OPS

Meeting Client Expectations in a Changing World

KEN CRUTCHFIELD WOLTERS KLUWER LEGAL & REGULATORY U.S.

Ken Crutchfield, vice president and general manager of Wolters Kluwer Legal & Regulatory U.S., discusses the results of the organization’s 2021 Future Ready Lawyer survey, including how new technology and processes are moving the legal field forward.

CCBJ: There has been so much talk in recent years about changes to legal departments, most of it having to do with technology and process. Why do you think those expected changes gained so much momentum from 2020 to 2021?

Ken Crutchfield: The pandemic was the trigger that caused organizations to really rethink things. There was a real need for action, and increased pressure to change to ensure continuity of business operations and competitiveness. Everyone needed to make sacrifices and take action. We’ve certainly seen the pace of change accelerate in our daily lives. We’re still not going out to restaurants or shops as much as we used to, and we’re still buying more things online. Those sorts of ongoing trends in our personal lives have definitely played out in the business world too. Due to the uncertainty of the pandemic, there was tremendous pressure being driven by the potential that something catastrophic might happen that would have further impacts on business. Organizations have been accelerating the pace of change and acting on things with greater urgency than ever before.

What barriers do you expect as far as implementing any of these changes?

The first step, especially with technology, is accepting the need for change. You have to adjust the tools, you have to adjust the processes, and people need to be trained and accept the changes that are being pushed

through. This was pretty self-evident when offices shut down. Everyone affected had to adapt to work remotely and understood why. Other changes can be a bit more nuanced. Skill sets need to be adjusted in order for these changes to be successfully implemented and staff need to understand “why”. That’s key. You need buy-in from your people, as well as buy-in from organization leaders. You also need to make sure you’re solving the right problem in the first place and focusing on real business results, as opposed to implementing artificial intelligence (AI) just for the sake of implementing AI, for example. In the case of an AI project, AI should be applied to a specific problem, such as identifying deadlines in contracts that need compliance, so that you can take action.

Regarding client-firm relationships, in Wolters Kluwer’s Future Ready Lawyer survey it was noted that law firms fell short in terms of certain client expectations about their capabilities and services. Please expand on this. Why was this the case, and is this likely to continue?

The 2021 Wolters Kluwer Future Ready Lawyer survey identified and mapped out certain existing gaps, but it didn’t go into as much detail about the root causes, aside from the fact that we know clients want their law firms to know more about them. The gaps the survey pointed to suggest that maybe firms don’t know their clients as well as they should. Maybe they don’t know the industry as well as they should. Maybe they need more tools or expertise to be able to do that. As an example, an M&A attorney may want to have a better pulse on what investment bankers are advising similar clients. If the finance world thinks the market for “SPACs” is drying up, it would be good to know that when advising a client on a SPAC related issue.

But I will also say there are explicit items in the survey, such as greater scrutiny from clients about how technology is being applied to delivery legal services from law firms. In short, clients want confidence about how services are delivered in addition to results. There’s also an expectation that a firm’s policies and practices reflect the client’s business from the standpoint of diversity, supply chain policy, data breaches, things like that. A firm is a trusted advisor, but firms must also increasingly conform to vendor requirements and client policies. That means conforming to areas like hiring practices, data security, and even things that may seem totally unrelated to a law firm, but that are important to the client. And with new disclosures required by publicly traded corporations from an environmental, social and governance (ESG) perspective, there will likely be even more focus on aligning with client policies.

Those are some areas where the survey indicated there are gaps and how I interpret some of the data. Clients need firms to understand more nuances about their business and industry to effectively advise them, and they need firms to conform more with their goals, values, and policies.

Clients want their law firms to understand more about their business, so they are able to more effectively advise them.

Let’s talk about technology investment. The survey reported that 63 percent of law firms and 57 percent of legal departments intend to increase their technology investment. Are you inclined to believe that this growth will occur? What will it mean for firms and departments if growth in this area does occur?

Yes, I am inclined to believe this growth is going to occur. I will say it’s likely to happen, if for no other reason than because there’s a talent shortage. If you have a certain amount of work to get done, that workload continues to increase, and you can’t throw more people at it, you have to use tools to enable productivity among the people you do have – and I think that’s key. I would argue that technology has to be part of the relief valve for the pressure that is on corporate legal departments today.

So what will it mean for law firms and legal departments if this growth does occur? I think it means greater productivity, being able to do more with less, and hopefully getting better results for the business and better outcomes for corporate legal clients when a law firm is serving them.

If increasing the importance of legal tech and coping with the increased amount of information are top legal trends, why is it that only one-third of lawyers are actually prepared to meet those demands?

