Legal Operations: The Catalyst for Digital Transformation in Corporates

Legal operations and technology

A recent report commissioned by the leading integrated legal services provider, Cimplifi highlights the increasingly strategic role being enjoyed by legal operations leaders in large-scale organizations. The report is based on a series of in-depth interviews with more than 30 senior legal operations professionals from a range of industries including financial services, life sciences, telco/technology, and consumer products. Although there is a limited pool of professionals surveyed, their seniority and the rigorous nature of Ari Kaplan Advisors give this report a lot of credibility.

A common theme from the respondents is that legal operations have moved from being primarily seen as an administrative function to one that provides strategic value to the legal team and the CLO/General Counsel. There are a plethora of reasons for this elevation in influence but in our view, the principal drives include:

  • A dramatic increase in awareness of what legal operations is and why it is important. This has been heavily championed over the last 6 years by CLOC, the Corporate Legal Operations Council whose charter has been to redefine the business of law by bringing together legal ops professionals with legal stakeholders such as law firms, GCs, legal tech providers, legal education institutions etc. The council has done more to raise the awareness of legal ops than any other single initiative.
  • The legal function has in itself become more prominent in corporations. That is to say, in a world which is more litigious than ever, with the ever-increasing pace of business, there are more new regulations and compliance requirements to meet than ever before. The CLO and their team are therefore more central to the day-to-day growth of the business. Legal is no longer just a back-office, support function. Today the CLO is more likely than not to be on the executive leadership team and a peer to the sales, finance, marketing, etc. leaders. Most other functions have a well-established operations capability. Legal is now adding this.
  • Perhaps the most important driver for this shift in importance has been the role of legal technology and how that is expected to drive the digital transformation of the function.

Digital Transformation in The Legal Function

“Laggard” may be too pejorative a descriptor, but it has been common knowledge for a long time that the legal function has been slow to adopt technology than most other functions within a company. Unlike other business functions that have long been using enterprise-grade platforms on which to run their businesses – for example, ERP for production, SFA/CRM for sales, Marketing Automation Platforms for marketing, financial packages for the finance team, the legal function has been slow to adopt a platform to run the legal business. However, that is changing, and changing fast.

As we outlined in a previous post, investment in legal tech companies is at an all-time high and the use of technology is moving beyond just eDiscovery, billing, matter management, and other point solutions that address a single pain point. What we are seeing emerge is some well-funded and, in some cases highly profitable, companies focusing on the life cycle of that most important business document the company has, the contract. 

DocuSignIcertisSirionLabsAgiloftEvisort to name just a few are all focused on helping organizations control the full lifecycle from contract creation, negotiation in the pre-execution phase to the post-execution of managing them in a secure repository, doing deep analysis on the contract data and deriving insight to help drive revenue and lower costs.

Legal operations professionals are being tasked with implementing such technology to help the lawyers become both more efficient, by automating as much of the contracting process as possible, thereby freeing them up for higher-value work and effective by providing insight and answers to questions relating to the contract corpus. This is therefore raising the role and profile of the legal operations function. In fact, the Cimplifi study highlights the belief that it is indeed legal operations professionals that are driving the growth of CLM. 68% of respondents expect to increase spending on CLM in 2022 and 81% expect to see benefits from a successful implementation.

However, as we outlined earlier this month, while Contract Lifecycle Management (CLM) is certainly being adopted at a rapid rate, it is still a far cry from the preponderance of those other functional platforms outlined above.

Some of this is to do with the length of time it takes to roll out a CLM platform. Implementation cycles of CLM and other legal technology are lengthy and are not yet frictionless, as they are with CRM or Marketing Automation software. Issues include the cross-functional nature of the contracting process that inhibits rapid roll-out since so many stakeholders are involved: from the business function that generates the need for contracting buy-side (procurement) and sell-side (sales), to legal who is usually involved in negotiating and drawing up contracts through to post-execution where the business has an interest in how the contractual relationship is performing.

Automating the Contract Process’s Biggest Pain Point

Today a CLM that doesn’t use some form of AI is essentially dead in the water. In the legal function, there are just too many contracts, too much is being asked of contract analytics, and too much opportunity to transform the contracting process for AI to not be at the core of digital transformation.

AI is seen as complicated and using NLP and Machine Learning to automate the pre-execution and post-execution phases is in its infancy, but major strides are being made. And it is legal operations that are helping socialize and roll out these technologies.

In a flourish of optimism, the report concludes that CLM is at the heart of digital transformation. But for this to happen it requires CLM to be more effective than it is today and implementation cycles to be reduced significantly.

And that is where BlackBoiler comes in. In the contracting lifecycle, the vast majority of time and resources are allocated to redlining and negotiating a contract before it is executed. One of the most expensive resources, the lawyers, are spending way too long red-lining third-party paper and managing an iterative negotiation process with the counterparty. Much of the work they do is repetitive and manual. So, much of that work can be automated and AI can be used to quickly mark up standard contract types without human involvement. Automating that key part of the contracting process will go a long way to helping CLM projects payback quicker.

BlackBoiler’s mission is to bring AI to that redlining process and automate it as much as is possible.