Photo by Boegh (Flickr/Creative Commons)

Perspective: GCs Hold the Keys to Innovation

Editor’s Note: The authors of this post are consultants to corporate law departments.

By Jaron Luttich, Director of Practice Development at H5, and Vivek Hatti, Senior Principal, Infosys LPO

General counsel are now firmly in control of change in the legal profession. Although they began driving change in the late 1990’s by incorporating technology, data, and metrics into their workflow, the “Great Recession” planted them ever more firmly into the driver’s seat as the demand to cut costs intensified.

“Do more with less!” was the mantra, and corporate counsel reacted by adding more modern tools to their traditional arsenal. As companies decided to implement what were, at the time, groundbreaking ideas using technology and outsourcing, GC’s began routing high volume legal tasks to outsourcing companies, often over the objections of law firms. Some went even further, creating dedicated, outsourced legal centers to support their outside counsel. The Great Recession turned out to be a great motivator.

These advances in the corporate legal department were made in a time of intense financial pressure, and for many it was a desperate attempt to stave off disaster. But the measures, tools, and practices put in place as the economy languished have now become the new normal. The practice of law has forever changed, with legal technology and outsourcing companies emerging from the shadows to become a mainstay of the legal industry.

Before the Recession, law firms were not known for embracing innovation or cost containment strategies, deferring instead to the corporate legal domain to lead the way. This is still true, if you believe the multiple articles and surveys that continue to proclaim it’s the GC’s rather than firms who are examining and implementing cost-effective alternatives.

But here lies the danger. As the economy gets healthier and outside pressures wane, corporate legal departments may lack the motivation to innovate further. This is perilous, because change in technology and business is more rapid than ever; there’s no time to slow down. There are corporate legal departments today, finally winding down lengthy matters from the financial crisis, that recognize they’re way behind the state of the art legal practice — stuck in 2009, they’re trying to catch up to 2016. But in fact they need to be thinking ahead to 2021, or they’ll find themselves stuck again, forever doomed in a never ending cycle of playing catch-up until another painful event spurs much-needed innovation.

The point is that GC’s needn’t wait until it’s “necessary,” nor rely on bureaucratic procurement processes to determine what may or may not be the right solutions going forward. In fact, they are in a unique position now to innovate, perfectly aligned to drive incremental improvements. As they increasingly play a multi-faceted role at their companies as strategists and business leaders, they should consider the latest legal technologies, innovations and processes that can drive such incremental change. The array of innovative possibilities is broad, from contract management tools, platforms, and processes, to actively using technology-assisted review in e-Discovery, to centralized dashboards and databases that will help them monitor their matters, gain insight into legal spend, provide outside counsel oversight, and house legal research.

Absent external pressures, legal wheels tend to turn when the subpoena comes in the door and there’s an urgency to act — not the perfect time to consider new options. The GC, however, faced with a blizzard of legal matters on similar issues, can take a more purposeful approach to evaluating solutions.

Believe it or not, the practice of law actually lends itself well to evaluating and testing new approaches, if those with the reins take hold of them in a timely way. There are new matters all the time with varied financial stakes. Using individual matters with less financial exposure to test innovative legal solutions allows for continual discovery of better methodologies, enabling the development of a framework for comparisons between processes, and subsequent promotion of successful solutions to more important matters.

Only through regular, systematic experimentation can legal departments develop improved processes with better results. The cost of such experimentation might result in a marginally more or less desirable outcome in a single matter, but the benefit of identifying the process that led to the better result and applying it to the more significant or riskier matter validates the overall exercise. It also removes the panic from time-pressured decision making and smooths out the bumpy ride of adopting innovative solutions only when the whistle is blowing.

General counsel can, with measured steps, pave the way to innovation, best accomplished in partnership with the firms they partner with. If they seize the opportunity to foster proactive and deliberate changes through a thoughtful process — now, while the going is easier — they can avoid the pain and pressure they may face when it’s not.