That’s a good question. Sometimes it could be as simple as adding a legal ops professional to an organization, whether it’s a law firm or a corporate legal department, to make suggestions and help guide the decision-making – someone who can bring a bit of business rigor to the legal department or to the firm itself. That’s probably one of the most basic things. Lawyers don’t have to be experts in everything, just as an accountant doesn’t have to be an expert in knowing how software is designed. A lawyer doesn’t necessarily need to understand that either, but they do need to know how to rely on people who can help manage these trends and help them prioritize and apply the right technologies to the right problems. That’s really the core of this – if lawyers are willing to think about how to leverage business people, whether it’s product managers, project managers, or people who can write a good business case to justify a good technology investment, that can help get them over the hump.

Realistically, as we look forward, you are going to have more people on legal teams who have strengths in business or technology. If you start to strip away that prerequisite of having a JD, when you’re looking for project management or coding or whatever, it’s just going to open up that talent pool. Maybe there are some things you don’t need to have done by an attorney, but you do need support staff that can help guide you and help you be more effective with various tools for deploying better processes – and that’s what you get with legal ops. 

Ken Crutchfield is the president and general manager of Wolters Kluwer Legal & Regulatory U.S. He leads the Legal Markets group and is responsible for setting the vision and strategic approach with a focus on developing leading digital products. His group aims to provide legal professionals across a wide range of markets with expert content and analysis and leading workflow solutions. Reach him at Ken.Crutchfield@wolterskluwer.com.

Why In-House Legal’s Digital Transformation Starts with Your Contracts

RICK RALSTON CONTRACT LOGIX

Rick Ralston, CEO of Contract Logix, observes the digital transformation that companies have been experiencing, as well as how the lack of support from in-house legal departments on these digital transformation strategies is affecting CLOs and GCs.

There’s no question that the need for digital transformation accelerated greatly during the COVD-19 pandemic, and there are no signs of slowing as we begin to get back to normal. That said, many in-house legal departments have lagged in supporting their company’s digital transformation strategies.

While chief legal officers (CLOs), general counsel (GCs) and their in-house legal teams want to serve their clients in the most strategic and effective manner possible, too much of their valuable time is spent chasing down routine requests across various departments and managing multiple workflows involving numerous stakeholders, introducing complexity into any kind of transformation. All of this takes CLOs and GCs away from the critical task of mitigating risk and ensuring compliance.

According to a Deloitte survey, more than half of CLOs said that recurring tasks and data management constraints interfered with their ability to create value. Functional silos can be disruptive and the way workflows are structured often makes key performance indicators (KPIs) difficult to track and evaluate. That said, digital transformation is imperative and firms that embraced technology during the pandemic outpaced the competition. Research confirmed that leading organizations see digital transformation and technology as a key driver of improved performance, efficiency and productivity, and that increased use of and investment in it will continue.

Legal and Legal Ops teams are no exception and can take on a leadership role in their organization’s broader digital transformation strategies. But where to begin? With so many legaltech solutions available to help increase productivity and efficiency, it’s easy to get overwhelmed or invest in technology for technology’s sake. A more prudent and proven approach would be to start with the often overlooked backbone of every modern organization: contracts. Why? Because contracts define and are foundational to your business relationships.

The fact is, however, that many teams still embrace a traditional and manual approach to managing legal agreements. Often, this involves hard-to-maintain spreadsheets to track dates and other important information, unsecure and hard to search shared drives for document storage, and email for managing reviews and approvals, making version control an absolute nightmare. If contracts hold the key to in-house legal’s digital transformation, then the way you manage contracts must also be digitally transformed.

Enter Digital Contract Transformation

Digital contract transformation or DCX is all about the digitization of contracts and contract lifecycle management (CLM) processes. It gives legal departments the ability to modernize, streamline and automate their contracting efforts as well as harness the wealth of data available in contracts to deliver actionable insights. After all, digital transformation is all about data and using it to evolve your business. The end result of DCX for GCs and CLOs is far less risk, greater compliance, and the ability to finalize business faster. Let's look at the four main ways this can be made possible using legaltech such as contract management software.

1) CLM Process Automation: Manual processes are a huge time suck for GCs and their teams. They are also very error prone given the high degree of human touch required, resulting in unnecessary risk. Using contract management software to automate the CLM process from the moment a contract is requested through the creation, negotiation, approval, execution and ongoing management of it is key to mitigating risk and increasing compliance. With automated workflows, business rules are always followed with efficiency and speed. Automating alerts, tasks, and other notifications

associated with contracts helps eliminate missed obligations, dates, milestones and other critical items.

