From Revenue Leakage to Value Leakage

Our CEO, Alistair Maiden, recently wrote a thought-provoking piece about revenue leakage.

“Did you know a revenue leak typically goes unnoticed until it hits at least 5% of a company's turnover. Just think about that for a moment. Five pence in every pound is slipping through your fingers, and no-one even notices.”

The same principle can be applied to value leakage – the value leak in every company which arises when that company does not maximise its existing and paid for investments in technology. All those expensive software licences gathering dust or only being used at an estimated 10% to 20% of their capability and value capture potential.

Value leakage equally arises in not continuing to change the company by investing in new technologies.

This value leakage can be quantified either as:

• increased cost of production (e.g. legal documents and contracts costing too much with external law firms or taking too long to sign off in the legal department);
• reduction in net profits (e.g. too many person hours spent on contract production);
• an increase in commercial risk (e.g. not having full electronic dashboard visibility on your digital estate of contracts and other business critical documents, like regulations, policies, operational procedures and performance); or
• simply lost opportunity cost (e.g. not crystallising a seven digit contractual rebate sum due under your services contract by not spending a few more pounds with the contractor on additional services before the end of the financial year).

Digital transformation is the name of the game for every organisation. Covid has not only accelerated the pressure on organisations to keep up by changing what they do, how they do it and why they do it, but it has also widened the gap between the strong and the weak, and the business winners and losers.

Wherever you are on the “digital transformation continuum”, the journey never stops but, like every journey, it is never too late to start, catch up and move ahead of your competition.

Earlier this year, Gartner predicted that, by 2023, 33% of corporate legal departments will have a dedicated legal technology expert in-house helping improve and increase automation. Given how central the basic document is to every organisation, it is not surprising that the in-house legal department has become ever more centre stage and in the bright spotlights of the rest of the organisation in terms of its performance levels. If you do not automate at least some parts of your legal function, you simply cannot compete. The end game must surely be to automate all the “business as usual” legal work, leaving only the highest value and the highest risk work to some bespoke elements.

SYKE is witnessing an increasing appetite in its corporate, financial services and law firm clients to help them embed the dedicated legal technology expertise, which Gartner talks about, within their legal departments and practice teams.

Continuous professional learning and development of such expertise can be done in any number of ways along the spectrum. SYKE has offerings at various staging posts along this journey to help organisations achieve this level of in-house expertise. Legal technology then becomes the lens, the optic, through which modern lawyers need to look, not only to make sense of the business world, but also to have full vision of their organisation. The current situation can be one of disorder and chaos. Blurred vision. SYKE OPTIC can help to solve this.

SYKE Open Learning. Starting from training the next generation of in-house lawyers by delivering a LegalTech module of a law degree course at university or later in their professional career through a tailored module as part of executive business education.

SYKE Project. Project team pods, which operate as a consultancy resource in a project to deliver the agreed scope of work, e.g. to generate increased ROI on your current tech stack by introducing more efficient collaboration, internal and external, using existing tools to build more connected and joined up workflow.

SYKE Train. Training team pods, which run onto the pitch at the end of each project to increase the tech adoption success rate and return at regular intervals during the year on a fixed or periodic basis.

SYKE IT Governance. Governance team pods, which support organisations in the strategic management of technology, by sitting on their LegalTech committee, as a sub-committee of the main IT Committee, or helping them set up such a LegalTech committee. Sitting alongside the IT Director and the General Counsel/Head of Legal, the SYKE IT Governance team representative sits as the equivalent of a Non-Executive Director attending monthly or quarterly committee meetings, participating in brainstorming “away days”, being onstream and available to be counselled and ready to jump in at any of the teach, project, train or coach levels.

SYKE Coach. Coaching team pods, which take any previous training on capturing value from tech and creating new value from tech onto the next level, in the same way that professional sports women and men use high-performance coaches to optimise individual and team performance. Performance equals Potential minus Distraction (Timothy Gallwey The Inner Game of Tennis, Golf, etc). In the context of legal technology, for Distraction, read technology illiteracy, or analogue rather digital ways of performing, resulting in no improvements in performance (whether at the document production level, matter management level, management reporting level, or business development and new sales level).

OPTIC. By helping organisations to manage the value creation lifecycle of building dedicated in-house legal technology expertise in one or more professionals in the organisation’s in-house legal department, SYKE hopes to prove that Gartner’s 33% figure can not only be achieved, but also exceeded and ahead of its predicted date by 2023.

In conclusion, the opposite of value leakage is value capture. Value capture is one half of the classic strategy equation. Strategy = Value Creation + Value Capture. SYKE is available to help organisations deliver on their strategy by delivering the true potential of their current technology and future technology.

Tim Travers, Senior Legal Engineer, SYKE