Why should my board invest in legal tech?

ThoughtRiver writes:

A tradition of resistance to technology

Wherever you look, technology is driving change. How we work, socialize, consume entertainment, even how we order food, has been changed by new solutions that make it easier for us to achieve what we want to do.

But until recently, the legal industry has resisted the lure of innovative technology and instead relied on centuries-old traditions of highly skilled and highly skilled minds employing analog contract processes.

This has been driven in part by the due caution that is at the core of the legal profession. Using a digital platform to watch an on-demand recording of the latest Scandinavian noir detective series is low risk should something go wrong. Missing a critical part of a contract in a multi-million dollar M&A is a whole different matter.

Legal tech is ready – but not all companies are

It’s important to note that legal technology is no longer a niche or experimental market. Legal tech is big business and it’s only getting bigger.

In 2019, the legal tech market generated worldwide sales of $ 17.32 billion, with the market expected to grow at an average annual growth rate (CAGR) of over six percent through 2025. By then, sales are expected to reach $ 25.17 billion.

The supply of AI legal technology for companies increased by almost two thirds in 2020 compared to 2019.

There’s a lot of choice out there; possibly too much choice. In an increasingly crowded market, it is more difficult to determine which vendors offer real value for your use case and which are not a good fit. It’s easy to see how this leads some companies to simply give up trying to figure out which technology will provide ROI. This is a mistake because choosing the right legal tech company offers measurable benefits with faster time to value.

GCs are ready too

Our experience shows us that GCs are ready to take advantage of the opportunities that Legal Tech offers. And this is supported by research.

Studies show that 70% of in-house attorneys say they don’t have adequate technology and 97% say they struggle to secure legal technology investments.

More than half of GCs (59%) believe that using technology more can help them cut costs, but only half of legal departments have increased their use of technology in the past 12 months. This is important as GCs say the workload will increase by 25% over the next three years, with three quarters of respondents not expecting budgets to keep up with this additional work.

Internal legal teams are urged to do more with less. The only way to do this without exposing the company to unnecessary risk or dramatically slowing the procurement process – both of which are unacceptable to the company – is to use technology.

Legal tech growth is ongoing, but not fast enough. Gartner predicts that legal technology spending will grow to around 12% of internal budgets by 2025, tripling from 2020. But that’s not enough to make a significant difference.

GCs are certainly not the ones blocking technology investment – they are actively promoting it. And to make that investment happen, they need to get approval from the board for additional funding.

4 reasons why the board should invest in legal tech

1. Remove tasks of little value

One of the most common problems facing in-house legal professionals is the mountain of paperwork to deal with. Much of this work is necessary and needs to be done, but it offers little value. In fact, 87% of in-house attorneys say they spend too much time on low-value, routine tasks.

Existing technology can automate 23% of the work done by lawyers

It doesn’t have to be like that. It is estimated that 23% of the work done by lawyers can be automated through existing technology. Gartner estimates that this number is likely to double in the coming years as legal departments will be able to automate 50% of legal work related to large corporate transactions by 2024.

As the technology eliminates routine contract reviews, the legal team can do the work that has previously accumulated (and likely only to increase). You can devote more time to higher-value strategic activities and ensure that the legal situation is no longer a bottleneck without compromising the quality of work or creating additional risks.

2. Accelerate contract processing

Time is the killer of deals. Even a simple NDA prior to contract negotiation can lead to fatal delays in a transaction. The longer the contract process goes on, the more likely it is that the deal will fail.

Digitizing and automating the initial contract review can save up to 95% of the time it would take a lawyer to do the same job. With the right technology, an initial contract can be completed in minutes instead of hours.

With technology that reviews the contract the same way a lawyer does (but in a fraction of the time), companies can enable safe self-service, with the legal team delegating the initial contract review to sales or procurement with little or no additional risk . Technology is the safety net that applies strict rules for acceptable language and identifies terms and clauses that require further work.

This ensures that the lawyer is always in control. The contract review platform can be trained to understand what is acceptable and what is not, as directed by the GC and company playbook. Anything that is likely to be problematic will be presented to the attorney for review and a decision will be made on the appropriate course of action.

3. Increase sales in the company

This is the direct result of a faster contraction. Sales aren’t delayed by legal action and can close deals faster. Instead of constantly checking for updates, sales can do what they do best and focus on generating new offers. You are no longer stuck in the details of the adversaries.

Any salesperson can tell you a story of leaving an exciting first meeting with a sense of excitement only to lose momentum when the NDA takes three weeks to negotiate. By this point, all the excitement is gone and you just never get it back. Momentum is important in sales.

Faster contract processing.  Close deals faster.  Generate new offers.  Increase sales.

Similarly, faster contracting allows purchasing to realize the full value of any carefully negotiated deal. The faster a business becomes tangible and real, the faster the benefits can be felt. The value seen on paper becomes a reality in the company’s results.

4. Become a data-driven company

Many companies express a desire to be truly data driven but aren’t sure how to do it. By digitizing all contracts at the time of the initial review, ThoughtRiver creates a structured data set that is perfect for analysis. Organizations can easily search their entire contract portfolio to better understand what caused previous delays, identify common trends, and gain insights to improve the contracting process.

In this way, the company can use knowledge from existing contracts to inform how new contracts can be negotiated more efficiently. The organization can continually learn and optimize and update the playbook to ensure that it reflects reality.

Data insights are also ideal for adding years of experience to junior members of the legal team. They can access and query contracts to understand how certain clauses have been handled in the past, and access to a huge resource of information to help them operate with the utmost confidence.

ThoughtRiver can help you prove ROI to your senior colleagues and make it easier for them to make a decision to invest in legal tech. With a measurable equation for transaction speed, the speed at which you get from the first draft of the contract to the signature, we can help you perfect your pitch and make the business case for legal tech undeniable.

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