In an era where digitalization is the new norm and IT budgets are not growing significantly, CIOs are in a position to become digital leaders by not only partnering with key stakeholders in the business but deepening digital savvy of the organization through their own leadership. Attorneys aren’t generally known as early adopters when it comes to technology. This lack of enthusiasm for technology trends can, at times, dishearten even the strongest of technology advocates.By understanding the opportunities legal technology can provide to the business, CIOs can help drive notable efficiencies, dramatically reduce corporate legal costs and bring visible value to the business.
Cloud-based legal software addresses concerns like data security, data portability, and costs.
Data security, whether on-premise or cloud-based, is a top concern of both CIOs and law departments. Add to that the perceived data risks of cloud services, and it’s no wonder there is reluctance to put highly-sensitive legal information into a cloud-based legal software solution. And yet, with the rise of Insider Threat, even on-premise solutions are not impermeable bastions of security. So what is a CIO to do?With more CIOs focusing on engaging the customer (internal and external), the answer lies with partnering with the law department in the product selection process—performing due diligence is equally open to cloud and on-premise solutions—and educating stakeholders about security considerations of the solution(s) being assessed so an informed decision can be made.
In today’s market, reputable cloud-based legal software vendors view security and availability as a top priority and will be able to demonstrate a solid history of implementing data-security best practices combined with independent third-party assessments to validate security controls are both appropriate and operating effectively. During the purchasing due diligence process, CIOs can review the vendor’s security posture to determine whether or not the vendor’s controls meet the requirements of the enterprise.
A common concern when assessing cloud-based legal solutions is data portability that protects the enterprise against vendor-lock in. Since legal matters can take years to resolve, understanding if and how your data is returned to your enterprise in the event of service termination is key.
It goes without saying that part of the attraction to cloud is ease of deployment and relative affordability. As business users are required to do more with less, cloud-based legal software alleviates deployment costs and capital overhead to run an on-premise solution. In exchange is a solution that is a monthly operational expense and may offload support requirements from an already over-burdened enterprise technology department.
Legal technology provides visibility into the entire legal project portfolio.
Much like IT leadership has been challenged to have visibility into technology projects, a similar challenge confronts general counsel (GC) for legal project (aka “matter”) management and the invoice e-billing that accompanies the work. In fact, some GCs believe it is not possible for a legal department to track everything outside counsel is doing, even with the help of technology. Corporate law departments may have strong, entrenched opinions about why they cannot benefit from a legal technology solution.
Whether the legal department is dealing with thousands of matters or “only” a few lengthy, complex matters, cloud-based legal software enables the law department to:
- Track the individual details of specific matters to provide accurate, real-time reporting from which to make informed decisions to drive down costs
- Have a reportable and defensible process for matter management as opposed to the legacy methods of using a shared drive and Outlook folders
- Collaborate directly with external law firms throughout the lifecycle of the matter
Through sharing one centralized location accessible by both inside and outside counsel, the corporate law department receives the benefit of having current matter knowledge at their fingertips and prevents unwanted surprises.
Technology uncovers and quantifies the value of the legal department.
With more corporations focusing on deriving value from all areas of the business, it is more critical than ever that a department can demonstrate—through reporting and impact to the bottom line—how they provide value. Over the years, the misconception that the value of the legal department can’t be quantified has persisted due to challenges confronted by the GC in trying to gain visibility into her department’s outside legal spend, what matters each firms were working on, and even what their own internal attorneys were working on.
Through the use of matter management software, this information is now trackable, thus enabling reporting on such things as matters and savings attributable to the legal department, such as invoice reductions, negotiated project pricing, or year-over-year overall spend.Legal departments can identify where legal cases are originating and where more training is needed for employees, and then report on the results of that training through the reduction of money paid out.
The bottom line is the legal department is ultimately a cost center and, like all cost centers, when the time to cut costs come—and sooner or later it always does—having the reporting tools to justify spend and demonstrate value is invaluable.
Law firm fees can be projected and budgeted for in a given fiscal year.
