In-house, there is less fear of AI-enabled technology (but not necessarily better access to it)
By Dera J Nevin, lawyer and legal technologist
By all measures, this past CLOC conference in Las Vegas was its largest and most ambitious yet, boasting dozens of education-rich panels. It also showcased a vendor floor of technology and service vendors (including law firms) and made meeting rooms available so that delegates could speak to, learn from and potentially engage these vendors. Part education conference, part trade show, CLOC has become a fixture on the calendar for those interested in technology that impacts legal services delivery.
CLOC has also given voice to and facilitated the rise of the legal operations professional as a key stakeholder in the evaluation and purchase of legal technology. As a result, there has been a rapid increase in technology offerings aimed primarily at in-house legal teams and operations specialists. How does the uptake of this law-department technology compare with legal technology directed at law firm buyers? I went to CLOC to find out and had the opportunity to informally speak with a number of attendees.
In-house teams are buying, not just sitting on the sidelines
At least a quarter of the in-house members I spoke to reported they have budget and authority to spend on specific technology categories, mostly related to budget management and external counsel monitoring or process automation. Others had, in addition, an interest in extending the use of alternative legal service providers to supplement or replace law firm activity or were actively exploring labor arbitrage and process automation solutions. Another few reported they were on fact-gathering missions and expected to have budget to spend on similar initiatives in the coming 12 to 24 months. Just under half did not have technology budgets and were there to attend panels to hear what others were doing or to look at technology themselves.
This informal (and unscientific) poll suggests that legal operations are increasingly successful in making the business case to allocate law department funds to technology initiatives aimed at overall cost reduction. I expect this trend will continue for the next few years.
But in-house buying is focused, and tactical
The pain-points I heard generally revolved around basic things: formal and process challenges. “All my bills come in different formats, some in paper where I have to use a regional firm. It takes ages to figure out whether we’re spending the right amount.” “I don’t always know when or why [the business] varies a term in a standard contract – and I don’t know how to track that right now.” “I am sure we get the same kind of advice from our law firms, but I don’t have a way to know this. We might be getting inconsistent advice or paying for the same advice multiple times.”
So it is not a surprise that the majority of focus in-house teams were reporting to me was on the tactical side: monitoring and reducing spend, organizing individual matters into portfolios, streamlining contract approval processes and times, and making certain information public to the business to reduce time spent answering routine questions. Contract negotiation coordination and contract lifecycle management were the top purchasing and operational priorities of those I spoke to, although the specific motivations for doing so differed vastly.
Only one person I spoke to (admittedly, from a limited set) was exploring advanced solutions for transactional management or automation of specific business needs. This innovation professional, who had been with his organization for some time, had already implemented an external panel- and cost-monitoring mechanisms as well as some process automation software. During a long hallway conversation, he mentioned the need for CLOC to help those on the more advanced end of operations implementation liaise with others and technology in the more custom solutions spectrum.
From these conversations, I learned that those I spoke to remained in a tactical posture even where this was serving a strategy of overall cost-reduction and process streamlining. Few were engaging with the larger question of how to add value to their organizations, including through enhanced data insights about the business, although many had aspirations to do so.
If it works it doesn’t matter if there is AI in it
Everyone I spoke to was conversant with the kinds of machine learning and natural language processing available in advertised technology, but functionally they cared only if there was AI in a product if its presence helped secure budget. Mostly, they wanted the products they were looking at to work, and to be easier to install and more intuitive to use.
One person I spoke to noted that vendors need to spend less time talking about AI and more time talking about the realities of cleaning data and ensuring it can be imported and exported easily out of the technology. “They don’t factor in how hard it is to get data” into analytics tools, he noted and mentioned that the subject of data portability and interoperability was increasingly being asked about within private in-house counsel and legal operations forums.
I learned from this that the significant need for industry interoperability and data format and quality standards – long felt by law firms because of eDiscovery – is now starting to impact the in-house community as well. It will be interesting to see whether CLOC starts to champion data interoperability standards for vendors.
Many still really need their law firms to help with the heavy, strategic lifting
The in-house personnel I spoke to here were happy to see eDiscovery and transactional management solutions and vendors at CLOC, as some of them indicated a preference for engaging these services directly; in many cases, where the business case warrants it, in-house teams have already done or will do so to aggregate purchasing and reduce spend.
But other people I spoke to appreciated the opportunity to do some comparison shopping of products and to educate themselves about what the tools do. The legal operations professionals intend to take this knowledge back to their law departments and educate their attorneys about what to instruct their outside counsel to do with these technology categories or might consider adding requirements about process and technology to outside counsel guidelines.
There seemed to be no consensus or trend, but my impression was that law firms are still expected to do much of the work in identifying practice solutions to legal services delivery of substantive work. However, many of the in-house teams wanted to be consulted on solutions being adopted by law firms, or at the very least told about them.
But some problems remain acutely with in-house teams
There remain categories of problems that law department face that have yet to be the targets of widespread technology education. Helping to consolidate and aggregate risk associated with business activities, such as by measuring the real at-risk value of cancelled or partially performed contracts, the time-value of money associated with projects or products delayed to market, or the value of compromised IP assets relative to enforcement costs were cited as examples of “bigger problems” that are ongoing. Solutions to these challenges represent material value to the businesses of the law department representatives there, but technology solutions have yet to emerge.
What I learned from this is that, regardless of the substantial progress to date that legal operations personnel have had, there will be a long tail of material challenges for them to resolve. Law firms take note, so that you are positioned to assist once the tactical items are under control.
Dera J Nevin formerly practiced information governance and eDiscovery at Baker McKenzie. Opinions expressed in this article are the author’s alone. She can be contacted at dera.nevin@gmail.com.
This first appeared in the May issue of The Orange Rag, click here to sign up for our monthly issue.
