Legal technology: The in-house perspective

As corporate legal departments increasingly rely on technology to manage their workload, law firms are looking to leverage client facing technology as a differentiator that helps them develop and cement strong client relationships.

For some time now, large organisations have been expanding their in-house legal teams in order to handle more work in house, reduce their legal spend and minimise uncertainty around their day-to-day legal costs. And according to Altman Weil’s 2015 Chief Legal Officer survey, this trend is set to continue, with 40 per cent of law department respondents planning to reduce their spend on outside counsel in the next 12 months.

Corporate legal departments are looking for value for money from their external counsel and their internal teams, and they are investing in tools and technology to increase efficiency and ensure that work is assigned at the appropriate level of skill and expertise.

A boutique law firm within the organisation

In some large organisations, such as BT or Royal Dutch Shell, the legal function is equivalent to a mid-size international law firm. Other organisations, such as The Financial Times, run a lean ship, with a team of just 13, including company secretarial staff. Most corporate legal departments rely on external support when they need specialist expertise, during exceptionally busy times, dealing with a merger or significant litigation, or to handle large volumes of routine work.

A corporate legal department is equivalent to a boutique law firm because its remit is to look after the legal interests of the business. In addition to its core responsibility, it needs to provide value to the business. It therefore has to manage its budget and its resources effectively. These strategic priorities are supported by specialist legal technology, in addition to the organisation’s core IT systems. One issue that faces all but the largest legal teams is that as a business support function, the in-house legal team is not top of the list when it comes to investing in IT resources. And this is where external legal services can add value – by providing IT resources that support their clients’ business.

How do in-house legal departments use technology?

Legal-specific tools and systems

In-house technology requirements are similar to those of a boutique law firm.

Recent research highlighted the rise of legal process outsourcing (LPO) and cloud-based collaboration. While deployment of workflow tools had reduced, possibly because of the increase in LPO for due diligence and routine contract work, the use of matter management systems had increased slightly.

According to Greg Gosling, director of professional services EMEA, Wolters Kluwer ELM Solutions, matter management solutions give the legal department ‘a complete global view of operations, including number and complexity of matters, and breakdown of matters according to corporate and geographic structure. Detailed dashboards provide a view on risk and spend on a global and local basis’. They also enable legal departments to track the progress of matters and how work is allocated – i.e. ensuring that assignments are handled at the right level of seniority and collecting management information which can be used to develop workflows for efficient service delivery.

Like law firms, in-house teams need systems to manage their documents and their knowledge – contracts, precedents, templates and other standard forms. Traditionally, document and matter management systems are on-premise, although cloud-based systems such as NetDocuments are attracting more corporate clients, most recently the Financial Times.

Budgeting and e-billing software helps corporate legal departments manage their legal spend, compare and analyse the bills submitted by various external firms and determine who to select for particular instructions. Popular products include Thomson Reuters Serengeti, Mitratech and Wolters Kluwer ELM Solutions.

Like law firms, in-house legal departments adopt a ‘best of breed’ IT strategy, whereby they combine a selection of systems and tools. However, if they are using technology designed specifically for legal work, there can be issues around integration with the organisation’s core systems. While it may be acceptable, or even desirable, that some systems are stand alone, others may need to interface with the rest of the organisation, or reflect its strategy and culture. For example, Sarah Spooner, head of legal at Vodafone told the Vis-à-Vis legal IT conference that Vodafone is a paper-free organisation, so all documents and matters are managed online.

The drive for integration and collaboration led Nishan DeSilva, senior director within Microsoft’s Legal and Corporate Affairs Group to create Matter Center, Microsoft’s SharePoint and Office 365 based matter-centric document management system. ‘The idea was to develop a simple add-in that would connect Microsoft Office tools to Office 365 used by Microsoft, our partners, and clients. When we shared our approach to simplify collaboration in the cloud with our clients and partners they asked us to make Matter Center available to the broader market. We are currently connecting our system to our third-party financial systems and Power BI for business analytics.’ Clearly the idea is to facilitate Office 365 adoption. Although this is not mandatory, Microsoft encourages its business and legal professionals to use Matter Center. DeSilva emphasises that it simplifies collaboration on matters and documents.

Building bespoke solutions

The recent Yerra Solutions conference featured two organisations where the legal department had developed bespoke IT solutions that delivered direct value to the business.

Jason Williams Director, Legal, Deutsche Bank explained that out-of-the-box solutions need to be combined judiciously and tailored to the business.

Williams and his team brought together several legal technology products to create DExTR which manages Deutsche Bank’s regulatory reporting requirements by combining automated metadata search and content analysis, business intelligence tools with a self-service user interface. The system, which is based on Recommind’s Axcelerate and Perceptiv e-discovery products, saves Deutsche Bank some £10m a year in compliance costs and reduces the work of the legal department by giving users self-service access to over 65,000 contracts and reducing manual input by 80 per cent. Williams emphasises that automation produces more accurate and complete data sets and offers the ability to repeat searches quickly using different variables.

As part of BT Legal’s global transformation, Chris Fowler general counsel, UK commercial legal services, has invested in value-adding technology, notably creating an online ‘front door’ for all internal requests for legal services. As Fowler explains, the system has been adjusted to integrate with BT’s core systems to facilitate collaboration. ‘It started as a SharePoint-based web portal. We are now using Axiom’s Iris technology, which directly links into our corporate intranet. This means it automatically recognises our business colleagues, so basic information is auto-populated. The technology has progressed from manual free-text based instructions to pre-populated menus that enable work to be immediately allocated to the most cost-effective resource, based on workflows using consistent instruction information.’

