Today’s legal functions are having to do more with less. As digital transformation hits the legal department, it’s tempting to reach straight for tech tools – and their promise of cost-cutting potential. EY believes that a holistic understanding of tasks and value must come first. A detailed analysis is key to improving quality, accelerating delivery and spending less. By embracing innovative tools and approaches such as EY Legal Managed Services at the same time, in-house lawyers can position themselves at the heart of a legal ecosystem where work is redistributed at right value. With this in mind, the transformation of the legal department can be seen as a continuous improvement experience along five work streams:
1. In-house lawyers
Many efficiency gains are to be made from standardizing legal work. Setting up efficient processes and templates, and then re-leveraging those over time is key to developing a structure that supports the right effort-for-value ratio in the legal function. The transformation journey is a project to manage, with phases, milestones and desired outcomes like any other. Putting the in-house legal team, with its wealth of knowledge and understanding, in the driving seat is helpful in right-sizing solutions to the specific needs of the company and the legal team. It also encourages effective change management as tasks are allocated to make the best use of internal know-how and resources, facilitate flexibility and enable new ways of collaborating in an ecosystem with internal and external stakeholders. In-house lawyers decide which tasks to cover internally, when to engage an external law firm and what can be outsourced, e.g., to EY Legal Managed Services. The aim is to redistribute the workload for an optimum balance of value and costs.
2. Internal customers
As an internal service provider, the legal function should strive to deliver an excellent customer experience. Depending on the size and nature of the company, internal lawyers will serve a range of different internal functions. At a bank, for example, they support client advisors, back-office staff and procurement teams, and will also have dedicated compliance expertise. With resources already stretched, self-service portals and automated processes – where relevant – can provide welcome relief by cutting admin for lawyers. When designed well, self-service solutions enhance customer experience by empowering the non-legal user to access legal documents or request additional support. Only issues requiring the expertise of a qualified legal professional will end up on the legal team’s desk. Self-service solutions can also be complemented by Legal Managed Services. This is specifically adapted to legal tasks supporting the contract lifecycle management, again with various possibilities to outsource to a provider like EY, reducing the need for time-consuming coordination between procurement and legal, for example.
3. External customers
Not all legal functions address external customers. For those that do, touchpoints will be determined by the nature of the business and can vary greatly. This may go some way toward explaining why the external customer work stream is often neglected in legal optimization projects. Innovative approaches are well suited to the external customer area, though, and businesses could even secure a competitive edge by offering novel ways of accessing information. An example could be a legal hub that visualizes terms and conditions in a user-friendly way. Smooth provision of legal information boosts the user experience and adds value for the business overall. Another innovation could be to offer customers direct access to claim processing, making it easier for both the consumer and the business. And for organizations with complex cross-border structures, EY Legal Managed Services could provide a cost-effective alternative to local law firms in handling claims, or selected aspects at least, in the jurisdictions of relevance. As a single global provider of local corporate law expertise, EY has access to know-how and technology that enables, for example, terms and conditions to be managed without the need for constant briefing or coordination, mapping out the regulatory and legal changes in any country. The result is superior quality at lower cost.
4. External counsel
As companies seek to contain legal costs, external counsel may seem an obvious target. Obviously, it is not possible to eliminate external legal costs entirely, but companies should seek to get the best value possible from their external providers. In some cases, the decision to outsource (or insource) a matter is not financially driven, but an obligation (e.g., in litigation). It may also be a strategic or tactical choice (e.g., an environment hazard at a foreign manufacturing site), or simply situational (e.g., long sick leave of the tax lawyer for Spain). Notwithstanding, legal technology can help get the balance of value and cost right. Appropriate data-driven technology can save an in-house procurement team significant effort in managing work in progress, invoices and services. Issues and questions are flagged automatically, and early. With a better decision-making basis, smarter choices can also be made about which firms to work with when external counsel is needed and what can be shifted, for example, to EY Legal Managed Services. This translates into an efficient use of budget and resources as well as higher quality.
5. Tech vendors
Scan social media, and you’re likely to read glowing reports of how tech has transformed various corporate functions. In truth, tech only serves as an enabler if the product – and project – are right for an organization. In the legal function, success depends on strong alignment between the tech vendor’s roadmap and the in-house counsel’s own IT roadmap and infrastructure. If the company as a whole has just switched to a modern new ERP system, then legal tools and technology should be compatible. Adoption will also depend on effective user support, including adequate training. This work stream is about making intelligent choices for the future and asking: where are we now, and where are we heading? The latest trend is also about “doing more with what we have”, e.g., leveraging enterprise access to various technologies already compatible with the security framework of the company. Finally, of all the work streams, tech is the one that must be integrated in all of the other legal transformation work streams.