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LOD - Lawyers On Demand
The top Four IT Issues for In-house Legal Teams Heading Into 2023
James Kenney
In-house legal teams face unique challenges that differ from the demands of other business functions. While organisation-wide challenges, like cyber risk, are relevant to legal departments, they also have idiosyncrasies that should be front of mind for CIOs and tech leaders. This article will explore what we think are the top four challenges for legal teams in 2022 and 2023. Underpinning all these areas is a central objective – controlling risk and accelerating legal service delivery.
Managing your knowledge – smarter thinking
Legal, risk and compliance professionals are all types of knowledge workers, to borrow a phrase coined by the inimitable Peter Drucker. As such, one of the critical questions knowledge teams need to ask is: how do we manage our knowledge? Is it efficient, and is it secure? The formal description of organising your information is Knowledge Management ('KM'), which plays a vital role in many facets of the business.
KM helps promote profitability by boosting the speed and efficiency of commercial deals, as well as supporting staff retention through knowledge-sharing that improves well-being. It's also a pivotal way to manage risk by sharing and learning from past experiences. With an abundance of system options, it's essential to understand the landscape – the various track records of the KM tech vendors, the possible integrations, the roadmap, and the list goes on.
By working with external partners, CIOs can ensure that their legal team's KM setup is independently and expertly executed. We have been working with clients across Asia-Pacific implementing best KM practices – and we have seen the pitfalls of DIY projects. And a word of caution: a failed project can cause organisational scar tissue, making future change projects even harder. Measure twice and cut once.
Contract lifecycle management – better risk governance
Organisations are digitally transforming their business, making it easier to do business with and for. Underpinning these transformations are agreements and agreement processes. While in-house legal teams are not responsible for managing an organisation's contracts estate, they are certainly responsible for ensuring risk is monitored and controlled.
A lack of oversight of a company's contract portfolio creates risk, so having a single source of truth enables easier and tighter controls. Risks are commonly associated with contract values, terms that exist or don't exist, compliance with regulations, renewals and milestones, and often date-related obligations. These are all data points that can and should be captured, tracked and actioned through the life of the contract.
We often see disputes about what exactly should be paid, and when? What are the deliverables? And to what standard specification should they be delivered? These oversights lead to contract value dilution and significant issues being missed. Terms that would never be accepted were a contract to go in front of the legal or contract management team are being accepted by the business. We are talking about fundamental things like automatic price increases, automatic renewals and exclusivity issues. A well-implemented contract lifecycle management ("CLM") will radically reduce risks like these and give you peace of mind.
The maturity spectrum for "CLM" is deeply varied across markets and organisations – from companies who couldn't tell you where to find their contracts, right the way through to digitised, automated and intelligent contracting. We believe that CLM is an area often ripe for large efficiency gains through data structuring, tech selection, implementation and change management.
Tech strategy – facing the same direction
In LOD's recent global survey, we saw that most legal teams do not have a tech strategy underpinning their operations. Whilst this was okay in the past, today our data shows that those teams with a formal, documented tech strategy are more highly valued than those without one. What do we mean by "tech strategy"? An agreed, written document that clearly outlines how the legal department will procure and use technology to operate efficiently and maximise its effectiveness to the business.
The in-house legal team's tech strategy should align with the broader business. Often clients are surprised to discover they can re-purpose existing technology for specific legal service use cases. The tech strategy should be a blueprint to facilitate how your legal team does business, for instance, managing and monitoring the team's workload, an Entity Management solution for International companies with many entities, IP management and, of course, a CLM for in-life management of agreements.
Knowledge Management helps promote profitability by boosting the speed and efficiency of commercial deals, as well as supporting staff retention through knowledge-sharing that improves well-being. It's also a pivotal way to manage risk by sharing and learning from past experiences
Apart from forcing consensus (typically with input from the IT team), it enables the clear application of principles to tech selection – narrowing and improving how you select your tooling. Example principles might include preferred operating systems (i.e. Microsoft or Google), a limit on the number of tools, must-have integrations, billing procedures and built-in periodic reviews.
Data intelligence – optimising delivery
Data in all facets of business drive decisions, and legal, risk and compliance are no different. Knowing your agreements comply with the ever-changing regulatory landscape must reduce those sleepless nights. Additionally, it's easier to negotiate a commercial deal when you have all the salient information in your toolkit. In-house leaders can derive critical insights from their documents and contracts; the trick is getting the structure and reporting in place properly. In-house legal teams should be aligned with the companies' strategic objectives, spending their time and using their expertise in the right areas. How can they demonstrate their value if there is no data, and how can they allocate their resources without having the relevant information at hand?
Conclusion
To wrap up, we see four key emerging issues that CIOs should be keeping in mind – knowledge management, contract management, tech strategy and data intelligence. As is often the case in the commercial world, the core difficulty often surrounds people and change management, not the use of tech tools. Armed with a functioning CLM, a clear tech strategy, data-fluent reporting and KM, your legal department will fly.