Law firms have convinced many a GC that litigation simply can’t be budgeted. It’s a tale as old as (billable) time: Company gets sued, company asks law firm for the expected budget, law firm cries you can’t budget for something as unpredictable as litigation. But now legal departments are pushing back against law firms because of increased internal pressure for legal department budgets.
It can be done without much difficultly as long as everyone agrees to the same assumptions:
- the budget is based on the law firm’s knowledge of the case today and past experience handling such cases,
- the budget may change as the evolves, and
- there is no need to budget for unknowns like an appeal until the time comes.
Litigation is not a special snowflake. There are budgets for building skyscrapers, renovating kitchens, and IT projects—all deal with unknowns and potential scope changes. The key is to define the assumptions, and if those assumptions change, modify the budget.
Tracking legal budgets through a cloud-based legal solution means not only can the budget can be tracked, but the onerous task of providing regular budget updates can be assigned to the outside law firm. From there, reports can then be generated for the GC to make informed decisions.
Accounts payable systems do not capture the key legal spend metrics.
Accounts payable (A/P) software is capable of tracking spending by cost center and vendor, but is unable to track spending with the detail necessary for the legal department to project and report on the true value it provides. The types of detail include timekeeper rates, areas of law, practice groups, phase of the matter, and expense-against-budget. Unfortunately, when the legal department is investigating software solutions that capture this level of critical, legal-specific reporting, they are often met with resistance from accounting, IT operations, finance or procurement that incorrectly believe legal spend is already adequately tracked with A/P and invoice approval systems.
Modern SaaS legal solutions rely on the industry-wide standardized electronic format for legal invoices: 1998B LEDES. By requiring law firms to submit invoices in the LEDES format, the spend system will automatically capture key data in a legal invoice, such as what was done, who did the work, what it cost, and categories of expenses.Because of A/P software’s inability to process legal-specific details, the legal spend reported is woefully inaccurate and, even if the legal spend were accurate, it is not detailed enough to be actionable. And because legal spend often spans across many cost centers and business units, getting the full legal spend report can be difficult to impossible using A/P software.Nielsen Business Media, Inc. – the global leader in measurement and information – has acquired many companies over the years, resulting in the use of multiple A/P systems simultaneously. “It became a real problem because we couldn’t tell who was managing matters; there was no way to look at the overall workload and know how much we were spending on a particular matter or even by a particular entity within the company,” said Bob Engel, manager of Nielsen’s legal department. Because of all these various complications, Nielsen simply wasn’t able to report across the global enterprise until it put all its legal matters and spend on a legal SaaS solution.
Even if the legal spend from an A/P system were accurate, A/P software is not set up to provide reports in-house counsel need. By monitoring their fees, expenses and matter spending through a SaaS solution, Nielsen was able to save over a million dollars in fees a year, says Engel.
Cloud-based legal software does not break attorney-client privilege.
Another common concern is that matter management and legal e-billing software may break attorney-client confidentiality. In reality, all software and email systems have system administrators who could potentially read sensitive information protected by the attorney-client privilege. Various court cases and opinions have agreed these types of communications and information storage software (e.g., email, document management systems, IP management systems) have a reasonable expectation of privacy even if a system administrator could potentially view this information.
By understanding the particular needs of the legal department, a CIO is in a unique position to partner with and guide an often technology-reluctant group of attorneys to be able to do their job better than ever before. The savings and efficiency achieved through this effort for the legal department is exactly the type of successful project will show not only the value of the legal department, but the value of the CIO and his team as well.
About the author: Anne-Marie Scollay is Director of IT Operations and Information Security and leads the IT, data center operations and information security strategy for the combined Thomson Reuters Serengeti and Elite legal business units. For more information visit: www.serengetilaw.com
Thomson Reuters is the world’s leading source of intelligent information for businesses and professionals, combining industry expertise with innovative technology to deliver critical information to leading decision makers in the financial and risk, legal, tax and accounting, intellectual property and science and media markets, powered by the world’s most trusted news organization. www.thomsonreuters.com.