The world we live in is continuously shaped by waves of colossal transformation. The discovery of fire. The introduction of language. The systematic application of law and order, the development of jurisprudence and establishment of trial by jury. Johannes Gutenberg’s invention of the printing press. The Age of Enlightenment, the Scientific Revolution, and the ever-evolving communications and technology zeitgeist of today.
Such modern metamorphoses encompass the manners in which businesses manage everything from financial information to cybersecurity, including enterprise resource planning (ERP), sales and marketing customer relationship management (CRM) tools, and the 21st-century revolutionization of supply chain management (SCM) and human resource information systems (HRIS). When it comes to change, though, one might argue that legal operations, a relatively young function in the enterprise, has not always made the boldest of leaps towards digital modernization.
However, the 2022 Enterprise Legal Reputation (ELR) report — a multinational study commissioned by BusyLamp’s parent company Onit, that spotlights the perceptions enterprise employees have of their legal departments and the way legal professionals view their interaction with internal clients — uncovered some striking insights. First, the ELR found that the legal department is perceived by nearly four out of five respondents worldwide (78%) as a protector of the company, their employees and their assets, providing excellent advice.
And perhaps most urgently, the ELR report also revealed that legal teams have the power to influence materiality in every corner of the enterprise, from revenue generation and operational efficiency to overall corporate culture.
In short, Legal has the potential to be a powerful agent of change for the future of a business.
Legal as a driver of transformation
In a profession driven by policies, precedents, and statutes, “change” hasn’t necessarily scaled the mountainous list of asks and tasks for legal departments. But it is far from absurd to expect Legal to become a driver of change. As a business authority, the legal department exists to mitigate risk and maintain corporate stability. This points to Legal as not only part of the process, but integral to the creation of new policy.
Almost two-thirds of German enterprise employees interviewed (64%) report a positive relationship with their legal department, and, when compared to other legal departments globally, German teams are worldwide leaders in responsiveness (91% acknowledge a “moderately” or “very” responsive nature). By banking on these collaborative partnerships and insights to manage topline revenue and procuring service providers and vendors to become more operationally efficient, Legal can also exercise a distinct impact on materiality, stand out by competitive differentiation, and further protect and promote their brand. Through these measures, Legal will show it is not just a back-office function, as it is often historically viewed, but an emboldened and forward-thinking leader.
Here are three key ways in which Legal can enable change and spark material growth:
Accelerating revenue generation
While most enterprise employees are confident in Legal’s ability to negotiate and German respondents are the least likely to believe that annual revenue is lost by poor negotiation, the ELR report also shows that half of the respondents still express concern that overly laden processes, an overabundance of caution, and that the lack of resources adversely affects deal cycles. Nearly half of German employees (48%) also consider Legal “bureaucratic,” leading to more than two-thirds (68%) occasionally bypassing the legal department, even if it is against company policy to do so. Additionally, one in 10 respondents globally is concerned that the legal department perilously lengthens the time to close and win deals.
10% may not seem overly significant, but when one applies those figures to that of a corporation with 500 salespeople, 10% equates to 50 salespeople experiencing delayed deal cycles. If 50 salespeople are stuck on deals and miss their numbers, for most enterprises—many of whom are public—this can be materially deleterious to earnings calls, forecasts, stock prices and ratings, and company valuation.
The silver lining: Cutting the time to seal deal agreements by weeks or months can truly alter the financial outlook and earnings. Germans are the most likely globally to believe the legal department’s main goal is to provide good service to its clients; respondents also feel Legal has a positive impact on sales and revenue (58%). More than half (51%) also believe that the department actively accelerates deal cycles. By initiating a conscious effort to cultivate flexibility and challenging and replacing legacy paradigms with optimized processes, deals can be won faster and then more deals can be made (and won), advancing business growth rates and effectively maximizing revenue generation.
Harnessing AI for operational efficiency
But is effective the same as efficient? And just how much faster can faster be?
One element is clear: Legal no longer has the option of saying “no” to cutting-edge technology like artificial intelligence (AI), especially in a macro market featuring inflationary risk, rising interest rates, and geopolitical conflict. Though tech adoption can feel daunting, contract lifecycle management (CLM) powered by AI provides a major opportunity for legal operations teams to materially transform the business.
Only 54% of legal professionals say their CLM is currently automated, however. But every functional group of an enterprise creates and manages contracts. According to the ELR report, two in five legal respondents (40%) spend four to five hours each day with reviewing contracts. In Germany, that number skyrockets to one in five spending up to eight hours daily—almost the entire business day, work week, quarter, and fiscal year! Is this how high-powered legal professionals should spend the bulk of their time? And does spending at least half of every legal professional’s salary on contracts seem operationally or cost-efficient?
There can be no revenue recognition until contracts are signed. CLM, artificial intelligence (AI), and machine learning (ML) tools have the capability to expedite the entire contract process, from document generation and redlining to e-signature and finalization. This acceleration can pilot faster decision-making on how to push contracts through review cycles, renewals, and negotiation.
Additionally, studies have shown that automation can boost both operational and cost efficiency by more than 50%. In the context of a company with 20 lawyers that reviews, on average, more than 9,000 contracts annually, this corresponds to the same team processing nearly 5,000 additional contracts each year. If legal operations take control and integrate these tech tools into their processes, legal teams can focus on business-critical tasks of higher value and complexity, more important matters of materiality, and overall operational excellence—saving legal teams time and money (and time, as it has been said, is money).
Elevating innovation and inclusivity
Innovation is the antithesis of stagnant thought. Inclusivity encourages new voices to contribute to a company’s innovation. Legal, then, is an essential component in the success of both.
There can be no material growth without a valuable product or service, and the ELR report shows that more than three in five (61%) legal professionals believe they play a prime role in positively impacting their businesses’ abilities to innovate and differentiate competitively by protecting company patents and intellectual property (IP).
Beyond the realm of ideas, it is people who are the atomic units of a business. As a protector of the business, there is a rising urgency for Legal to influence corporate culture and values and become an advocate for diversity, equity, and inclusivity (DEI), which are fundamental to bottom-line operational efficiency and materiality. Fortunately, four in five (80%) enterprise employees view Legal as a great partner for procuring vendors and services, and more than half of the respondents (52%) worldwide—and nearly two out of three (64%) in Germany— say their department and companies are now prioritizing vendor diversification.
Being the protector of the business means protecting not only how but also the “by whom” such business is accomplished. By taking a bold approach to introducing new initiatives that laud respect, communication, and collaboration, and becoming more contributory to the growing culture of the business, Legal will embrace true protection for its constituents.
The path ahead: Legal as business influencer
“In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks,” said Meta’s CEO Mark Zuckerberg.
Change and comfort rarely go hand-in-hand. But Legal can—and should—act as a catalyst in changing the game moving forward. By leveraging a metamorphosis of technology adoption and delivering on the promise of an equitable culture, Legal will transform its businesses efficiently and materially, redefine itself as a true protector, and establish its evolution for the next generation of lawyers.
Editor’s note: BusyLamp, an Onit company, is a long-standing cooperation partner of Deutscher AnwaltSpiegel, a sister magazine of BusinessLawMagazine. With offices in Frankfurt, London, and New York City, BusyLamp is a partner committed to optimizing legal operations innovation and improving the efficiency of in-house legal teams with legal spend and matter management solutions around the globe. (tw)
