Looking back at 2023 - and ahead

The AI hype cycle

Undoubtedly, the main theme of this year for anyone more than remotely interested in legal innovation, technology and future-proofing has been generative AI. It's been immensely discussed and has pretty much filled the agenda of all legal tech and legal innovation conferences this year. Like someone said to me "you cannot have a conference this year without AI at the center stage".

While the legal function might have been the laggard when it comes to tech adoption at scale vs. peer functions like HR, Finance and Procurement, generative AI has acted as a bit of a "wake up call" for many lawyers this year - and a glimpse into the more tranformative opportunities, and disruptive forces, that technology will bring.

AI has entered into the domain of lawyers - language models, and has proven fit to carry out many tasks that are at the core of lawyers' work, like doing research on large amounts of information, analyzing complex information sets, synthesizing information and drafting documents. What is more - AI can produce output that is understandable to non-lawyers, which - let's admit it - lawyers have not excelled at. This has democratized law.

This can freak some lawyers out, while others see great opportunities in letting AI do lots of the mundane work in the daily life of being a lawyer, or even enable large-scale self-serving for business people in routine matters, so that lawyers can free up time for the truly meaningful and value-adding work, like strategy, innovation, cross-functional collaboration and complex problem-solving.

The skeptic, the optimist and the realist

There seems to be three groups of lawyers. One ('the skeptic') that resorts to doubt and distrust, pointing out all the risks they see or the weaknesses of large language models or gen AI applications or that try to defend the status quo, the traditional lawyering. One ('the optimist') that is extremely enthusiastic and wants to dive straight into seizing all the cool opportunities AI brings, try it out and move to quick implementation. And one ('the realist') that is somewhere in between, that is curious and wants to understand AI, both the risks involved that need to be managed and the success factors for effective implementation. These people often want to learn properly first, and then apply a step by step approach where they start small, test and then evaluate.

It's healthy with all these different perspectives on AI, because it brings nuance to the discussion and makes us better equipped to properly assess this technology. Without doubt we need to add some sound risk thinking and general caution to the AI formula and not get carried away. In fact that is a key contribution for lawyers to make.

But to simply reject AI and seek comfort in the status quo seems risky. AI might not replace lawyers, but lawyers that understand, embrace and use AI will most likely replace lawyers that don't, and old business models may not prove resilient to competitition that enhance with AI and can develop more competitive pricing models, or deliver better client service or client experience. When people experience fear or are naturally risk-averse the natural reaction is to "wait and see". But ironically the biggest risk right now will probably be to NOT act.

This is a good time for anyone, be it law firms or inhouse lawyers or others, to zoom out and take a long-term perspective, try to approach the situation strategically and be bold and dare to fundamentally challenge the status quo.

Competing with AI

For starters, lawyers should take the time to reflect on how to stay competetive as an individual vs AI. What do we, as humans and as lawyers, do better than AI? What is our USP, our differentiator to AI? That is the future skillsets and mindsets we should focus on developing. And if you are a legal leader you should have a plan not only on how to upskill your team for the future, to understand tech and data and adapt to change, but also to develop those unique human skillsets like collaboration, communication, self-leadership and EQ.

It is also a good time to look at the role of Legal - what shall the legal function focus on and what should lawyers spend their time on in this new era, considering alternative ways to carry out work, including through AI and other technology.

AI also offers opportunities for Legal to take a more strategic role

Lots of lawyers have been busy this year with working out how to develop corporate policy around the use of AI, both within the organisational domain and in terms of how to responsibly and in a controlled fashion integrate AI into product development, business development and other long-term plans. Compliant AI use, taking into account IP laws and privacy regulation for example, and trustworthy AI that builds confidence with key stakeholders.

Lawyers play a vital role in this dimension, such as in helping their organisations set the relevant structures and policies. As AI has turned into the new strategic prerogative for many companies today, this offers a great opportunity for Legal to lean in to business and expand the role and contribution of Legal into areas like data strategy and data governance, taking a strategic role beyond traditional legal risk and compliance areas.

Beyond the hype

So if the past year (2023) has been about understanding the opportunities of gen AI in the legal domain on a general level - and managing the enterprise wide AI policy and compliance implications - next year (2024) will likely be more about bringing AI from hype, and the tech/solution focus, to focus on actual, hands-on use cases where gen AI can actually make a difference in day-to-day work. Bringing it into concrete targets and hands-on implementations.

What are the relevant use cases for generative AI that enable the legal team to work more efficiently, to free up time, to find better focus and to have more impact? But also, what are the use cases that will improve legal service delivery to business, such as increase access to and availability of legal know-how and opportunities for business to self-serve? And how can AI improve decision-making and generate better insights? Will we apply a buy or build strategy for AI adoption? And what are the foundational capabilities we need to build to even be able to effectively adopt AI, such as in terms of next level knowledge management or data strategy, data modelling or data governance.

