AI is a term du jour in the legal industry, a favored sibling of “big data” and “analytics.” Given the daily pressures to support the business, in-house legal professionals may find the term more artificial and less intelligible than an e-mail seeking legal guidance, a draft agreement for review, or an electronic signature request. Although AI may become that synthetic sinecure that will change your practice tomorrow, it may be unclear how AI can help you work with your business partners today.
Assuming the singularity will not occur until 2045, one might think that the landscape still has time to mature. Don’t wait. AI is actively changing the way in-house professionals work, offering opportunities to deliver immediate value.
How to Think About AI
Simply defined, AI is a machine replicating intelligent human behavior. In the early days of electronic discovery, many legal technologies were being re-branded as eDiscovery platforms. As you explore the current wave of AI-branded legal technology solutions, consider carefully what is intelligent and what is a machine.
Document and contract management systems do not manage documents and contracts; people do that. For example, contract management systems enable you and your procurement partners to track critical dates and obligations. Feeding these systems has been traditionally a manual process, requiring data entry or capture during the contracting lifecycle (or subsequently when reviewing the contents of a shared drive). Companies now use AI to extract automatically key business terms to populate these systems.
In short, you should understand AI as a solution that automates certain legal tasks or functions, making some – in some circumstances all – intelligent decisions on behalf of legal professionals.
Why you should care
Let’s ignore for the moment the bigger picture issues of AI’s transformation the legal services industry. The machine won’t replace your lawyers today, but it may offer ways to increase your legal team’s efficiency, responsiveness and work allocation. Law departments daily manage the optimal staffing amalgam to deliver legal solutions – a mix of internal professionals, LPOs/contractors, and law firms. In this context, there are several AI solutions that can help you more fully understand the cost of delivering legal services, intelligently allocate work across different sources, and scale with the business.
Where you might start
There is a growing list of available AI solutions for in-house professionals, including intelligent legal research, efficient process automation, novel contract analysis, thoughtful legal spend analysis, business-oriented expert systems, enhanced eDiscovery, simplified due diligence reviews, and promising legal outcome predictions. As you explore the landscape, there are several issues you need to consider:
- Pain: what are the pain points for the legal team? For the business?
- Priorities: how do the solutions align with your strategic priorities?
- Production: how receptive are the relevant stakeholders to change (bottom up)?
- Perspective: how far are leaders willing to push (top down)?
- Perspiration: how many near-term resources are you willing to devote for long-term gain?
As with most technology-related initiatives, some of the biggest challenges involve change management and adoption. Changing the behavior of legal professionals to save systematically a document or an e-mail is the keel of the document management system implementation iceberg. You know something is there – you just don’t realize the impact until you run into it. AI solutions are no different.
If you are going to explore AI, focus on solutions that simplify the lives of your lawyers and business partners to ease adoption. There are four types of AI solutions that law departments are using now that you might consider: (1) business process automation; (2) expert/logic systems (3) legal spend analytics; and (4) contract analysis/discovery.
Business process automation (BPA)
As law departments evolve, so do the informal, ad-hoc processes associated with supporting the business. Requests for contract reviews, employment advice, approvals, signatures, and new matters are traditionally managed by e-mail or systems that operate in silos. The underlying processes typically have built-in inefficiencies, making it difficult to track holistically the status of various activities or to measure performance.
Legal operations professionals are implementing business process solutions to document, streamline, and manage law department service delivery. In addition to standardizing legal-business interactions, BPA-enabled solutions deliver on the promise of self-service for the business to draft contracts (escalated to legal as appropriate) and route documents for approval or electronic signature. These process-oriented solutions offer consistency, less opportunity for error, audit trails, and real-time visibility into team performance. In the end, law departments enhance productivity and save money.
As you consider whether to automate law department processes, consider how to you are thinking about the problems and solutions. Are you trying to innovate for the department, the business or (hopefully) both? Design thinking suggests a holistic approach to craft the right solution(s) for your company.
If business process automation enables law departments to streamline operations, imagine how businesses can benefit from expert systems that replicate the thinking and actions of legal professionals in response to specific questions or tasks. Legal teams can develop expert systems to capture, deliver, and scale their legal subject matter expertise through secure online offerings. Your team enables the business to get targeted legal guidance and move forward, all while reducing the daily churn for the legal team. A win.