BT has also developed its own knowledge management (KM) system, which was previously on SharePoint, but they are now moving to a Tikit (the legal IT supplier that BT acquired in 2013) cloud-based solution that will enable BT Legal to develop a consistent service across the business.

Panel selections

Cultural fit is an important consideration in panel selection. A firm is more likely to be selected if its approach to technology matches that of the client organisation. For example, Vodafone tends to instruct firms that offer mobile access to their systems! At Microsoft DeSilva confirms that ‘appropriate and/or creative use of technology is a decision factor, especially for transactional services’.

Some corporates use technology to manage – and speed up – panel selections. Last year Santander applied a live reverse auction process, which lasted about an hour to its panel appointments. Firms submitted hourly rates, which could be revised and fed into an online ranking process, which was updated every few minutes and included factors such as quality and price. Yerra Solutions offers consultancy and technology around selecting the best law firm for specific instructions.

Technology will be at the forefront of BT’s next panel exercise. ‘One of the biggest challenges facing legal departments is that they are not at the front of the queue when it comes to allocation of IT funding or systems implementation,’ explains Fowler. ‘Therefore, working with service providers who can provide portals, systems and workflows is absolutely fundamental.’

He would like to see more from creativity from panel law firms. ‘Law firms have huge amounts of data from the transactions/matters they have worked on and I would love to see more creativity in how they embed this into their offerings. It’s a huge opportunity to offer greater insight and consistency, which is where some alternative suppliers are further ahead.’

‘Where technology had helped make other industries deliver more consistent and cost-effective outcomes, we have hardly scratched the surface of what it can do in the legal market. Big data, workflows and automation are allowing BT Legal to become more proactive, not just demonstrating efficiency but providing our business with greater insight into how we can do things quicker, cheaper and more consistently. If law firms can harness this, it will be a game changer because technology-based solutions are inherently stickier.” And some firms are adopting this approach to cement long-term client relationships.

Law firm technology as a differentiator

Although panel selections and requests for proposals (RFPs) may include technology requirements, these depend on the nature of the work. ‘Banks ask security and data protection questions as they are highly regulated. A litigation RFP will usually ask about tools and processes and IP and patent clients will ask how their portfolios are managed. Most RFPs ask about collaboration tools,’ explains consultant Antony DeCerce, adding that unless there is a problem with any of those issues, technology tends not to be the deciding factor.

Julie Berry, IT director at RPC, agrees that the most common questions are around security and data protection. Generally RFPs tend to cover:

• a particular category of technology such as email encryption, without specifying a vendor;
• a specific topic such as information security;
• an issue where technology is part of the solution, such as billing efficiency; and
• the requirement to use a specific technology, such as for collaboration.

However, it is generally agreed that panel appointments are won by legal services rather than technology.

At TLT, head of transformation Jeff Wright and IT director Graham Sankey highlight the importance of information security, with panel selections increasingly asking whether firm’s systems conform to ISO27001. ‘They ask about case management and document management systems because they want to be certain that their information is held securely,’ says Sankey. Other questions cover e-billing and e-instructions, deal rooms and extranets. ‘Ultimately it is about technology supporting legal services,’ adds Wright. ‘What used to be a differentiator has become a hygiene factor.’

Consequently, firms are creating client-facing IT tools and systems – but to make relationships ‘sticky’ these need to be tailored to the clients’ business. ‘Post tender, we identify solutions that are often technology supported,’ says Wright. TLT focuses on reporting management information (MI) and giving clients access to the status of their matters. ‘In-house counsels commonly wrestle with a myriad of systems that don’t enable them to create a single view of their portfolio of matters with each firm.’ Other offerings include data exchange for financial services clients including automated web services and e-instructions.

One project covers the electronic acceptance of instructions – and refusals where there are conflicts. The process is entirely automated. ‘It is quite challenging to set up, but ultimately it saves time and effort,’ says Wright. This type of resource is a win-win – offering the client added value while maintaining margins by automating data input. It is about developing conduits to the client at the right level.

RPC’s rpcreserve.com is a private cloud solution hosted on Azure that provides insurance clients with real-time claims data. As Berry explains, it gives clients access to working data, with information updates every three minutes as and when lawyers work on a claim. Clients can drill down to the latest position on an individual claim, or review their entire portfolio.

The firm collates a core set of MI data for every insurer client, which is accessed on a self-service basis. Information is provided in an exportable format so that it can be transferred to clients’ systems without data having to be rekeyed. This balances efficiency with compliance as regulations require insurers to be aware of potential claims. It also helps to cement RPC’s client relationships and regularly features in pitches.

As partner, IS and operations director Stuart Whittle explains, Weightmans has developed a system for presenting MI from case management and workflow systems back to property clients via an extranet. Online dashboards give them access to a geographical map of their entire portfolio. They can then drill down into graphical interface to see detailed information for each property.

‘The idea came from our insurance practice, which provides insurance companies with claims information,’ says Whittle. ‘We adapted the system to offer commercial clients additional information about their businesses. For example, it can identify which elements in their portfolio are creating legal issues.’

As this ‘extra’ resource is useful even when the housing association or leaseholder does not need legal advice – it increases the likelihood of repeat instructions. Like Williams at Deutsche Bank, Whittle has adapted off-the-shelf technology to create a tool that provides access to an entire portfolio of data which can be cut in different ways. And like RPC and TLT, Weightmans leverages its client data and IT expertise to cement client relationships and win repeat business.

There is still potential

Notwithstanding the examples above, Chris Fowler at BT believes that there is still potential for law firms and alternative legal services providers to leverage the client data they hold. He is impressed by providers who engage strategically. ‘Most alternative service providers ask, ‘What do you need?’ whereas when I meet law firms they tell me about their experience. Delivering BT legal service within a decreasing budget means challenging the way we do things. And collaboration is key.’