2) Better Collaboration: Every corporate lawyer knows that negotiating even the easiest contract involves multiple stakeholders and multiple reviews. The World Commerce and Contracting group estimates that the average cost of processing and reviewing a negotiated contract continues to rise and can range from $6,900 for a simple contract to more than $49,000 for complex agreements. These costs introduce risk and delays, and it’s not uncommon for slow negotiations to kill a deal. A frictionless collaboration environment using modern collaboration tools helps finalize business faster. Lawyers can easily and quickly negotiate contracts internally and with third parties using concurrent editing, automatic and accurate version tracking, real-time messaging and e-signatures – without ever having to leave the contract management software.

3) Actionable Business Intelligence: Harnessing the data in legal agreements gives GCs and their staff the ability to benchmark and track KPIs that can be used to optimize the performance of contracts and contract management processes. For example, an organization can benchmark the current average total number of days in a contract lifecycle and identify opportunities to improve it. Another example of a KPI focused on the pre-award phase of a contract is understanding the average time to reach and execute each contract milestone like requesting an agreement, drafting it or negotiating it. By benchmarking and tracking KPIs based on data made available through digital transformation, GCs can provide the business with strategic intelligence not previously available to them.

4) Greater Security: It’s not a surprise that contracts contain some of the most sensitive and confidential information about businesses, customers, partners, employees and vendors. However, most legal agreements are freely accessible and shareable due to the nature of being stored in shared drives. In many cases, they can even be inadvertently deleted or misplaced. This is increasingly problematic and exposes the business to major risk with severe consequences as the number of data breaches and cyber-attacks continues to skyrocket around the blog. 85 percent of data breaches last year involved a human element, but by digitizing contracts and processes and centralizing that data in a secure contract management repository, GCs can now confidently regulate access to that information. Capabilities like role-based and feature-based permissions ensure the appropriate people and groups have access to the right information. Other security features and certifications like SOC 2 Type II, HIPAA and FISMA will keep the IT department happy and contract data safe.

Key Takeaway

The role that automation, centralized management, real-time analytics, collaboration and improved security plays in CLM can help any in-house legal team streamline the routine onerous tasks CLOs said were holding them back, while reducing risk and satisfying compliance requirements. A modern contract management system that facilitates DCX gives legal departments the data they need to support and lead digital transformation strategies with additional visibility into all contracts and contract data. With this transformative approach, departments can extract value from the information within their contracts, optimize those legal agreements, and then provide a tangible ROI to the business. Less risk, greater compliance and an ability to get business done faster is a win for all parties! 

Rick Ralston serves as the CEO of Contract Logix. Rick has over 35 years’ experience in various engineering, operations, and leadership roles including as the COO of iProspect, president & CEO of KeyCentrix, and managing director of IT Operations at Koch Industries. Rick has founded, cofounded, or held senior positions in over a dozen successful entrepreneurial ventures.

ILTACON Tackles Changing Legal Service Delivery Models

BRAD BLICKSTEIN BLICKSTEIN GROUP

Brad Blickstein, founder of Blickstein Group reflects on ILTACON 2021, and its gradual shift of focus over the past few years.

I was one of the lucky ones who was able to attend ILTACON 2021 in Las Vegas in late August. While the conference itself was, as expected, more sparsely attended than in years past, there was still a lot of value present. Many of the key players were there; meetings were held, business was conducted, and parties were attended. Still, the footprint was much smaller, and while still valuable (some might even argue more valuable), the event felt different.

In addition to the smaller attendance and higher percentage of senior people, I also felt a significant shift in the content. In years past, ILTACON has felt very…techy. Most sessions covered technology—tools, platforms, and features. In more recent years, there have been more discussions about adoption and value proposition. This year, however, there was a noticeable shift towards a discussion of business models throughout the legal industry.

I counted at least six sessions on this topic: Redefining Delivery of Legal Services; The Changing Nature of Legal Procurement: “NewLaw and Aggregators of Legal Products and Services; Legal Business Design Challenge; Ewww, David! Change Management and User Group Lessons Learned from The Roses; The Future of Legal Services Pricing; and The Legal Engineer Consultant. There were probably more. For the first time, ILTA talked less about how to make legal work more efficient, law firms more profitable and lawyers more satisfied and instead and more about the potentially seismic changes afoot throughout the legal industry. New Service Models

During Monday’s Changing Nature of Legal Procurement session, Jae Um, founder and executive director of Six Parsecs, took a shot a defining “NewLaw.” She says, “NewLaw is about one thing, and one thing only. It’s about building scale in legal business and legal services.” By “scale,” she means the ability to flex up capacity while keeping cost flat. She references Jason Barnwell, general manager for digital transformation of corporate, external, and legal affairs at Microsoft, who says that he expects the company’s legal capacity to have to increase tenfold over the next few years, but the option to increase headcount at the same rate is not on the table.

