In most industries, the pace of change has increased more and more over the last 20 years. Everything needs to go faster and at lower cost while improving the quality standards of the goods or services delivered. As a result, organizations and companies – especially those who operate in a competitive environment – are forced to adapt to the fast-changing world in which they live. The key success factor to survive in this transforming world is the ability to adapt to the changing standards and requirements. In many cases, this will involve drastic changes on how you do your work and the use of new technologies. Further, you have to be aware that this is not a project with a project-ready date; it’s a continuous program of adapting to a world that is changing faster than ever.
As a conservative and protected industry with working processes that are two centuries old, the legal industry was able to escape the Third Industrial Revolution up to the recent recession in 2008. While the Third Industrial Revolution used electronics and information technology to automate operations, the Fourth Industrial Revolution is characterized by a fusion of technologies that brings together physical, digital and biological systems. The speed of current breakthroughs has no historical precedent and is disrupting almost every industry in every country, including – perhaps especially – the legal industry. The economic recession and globalization forced companies to cut costs and become more efficient by transforming their business processes and ways of working. Companies also demanded better cost control of their general counsel and forced the GC to significantly reduce the cost of his/her in-house legal department; this could only be achieved by a change in their working processes and a cost-conscious mind-set within these departments. Among other factors, this ”in-house corporate cost control” now forces the legal service market to change and bridge the huge gap between law and the other industries that are already entering the Fourth Industrial Revolution. The legal industry has no other choice, so it needs to change and get connected to the real world!
Rethinking legal delivery operations
Many GCs now spend an inordinate amount of time thinking about their legal delivery operations. More legal work moved in-house, and many GCs saw the need to unbundle the workload: breaking it up in pieces and doing more of the work in-house. The GC started using different types of in-house lawyers and professionals with (nonlegal) operational, business and tech-savvy skills. The aim of this approach is to achieve lower costs, better working processes and happier employees while keeping more knowledge in-house. In fact, a large part of this “rethinking” process revolves around relationships the GC fosters both inside and outside his or her company. For example, the pressure on GCs to reduce legal costs also opened the doors for the rise of alternative legal service providers (ALSPs), including those legal tech, operations, process outsourcing and most recently, the Big 4 accounting and consulting firms in some regions. After having worked with these “new kids on the block” and building trust, GCs gradually allowed these new players to take over some of the legal workload. While these outside partnerships are important, within the company GCs should be reaching out to other business units, collaborating with them around areas like process and operations management, IT and corporate governance. Amid all the focus on these relationships, it’s vital for GCs to remember that they are leading this charge to change. It’s the pressure they exert on their outside counsel – inside their department and company, and with third-party vendors of legal services – that is their ultimate cudgel – along with the buying power that underscores it. While that may sound like a lonely and challenging job, it doesn’t have to be.
Networking to learn from others
The rise of peer network communities, including those for general counsel, is striking. These networks create a platform to meet peers and share knowledge and best practices. Networking creates better alignment of legal departments and enhances collaborating with the outside world. Indeed, the slogan of the General Counsel Netherlands is: “Why re-invent the wheel when you can learn how to do it from others?” GC networks also collaborate with legal and nonlegal service providers with the common goal being to achieve a more competitive legal market with lower cost and more alternatives than before. These new ways of networking have therefore become very valuable and worthwhile, both for the in-house community and legal and nonlegal service providers. Since the GC is ultimately responsible for the legal budget, there is a great need to be better informed about the outside world than before. Since there is not a one-size-fits-all model for the purchase of legal services, GCs need to take time to explore and make strategic decisions for their legal operations. A lot of legal tech products are brought to market – almost all are heralded as the newest, shiniest thing – but often it can be difficult to assess what they ultimately will bring to your operation or how they will benefit your team. While it’s true that legal tech companies need to develop a better understanding of what the average GC wants and what their specific operational needs are, it’s also true that GCs need a more refined, proactive approach to assessing which technologies and tools are pertinent to their law departments’ needs. At a minimum, the GC should be able to ask the right questions.
Conclusion
Law needs to close a huge gap in “how things are done” – aligning the legal service industry with other industries. GCs should operate at the intersection of law and business, utilizing technology, a diversified and truly global team, and a differentiated panel of legal service providers to create new opportunities for all players in the legal ecosystem. Differentiation and professionalization of legal services, and the entrance of new players will benefit all players in the legal market. GCs are positioned as one of the primary gatekeepers of making that happen. Networking and collaboration can bridge the current gap in moving toward the Fourth Industrial Revolution. It will make our legal industry one that can operate on the same level of efficiency, quality and transparency that is standard in most other industries. The current task is far too big and too complex to realize within your own company. Participating in peer networks will help all legal ecosystem players to get answers on the numerous questions that will arise during the closing of this gap and enable all players within the legal market to enter the Fourth Industrial Revolution.
This article was originally published by Thomson Reuters Forum in May 2018 – the article can be found here.
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