This is the next frontier for legal and compliance functions in embracing AI. Now it is time to also let AI come to play for the legal function and the legal and compliance domain specifically.

Interestingly, when focus shifts to use cases, or actual problems that need solving, many legal and compliance teams will also realise that AI is not a silver bullet or the answer to all problems. Most important is always that you start with the problems you have, and then identify the most relevant solution. Perhaps it's AI, perhaps it's something entirely different, like better communication, or a slight process improvement, or a complete redesign of current ways of working or a redefinition of Legal's role within the organisation or repurposing of lawyers. Don't get biased to think tech - and especially AI - is the only solution.

Tech adoption at wider scale at the horizon

Still of course technology will be at the core of change and transformation in Legal in the years to come. The sense of urgency for tech adoption at wider scale in legal and compliance has also really accelerated just in the last year, and it's fair to assume that the breakthrough of gen AI has been a strong catalyst. As if people are finally realising that they cannot just sit still in the status quo, and that - perhaps - if Legal does not have a vision, a strategy and a plan for how it will enhance with tech, including embrace AI, others will digitalise the legal and compliance space, like Procurement, or Sales, or HR, or Finance. That means lack of control and loss of influence.

Integrating learnings from previous tech initiatives

Legal and compliance teams are also increasingly integrating their learning from the "first generation tech initiatives", into their future planning. Perhaps the problems that most needed solving were not at the center of the initiatives but rather fancy tech offerings by vendors, or perhaps the tech approach was too siloed, focussing too much on Legal's problems or lawyer's daily work, such as on making lawyers slightly more efficient, rather than taking a broader perspective and try to improve the service delivery to business or solve critical business problems, or generate valuable business data.

Or legal teams underestimated the stakeholder complexity involved in contract management intitiatives for example (as contracts are touched by everyone in the organisation but often owned by nobody). Or perhaps the problem was "underinvestment" - that not enough resources or leadership headspace went into the initiatives, and that the change management implications or needs were vastly underestimated.

These learnings have been useful for many legal teams, and have equipped them to embark on their second generation tech initiatives.

Doing the groundwork properly

Hopefully, 2024 will also be the year where inhouse legal and compliance teams place more focus on the ground work needed for successful change initiatives.

Working out the overall vision and strategy is one part of this. Where are we going and why, what are we building for, what's our future target state? How will we better meet the evolving expectations of business, and stay relevant? Only when that is clear can you understand the role technology will play to enable you to get there - including to take the role you want to have and help you approach your work the way you want. Doing this will also help bring more vision, and more transformational thinking, more "reinvention", rather than just incremental improvement to the 'legacy model' for legal work.

Another key area is to make sure to build the business case, to get the funding and the internal attention and priority needed to be successful, both in the needs analysis and the plan-setting and in the implementation. It's promising to see how the community of legal operations professionals is growing, even in the Nordics (that is somewhat a laggard compared to the US or the UK).

Getting help on the journey

Legal teams are also increasingly realising that initiatives can be accelerated and enhanced by bringing in external legal operations or management consultants to support the process. Not only can it add extra bandwidth when you want to implement the change (and people in your team are too busy with other work to do it), it is also a way to bring in complementary competencies that your legal team might not have (tech, data, project management etc).

Management consultants can also bring more strategic thinking and the structures and best practices needed to design a future-proofed Target Operating Model and are up to date on all the new opportunities that new solutons and approaches offer, that may not be clear to the legal team, in the grind of the status quo.

Catching up with peer functions in transforming the legal function too

If Legal takes a closer look at their peers in HR, Finance and Procurement, they often find that these have ambitious transformation plans, that are carefully designed and detailed, and staffed and resourced to be implemented over several years. If you are a legal leader, what can you learn from these peers, that you can integrate into the development of the legal function?

Perhaps 2024 is the year when you too will go after bigger, bolder change, set long term vision, hands-on targets and develop a proper roadmap for the change, with focus areas and themes for initiatives, along with a compelling narrative, to be able to sell the change internally to get through the noise, and your fair of the corporate transformation budget? And why not with a cool project or program name too...?

Future-proofing the people

Or perhaps 2024 is the year when you will set a future state for your legal team? Digital transformation involves a lot of people transformation too. People need to have tech literacy, data literacy and change literacy, and need to develop a mindset that is open to change, optimistic in response to new opportunties, brave to go after innovation, and resilient to manage the bumpy road that comes with transformation and operating in a VUCA world (one that is Volatile, Uncertain, Complex and Ambigious). There will definitely be setbacks and failures, but with the right mindset these are seen as learnings and opportunities for development.

Welcome 2024!

Let's now close 2023 and look with anticipation at the year to come and what it will bring in propelling legal and compliance functions into a more advanced and future-proofed version.