At ILTACONs in the past, we might have discussed scalability, but only in terms of technology. And while tech is at the forefront, it is not the only building block for these new models. People, process, and data are equally important.

During the panel I moderated, Redefining Delivery of Legal Services, Meredith Williams-Range, chief knowledge and client value officer at Shearman & Sterling, Kimball Dean Parker, CEO of SixFifty at Wilson Sonsini, and I discussed the new approach that clients are taking to legal services. In the past, clients had two options: they could do the work in-house, or they could ship it to a law firm. That is no longer true today. Both options still exist, but others do, too. The client can engage an alternative legal service provider to do the work domestically or overseas. It can build or buy technology to allow the work to be completed more efficiently inside the legal department. It could deploy technology to allow the business units a “self-service” option. It can study data to determine if the work needs to be done at all.

On top of all that, if they are so inclined, any of those options can be delivered to the client by their favorite law firm. According to a 2020 report from Baretz+Brunelle, at least 35 Am Law 100 law firms have their own captive ALSP. Many law firms are deploying technology designed to increase efficiency. As I learned from Kimball Parker during our session, SixFifty is doing an amazing job of automating Wilson Sonsini’s legal expertise to allow clients to use their computers to write legal documents like a lawyer. And as Peter Lee, CEO of Simmons Wavelength, said during Thursday’s The Legal Engineer Consultant panel, “I think data is the juice that drives a lot of this stuff.”

Making matters even more complicated, although ultimately to the client’s advantage, is the fact that more than one option can be applied to any problem. Many law firms partner with independent ALSPs. Some ALSPs help clients choose the right technology for their own use. Many contract management processes leverage automation, then escalate difficult issues to ALSPs, law firms or in-house counsel. Or all three. New Business Models

One thing that lawyers and legal technologists (including ILTA’s planning committee) are starting to understand is that clients and counsel alike are interested in developing new legal service delivery models. And for them to work, we need new business models as well.

If I were to take this opportunity to complain about the hourly bill, it wouldn’t be the first time. I’ve spent decades speaking and writing about how hourly billing rewards inefficiency and creates a misalignment between client and counsel. And while I believe that to be true, I no longer believe those to be the biggest issues. The biggest issue is that, when legal services are technology-enabled, process-driven and flexibly staffed, the law firms can’t make as much as they deserve in fees. Consider a tool that takes a draft of a document that would otherwise take an associate a few hours and delivers a first pass in five minutes. Under an hourly billing model, the firm could bill for five minutes time.

But few clients would deny that the work product is worth many times that.

Which brings us back to Jae Um’s definition of NewLaw: legal services at scale. Scale should be good for everyone: the overworked client looking to reduce costs; the law firm looking for more profitability; lawyers looking to practice at the top of their licenses; ALSPs who already have a head start at delivering; business units that want work done faster. The key will be finding not only delivery models that work at scale but business models as well.

Let’s take a deeper look at how some of the sessions at ILTACON covered new service delivery models as they are impacted not only by technology but by people, process and data.

Critical New Roles

One of the more interesting sessions at ILTACON was The Legal Engineer Consultant. At some firms, the role of legal engineer is new. At others, the function has been around a while but with titles like “system integrator.” Regardless, the role is becoming more critical as, more and more frequently, legal engineers are now interfacing with clients. The function sits between the lawyers and the technologists. As Rebecca Holderedge, innovation leader at Husch Blackwell, describes it, “[The] legal engineer…understands how the lawyers work, but they also understand the technology and the process and are able to relay that more effectively.”

What skills does a good legal engineer have? Simmons Wavelength employs about 30 legal engineers. Peter Lee is CEO of Simmons Wavelength, which describes itself as “the regulated firm of legal engineers.” As Lee describes it, “It's a combination of different skills sitting at this nexus between different departments and different skillsets within the profession. And a lot of it is about translation and understanding problems and coming up with creative solutions, using the tools at their disposal.”

Lawyers solve legal problems and are famously (though sometimes unfairly) known to be tech-averse. Technologists solve technology problems, and few went to law school. “There are enormous inefficiencies in the practice,” said Lee. “And some of those are inefficiencies that take highly compensated professionals away from doing the thing that actually does earn money.” The trick is applying technology to solve legal problems. And that’s where the legal engineer comes in.

