The pressure on legal departments to do more with less is increasing. Especially in the current environment where COVID-19 has impacted the business, general counsels face an increased workload, whilst being asked to enhance efficiencies and reduce costs.

In 2019, EY Law conducted a legal operations survey of 1,058 senior legal practitioners from businesses in 25 countries around the world. Responses revealed that having to balance an increase in demand against a squeeze on costs, while remaining compliant with a complex and ever-changing regulatory environment, poses a significant challenge for the general counsel. At the same time, legal functions are struggling to capitalize on technological advances and are having difficulty attracting and effectively utilizing legal talent. Legal functions are in danger of falling behind other functions, such as HR, IT and Finance, which functions have already enhanced efficiencies and are increasingly implementing the use of technology.

As a result, many legal functions acknowledge that their operating model needs to change. In order to meet these challenges legal departments are expected to implement new technologies. Technology is available that, amongst others, is beneficial for the transparency and monitoring of incoming requests, manage contracts, track and comply with (new) regulatory requirements and increase the added value of services provided to the business.

In addition, legal departments are scanning options to work with alternative providers (besides the classic law firms) to advice on, assist with and strengthen the use of technology, usually for routine or lower-value legal work. These alternative providers have the ability to provide legal services through a combination of people, processes and technology. Over the past years these alternative providers, including EY Law, have invested in technology and automation of standardized legal work. As a result they provide legal (managed) services against lower fees, helping legal departments to enhance efficiencies and save costs. We see the use of technology and automated processes in various workstreams such as entity compliance and governance, research and regulatory mapping, managed document review and contract lifecycle management.

As an example and particularly in the current environment, efficient and accurate contract review increasingly gained importance. Legal departments are or have been asked to provide insight and guidance to the organization around the rights, obligations and risks in internal and third-party contracts. However, as it often relates to large volumes of contracts that are maintained in different formats, systems and locations across an organization, a full review is very time consuming and thus pulls the legal departments away from other critical priorities. Using technology-driven processes, including technology tools with an artificial intelligence (AI) component, helps to expedite and increase the accuracy and completeness of contract reviews. Additionally, technology helps to focus the review by flagging missing pages, abnormal wording, additional clauses, incomplete signatures and other structural and linguistic anomalies. Contract review technology is not only valuable during the current crisis but also very often used in M&A due diligence on third-party contracts, supply-chain evaluation, assessment of rights and obligations in employment contracts, creditor/debtor disputes and regulatory remediation.

To conclude, technology has the ability to empower the legal department and make it a major strategic player within the organization. Striving for optimal efficiencies, reduce cost and mitigate risk should be a driver for each legal department to seriously explore the possibilities to change, be innovative and look into alternative service providers based on a ‘best-in-cost / best-in-class’ exercise. Especially important in these times of crisis and uncertainty.

About the authors

Susan A.M. ten Haaf and Scarlett E. Snethlage
EY Law
+31655442191
Susan.ten.haaf@hvglaw.nl