The i-Team: The client perspective on AI

Pioneering GCs are taking control of legal spend, armed with the latest tech. Can the rest of the in-house community keep pace?

If conventional law firms have been slow to embrace technology – and they have – their counterparts in-house have been barely moving. But in the last five years signs have emerged of ‘early adopters’ in the bluechip general counsel (GC) community who are willing to do more than apply new tools at the margins. The GCs are turning to technology to reshape the way they work.

Aside from the obvious efficiency benefits, the appeal to such GC pioneers is often more potent to the professional soul: control.

As Reckitt Benckiser’s vice president and GC Claire Debney comments: ‘I want the intellectual capital in-house, in my team. I don’t want to be outsourcing all of our supply agreements, distribution agreements, or our digital platform agreements. We want our people at the meetings and in the negotiations and have the external back-up if we need it.’

As in-house teams have gained prominence – largely due to budget-conscious companies squeezing external legal spend post-crisis – a number of legal heads have made it their business to get to grips with the latest technology. Many recognise that data analytics can help rather than hinder, and that the right software can save time and costs while increasing overall team performance. This is most evident in the e-discovery arena, where predictive coding and computer-assisted reviews have created efficiencies that directly translate to time and cost savings.

While there are GCs that fear the necessary changes associated with implementing new software and processes, some, particularly those from more tech-driven or heavily regulated sectors such as TMT, banking and life sciences, are using technology to reshape their own teams and operations. However, such overhauls do not come cheap and legal teams have often struggled to get heavy investment for IT and infrastructure.

‘The trouble with technology is it’s expensive and you need to remember you’re part of a business with an integrated information system. You have to make sure you optimise what you have. There are products out there that can help, not least by ensuring ready access to information,’ concedes Vivienne King, outgoing GC and director of business operations at The Crown Estate.

Nilema Bhakta-Jones, group legal director at media house Top Right Group, takes this point further: ‘Budgets are always challenged. You have to put together a business plan to support the capex spend. It is more likely to succeed if your plan demonstrates that tech improves cash flow, adds to revenue or creates efficiencies with those outcomes. For those organisations that are not focused on technological innovation, there will be little pressure on in-house legal teams to do so. Instead there may be reliance on external providers and private practice firms to provide cheaper tech solutions. Other in-housers want to innovate and will use technology as an enabler. They make it work for them; for example, they might use social media to communicate key messages, or use it to “beta” test a new legal portal that provides contracts management. It’s a choice for the legal head about how best to create operational efficiencies or engage with their business colleagues. Ultimately, it has to fit in with their, and their chief executive’s, vision and purpose.’

But there is a significant emerging group of GCs with ambitions to harness new tools. BAE Systems group GC Philip Bramwell sums up his goals for the next year: ‘Our biggest challenge is around the way we work as lawyers – this will be one of our themes for 2016. Lawyers now have no idea of life without the internet; there are electronic versions of the old paper world now. I’m making use of the newest devices and wireless technology. We’ve got to be better educated on managing [the] cyber security rise and inputting as crisis lawyers, while striving to keep abreast with changing law and regulation.’

For some of the biggest names in the in-house legal world, such as ITV’s GC Andrew Garard, embracing more sophisticated processes has become a priority that clients have to take the initiative on, rather than wait for external advisers. At ITV, the team has created a system to allow the business to create contracts with minimal oversight.

‘Annually we have over 10,000 contracts just for our advertising business with a team of four lawyers doing it – it means the sales guys can put together some of their own contracts based on language the lawyers have provided and they can’t change it. They feel empowered, we know the language is safe. But they don’t have to wait for a lawyer to review their contract so the business moves faster; it’s less overhead. God, the profession is slow to pick up on technology – in private practice, appallingly slow.’

In-House in order

Figures from technology research company CEB show that around three-quarters of in-house legal departments spend nearly a third of their time reviewing contracts. And as contract volumes continue to climb, automated contract management systems have unsurprisingly proved top of the priority list for GCs trying to implement better systems.

