Making legal tech your organization's value driver

Dive Brief:

• Contract management software has become the most commonly used legal technology among in-house legal departments, with nearly two-thirds (65%) now utilizing it, according to a report from the Association of Corporate Counsel (ACC) and Exterro.
• In-house legal professionals also rate contract management technology, often called contract lifecycle management (CLM) software, as the most effective legal tech tool, the ACC/Exterro survey report found. 
• The other three categories of legal software used by more than half of legal departments are legal research (61%), e-billing (55%) and document repository (54%). The 2023 Legal Technology Report is based on responses from 252 in-house counsel and legal operations professionals from 22 countries.

Dive Insight:

The 65% of legal departments using contract management software is a 14 percentage points increase from when the ACC conducted a similar survey two years ago, the largest such bump among the various legal tech tools.

The uptick in utilization has come as there are a growing number of CLM software offerings in the market, with an array of companies generating millions of dollars in new investment to further develop and scale their products.

Many of these tech tools incorporate cutting-edge AI into their products, including generative AI, helping users achieve additional efficiency gains and generate improved contracting insights.

The relative effectiveness of CLM software compared to other tech tools, as evidenced in the ACC report, is also likely helping to boost usage rates. 

Overall, 52% of professionals said they found contract management to be among the most effective software, a 5 percentage point increase from two years ago. 

Even though respondents were able to select up to four options for the most effective technology, no other type of tool was listed by at least 40% of survey participants.

Reasons given for CLM software’s effectiveness included that it helps streamline the contract review process and makes contracting more consistent.

“It allows for superior efficiency and confidence of the legal department’s ‘one version of truth’ when it comes to contracts utilized across the organization,” one survey respondent wrote.

Another respondent said they appreciated that the software allows multiple colleagues to collaborate on the same document, and it houses all the executed agreements. 

The ACC/Exterro survey found that 63% of legal chiefs and 51% of other in-house counsel listed contract management software as one of the most effective tools compared to 48% of legal operations professionals.

For legal ops professionals, e-billing (69%) and matter management (55%) were more frequently listed as among the most effective technologies.

Roughly three in four respondents overall (76%) hope to leverage CLM technology more effectively moving forward.

Meanwhile, of the respondents whose organizations are planning to or considering purchasing new technology in the next year, 46% said they would invest in contract management technology. 

While the CLM figure was the highest among the different tools listed, it was down 10 percentage points from two years ago. This may be the result of an uptick in purchases in the past two years.

Additionally, 31% percent of respondents said they planned to purchase matter management technology and 23% document repository technology. No other tech tool eclipsed 20%.

When she was asked to help a team find and onboard contract lifecycle management software, Jackie Bley started with an internet search but she also tapped a free online comparison tool called the Observatory.

The tool, hosted by Orrick, the global law firm, has about 700 products in its database, enabling visitors to get a first impression of CLM or e-billing or other legal software, Bley, a senior paralegal at synthetic DNA company Twist Bioscience, said in an Inside Voices podcast. 

“You put in key words like CLM system or IP docketing system – whatever your search features are – and it will provide you with a listing of options, vendors and price points,” said Bley, a 30-year legal-team veteran who provides support on commercial contracts and also serves as the in-house legal team’s operations point person. 

That and other tools are among the tricks Bley uses to help her meet competing priorities as a team member who has to wear both a legal-support and an operations-support hat in her paralegal role. 

Must-haves

For the CLM implementation, the general counsel had two must-haves: redlining within the system and what Bley called a chess clock – a dashboard feature that would enable the GC to identify what parts of the process are causing a snag in closing out a contract. 

“Just imagine two people playing chess,” she said. “They make a move and they hit the clock, which stops what they’ve been doing. And then it goes to their opponent. What does that do? That gives us metrics to figure out if the request is lingering in the legal department or our internal customer or our counterparty.  It allows us to home in on the inefficiencies and figure out what the bottlenecks are and how we can repair them. So, that was the GC’s dream.”  

Even if the team isn’t looking to add a tech tool in the near future, Bley said, she attends conferences and webinars and in other ways tries to stay current on what’s happening in the world of tech tools so she doesn’t have to start from scratch if the general counsel or someone else wants to know what’s out there. 

“Let’s say one day someone says, ‘I need an e-billing system.’ I need to be ready for that; I don’t want to have to go back to the drawing board.” 

User rewards

When the team settles on a tool and implements it, she uses a rewards program as one of the ways to get users to buy into it. 

“You can get points that translate into a Starbucks or Target card or something like that,” she said. “Let’s say someone hits 10 workflows in a week, or 100 workflows in a month. We showcase that we’re rewarding them for being a prolific CLM user.” 

Champions are also recognized. Team members and others who are big users of a tool and who encourage and help others use it get their own recognition.

The complexity of a tool shouldn’t dictate whether, or how often, the legal team looks into changing it, Bley said.

That’s the case even with a CLM, which is probably the most complex, resource-intensive and deeply integrated tool to implement. 

