The Rise of Legal Operations

April 25, 2019

Digital transformation is disrupting the legal profession. Both increased competition and the rise of technology is shifting how in-house legal departments and consequently law firms, operate. This has led to the rise of legal ops which seek to enhance the delivery of legal services to businesses.

The interconnectedness of organisations and industries, together with the ever-expanding regulatory scene, has seen the transfer of legal work from law firms to in-house legal teams. Over time, corporate legal departments have begun to grow in size, with the complexity of tasks requiring more personnel to manage workflows and achieve the required results. The nature of work is both shifting and expanding, as the use of technology becomes commonplace.

In order to control costs and manage the new reality, many organisations are approaching their in-house legal departments with new vigour. Momentum to adopt digital practices has been building, with investment in legal technology reaching US$926 million last year.

According to BCG and Bucerius Law School a staggering 90% of organisations with large corporate legal departments now have staff dedicated to legal operations as a means to increase efficiency. Differing significantly in size, covering a range of cross-functional competencies including financial management and legal data analytics and working closely alongside the general counsel, their aim is to deal with those narrow and specific areas of practice and leverage cutting-edge technology to manage the organisation’s needs in an economical way.

Reducing costs, risks and inefficiencies

According to information published by Lexis Nexis, proper implementation of legal operations can cut costs by 5% to 30%. The strategy is simple and focuses on the creation of a holistic framework within which in-house legal teams can operate. It looks at the various functions a general counsel and their legal department needs to perform and finds ways to manage them as effectively as possible including through automation.

Collaboration and innovation

AI based virtual data rooms in particular integrate the different aspects of legal processes and have become recognised for their benefits in conducting online due diligence. Lawyers and their clients can create a document database that both parties can update at any time, from anywhere in the world using their computer, iPad or mobile. The client can compile all necessary contracts and other documents in the data room. Lawyers with access rights can then review any documents required as part of a due diligence process. Also offering and meeting a host of internal and external management benefits and regulatory compliance requirements a VDR can be used as a centralised digital platform to support with corporate housekeeping tasks and client communication in a wider context.

According to recent figures issued by Thomson Reuters, spending on AI solutions will hit an estimated US$47 billion in 2020, increasing from US$8 billion in 2016. AI can help decision-making in a VDR environment through Natural Language Processing (NLP), whereby computer systems explore, analyse and ‘understand’ patterns of human language. NLP is applied to the unstructured data held by companies, consisting of non-formalised images, emails, word documents and PDF files. Making such data quickly readable and accessible for analysis is particularly useful for legal due diligence, affording substantial savings of time and money.

With legal ops and tech now becoming a primary focus, corporate legal departments will find traditional law firms unable to meet the changing demands of the industry. To be successful however requires the identification of pain points, streamlined implementation and widespread adoption, pairing the right teams to the appropriate technology to ensure the value-adding function isn’t lost in the increasingly fast paced environment in which they operate.

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