ComplianceHR is one example in a growing list of expert systems that help businesses directly resolve their legal issues. All these AI solutions capture essential data about the nature, scope and source of legal service requests, helping legal teams improve service delivery over time. This is not possible today with e-mail – the likely current medium for the delivery and exchange of your team’s legal advice.
Law firms are actively developing and maintaining expert solutions for their corporate clients. Some portion of in-house support involves the repeated delivery of focused advice. Depending on the scope and frequency of these requests, law departments might consider directly developing solutions or exploring subscriptions being offered by law firms.
Legal spend analysis
A recent general counsel report suggests that only one-third of law departments use e-billing software. Somewhat surprising given that outside counsel spend is reported to be upwards of 40% a law department budget. E-billing software provides greater visibility into external legal spend, helping in-house professionals to enforce billing guidelines and streamline billing reviews. Although e-billing platforms yield cost savings, current offerings have two limitations.
First, e-billing data is not well suited for thoughtful analysis. Lawyer time entries are inartful at best, given block billing, simplistic narratives, and lack of structured information. Your outside counsel billing guidelines may direct law firms to provide phase and task codes for all time entries, but consistent application of such codes across all time entries and firms remains suspect.
Second, given the relatively poor data input, the resulting reporting and analytics deliver limited value. You want to understand not only what work was done, but also how that work (a) aligns with other work by that firm, (b) compares with work provided by other firms you are using, and, most importantly, (c) compares with the broader market.
Enter AI. In addition to monitoring for compliance with billing guidelines, AI solutions classify and analyze time entries, looking for (in)efficiencies in staffing, work and workflow. These solutions also offer insights you cannot get from your data alone, benchmarking your bills against a much broader set of data from multiple firms and industries.
Given the current state of AI legal spend analysis, additional process and technical alignment is needed to knit these solutions tightly with existing e-billing solutions. That should not deter you from exploring landscape to help you better understand and manage your legal spend. You will gain a better understanding of the cost of using law firms, probably saving an additional xx% off your outside spend.
Contract analytics/contract discovery
Consider where eDiscovery/Technology Assisted Review (TAR) solutions were 10 years ago. The technology was relatively novel; adoption took years. The art of contracting is transforming much faster. AI contract analytics solutions are changing (and will dramatically change) the way contracts are drafted and reviewed and by whom.
Contract management systems track critical dates and obligations for the business and manage legal risk. These systems also help law departments track metrics about the contracting process. An evolving category of AI solutions has moved beyond the basic management of contracts and terms to the discovery and analysis of business and legal terms.
Companies (and law firms) now use AI to analyze and extract automatically key business terms to populate contract management platforms, conduct more efficient due diligence reviews and streamline lease/real estate management. More sophisticated AI solutions focus on the legal terms, facilitating the contract drafting and review process itself. These solutions compare a company’s standard terms with those in a proposed contract to identify divergent or missing clauses. These solutions can also help in-house professionals manage and update company contract standards.
These real, rapidly evolving solutions deliver relevant, measureable data to help you run your business and law department. AI-enabled reports and analytics now, among other things, include:
- Process: #, source and frequency of requests; request timing (end of quarter?); request types & status; response time; cycle time; time to signature; SLA compliance
- People: productivity (# of contracts processed); type of reviewing resource; # of cycles (by reviewer and requester); turnaround time; types of contracts processed by reviewer
- Contracts: frequently negotiated terms; contract complexity (new, amendments, etc.); company vs. 3rd party paper; deviations from standard terms.
AI contract analysis and discovery solutions will impact your in-house practice. It is simply a matter of time. Take action when you feel the technology meets your business needs and/or when your team is ready.
AI in law departments requires thoughtful design, implementation, and adoption strategies before the machine becomes the solution for your company. Law firms and LPOs are developing and offering AI solutions, while consultants and legal operations professionals have in-depth experience crafting solutions to meet business objectives.
As you continue to manage law department staffing with a mix of in-house, outsourced providers and law firms, remain aware that AI is fast becoming an additional, cost-effective way to deliver legal service to the business. Now is the time to start thinking about your opportunities and priorities. The options and impacts will get only more complex.
This article originally appeared on LinkedIn on January 12, 2017. Interested readers are invited to share on LinkedIn the link to the article or their comments.
©2017 Peter Krakaur