Lexion, an AI-powered contract management system geared to in-house lawyers and legal professionals, recently announced the results of a survey of some 450 in-house legal professionals. The Survey sought information on the state of legal technology, the potential economic slowdown, and the potential impact of any slowdown on their work. The results were published in The State of Legal Technology: Improving Efficiency with Existing Staff and New Technology as Hiring Slows. Respondents include in-house counsel, legal operations professionals, and contract managers across various industries.
Much of what the Survey found was not surprising. Close to 90% of the respondents are worried about the economy. Most of the respondents (almost 70%) believe their companies will likely soon slow down or freeze hiring. Most think they will also need to reduce outside counsel spend and even conduct layoffs.
So no surprises there. And on the surface, it would seem that a cut in legal spending would also portend reduced spending on legal technology. But not so fast, says Gaurav Oberoi, co-founder and CEO of Lexion, who I talked to at length about the Survey and what the results mean.
Oberoi highlighted a couple of other important Survey findings. First, most respondents (70%) believe that technology can increase efficiencies and help them do more with less. Second, the respondents identified having to spend too much time on low value tasks as one of the most significant barriers to doing their jobs well. Over one-third of respondents, for example, specifically identified activities such as finding, tracking, and versioning documents, as a big time sink.
Oberoi says that while headcount will no doubt be reduced, finding and using legal tech to cut out the time in-house legal professionals spend doing tasks they don’t need to do will be critical. In-house legal will simply have to find a way to cut out doing stuff for which they certainly didn’t go to law school.
Technology will then, in turn, free them up to do more substantive work even if the headcount is reduced. Oberoi thinks it’s critical that this happen, especially in growing companies. In growing companies sales are typically increasing. And the need for in-house legal thinking and analysis, in turn, is growing exponentially. The only way to handle this increased legal workload with fewer people is to jettison work that lawyers and legal professionals do that they don’t need to do. And technology says Oberoi holds the key to enabling that to happen.
But I wondered to Oberoi whether, in a time of cost-cutting C-suite folks could be convinced to spend more on legal tech. Won’t that be cut too?
Contracts are not just the province of legal. Contracts touch all aspects of the business, and the need to have information about contracts transcends legal
Oberoi response was interesting. He says that contracts, the preparation and management of which Lexion automates, are not just the province of legal. Contracts touch all aspects of the business, and the need to have information about contracts transcends legal.
But all too often, says Oberoi, many of the requests directed toward in-house legal about contract and contract management don’t involve legal analysis. Many requests are purely informational in nature. When is the contract up for renewal, for example? Is there a force majeure clause? What are the payment terms? Does the contract automatically renew, and when? Questions that can be determined by anyone from the face of the documents if only there were a way to access it.
Without an automated system provided by AI and legal tech tools, business people have little choice but to call in-house legal for these answers. And this takes up in-house legal’s time and energy. Legal tech and AI would allow in-house legal to get these answers without spending time.
Legal tech tools can not only let in-house legal get perfunctory answers sooner, but they can also empower the rest of the business
But legal tech tools can not only let in-house legal get perfunctory answers sooner, but they can also empower the rest of the business. The ability to quickly access information about what is in a co pany’s contracts certainly saves everyone time and energy. But allowing access to contracts and the relevant information to those outside legal often has an added benefit. It enables those closest to the contract, the other parties to it, and the day-to-day negotiation and management of it to have quick access to the terms.
It is the business people who often have the best knowledge of the business goals the contract was designed to achieve. It is the business people who often have the relationships with all those involved and understand what was intended. It is the business people who often best understand the context surrounding the contract and to know what it really means.
Why not give the business people quick access to contracts through automation and AI tools?
This kind of familiarity and understanding can be critical to the management of the contract—and the underlying relationship–and just might head off disputes that otherwise could mushroom into lawyer debacles. Why not give the business people quick access to contracts through automation and AI tools?
Oberoi confirmed that it’s to the point that while his first sales presentation may be too in-house legal, the second one often involves business people. The business people quikly grasp the advantages in letting others in the organization easily access contract information.
Legal tech vendors may need to think more like the Big 4 accounting firms. As I have discussed before, the Big 4 view legal problems as business issues that require some legal attention. Legal tech vendors would do well to think about their wares more as business products with a legal use.