Exploring the Relationship Between Legal Technology and Innovation

Are you a corporate lawyer with an eye toward the future? Technology can help you get there. Legal technology and innovation go hand in hand—particularly since the COVID-19 pandemic strained corporate budgets and manpower alike. Legal tech empowers businesses to streamline entire processes, including how they store and sign documents, adhere to preferred negotiating positions, and oversee timely contract execution.

The Role and Importance of Technology in Law

Over the last couple of years, corporate legal departments have leveraged legal technology and innovation to improve their workflows and services. 

And the numbers tell the story: 

• By 2024, legal departments will have automated 50% of legal work related to major corporate transactions, according to Gartner research. 

• 87% of legal departments surveyed in 2020 expect their total number of in-house, full-time employees to remain the same or decrease despite larger workloads. Advances in natural language processing (NLP) and machine learning technology present an attractive alternative to hiring in-house staff or outsourcing work to Alternate Legal Service Providers (ALSPs). 
  
  
• 70% of Chief Legal Officers (CLOs) plan to adopt new technology solutions to improve contract management, with 33% investing in document management and workflow tools and 25% investing in data privacy, analytics, eSignature, or collaboration management software.
  
  
• After years of hype, the true capabilities and impact of legal tech is finally being seen from early adopters. As a result, 58% of survey respondents have already accelerated their adoption of legal tech.

“The COVID-19 pandemic has heaped even greater workloads onto already thinly stretched in-house legal teams, with staffing levels holding flat,” said Zack Hutto, Gartner’s Director of Advisory. “Legal leaders are seeing that other departments have found success with their tech investments and also significant advancements in the legal tech market. This is driving their appetite to expand their use of technology to support workflows and meet productivity demands.”

Legal Industry Trends and Changes Sparked by Technology

With technology adoption rapidly becoming the norm in the legal industry, trends and changes have naturally followed suit. Here are the most notable ones.

Physical Contracts Going Digital

As recently as 2019, 84% of corporate legal departments processing 500+ agreements a month were generating deals manually and on paper. According to those surveyed, 46% of legal teams said these manual processes delayed the start of projects and 45% admitted they resulted in poor customer experiences. Nearly half of the surveyed organizations said they had difficulty finding and managing their agreements, let alone ensuring they were compliant.

Manual paper contracting can cause many legal headaches, including:

• Errors and waste caused by duplicate data re-entry
• Filing cabinet inaccessibility and document retrieval difficulties 
• Inability to search for terms, conditions, clauses, and precedents
• Inordinate costs associated with labor, printing, and postage 

Since contracting is the basis of all business and done at scale, it’s imperative that legal departments find ways to improve workflow productivity and contract performance. Digitizing paper contracts can allow for searchable clause libraries, automated playbook cross-checking, and transparent multi-party collaboration.

Digital Workflows Facilitating Daily Tasks

The emergence of digital workflows to facilitate daily tasks has been another major industry paradigm shift. Workflows define what businesses do and how well they do it. If not performed efficiently, repeatable tasks can inflate costs and cause frustration for in-house legal teams. Human errors like misrouted contracts, incomplete agreements, un-archived files, errors, and omissions not only slow down business, but hurt morale as well. 

With automation technology, however, workflows can be digitized and set legal teams up for success. The following contracting tasks can all be automated:

• Inserting standardized boilerplate language into contract drafts
• Reviewing newly uploaded drafts with corporate legal playbooks
• Finding context for recommended changes
• Routing agreements to the correct stakeholders
• Tracking contract review status, renewals, and performance 

Digitizing and automating repeatable tasks result in employees having more time to focus on providing better service and devising more cohesive business strategies.

Accelerating Business Speed 

Contracts have become much more complex, and the time legal professionals spend reviewing and negotiating them has shot up by 40% over the past several years. Presently, the average medium-complexity contract requires 30 days for review and negotiation—and a hefty price tag of nearly $20,000. 

As statistics show, business success is often hindered by slow, manual legal processes: 

• A one-day slowdown of the sales cycle equates to an $80,000 loss on average.
• High performers complete contract reviews in 8 days vs. 47 days by their slower counterparts.
• 65% of legal professionals cite slow administrative tasks as one of their biggest pain points.

Tech-powered legal teams are seeing dramatic reductions in both contract review times and time to execution. Businesses are now able to:

• Close deals in 6 days (down from 16)
• Reduce contract review times by 90%.
• Decrease legal playbook training times by 99%.

Legal Tech, Innovation, and the Future of Law

AI quickly scans databases and automates tasks based on logical algorithms. More importantly, it’s paving the way for business growth in legal tech. In a recent study, 85% of Mergers & Acquisitions teams considered the use of AI either “very important” or “important” in their practices, particularly when it came to exercising due diligence. A quarter said a high degree of their matters involved AI, but 76% of M&A teams said they planned to use an extensive amount of AI within five years. 

Forward-thinking companies like Panasonic, NetApp, and RSM are already utilizing LexCheck’s legal technology to innovate their services. Its award-winning contract review and negotiation solution delivers lawyer-quality redlining and risk analysis within five minutes’ time. Using an AI Digital Playbook, the system automatically enforces a company’s standardized language, negotiation positions, and clauses to uphold compliance. 

LexCheck is helping companies move forward and grow despite the difficult business climate spurred by the pandemic. As their needs evolve, so too does the legal technology and innovation that powers them.