Between the reams of paper (literal and virtual) spent discussing how technology will affect the legal profession and the thousands of legal tech companies springing up around the world, technology is on the minds of in-house teams of all sizes and sectors.

But often what is not communicated is how in-house counsel feel about the technological revolution hitting their profession, and how their teams and businesses have responded, if at all.

To that end, we went out to a selection of general counsel (GCs) from across Europe with a survey covering all things related to the use of legal tech at in-house teams. The responses came from a comprehensive selection of in-house counsel in a diverse range of industries. From finance and insurance, to healthcare and IT, the opinions collected and presented in this report paint a picture of the contemporary state of technology within the in-house legal community in Europe.

These responses provide a framing of the wider discussion about technology and its applications, both from an in-house remit, as well as a broader look at its impact on the profession. From the pressures on external advisers to get ahead of the technological curve, to much-hyped blockchain platforms and the predicted impact on how legal work is conducted, the topic is vast.

It is evident that technology is already making a material impact on the profession. Of those surveyed, 84% reported they use some form of specialised legal technology within their department, with 82% revealing that their department’s use of technology had increased in the past five years. For a profession often accused of technophobia, that is a significant change and one that only stands to become more pronounced when you consider that every single survey respondent acknowledged that technology can enhance outcomes for in-house departments.

There is clearly an appetite for the kinds of solutions being offered in the legal tech marketplace. Why this need has arisen and what effect this is likely to have on the profession in the long term are more nuanced questions, requiring a broader view of not just the survey responses but the opinions and activities of the various players in the legal tech market.

Why bother?

It is crucial to understand what is driving the demand for tech from in-house counsel. For the 84% of survey respondents who indicated they were utilising specialist law tech within their departments, increased efficiency was the most frequently cited factor GCs were considering when implementing new systems, at 84%. That was followed by ease of use at 50%, customisability at 32% and ability to integrate with existing systems at 31%.

Yet if the pressure driving new legal tech is the need to provide the business with efficiencies and more value for money, then the cost of entry for many of these legal tech solutions is a barrier that needs to be overcome to gain the support of the wider business.

‘To remain competitive, we need to increase productivity while enhancing the quality of legal processes against an ever-decreasing cost base. To achieve this there is no other solution than to embrace technology,’ observes Johan Huizing, associate GC for EMEA at Itron.

‘We need to increase productivity while enhancing quality against an ever-decreasing cost base. There is no other solution than to embrace technology.’

It is a common refrain to hear a willingness from GCs to adopt legal tech solutions throughout their department, but getting the necessary budget was a major hurdle for many. While 70% of the in-house counsel surveyed for this report felt their company was supportive of implementing new technologies, only 56% had seen this translate to a larger budget.

For teams with a smaller headcount, taking that first step was often the hardest. This group had the worst uptake of technology, with 42% of departments having less than ten people saying they did not use any bespoke legal technology at all. They were also less likely to have received an increase in budget for technology over the past five years, with only 47% reporting an increase in budget for technology (compared with 57% overall). Yet in many cases, it was smaller teams who thought they stood to benefit the most from such investment.

‘There is still the need for smaller teams to provide increased efficiencies, but the budget doesn’t allow for it. It’s then left to us to find ways to use technology to provide efficiency, but essentially for free. That’s not to say it can’t be done, it’s just more difficult,’ says one GC from the consumer goods sector.

Some corporates were lucky – or large – enough to have internal resources for tackling bespoke software development projects, or budgets for cultivating start-up arrangements – though the latter is much less common for in-house teams than for law firms. But whatever the infrastructure or budget available, investment in tech requires bravery, given the unpredictable return on investment and the long-term nature of that return.

But while budget proved one of the biggest predictors of tech use and implementation, communication and demonstrating the value – particularly for larger companies, which required a higher degree of co-ordination across existing systems – was also proving a challenge.

‘Money is nice, but implementing new technology will require the co-operation of the whole business, from the board to the IT department. So money is something, but it’s not the only thing,’ comments one GC from the utilities sector.

Types of tech

The legal applications of technology are vast, ranging from the rudimentary to the complicated. Generating by far the most interest among those surveyed were the basics: for example, the most commonly cited use of technology was for contract management, from 55% of respondents.

But technology can provide legal departments with solutions far beyond a contract management system, often little more than a repository of documents, or a standard contract template.

Software for law firm relationship management, including e-billing and increasing transparency around legal spend, is often seen as a boon and such tools can be make-or-break for a frictionless relationship. At present, 20% of respondents said their use of technology included tools for law firm relationship management, but based on the interviews complementing the quantitative research, this is an area that is ripe for expansion in the short term.

‘We demand use of our billing platform and insist that our rules for invoice submitting are followed. This has increased our understanding of the drivers for outside legal spend and budgeting, and resulted in a better control of such spend,’ comments Huizing.

‘We move away from firms that are low performers when it comes to the use of our billing solution or that execute poorly on following our instructions for entering reports or invoices.’

