What does the legal industry have to do to be part of the Fourth Industrial Revolution — one that is causing almost every industry to transform themselves at a speed with little historical precedent?
Rose Ors of ClientSmart spoke to Dan Lange, Executive Sponsor Partner for Deloitte Legal Business Services, on how corporate legal departments can join the technologically-driven revolution.
Rose Ors: There has been much talk about the legal industry’s need to join the Fourth Industrial Revolution, with much of that focusing on digital transformation. What does “digital transformation” mean in the context of a corporate legal department?
Dan Lange: Some think digital transformation is all about adopting and using technology; and others believe it is all about using data to gain business insights. Each is partially correct.
Digital transformation does require both technology and data, but what will drive change is the ability of the general counsel and others in the legal department to reimagine how to optimize the department’s value to the company it serves.
Rose Ors: Deloitte helps transform many functional areas within companies throughout the world. Where do legal departments fall on the digital transformation spectrum?
Dan Lange: Overall, legal departments are one of the last departments to be transformed. Some legal departments are quite far along in that journey, but many are still operating in the same manner they have for decades. The pace of adoption continues to be relatively slow.
Rose Ors: Why do you think that is?
Dan Lange: It is not easy for legal departments to transform themselves because much of their work involves interacting with a range of business areas. They are not self-contained with end-to-end control and ownership of essential workflows, and that interdependence introduces complexity into the transformation process.
For example, contract lifestyle management is an area with many individual stakeholders who play a role in a multi-step process. It is not as simple as the legal department unilaterally saying, “We are going to change how we manage contracts to become more efficient.” They must get buy-in from all the other stakeholders.
Rose Ors: What are the most significant changes legal departments need to make?
Dan Lange: Legal departments typically do not accumulate or utilize the data needed to transform themselves. Decisions often continue to rely on the intuition and experience of the lawyer making them. A successful transformation requires a data strategy, and it also requires a rich and reliable dataset that can be mined for meaningful insights quickly. The results, of course, are smarter decisions and measurable outcomes.
Rose Ors: What’s an example?
Dan Lange: Let’s take contracts again. A high-quality repository of contracts is becoming table stakes for legal teams. Digital storage of the actual agreements supported with appropriate data-tagging provides for rapid search, retrieval, and reporting. Tagging metadata inside contracts can help measure risk positions and identify critical milestones and deadlines, as well as identifying those who must approve the contracts.
A repository could increase efficiency by providing contract templates and clause libraries to speed future contract drafting. When privacy rules or other laws change, the repository would enable the legal department to quickly determine which contracts have clauses that need to be revised.
A successful transformation also requires legal departments to employ the multi-disciplinary expertise that many departments now lack. Those departments that invest more in Legal Ops will accelerate the pace of change.
Rose Ors: What else must legal departments address?
Dan Lange: Legal departments tend to focus on changing individual aspects of their operation in isolation. This one-off approach can result in disjointed investments in process improvements and technologies which may not operate well with each other or are not connected to the greater enterprise.
There are far too many instances in which corporate legal departments define a problem too narrowly. Technology is a prime example. A legal department sees a need for a technology upgrade, buys that technology, and thinks it will solve whatever larger problem there is. When the issue remains, they are dissatisfied with the technology and may stop using it.
Rose Ors: How can legal departments avoid too narrow a focus?
Dan Lange: Legal departments must recognize that real transformation consists of several elements. It will require expertise in four key areas: change management, process improvement, technology utilization, and project management. You need to employ a multi-disciplinary set of skills and experiences as well as subject matter specialists.
At Deloitte, we launched Legal Business Services to meet these broad needs.
Rose Ors: What does Deloitte bring to the table?
Dan Lange: As the world’s largest professional services organization, we have extensive experience in those four key areas I just mentioned and subject matter specialists, all of which we can draw on from around the globe. We have decades of experience applying our knowledge to help legal departments align their talent, data, and technology.
We recently added some of the most talented and respected market leaders to our team, including Mark Ross, Richard Levine, Lewis Christian, and Steven Walker. Our goal is to help the legal department move from a primarily risk management and compliance center to one that drives quantifiable business value.
Rose Ors: What does a modern in-house legal department look like five to 10 years from now?
Dan Lange: I see a legal department where lawyers are focused on strategic issues using data to drive faster and better decisions — a department that leverages data and artificial intelligence to perform low-risk, high-volume tasks more efficiently and offer self-help options to the business units.
The department also will use technologies that are not one-offs, but rather a suite of legal technology that is connected to the rest of the organization.
Rose Ors: What are the benefits of this cultural and technological shift?
Dan Lange: It has long been the goal of most general counsels and their legal departments to be valued as strategic business partners. Digital transformation will help them achieve this goal.