Technology

One of the last places you would expect to hear the siren call of the Airbnb or WeChat consumer experience is in a corporate legal department. But as powerful experiences spread from consumer markets to companies' internal work, a legal department's internal customers now have similar expectations for convenience, simplicity, speed and low cost.

Digital technologies are essential ingredients for meeting those expectations. While legal departments often adopt digital technologies to lower costs, the most transformative effect will be on the experience that legal provides to internal business customers. Among the most promising technologies, artificial intelligence (AI) has been embraced by forward-thinking legal groups in a range of industries.

JPMorgan Chase's legal team, for instance, used to review commercial loan agreements manually. Starting in 2017, JPMorgan built COIN (Contract Intelligence), an AI engine to automate legal work that cut up to 360,000 hours of agreement review by lawyers and loan officers each year. Now, the company is rolling out COIN on other complex legal processes, such as reviewing credit default swaps and custody agreements.

At Coca-Cola, AI-based tools have sped up contract drafting and reduced the amount of time that lawyers had been spending on review. Coca-Cola launched a self-service portal that reduced contract-drafting time for many matters from up to 10 hours to around 15 minutes. These tools also reduce risk and improve efficiency by creating consistency in agreements—and they free up the legal team to focus on more strategic and value-added work.

By allowing accelerated digital processes to take the place of manual busywork for many routine legal matters, the department can then focus on the tasks that further business objectives. Yet legal is lagging some other corporate functions in this regard. Only 20 percent to 25 percent of legal departments use AI in at least one area, according to a LexisNexis survey of legal departments, compared with 40 percent in finance and 54 percent in HR, recent Bain & Company surveys found. Looking two years out, finance and HR expect to adopt AI much more aggressively than legal.

Legal groups committed to accelerating their digital journey need to find a practical path that balances opportunities with the realities of the organization's current digital maturity, investment budgets and the cultural transformation required. The path consists of a measured but fast-paced sequence of steps that department leadership will embrace.

Think big. A digital vision should be ambitious, though it can build on prior successes. For example, legal could aspire to reduce manual reviews of nondisclosure agreements (NDAs) by 80% or to accelerate contract or distribution agreements. Or it could aim for a streamlined digital management of employee litigation and disputes, as well as policy compliance.

Choose your battles. To avoid chasing the next shiny object, set digital goals based on the business's strategic and operational objectives. Then assess the legal department's digital readiness against those goals, as well as against competitors and other leading companies. To determine where to invest more and where to invest less, identify the investments that will move your organization closer to its business objectives.

Think process. Digital technology only yields value when an organization embeds it into the workflow. For instance, the same handful of issues typically crop up in any NDA form, such as the expiration of confidentiality or clauses related to venue or arbitration. A convenient digital process would allow a user to pull down the preapproved form and send it out without intervention from a lawyer. If it comes back with a couple of changes requested, a well-trained AI bot can pick up the changes and respond; only exceptions to exceptions would need to go to a paralegal or lawyer. Rather than digitizing a broken or inefficient process, it's generally better to fix and simplify them before digitization.

Assemble a portfolio of digital bets. Your portfolio could include three types of bets. First, as a baseline, don't neglect tried-and-true technologies, such as automated drafting of routine high-volume contracts or platforms for e-billing. Next, explore more ambitious bets that could help your company gain a competitive advantage, such as forecasting litigation costs and outcomes using predictive analytics, improving compliance through automated workflows, or making the contracting process quick and easy. Finally, check out a few bets that could put the firm at the leading edge, such as self-executing smart contracts via blockchain, or machine learning to value large intellectual property portfolios.

Build up your capabilities. The biggest gap in making AI work often lies in a firm's capabilities. For example, a machine-learning algorithm only works as well as the quality of the data. These algorithms may need a monthly, daily or even real-time refresh of data to work well. Without addressing data governance and quality, algorithms have limited value.

Change behavior accordingly. Behavior change often is more challenging than making the technology work or finding the funds for investment. It's critical to win over internal business customers and sometimes even external customers, suppliers and other partners. The IT group should be involved from the start, rather than finding a technology and then forcing IT to implement it. And behavior change hinges on strong sponsorship by the chief legal officer and chief information officer, both of whom can reinforce the message that digital investment in legal accelerates business objectives. Finally, unless people are adequately prepared, briefed and trained, the program will fail. Take a cue from consumer markets by doing iterative testing and learning on pilot projects that include feedback from internal stakeholders.

Legal's internal customers are demanding faster, higher-quality advice and service at a reasonable cost. Careful selection of the appropriate digital tools from an ever-expanding kit, combined with continual upgrades of the technical and analytics skills of the legal team and a thoughtful approach to behavior change, will help raise legal's strategic value to its business partners.

Michael Heric is a partner with Bain & Company's Performance Improvement practice.

Neal Goldman is a legal management adviser to Bain and former chief legal officer at Skype, 3Com and Polaroid.