“If we have to change CLM twice or three times, you need to do it,” she said. “You need to think five, 10 years out. If you’re a startup, you don’t need much, but your company could go gangbusters and now you need a CLM for 5,000 people.”

As a paralegal whose first responsibility is supporting attorneys in their contract work, Bley said, she has to focus on time management. That enables her to wear her two hats without letting either responsibility slip through the cracks. 

“My first-burner projects are not going to go away while I’m working on my back-burner projects,” she said. “Sometimes I just put on my calendar half an hour or an hour. Or on Fridays, we have a no-meetings policy, so those Fridays are useful because I can work on a project for a few hours and really focus on that.”

If you’re bringing in people from other functional areas when you’re getting ready to deploy legal technology, you’re too late, says Ross Dubinsky, a legal management consulting specialist at Stout in a Today’s General Counsel webinar. 

Legal technology is too complex to have a successful implementation if you don’t bring in all stakeholders, including those from outside the legal team, at the front end when you’re still deciding what technology you need, said Dubinsky. 

“You’re not just standing up a system,” he said. “Typically it’s an ecosystem.”

Whether it’s contract lifecycle management, e-discovery or some other tool, it’s not uncommon to have six or even eight integrations with other systems, including those for HR, matter management and accounts payable, Dubinsky said. 

These integrations mean you need to get permissions from IT and solicit input from a compliance perspective from information security and privacy teams, among other things. 

“Separate from the technical aspects, it’s getting these stakeholders aligned,” said Dubinsky. 

Strategic goals

During this early stage, you want to avoid choosing a solution just because it solves a pain point your legal team is experiencing, said Brett Tarr, associate general counsel at Collibra.

The better move is to link your solution to the broader organization’s strategic goals so whatever tool you choose is the right fit for what your legal team will look like in three or five years and reflect what role it’s expected to play. 

“Instead of trying to fix what is a problem today, consider where you want to be as an organization two, three or five years down the line and how you can use technology to get there,” he said. 

The more strategic your tool, whether it’s CLM or e-discovery or something else, the more important it is getting executive-level buy-in. Because without that, your implementation will lack the muscle to get people to use it the way it needs to be used to provide the value you’re looking for.  

“It can’t just be someone at a line level that’s introducing technology and pushing other peers,” Tarr said. “You need a level of buy-in and enforcement by executives, whether at a division, business unit or organizational level. People need to know how the technology is tied to the strategic goals of the organization to get people to commit to using it.”

Taking a two-pronged approach — change management and training — can help get buy-in, too.

For the change management piece, communication is crucial, because that’s how you tell the story of how the technology fits into the broader strategic goals. “It’s how you message the introduction of the new technology,” said Tarr. 

It also articulates how you integrate the new technology with other tools and build the APIs to connect the tools together, he said. 

The training piece is integral because without it people will get frustrated and simply choose not to use the technology. “People will think of change as what they’re losing rather than what they’re gaining,” Tarr said.

Outside help

Third-party implementers can help because they’ve been through these implementations before, know what tends to undermine them and can head off the implementation fatigue that inevitably settles in when you’re months or years into it. What’s more, they can act as neutral parties when two internal groups, like legal and IT, differ on something. 

“Defining success can be hard when you have competing priorities,” said Dubinsky. “So, an external party can serve as a neutral party that can listen to, internalize and provide an objective view, especially on what’s achievable within the time frame. They can help you phase the implementation to satisfy as many people as possible while staying true to a timeline or budget.”

To get buy-in for the project upfront, in addition to linking the project to the broader organization’s strategic goals, you want to show the return on investment, whether that’s measured in new money brought in or money saved or freed-up staff time to work on higher value work. 

If it’s not possible to show directly either cost savings or new revenue generation, you can still show a chain of results from implementation that can illustrate a less obvious ROI. 

“It’s harder to show an ROI when you’re trying to show the value from a process or risk standpoint, but you can show that you’re able to free up this individual, who can now take on more work from the paralegal, who can now take on more work from the attorney, which allows you to have less reliance on outside counsel,” said Dubinsky. “Last year we spent x on that and that can potentially be translated into an efficiency gain by leading to more insourcing of work. You’re looking at ways to generate that ROI in addition to just the cost savings.”

Ashley Pantuliano joined OpenAI as associate general counsel in November 2022, and she is among the lawyers both inside the company and across the globe utilizing its ChatGPT chatbot to assist with legal work.

Pantuliano said if she is beginning a writing project, she will sometimes ask ChatGPT to produce a response on the subject at hand. She can then use the output from the technology utilizing large language models (LLMs) as a possible starting point for her work.

Additionally, Pantuliano will sometimes take paragraphs she has already written and ask ChatGPT to shorten them or make the text easier to read.

For example, she said using the prompt, “Make this readable so a 12-year-old can understand,” or something similar, can result in the chatbot simplifying the language that is inputted.

