Innovation Puzzle

On February 3, we all witnessed what happens when poorly-designed technology, ostensibly meant to make a complex task more simple, gets in the hands of insufficiently-trained people. "Fiasco," "debacle," and other less-flattering terms were used to describe the chaos sowed, in large part, by the app deployed to tally and report results at the Iowa Democratic party caucuses.

While the media glare shined a bright light on the technological failures in Iowa, to one degree or another this type of situation occurs frequently—with less scrutiny—in the business world. Poor-fit technology, paired with poorly-trained people, leads to poor results. And technology that falls within the category of "legal tech" is no exception.

If we look back over the last two decades, we can see examples of situations where legal tech didn't live up to its promise, leading to costly investments without commensurate returns, at least at the early stages of its rollout. With more than 25 years of experience working with corporate legal departments on technology integration issues as the leader of an alternative services provider, I've witnessed the problems that arise when an organization tries to leverage technology tools before it has its "house"—people and processes—in order.

For example, when e-discovery software burst on the scene, investors heavily funded companies building e-discovery software, software companies rushed products to market, and businesses eagerly and quickly integrated e-discovery tools. And things often didn't work out very well. Software didn't solve the problem that businesses faced in sorting through massive amounts of digital data for two principal reasons.

First, early adopters of e-discovery technology, like early adopters of almost any technology, came to learn that initial iterations of e-discovery tools often didn't live up to their promise. Like the Iowa app, many tools were buggy and not sufficiently tested in real-world environments. Second, and more importantly, businesses that tried to leverage e-discovery software often hadn't laid the groundwork for its integration. They didn't have the people and processes in place to enable software—which adheres to rules and requires clean data—to serve its purpose.

While many of the issues with e-discovery have since been ironed out, legal tech continues its relentless march into other domains and functions within corporate legal departments. In recent years, businesses and legal tech companies have been working to deploy software to assist in the management of the massive amount of commercial contracts that flow through corporate legal departments. And if they're not thoughtful and strategic about how it's done, they'll repeat many past mistakes.

Tech is an accelerator of results, not a silver bullet for every problem. To leverage legal tech effectively, corporate legal departments should focus, first, on getting the right people and processes in place. By laying a strong foundation with the right people and processes, legal tech can then be plugged in to accelerate problem-solving, rather than causing more of them. Indeed, it's not uncommon for a business that lacks the right people and processes to struggle for 12 to 18 months to implement a new legal tech tool, only to learn that, given the pace of innovation, better tech solutions have become available. They're then forced to start over, or move forward with a less effective solution.

What follows are three ways that corporate legal departments can set the stage for the successful integration of legal tech. While these strategies will be described in the context of deploying technology for the management of commercial contracts, the underlying principles apply no matter what function legal tech is meant to serve. Broadly speaking, when it comes to the integration of legal tech, it's advisable to walk before you try to run.

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1. Get Your Data in Order

Artificial intelligence-powered legal tech has tremendous potential to help businesses sort through, analyze and optimize the massive amount of commercial contracts that many must manage. But for software to do its job it must be able to access the data it needs.

Many businesses struggle to capture data across their commercial contracts portfolios. Layering software on top of a disorganized system won't solve the problem. Rather than spending time and resources trying to integrate software to manage "dirty" data, a better investment would be to clean up existing data and implement more organized systems for data capture moving forward.

Once those systems are in place, legal tech can then be deployed to extract and analyze data and create efficiencies in the review, negotiation, and management of commercial contracts.

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2. Define Rules and Create Structure

In the not-too-distant-past, each commercial contract that worked its way through a business was typically treated as unique. This led to a custom contract review process, often involving expensive outside lawyers, even for boilerplate agreements. By identifying the commonalities across contracts, businesses have been able to fashion more streamlined systems and processes that allow for the faster, higher quality, and less expensive review of contracts.

Moving forward, the systemization of contract review will become even more important and valuable. Over the next several years, the acceleration of the integration of AI into the contract review process will enable corporations to extract data and clarify the content of contracts more effectively. This type of automation will allow businesses to review contracts more rapidly, organize large amounts of data more efficiently, and increase the volume of contracts that can be reviewed, negotiated, and executed.

However, those who realize the greatest benefits from AI in the future will be those who lay the groundwork for it today by establishing processes that will enable machines to optimally perform. Software requires rules, and if there are no clear rules to abide by, even the strongest supercomputer paired with the smartest software won't be able to add much value.

Accordingly, before investing too heavily in technology, businesses should attempt to standardize terms, create templates, think through "if/then" scenarios, and evaluate risks associated with their various forms of commercial contracts. We call this process developing a "playbook" for your contracts. It's not possible to standardize and create rules for 100 percent of contracts—there will always be outliers—but creating a playbook, which can be used to set rules for software, can drive tremendous efficiencies for a corporate legal department.

By clearly documenting the commonalities among contracts, the nuances that fall outside of those parameters—and, thus, outside the scope of software—can be properly directed to the appropriate in-house resources for further review.

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3. Elevate Your Team Members to Their Highest and Best Use

All corporate legal departments perform legal review of commercial contracts, but the process is often tedious and laborious, and prevents in-house attorneys from doing what they do best. Instead, they're bogged down in the details of a seemingly endless stream of requests to review non-disclosure, procurement, licensing, and other commercial contracts.

When contract review work is misallocated, it often means that lawyers—whether in-house or external—are doing work "below their pay grade," which means that the expertise available to a business is not being properly utilized. In other instances, individuals are being tasked with contract work that falls outside of their wheelhouse, which leads to inefficiencies and costly errors.

Even when you have software in place that automates aspects of contract review, there will still be humans involved in the process. Therefore, before turning to legal tech, it's important to designate and train the lawyers, and non-lawyer resources, such as those provided by alternative legal services providers, who will supplement the finite capacity of software. By doing so, you'll ensure that your people are being elevated to their highest and best use.

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There's No Perfect Software

Commercial contracts flow to in-house from sales, procurement, and other departments within a corporation. These contracts, which emanate from different areas and serve different functions, often look quite different from one another. Right now, there is no perfect enterprise-wide software that addresses all of the contracting needs and nuances of the different internal constituencies that corporate legal departments must serve.

That is not to say, however, that software can't help in creating efficiencies in commercial contract review, as well as other legal processes. But it's advisable to refine and optimize your people and processes before turning to legal tech as an accelerator of results. You're going to have to think through how to best use your people and dial-in your systems as part of the process of integrating technology into commercial contract review. Since we're all still sorting out the best technology tools available, why not think more about the issues within your control—people and processes—now?

Dave Galbenski is the founder and Executive VP, Strategic Initiatives, of Lumen Legal, a national alternative legal service provider (ALSP) specializing in commercial contracts outsourcing, secondments, document review, contract staffing and legal spend analytics. Lumen's clients include top corporate legal departments, law firms and government agencies. Dave is the author of the books Legal Visionaries and Unbound: How Entrepreneurship Is Dramatically Transforming Legal Services Today. Follow him @davegalbenski on Twitter.