At the least, technology can assist external firms to be more cost-efficient, so that those savings can be passed on to their in-house clients. But there are more benefits to be reaped from relationships that leverage tech solutions.

‘We’re building collaborative tools. We saw that a lot of time goes into emails and phone calls between a lawyer and a client. Now obviously that’s part of the personal relationship with the lawyer and client. But if you’ve got five emails back and forth trying to describe what part of the land the lawyer is talking about, that’s just inefficiency. So by bringing both the lawyer and the client onto a collaborative workspace on [our] platform, you can cut out a lot of that repetitive back and forth,’ says Ed Boulle, co-founder of legal tech company Orbital Witness.

‘The baseline is that we must be able to communicate effectively with our external law firms. This requires that they use state-of-the-art communication and cloud-based collaboration software,’ adds Gábor Kukovecz, head of legal and operations at Diageo.

‘In the near future, we will implement a collaboration software, in which we work together with our external law firms, that they must fully implement.’

Far from being limited to external relationships though, tools and platforms that assist legal in becoming more accessible to the wider business also proved popular.

‘Legal is building knowledge management tools to get to a single source of truth – a lot of the technology we’re using, because we’re operating at scale, supports us when we need to have information held reasonably accessible, so everybody can rely on them,’ says Nina Barakzai, GC for data protection at Unilever.

IBM also has a shared knowledge platform called the Legal Community, which is used to integrate items such as contractual provisions and presentations. ‘It’s a collaborative community space and that’s very useful. You have owners, who can replace or change things on a particular subject, and it is shared with all the rest of us who are members,’ says Vincent Martinaud, counsel and legal manager at IBM.

Legal case management is another popular focus and 40% of in-house counsel surveyed cited case management as one of their uses for technology. This can include the basic case management tasks but can also extend to case review administration and analytics.

‘We must be able to communicate effectively with our external law firms. This requires state-of-the-art communication and cloud-based collaboration software.’

Increasingly underpinning many tools is artificial intelligence (AI), as machine-learning tools are designed to quickly parse and categorise vast amounts of information, presenting it back for lawyer review in a fraction of the time taken for junior associates or paralegals.

‘I think that our job will change, especially the analysis of documents, because of the way AI now is able to read and understand natural language, including your notes and the ability to decipher a picture,’ says Martinaud.

At the outer reaches of technology applications in the sector are predictive tools, employed to forecast case outcomes, including judges’ decisions – although these are by no means widespread or particularly popular among those who contributed to this report. But, as algorithms creep into everyday lives, the predictive power of technology is encroaching on the legal system itself, for example, in the criminal justice system.

‘[In Spain] work is being done on “algorithmic justice” – for petty thefts and things that are repetitive, the possibility of being able to come up with a first verdict, of course, allowing the two parties to appeal if they don’t agree with the verdict, but releasing many human hours that could add value in more complex cases,’ says Enrique Dans, professor of information technologies and systems at IE Business School.

‘All the things related to an insurance claim, traffic problems when there’s no victims, for example – these could be very well examined right now, with the current state of technology, by algorithms. You could ask one insurance company to negotiate with the algorithm of the other and get into an agreement, only bringing the human lawyers in if they are really required. That could take away a significant part of the burden for lawyers right now.’

Measuring the impact

When asked whether technology had the potential to disrupt the legal profession over the next five years, 84% agreed. The real trouble comes when trying to assess what form that disruption might take.

Seventy-one percent felt technology would be somewhat positive and 29% thought that the disruption would be entirely positive. Short of profession-changing upheaval, technological tools like collaborative platforms, AI document review and smart contracts, and the increased automation they facilitate, could change the day-to-day lives of lawyers in subtler ways by disrupting routine, everyday processes. However, introducing more technology often means more constraints on flexibility.

‘It does start to mean a little less flexibility and a bit more rigidity around the terms you’re putting in place and the structure of the relationships – because it has to have been thought out in advance, especially if you have multiple parties involved in supply chains,’ says Chris Wray, chief legal officer of blockchain start-up Mattereum. ‘It’s kind of legal design – mapping out who are the parties here, what are the contractual relationships and what are the key provisions, and then, given all that, once that’s clearly in mind: what is it we’re trying to automate, and have we mapped out different kinds of disputes that may arise and provided appropriate procedures for the resolution of those disputes?’

Alex Speirs is editor-in-chief of GC

Greg Hall is managing editor at GC

Catherine Wycherley is features writer at GC

Is your company supportive of implementing new technology solutions?

 

YES (70%)   The company is supportive of implementing new technology solutions	95% use specialised legal tech	NO (30%)   The company is not supportive of implementing new technology solutions	73% team receptive to new tech
	94% team receptive to new tech		58% lawyers not equipped for tech change
	67% increased budget for tech		58% use specialist legal tech
	61% lawyers not equipped for tech change		31% managing 10+ lawyers in team
	52% managing 10+ lawyers		27% increased budget for tech
	34% tech will greatly disrupt legal		27% tech will greatly disrupt legal
	6% tech disruption negative for legal		4% tech disruption negative for legal