With its own system i-Legal, Reckitt Benckiser is ahead of many peers (see box, opposite). But Novartis has also embraced the concept and is seeing the benefits after moving away from years of storing documents locally to using a centralised electronic document management system in 2010, following a six-month pilot of the system. Because of its successful application, the same tech is currently being rolled out across the general legal function.

‘Everything used to be paper-based, stored locally and moved from attorney to attorney around the world as responsibilities changed,’ says Nick Finnie, head of legal operations and IP management at the Swiss pharmaceutical giant. ‘Now, you log into the system, access the entire file, and access related files with a matter that involves, say, 20 countries. This allows me to compare and contrast what has happened – so the ability to access the information to do my job has dramatically increased and improved.’

Meanwhile, Vodafone, for years one of the most innovative and tech-savvy legal teams in the industry, is currently getting alternative legal providers to pitch to extend the handling of contracts. Vodafone group GC and company secretary Rosemary Martin comments: ‘We are trying to get an end-to-end process around contracting with our business customers, handling the contract creation, execution of workflow, storage, retrieval and metadata, so we can manage those contracts in a very real and tight way.’

Martin, who notes it is alternative providers rather than law firms making the running in this area, adds: ‘I know that other corporates are trying to do the same thing. Our experience has been good so far. There is really an appetite in these alternative service providers to try to understand what it is that we are trying to do and then provide the technology to support it.’

Coca-Cola Enterprises (CCE) is in the early stages of rolling out a contract lifecycle management tool and this summer launched a five-year strategy to transform its internal systems following a consultation with legal management consultants Jomati. A new system for the creation and storage of contracts was implemented in the UK in May and launched in Europe four months later.

‘It’s a bit cart before the horse, because the first step is to run a technology need analysis and review what tech is out there and how it can help the business,’ says CCE vice president, legal and company secretary Paul van Reesch. ‘But when this is fully rolled out, it will allow people to generate a contract themselves or request a legal team to create it if it’s complex. This can then be sent to a customer and drafts can be exchanged using a negotiation portal. Internal approvals can be received and contracts can be signed electronically by both the customer and us, which can be stored electronically.’

CCE’s team of 30 lawyers is currently awaiting sign-off of the negotiation portal, approval process and electronic signature aspects. ‘This doesn’t mean we will abandon face-to-face meetings, but means we can exchange documents with customers,’ van Reesch adds. ‘We have sales people of all age groups that are often on the road and have time constraints. So how do you best leverage the traditional things and get the message or advice deeper into the business? This is what tech enables us to do: engage people on multiple platforms in multiple ways, with advice on the go without having to talk.’

Similarly, BT’s legal team is in the process of implementing a case-management system, having first showed its interest in the legal tech realm in 2012 when it acquired Tikit Group, one of the largest independent suppliers of technology and services to legal and accountancy firms, for around £64m.

BT’s GC for UK commercial legal services, Chris Fowler – a noted advocate of the use of tech in legal departments – says the advance of technology has been significant in the law.

‘Eighteen months ago, we wouldn’t have realised what we could do with SharePoint. People are demonstrating how technology can take some of the noise away and allow us to focus on the coalface stuff.’

Similarly, Westfield’s 14-lawyer team, which has an external legal spend of around £7m to £10m a year, also signed a deal with NetDocuments early this year to implement its cloud-based software-as-a-service (SaaS) DMS.

But not all in-house teams can see the immediate benefits of investment in technology. Daniel Toner, GC and group company secretary at Spire Healthcare, comments: ‘We are looking at case-management systems but it’s not viable for us to get value compared to the cost. We have looked at artificial intelligence systems and looked at programmable logic controller systems, for example. I don’t see it having any interplay with our business. Reckitt Benckiser has a case-management system but it operates in 70 jurisdictions. A lot of what we do is bespoke. It will be a long time before we replace people with machines.’

