Why is Legal Tech Funding a Problem for Corporates?

- By Jon Wainwright, Sales Director, Ascertus Limited

This comment from a General Counsel recently says it all: “We have done an acquisition worth ￡50 million in three months, but it has taken us two years to get ￡80,000 signed off for legal technology for the department.” We frequently hear such anecdotes from corporate legal departments.

It is genuinely mind-boggling. Why do in-house departments struggle to secure investment for legal technology from the business and indeed from IT? The commercial rationale for legal technology is exactly the same as for any other business application and department – increased efficiency and productivity, reduced staff cost, decreased business risk and more recently, the need to comply with the requirements of the GDPR.

A longstanding argument that traditional corporates often express is that the legal department is a cost centre. It’s true that in the typical sense, the legal department does not bring in revenue like the sales department does; but this is a very old school way of thinking. Today, more than ever before, due to the global political and economic environment, the General Counsel plays a highly strategic role in business, facilitating the achievement of the broader corporate objectives, be it regulatory compliance, mergers and acquisitions, transformation or any other.

Technology can help ensure that the legal department maintains its focus on delivering the high value, strategic legal services to the business, by relegating the low value, routine administrative tasks to IT. This not only enables the department to contain costs, but indeed become a value generator for the corporate.

The characteristic IT view in corporate organisations tends to be that the applications deployed across the business are and should be equally suitable for the legal department. The reality is that while this may be true for some applications, legal technology is designed to deliver against very specific functionality requirements of lawyers and General Counsel. Take document management. Holding business-critical, matter-related files on multiple shares and drives is risky. Instead, an integrated email and document management system ensures that all matter-related files are automatically stored in a secure central repository, supported by automatic version control, change management, audit trails and powerful search capabilities. This supports collaboration across the department as there is always one de-duplicated version of the truth and teams always know the latest position and status of every single matter that the department is dealing with.

Similarly, legal departments often employ external counsel and law firms for specialised work. A senior lawyer in a corporate legal department recently recounted his frustration over law firm invoicing: it took this individual a couple of hours reviewing a panel law firm’s invoice, line by line; formulating an extensive email questioning why a large amount was charged for a particular activity; subsequently calling the law firm partner to discuss the sum, who in turn discussed the issue with the fee earner for clarification; and finally arranging a face to face meeting for a later date to settle the issue.

Of course, in this example, the lawyer is only talking of one of the panel firms. A similar process is typically applied to invoices from all the law firms on the corporate’s panel. This scenario is immensely avoidable with a legal spend management solution. Not only would this solution enable the adoption of e-billing, making reviewing bills easy; the legal department would be able to undertake risk and spend management, which will help tangibly reduce costs – a goal that the department is tasked with.

In the current, technology-driven and increasingly regulatory and legal-led business environment; it’s time the archetypal attitude of IT and the business towards legal technology changed – for the benefit of the wider organisation.