, today’s legal departments will need to be a lot more resourceful. Litigation and matter management software can help stakeholders visualize how their legal personnel staff and cycle through matters.

A well-conducted process mapping exercise, for example, can create comprehensive flow charts that allow general counsel to show how they can optimize staff output, eliminate inefficiencies and identify automation opportunities. Ideally, these maps should be visual, consistent and easy to follow. Legal, for example, can use diamonds to represent decisions, arrows to represent the flow of information and other shapes and colors to represent bottlenecks and obstacles.

Your legal department can also create “swim lanes” for specific individuals or subdivisions in order to delineate their responsibilities and workflows. From there, you can chart out its processes and assess how it can streamline its operations. Customized offerings can also generate customized reporting and features that help decision makers better understand each matter’s risks and liability savings. These approaches can help supplement dashboard activities, better visualize outside counsel spend and measure key metrics. These benefits are critical since the typical legal department handles roughly 428 matters annually

These dashboard tools can also help legal departments prioritize tasks, assess risks, enhance forecasting and conduct cost-benefit analyses. Considering cost-benefit issues can help your legal department demonstrate its alignment with the C-suite — an important consideration since the Legal 500 found cost-benefit considerations to be an emerging priority for stakeholders.

Data Analytics

Regardless of the types of tech or software used, your legal team should be leveraging big data, a byproduct from its day-to-day activities, to create immense value for your company.

Data review and analysis can have a measurable impact on cross-departmental performance — with stakeholders stating that data collection and analysis have fundamentally changed how their companies have conducted business over the past three years. McKinsey found that data analytics can help companies reduce up to 30% of logistics costs and 20% of services costs over three years.

Legal departments have a prime opportunity to capitalize on this data to help the entire organization. Think of every transaction, liability, compliance issue or employment issue your company has ever faced. Your legal department has collected all kinds of information about contracting and litigation life cycles, including the success rates of working in critical terms and the ideal settlement values for specific matters. Your company can utilize this to better predict future behavior and resolve early matter disputes.

Your legal department can also package measurable information from these matters for other departments to review when making critical decisions. The availability of this information can be a game changer. With this data and business intelligence, you can review and cross-reference information in real time in order to change the response times across the organization.

Exporting all of this information into business intelligence and predictive analytics programs can help legal and other departments work together to make cost-savings decisions about staffing costs, supply chain arrangements and renegotiation strategies. When paired with descriptive analytics programs and data visualization apps, your legal department’s data can help the C-suite better understand the overall context behind how their products and departments are performing and make necessary adjustments. This ultimately results in a legal department more aligned with executives’ preferences.

Legal transformation is an important piece of digital enterprise transformation that is either overlooked or not recognized. This needs to change, and it can with leadership in the legal departments.

Tariq Akbar,
Chief Executive Officer, LegalEase Solutions

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