Over the course of its history, humanity has gained tremendous amounts of intelligence — gains mostly derived from human innovations. Nevertheless, throughout the centuries, many people have been resistant to new technology, whether revolutionary or evolutionary. Even though mechanized looms increased the economic efficiency of textile production, for instance, the Luddite handloom weavers — believing that these very innovations would render their jobs obsolete — found plenty of reasons to oppose them.
Lawyers today are hardly like the Luddites of yore. But like technological advancements of yesteryear, legal digital transformation has not quickly taken hold across many companies and industries.
That is about to change drastically, though, largely due to legal technology’s massive growth. McKinsey Global Institute estimates that at least a quarter of lawyers’ current work can be automated. McKinsey also reports that those organizations that have undergone a legal digital transformation are “23-times more likely to acquire customers, 6 percent more likely to retain customers, and 19-times more likely to be profitable.”
Naturally, the greatest beneficiaries of legal’s digital evolution are in-house corporate counsels. They now have an opportunity to truly transform, in form and function. With the help of advanced legal tech, these overworked attorneys can become legal risk managers, legal knowledge engineers, and legal experts in design thinking. They can more creatively and strategically solve any legal problem and resolve any client issue that presents itself.
Legal Tech Trends Bound to Give In-House Lawyers a Boost
In the next four to five years, twelve percent of in-house legal budgets will be devoted to legal tech, according to Gartner. That greatly contrasts with 3.9 percent in 2020 and 2.6 percent just four years ago. In February 2021, the research and advisory company reported that although in-house legal departments have long been risk-averse when it comes to technological innovation, the COVID-19 crisis has forced many to think deeply about automating legal functions. Legal tech, as a result, will soon have an impact on corporate legal and compliance objectives, productivity, and effectiveness, Gartner determined after surveying corporate legal leaders in 2020. It will also have a transformational role to play in the legal value chain.
The following three predictions, partly based on their research, ought to inspire legal leaders to plan their legal tech investments and broader digital transformation projects this year — and in the near future.
- Spending on Legal Tech Will Increase Threefold
Over the next four years, the percentage of legal budgets spent on technology is set to increase substantially. By 2025, legal tech budgets will be three times as much as they are presently, as stated above.
Major advancements in the legal tech market are also driving legal leaders to expand their use of technology. That is to support workflows and meet productivity demands. Accordingly, coming up with a longer-term legal tech strategy will be vital to legal departments’ overall success. That is opposed to making ad hoc technology purchases, which do not go a long way in achieving business goals.
- Half of Legal Work — Tied to Corporate Transactions — Will Be Automated
As companies recover from COVID-19, and as the effects of the crisis lower acquisition valuations, mergers and acquisitions (M&A) work will only continue to rise. After all, demand for corporate transaction work has already recovered from “pandemic-driven lows.”
The typical legal department reported in 2019 that 33 percent of its corporate transaction work was automated to some extent. In keeping with this trend — and to keep up with new demand —55 percent of the department’s work on corporate transactions will be automatable by 2024.
Some leading legal departments will find enthusiastic and reliable partners in legal tech providers. However, what is key is identifying issues that can be solved with automation, instead of adopting and implementing legal tech in search of the problem.
- A Third of Potential Benefit of CLM Investments Will Be Captured
Legal tech and automation investments invariably take a longer period — think contract lifecycle management (CLM) systems, for example. The average legal team needs 2.4 years to recoup such a financial investment because of a failure to plan sufficiently. The predictable result of this, of course, are “poorly adopted” or “ill-fitting” systems.
In addition, failing to manage stakeholders’ expectations for a technology’s payback period can lead to the perception that new legal tech is underperforming or — worse yet — problematic for the business. Legal leaders may even find themselves in a vicious, perpetual cycle, where stakeholders’ disillusionment drives more disengagement. Companies may then be forced to abandon a technology initiative altogether, which is a clear waste of a potential six-figure investment.
To get the most return on CLM investments, let us say, legal departments must take into account their own contract management maturity and prioritize capabilities that will make the most sense. If they do this successfully, corporate legal departments can expect to capture at least 30 percent of the potential benefit of CLM investments by 2025.
Face it, Legal Digital Transformation is ‘Inevitable’
At the end of the day, legal is only following other industries that have embarked on their digital transformation journeys. However, because the sector is especially document-heavy, it is poised to benefit significantly from digital transformation projects. In-house legal and other departments — having already automated accounting systems, word processing, and email — will receive the fruits of deploying technology to automate tasks, like document drafting, management, and analysis. That is true whether they are in the back office or the front office.
“Most of what (working professionals) do will not even be possible without (machine-driven automation),” Kevin Kelly predicts in his 2017 book, The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future. “You might no longer think of it as a job, at least at first, because anything that resembles drudgery will be handed over to [artificial intelligence] … jobs that no one wakes up in the morning really wanting to do.”
Ultimately, AI-based legal technology will help overworked attorneys do their jobs more efficiently and effectively. It will also help them perform the kinds of legal tasks — like deep analytics — that they cannot do at present, and help them focus on the work they really should be doing moving forward. This will not only impact companies’ bottom line, but also expand who lawyers are, both creatively and strategically.
Ironically or not, legal digital transformation will help them to become more ‘human,’ during the process, too.
Matt Gould is the Head of Legal Transformation at ContractPodAi. He brings over 20 years experience as a General Counsel leading global in-house legal teams in the telecommunications and tech sectors. Read his executive bio here.
