Numerous business processes have been successively digitized in recent years. Legal and compliance departments and their processes had not been in focus for a long time. This was largely due to the main task of legal services, the analysis of facts and the application of laws, which was essentially seen as individual work. However, this has now changed.
Digitalization has become essential to efficient legal departments
Legal services are coming under increasing pressure to use the new technical possibilities (“legal tech”) to reduce their costs and improve their service delivery.
At the same time, their tasks are also changing. Collaboration with external law firms on specific issues is becoming more intensive, while cyber risks are increasing. Furthermore, new areas of focus have been emerging, including ESG (Environmental, Social and Governance) considerations, data regulation, AI regulation, and an increased engagement in internal investigations and eDiscoveries.
Typical mistakes
In various companies, the need for action has already been recognized and individual projects have been launched. However, we see some typical mistakes that should be avoided:
- Realizing stand-alone solutions
Digitalization projects often start where particular problems exist or have become apparent in the course of individual investigations, e.g., in the area of contract creation and management. These pain points are then implemented technically, and the individual case is solved. As a rule, however, there is no overall strategy or target picture, so this procedure results in isolated solutions and new interfaces. This approach results from a concern about long-running large-scale projects that tie up considerable resources and typically overtax the departments during implementation or go-live. - Long-term maintenance effort of individual solutions
The digitalization of individual processes leads to the cementing of existing – often historically grown and suboptimal – processes. On the one hand, this wastes a certain reorganization potential, and on the other hand, dependencies at the data level are not usually considered. Although this can lead to supposed quick wins, the resulting long-term maintenance effort is significantly underestimated. - Difficulties in formulating legal requirements
Furthermore, there is often a deficiency in the department’s own processes, especially those related to handling services related to case. In addition, the business department and the IT department often do not speak the same language, which leads to difficulties in formulating the exact requirements. Even if this is successful, however, it is – as described above – usually limited to the individual task and does not consider the dependencies from the IT strategy and the existing IT landscape. - No participative approach
The end customer and user perspective is not sufficiently taken into account in the projects. However, their involvement at an appropriate point in time is an important success factor for acceptance after implementation of the solution
Goals of the legal department of the future
Technology pressure is essentially aiming at increasing efficiency in the provision of legal services. On the one hand, costs can be significantly reduced, and on the other hand, processing times for individual issues can be significantly shortened. A Gartner survey among 300 legal leaders revealed an automation potential of between 50–60% of tasks in legal domains such as drafting, negotiation, and review. This survey also found that organizations have not yet reached the halfway point in realizing this automation potential (Gartner, Legal Planning and Budgeting for 2021).
In addition to increasing efficiency, the Legal Department of the Future approach also aims to provide better support and make work easier for employees. This is particularly true in times of increasing shortages of skilled workers. The aim here is to improve their day-to-day work:
- No time wasted searching for documents
- Fewer errors due to automated processes and reduction of repetitive activities
- More time for processing complex legal core tasks
- Better overview of pending tasks and their prioritization
- Enabling cooperative working without system breaks
- Avoiding requests to the wrong contacts through better routing
Better work support also supports the third goal – improving quality.
Framework for a digitalization approach of legal departments
In order to achieve the aforementioned goals, a framework is necessary that ensures systematic consideration of all relevant sub-elements. It is not mandatory that all aspects are implemented at the same time; rather, experience has shown that a successive approach makes sense in order not to overtax the adaptability of users and customers. The Deloitte “Legal department of the Future” framework comprises the following elements:
- Contract Lifecycle Management and document automation
Contract Lifecycle Management (CLM) supports all contract phases from creation, negotiation and signing to archiving and, if necessary, updating contracts. - Legal research & knowledge management
Legal research and knowledge management is often a highly manual task. Monitoring and tracking international legal developments (e.g., with RegMonitoring by Deloitte), fully automated source research and database queries during reviews of pleadings support this task. - Content management
Content Management refers to the use of solutions for the collaborative creation, management, publication and archiving of content, e.g., the collaborative and system-supported creation of pleadings and the automatic file assignment of e-mails. - Legal controlling
Legal controlling allows systematic tracking of the costs of external law firms and service providers as well as the management of individual and large-scale proceedings. In addition to pure reporting, AI-supported analyses of invoices for anomalies can be performed. - Matter management
Matter management is a systematic management of the lifecycle of legal proceedings and projects. This includes tracking all relevant data and information on a matter including deadline management, output, etc. This also includes setting up reporting on the respective matter status. - Workflow support
Workflow support encompasses the definition of uniform core workflows and (partial) automation of legal business processes based on a standard IT platform. A typical example is the establishment of a legal front door for the reception and efficient routing of all inquiries made to the legal department.
Lessons learned
The framework enables a forward-thinking approach to the legal office of the future. This begins by envisioning an overarching goal and can then move on to initiating the process with prioritized elements. Further implementation can then be stretched and controlled via a dedicated roadmap. In this way, the level of digital maturity can be increased piece by piece.
It is recommended to define a workflow core based on a standard platform in the sense of a workflow hub. This ensures that important master data will be kept in a uniform data model. Based on the platform, special solutions can then be connected for specific tasks (e.g., CLM or legal controlling). It also makes it easier to integrate AI components, which are reaching an ever-higher level of maturity.
Conclusion – companies need a pro-active approach to the legal department of the future
A proactive approach is necessary to ensure that legal departments are ready for the digital age. This is the only way to ensure that the original business needs, and the most important requirements of legal departments, are mapped correctly. It is advisable to set up a cross-functional task force involving the specialist departments, IT and end users. The faster the framework has to be implemented, the more likely it is that external consulting will be used.
Collectively, these points provide a digitalization boost for legal departments and will thus increase efficiency, quality, and satisfaction.