By Jerry Levine, chief evangelist and general counsel at ContractPodAi
“Economics is not an exact science,” American-Canadian economist John Kenneth Galbraith once rightfully observed, because the economy isn’t some “stable, immutable structure.”
You don’t need to be a preeminent analyst to think we’re in the middle of an economic downturn—or at least the economic waves have gotten a bit choppier. Either way, I know many legal departments that have been preparing for leaner periods by investing more in new technology, particularly legal technology solutions. They’re not alone. All signs point to more technology spending this coming year. In fact, Gartner predicts there will be an increase of 5.1 percent in global IT spending—up from a 0.8 percent growth last year. Meanwhile, the 2022 Blickstein Group Law Department Operations Survey found that 63.4 percent of respondents expected overall legal spending to increase in 2023. About 38 percent of those who reported increases the previous year were expected their legal department spending to increase more than 10% over 2022.
Sure, it may seem counterintuitive when times are tough. But when they’re spending money on tech, the reasoning goes both established and younger companies are more likely to see a return on investment (ROI). When they’re not, both can face greater financial consequences.
From saving costs to preventing revenue leakage, now is the right time to invest in legal tech and place automation on your ‘to-do’ list. Here’s why:
Is This the Right Time to Invest in Legal Tech?
This question is a lot like “when is the right time to buy a home?” And the answer is invariably the same: “right now” (as my realtor mother always tells me)!
But as a general counsel (GC) and someone who watches the bottom line constantly, I try to make sure that digital tools, like contract lifecycle management (CLM) software, fit within my law department budget as much as my in-house legal needs. I think about the most compelling technology use cases and their potential for increased ROI.
Smart Repository and Advanced Search
In a strong economy, CLM systems are beneficial. During economic uncertainty, they’re even more so.
A typical company now holds between 20,000 and 40,000 active contracts. During economic downturns, legal teams need to optimize their efficiency. Storing contracts in a smart contract repository allows you to have a ‘single source of truth.’ It helps to help teams to find any agreement from anywhere, at any time resulting in far better version control and even greater security and no more time wasted on searching for that one contract.
GCs and legal teams must go through a mind-boggling number of clauses to find keywords, dates, and other important legal information. But in addition to keeping contracts accessible and secure, CLM software allows you to search for a keyword or date, filtering out any agreements that aren’t needed. In other words, a system with advanced search goes a long way when seeking out everything to do with your contracts.
Workflow Automation and Artificial Intelligence
Amidst economic turmoil, organizations are hyper-focused on speeding up deal cycles and getting ahead of future opportunities to ensure stability. Often, slow deal cycles can have a direct impact when every dollar counts. Furthermore, revenue leakage can inflict major financial costs on an organization if contract termination dates go unnoticed. To mitigate these challenges and save costs, organizations can invest in workflow automation and artificial intelligence for their legal teams.
Complex legal processes and protocols involving numerous internal and external parties are commonplace. The good news is workflow automation simplifies and streamlines legal document creation, review, and execution, thereby saving valuable time in the pre- and post-contract phases. Deal cycles speed up significantly.
Given that contracts are the proverbial “lifeblood” of a company’s business activity, representing existing obligations just as much as future opportunities. Nevertheless, extracting obligations across agreement types, putting them in financial and operational categories all while keeping an eye on compliance and regulatory terms, is painstaking work. Not to mention, if there’s an error here the greater organization can suffer drastically. In addition to keeping track of termination dates and offering renewal warnings, artificial intelligence (AI) helps pinpoint all of the above contract risks—those that could be pretty difficult to weather in a poor economy.
With such automation and AI-based analytics in hand, you have everything you need to be efficient and effective in your contracting today, and stay agile and competitive through your contracting tomorrow, even amidst economic uncertainty
Adopting Legal Platforms—and Doing More with It!
Of course, many leading organizations have already invested in legal technology solutions, and they’re learning that their software is applicable beyond legal teams—across the enterprise. Accordingly, the latest legal platforms come with added digital tools—not only for CLM needs but also for legal intake and matter management. And the most innovative providers are expanding their legal tech solutions further as forward-thinking lawyers-technologists are discovering that more can be done in legal and other departments.
The bottom line is that investing time and money in legal technology can help law departments survive—and even thrive—in this economic climate. By carefully researching and selecting the best tools for your team budget and organizational goals, you can boost your productivity to stay afloat and ahead of the competition. You’ll be ready to ride the coming economic waves—however gnarly they might be—too!
Jerry Levine was previously general counsel and secretary a IPSoft, running its legal and corporate governance functions globally.
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