On the path towards
Legal Technology 3.0

An interview with Ralph Vonderstein

“Big data and analytics, and particularly the use of artificial intelligence, lie in the distant future.”

No matter which digital technologies a company currently uses to enhance its products or processes, it is usually always referred to as Industry 4.0. Does the legal department have to invest in Legal Tech 3.0 in order to keep up with the other departments in the company?

That sounds plausible, but it ignores the really important issues. First, Legal Tech 3.0 has not yet been conclusively defined. Second, each legal department should try and find its own way of providing the best services possible to internal customers using the right software. Medium-sized companies with a small legal department clearly need different solutions than corporations with over a hundred lawyers.

Okay, first question: What is Legal Tech 3.0?

For me, Legal Tech 1.0 comprises special programs that support selected processes in the legal department. Legal Tech 2.0 is the automation of certain tasks using software, such as document automation. In Legal Tech 3.0, big data and analytics come into play, i.e. recording and assessing huge amounts of data on specific topics. The next step would be to use artificial intelligence, where a computer processes legal topics from start to finish, right up to identifying a solution that is as good as one that a lawyer would find.

 

And where do you think we stand right now?

Big data and analytics, and particularly the use of artificial intelligence, lie in the distant future. The major topics over the next few years are likely to be document automation and digital signatures, because they bring major cost savings and accelerate processes. At Microsoft, for example, everycontract is created using document automation and digitalsignatures. The solutions are also relatively easy to integrate into existing IT structures. But even here, many companies have a lot of catching up to do. One third of companies currently use Legal Tech 1.0, and most others are only working with Legal Tech 2.0 even though there are mature solutions for comparatively low costs. Enormous increases in efficiency are possible for less than 100 euros per user and month.

But these solutions still aren’t being used by everyone?

That’s right. This brings me to my second point, which is really important for legal technology: The question of which IT solution best supports the work of the legal department. To answer this, lawyers first have to generally have an open mind when it comes to new technology. Second, they have to identify how they can make the work of the other departments – and their own work – easier and more efficient. Without clear objectives even the best legal technology solution will not be able to live up to its potential.

What does that mean specifically?

That the legal department delivers exactly what the requesting department needs and uses software to do so. Take document automation: If a company lawyer knows that the sales department regularly works with and combines a handful of general terms and conditions, non-disclosure agreements, notice periods and other mandatory components, then the appropriate forms can be created in a modular way and made available to the sales department to mix, match and print themselves. This kind of IT solution relieves lawyers from having to deal with the same requests from the sales department day in and day out, and accelerates the process of concluding standard contracts. The lawyers then have time to deal with special cases that often involve larger sales volumes. And working with document automation, and thereby creating a well-filled database, also lays the foundation for the further expansion of legal technology – the contractual metadata is being entered automatically.

Sounds logical.

But this level of technology poses enormous challenges formany legal departments. Up to now, far too few processeshave been implemented that would benefit from IT support. Even with practice management software used for process management, the digitalization rate is only 25%. Only if thelegal department establishes efficient processes can tools for collaboration, for example, unfold their full potential. Today, collaboration within the legal department or with other departments often consists of using different versions of a Word document and reaching for the phone.

And how does the head of the legal department identify which topics should be addressed?

There are different approaches. Some companies with large legal departments use legal ticketing. This allows them to determine which topics receive the most enquiries based on the ticketing data collected. The idea is: If answers are available automatically, this would increase efficiency. For a medium-sized company, a simple survey could also suffice to identify the top ten legal questions posed by the company’s other departments in day-to-day business.

And how does this lead to using legal technology, especially for small companies?

This naturally requires drawing the right conclusions from the results. For a corporate group, this could mean supporting its own lawyers in their work by introducing a specific IT solution. For the small legal department, on the other hand, this may mean pushing for the use of legal technology on one important topic, for example, by cooperating with a law firm and using an appropriate solution. Document automation, for example, can be outsourced to a service provider via cloud solutions and VPN connections while the client continues to fill the legal technology database. There are hardly any limits to your imagination. Thanks to digital technologies, even a one-man legal department can realize enormous advantages if the individual concept is well devised and, in a best case scenario, checked for viability together with an external expert.

So you advocate a step-by-step approach instead of investing in one big solution?

The right answer involves making the company’s legal d partment more efficient at a reasonable cost. But it’s not just about money, it’s about future viability in general. Anyone who doesn’t invest in legal technology today will not only miss the boat in terms of technology, but also become unattractive as a potential employer. The highly qualified lawyers of the Generation Digital Native, who are already stepping onto the professional stage, will hardly find a legal department without modern IT solutions to be an exciting place to work.