Rob Saccone is one of the true pioneers in applying technology (and process) to solving legal problems. He is a Lean Six Sigma Black Belt and was the CEO of SeyfarthLean Consulting. A panelist on The Legal Engineer Consultant, Saccone described the issue as follows: “I would say that it's more of an operations problem than a technology problem. And that requires the ability to engineer a better process…to re-engineer with scale and speed.”

Change Management Is Key

It’s clear that law firms are looking past technology for new ways to deliver legal services. They are starting to consider that new business models are required and are even building new roles to help. This will all matter little, however, if the partners in law firms are unwilling to change. During the NewLaw session, Joe Borstein, co-founder and CEO of LexFusion, said that “Law firms are the only ones in the U.S. market who are allowed to profit from the provision of legal advice. As long as that’s true I think they’ll do fantastically well. And if that changes, they’ll also be the first to adapt.” Borstein may be right that law firms will adapt well if and when alternative business structures come to the U.S. In the meantime, however, a change management strategy is critical. This topic was discussed creatively on the Tuesday panel, Ewww, David! Change Management and User Group Lessons Learned from The Roses, where the panelists used the characters from the television sitcom Schitt’s Creek to get their message across. The panel discussed why it is difficult for people to switch their behavior, describing the following as common scenarios:

• People do not think things need to change

• There is little to no motivation to change

• “We’ve never done it this way here”

• There is agreement but no forward movement

Ultimately the panel suggested an approach designed around providing crystal clear direction; engaging emotion; and creating conditions that enable both the leaders and followers to excel.

The Change Management panel quoted MIT’s Peter Senge in saying, “People don’t resist change. They resist being changed.” We have made some progress over the last few years. More and more legal professionals value the kind of incremental efficiency gains incumbent in new technology, and some are even starting to understand that legal technology is more than just tech. But what’s at stake here? What’s the value of figuring out how to drive all this change?

During Redefining Delivery of Legal Services, we talked about the three different levels of legal services. At the top of our imaginary triangle, there’s the highly strategic and specialized work that will likely always stay with big law firms. And at the bottom there’s the highly commoditized work: ALSPs and other technology-driven solutions are already winning much of that. It’s the work in the middle of the triangle—the everyday legal work—that is in play, and many experts feel that represents about 60 percent of it.

We have entered an era when legal service delivery models are being redefined and transformed. The winners will figure out how to effectively deploy technology, along with people, process, data and new business models. The losers will not. How that “everyday” legal work gets done is the biggest question we’ll be answering over the next decade. All that’s at stake is 60 percent of the world’s legal market. 

Brad Blickstein is the founder and principal of Blickstein Group. He focuses on helping legal service providers better understand and serve their clients while providing information about law departments and legal operations. Brad is also the co-head of Baretz+Brunelle’s NewLaw practice group, where he helps clients see the future – educating them on the industry’s evolution of legal services and their consumption.

LEGAL TECH STARTUP SPOTLIGHT

Centerbase, a Dallas-based company providing legal practice management software for mid-sized law firms , has received a growth equity investment from Mainsail Partners, a growth equity firm that invests exclusively in fast-growing, bootstrapped software companies.

In an interview with LawSites, John Forbes, founder and CEO, declined to say the amount of the investment, but he described it as “really significant.”

Since founding it in 2015, Forbes has self-funded the company. It has seen 100% year-over-year growth every year since 2017, when the company released its product commercially, he said.

A distinguishing feature of Centerbase’s cloud-based platform is that it is highly configurable by users. It includes native accounting, billing, timekeeping, matter management, document management, and reporting.

Its primary customers are mid-sized law firms practicing in the areas of civil litigation, insurance defense, family law, and criminal law, but the firms also span such practice areas as business, employment, immigration, intellectual property, real estate, and others.

Forbes said that the company intends to use the growth capital to enhance its product offerings, customer success, and marketing, and to expand its management team to enhance its ability to serve its customers.

“We have spent the past seven years building a robust practice management solution for the legal sector,” Forbes said in a statement. “Between our powerful billing functions, our integrated accounting solution, and our enhanced configurability, we were confident that our product was a stand-out.

Name: Brightflag Location: Dublin, Ireland Market Cap: Unknown # of Employees: 1,234 Institutional Investors: Unknown

“However, we also knew our growth was outpacing our internal resources. After several months of diligence, we chose to partner with Mainsail Partners based on their reputation for helping companies like ours. We are excited to leverage their experience in this next phase of growth.”