Why Legal Digital Transformation is Important – Right Now

Why Legal Digital Transformation is Important – Right Now
by Jerry Levine

Legal digital transformation is taking place all around us — in every industry, business, and function. But during times of crisis, like the COVID-19 (coronavirus) pandemic, it is easy to delay taking on any transformation project. The focus may be on surviving the ongoing crisis first before worrying about driving change for legal functions.

Still, there is really no better time to digitally transform legal than the present. In fact, the current global situation duly demands it.

Accelerating legal digital transformation

In a recent study aimed at helping business leaders learn from past crises, Boston Consulting Group (BCG) looked at the top performers during the 2008 financial crisis. BCG identified the similarities in their respective approaches to success. It found that top performers streamlined core operations, “redesigning processes to capitalize on digital, and generating efficiencies so that they were as lean as possible before tough times hit again.”

As the BCG noted: “That’s a more forward-looking approach than many organizations take. Many tend to rely on budget cuts and headcount reductions should a crisis arise.”

It seems, though, more and more companies are learning from previous crises. A survey of Europe’s German-speaking countries found that 70 percent of decision-makers expect the coronavirus to accelerate the pace of digital transformation in various industries.

Evolving operating models

Today, most companies work against the backdrop of focused and continual business improvement, endlessly pursuing greater efficiency and effectiveness. More specifically, critical business objectives are centered around:

  • Smarter work: empowering teams to streamline and automate processes to reduce workload and focus on higher value-added functionsdigital transformation serves to improve the efficiency of legal departments while cutting outsourcing costs
  • Accessibility: ensuring that individuals can access resources wherever and whenever they need them
  • Business continuity: providing systems that prevent — and assist recovery from — threats and crises

Without question, each of these elements points toward the digital transformation of a business. Where legal departments are concerned, two compelling arguments emerge. The first is that the company’s senior legal executive – whether a general counsel (GC), chief legal officer (CLO), or a Head of Legal – should be a business leader and use digital transformation to align the legal team’s objectives with organizational ones. The second is that evolving legal’s objectives in this way leads to the legal team being perceived as a complete value center.

Legal’s alignment with business objectives

Simply stated, the legal department is just like any other business unit in an organization. As such, GCs must treat their team’s objectives as any other business unit’s. And that means aligning the department with the overall direction of the organization, including digitalizing their very function.

Insight Partners recently provided market insight on the impact of the COVID-19 pandemic on companies. It highlighted that the opportunity in crisis’ for organizational leaders is accelerating “a company-wide digital transformation.” On cost optimization, its research revealed that business leaders are working to “decrease spend on professional, consulting, and contracting services.” In fact, a chief digital officer at a large Asian multinational computer manufacturer told Insight Partners that “a material number of contractors and consultants have been cut to achieve our cost objectives.”

Insight Partners also observed that “companies driving material cost reductions will likely be well-positioned during the economic downturn.” In other words, companies focused on improving efficiency and reducing costs will most likely survive — and even thrive — during economic recessions. Partly to that end, GCs and legal teams need to leverage these challenging times, drive digital transformation projects, and see to legal’s alignment with business objectives overall.

Legal’s consulting spend

Consulting spend is emerging as a significant cost-cutting opportunity, as stated above. That is because corporate legal teams spend exorbitantly on both consultants and outsourced law firms.

Keeping this in mind, legal staff can use digital automation to reduce mundane tasks, such as the creation of standard contracts and NDAs. Alleviating this burden would allow them to spend more time on higher-value, strategic projects, which are typically outsourced. They can also extend their own influence within companies, helping to shape companies altogether.

In other words, digital transformation and automation serve to improve the efficiency and effectiveness of legal departments while cutting all of those outsourcing costs.

Legal as a value center

Historically speaking, legal departments have been perceived as total cost centers. Its sole purposes have been delivering legal services like contract review, reducing risks, providing legal advice, and representing companies in formal disputes. So long as this remains the perception, legal teams will continually be affected by cost-cutting efforts. And precisely because of this view, legal digital transformation may even be a means of survival for corporate attorneys.GCs and legal teams need to leverage these challenging times and drive digital transformation

Consider the fact that mid-to-large-sized companies can easily have 20,000 to 40,000 active contracts across multiple divisions and regions, at any given moment. Then, consider automation that closely monitors — and provides reminders on — accounts payables, based on agreements with customers.

Concorde Technology Group, for instance, underwent a digital transformation that generated a successful payables result. It then went from receiving payments 60 days after contract renewal to receiving payments 90 days ahead of renewals. Basically, Concorde Technology Group was able to pull up payments on major contracts 150 days — or five months — sooner. It was a testament to the value added by legal, particularly through automation.

Starting the digital transformation journey

The bottom line is that GCs and legal teams have the perfect opportunity — in any given crisis — to start their digital transformation journey. It is an occasion to adopt and implement leading-edge digital tools. It is a chance to shift the perception of the legal department — from a cost center to a complete value center.

However, they must first find a technology vendor that will not only sell software, but also provide guidance every step of the way. They need to look for a partner focused on legal technology adoption, implementation, and deployment, as well as software training. And they have to do all of the above in an agile fashion.

To learn more about beginning your own legal digital transformation, read our latest e-book, Three Stages of Legal Transformation. It is a free publication that includes many helpful tips for GCs and legal teams.

Jerry Levine

 Jerry Levine
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