Pantuliano spoke during a webinar hosted by Lawtrades, the flexible legal talent platform serving law departments.

Ashish Walia, a Lawtrades co-founder and moderator of the webinar, said he too has used ChatGPT to help him generate ideas for what he called the “blank page problem” when beginning a project.

Legal research

Pantuliano said she also will use ChatGPT to ask general questions about a law she is not familiar with to get some basic background knowledge.

If she needs to dig deeper, she can then use other tools or pull up the statute itself.

She called ChatGPT a very helpful starting point for her research about legal issues.

However, Pantuliano said the chatbot can sometimes produce inaccurate information in response to prompts, so attorneys should be aware of that as well.

“As a lawyer, you don't want to be wrong on what the law is or anything like that,” she said.

Data privacy and security

When it comes to legal-focused use cases of tools such as ChatGPT, Pantuliano acknowledged that data privacy and security concerns are common.

She said attorneys should be thoughtful about whether to put client data into a tool like ChatGPT given laws that cover the confidentiality and use of client or customer data.

Lawyers also should work to protect attorney-client privilege in their use of generative AI tools.

Pantuliano shared that ChatGPT has the right to train on user data from the inputs and outputs of conversations with the technology, but users can opt-out of having their data used by OpenAI in this way.

“If you’re a lawyer and you’re using [ChatGPT] for your legal work for clients, it might be a consideration to go to our website and opt out of training,” Pantuliano said.

Exciting work

Pantuliano, a former Goodwin Procter associate, began her in-house legal career at Dropbox before becoming the head of legal at the technology company Loom.

She said it was former colleagues from Goodwin who told her about the job at OpenAI, and she joined the company just prior to its launch of ChatGPT on November 30, 2022.

Her focus as an associate general counsel is product and privacy counseling. 

Given her short history at OpenAI and the attention ChatGPT has generated around the world, including from regulatory bodies, Pantuliano said she has felt like she has been “drinking from the firehose.”

But she described the work she has been doing as very engaging and enjoyable, and said she was grateful for the opportunity.

“I think it’s one of the coolest jobs that any lawyer could have,” Pantuliano said. “Working on cutting-edge legal issues and cutting-edge technology I think is super exciting and interesting.”

Jessica Williams, a veteran legal operations professional, is among those who think AI can help legal departments better manage outside counsel spending.

For example, she notes that in-house legal teams often have to review bills from law firms that have hundreds of line items. One goal of such examinations is to determine whether the firms spent a reasonable amount of time on the work at hand.

Williams said tools powered by the latest AI, and with access to historical data, could help in-house legal professionals much more efficiently and effectively identify a reasonable number of hours for specific tasks.

“I think that these are the types of areas where our AI can see those patterns and quickly identify them,” said Williams, the director of legal team strategy and operations at FanDuel.

Williams spoke during a recent webinar hosted by the Buying Legal Council focused on how in-house teams can save money on legal spend through using artificial intelligence.

Nuanced legal matters

Matt DenOuden, senior vice president of sales at legal tech provider Onit, elaborated on the point made by Williams. He highlighted that there are certain tasks such as change of venue motions for which it is pretty clear how much time it should take outside counsel. 

But he said AI proves its power when quickly reviewing data to identify what is a reasonable amount of time for law firms to spend on more nuanced legal projects such as preparation for a settlement conference.

“I think what the AI can do is to help with the not-obvious cases,” DenOuden said during the webinar.

Additionally, DenOuden said, AI can help legal teams determine whether the right law firm timekeeper worked on a particular task. 

This could include technology identifying whether an associate or paralegal should have handled a matter based on the legal department’s outside counsel guidelines.

Law firms

David Cambria, a fellow at the College of Law Practice Management, said corporate legal departments have traditionally been much more likely than law firms to adopt e-billing technology.

However, the rapid advances in AI may spur firms to consider implementing technology focused on legal spend, he said. 

One reason for possible increased interest in such tools is that AI could make it even easier for law firms to track the work they do and present it to legal departments, thereby improving the relationship between the two sides.

“Both the law firms and law departments at the same time here are seeing that this is an inflection point,” Cambria said during the webinar.

Invoice improvements

DenOuden also shared that law firms have largely moved away from using their invoices to meaningfully update clients on the work they have completed.

He said Onit has been testing large language models to see if they can help produce a summary of the work a law firm completed “so that the invoice again can actually be a communication device.”

The early AI testing results in the invoice realm were very promising, DenOuden said. This type of functionality could further entice law firms to implement legal spend management tools.

More innovation

The webinar panelists also noted that the rapid pace of AI developments in recent months means there will very likely be additional innovations in the weeks and months to come.

Williams said she looks forward to seeing how technological advances will further improve the procurement of external legal services and the monitoring of such spending.

“With this generative AI, not only do we have it on the actual legal practice side, but now we have it on the business of legal as well,” Williams said. “So we're going to see a lot of changes in the future, and I think most of them probably for the better.”