Senior legal counsel David Johnson at First Gulf Bank agrees: ‘Producing new documentation quickly has been a struggle. Institutions across the world have moved from growth mode to cost-sensitive mode. You find external counsel who will work to almost any deadline you set, compete aggressively on pricing and do whatever is needed to secure transactions.’

A better generation

With many GCs frankly still wary of applying heavy automation and new processes in contract management, e-discovery and tech-backed litigation support has arguably seen more substantial change in the last five years. Novartis’ 500-strong legal team has in the last two years centralised a lot of its work around e-discovery, as well as implementing tools that have driven down costs and led to productivity savings of around $30m since 2011.

It is notable that e-discovery services are increasingly being handled by technology-driven providers, some LPOs and major accounting firms, rather than conventional law firms. By a similar token, the dramatic escalation in cyber attacks on corporates, and corresponding liabilities, is forcing many in-house legal teams to engage, however grudgingly, with providers deploying data analytics and more sophisticated tools.

But while the Novartis team is now reaping the benefits, implementing the software and changing the mind-set of users can be challenging. ‘We didn’t think there was much work to do after the first year of implementing e-billing. But we had to learn quite a lot very quickly once the tech was in place,’ says Maurus Schreyvogel, head of operational excellence at Novartis. Unsurprisingly for a pharmaceutical giant with a significant patent portfolio, the benefits have been primarily felt in IP disputes, allowing business users to collaborate across different jurisdictions. ‘Tech gives us the freedom to assign work to people globally. We are now no longer forced into giving document discovery work to external firms. Instead, we can use e-discovery vendors around the globe. Using IT systems reduces costs from $130 to around $70 an hour,’ adds Schreyvogel.

Some in-house teams are using other methods to drive down costs. GlaxoSmithKline (GSK), for example, has a policy that requires all litigation or corporate work over £250,000 to go through an online auction process using the platform OCSI (online collection software instances), where law firms can bid for work.

‘The lowest bidder doesn’t always get the work,’ says senior counsel Tom Spencer. ‘It is the combination of the team, experience, relationship, and what else the firm is offering that is considered. These different scores will be weighted along with the bid and then a decision is made.’

But for all the talk of tech transforming legal departments, in-house teams still have a long way before they even get to deploying the knowledge-management tools that are already mainstream in some industries, let alone working with the cutting-edge AI.

But relatively slow change isn’t no change. E-billing, for example, has revolutionised the way some teams monitor legal expenditure, with companies like Novartis and the Bank of Montreal (BMO) (see box) making substantial savings, and has won support for data analytics.

Tyco International uses e-billing tracker Serengeti to monitor all its external legal spend. It also this year introduced an online system for generating non-disclosure agreements. But vice president and regional GC of EMEA David Symonds says that while the systems ‘take the work off our desks, beyond that, we’re not very far along in the use of tech in our legal department’.

CCE’s van Reesch sums up: ‘It’s not about trying to automate 50% of our legal work but about getting the right balance with human interaction while moving with the times. In five to ten years, we will see more millennials coming through and we need to engage with these people.’

As tech continues to evolve, it is important GCs liaise with the right providers. BMO Financial Group deputy GC Jolie Lin comments: ‘Providers outpace and leapfrog each other all the time, so you have to re-consider your providers every three to five years. I am a little vendor-agnostic. Different platforms can do different things and are rarely the only provider that can do it.’

Debney adds: ‘I like the smaller companies that think out of the box and are happy to partner with us. We like to take solutions and slightly torture them by saying, “That’s a great starting point; can we have some more?” I like to take it as a platform and then ask the provider – “Are you happy if we tinker with it?”’

She compares her team’s progress with private practice when she says: ‘Compliance, contracts and learning are all interlinked, and should not be siloed, because you will create a better generation of lawyers that are able to deliver services in an incredibly streamlined way. We are going to leave private practice in the dust.’ LB

jaishree.kalia@legalease.co.uk