From cost centers to cost savers: the big shift for corporate lawyers

There are ever-increasing ways that corporate legal teams can be of value to their wider organizations, beyond just cost-cutting or efficiency. The best practices legal teams adopt can support new ways of business transformation and provide quality data insights to the rest of the organization. 

Adding value 

The legal department of any major organization is integral to operations, but there’s no getting away from the fact that its activities come at a cost. Whether it’s reviewing existing contracts and documents to mitigate risks and maintain compliance or referring to external council to get guidance and advice, everything adds up. As such, legal departments are often seen as necessary cost centers.  

In many larger organizations, these costs are often further exacerbated by knowledge silos, outdated processes and technologies, and legacy document management systems that make efficiency and collaboration difficult. But that doesn’t have to be the case. 

In recent years, a breadth of new technologies designed to help legal departments become more efficient, proactive, and cost-effective has seen the tide change, and perceptions are shifting as a result. Increasingly, we’re seeing corporate lawyers, rather than just incurring costs, implement significant cost saving measures – and even add extra value to their organizations.  

So how are they doing this? 

A new dawn of legal tech  

One of the activities that inevitably takes up legal department resources is contract assurance, often conducted for the purposes of risk mitigation, renegotiation, or repapering. 

In large organizations, going through thousands of contracts that contain details people have long since forgotten can be a Sisyphean task, but one that’s vital to the company’s success. Understanding the data and waterfall clauses these documents contain, and the daisy chain of effects they could have on operations, is integral in maintaining compliance and protecting company reputations. But the resources required to do this manually can be enormous – especially in organizations where new partnerships and acquisitions are par for the course.  

This is one area where technology can really shine, and AI in particular can play a starring role, allowing users to automate the search for data, easily understand what’s important, and ask questions of that data in an intuitive and conversational way. 

The implementation of AI in this context can be a huge time- and money-saver, and when your legal department's resources are always stretched, finding a way to execute contract assurance without needing to hire more people or outsource work can lead to significant savings. In fact, one of our large Telecoms clients recently invested in software for this very purpose and has seen an ROI of roughly $35+ million every year since.   

Knowing what lives where – and how to find it 

AI can also be combined with document management tools and knowledge management solutions to uncover a wealth of cost-saving benefits. 

Document management can help to bring scattered agreements under one governance banner, making sure ownership is clear and everyone is working from the same version of contracts. This saves the time that departments spend requesting access to the right documents and eliminates any possible errors introduced by poor version control, which could have both financial and reputational implications. 

But it’s knowledge management solutions that perhaps provide the most significant benefits in this area. We often hear that one of the biggest costs for legal teams is referring to external council to get advice that isn’t available in-house. In fact, one of our large banking clients estimates it spends $400 million+ a year on external billing. Amazingly, a third of that is down to different people asking the same questions.  

By investing in a collective knowledge solution, you can make sure the answers to these questions are easily accessible to everyone in the organization. Organizations that take the time to collect and curate their institutional knowledge in the form of their best work product can see immediate time and money value by eliminating duplicative efforts.  

To outsource or not to outsource? 

That’s not to say that you can eliminate the use of external counsel entirely. With legal departments often stretched to their limits, outsourcing work is common – especially when additional expertise is required to understand regulatory needs, geographical nuances, or to oversee huge jobs like acquisitions.  

With these jobs adding up to significant expenditure, the key to saving money is having the ability to properly assess what work should stay in-house and what needs to be done externally.  

To this end, matter management systems are often implemented to track all ongoing projects, and assess whether they’re linked to things like HR concerns, environmental matters, and mergers and acquisitions – anything which may need specialist, external guidance. 

With intuitive monitoring dashboards, these solutions can help make sure only the right projects are outsourced. And they provide a bird’s-eye view of external spend, which can help legal departments make broader and more strategic cost-saving decisions.    

It’s time to bring everyone together on the same page 

For legal teams, there’s never been a better time to explore the technological landscape. There’s a very real opportunity to streamline project management, mitigate risk, improve efficiency, and uncover better legal processes. All of which can play a huge role in reducing costs and adding value.   

Enabling the seamless sharing of information between legal and different departments within the organization is central to this. When so much time is spent asking questions of legal departments, and on the resulting search for answers, having a knowledge management solution that can provide pre-set answers to those questions – in a safe and compliant way – can often be the best investment you can make. 

By allowing users self-service access to answers and all relevant documents, you not only make companywide processes more efficient, but also free up time for those within the legal department to focus on more pressing matters. Which in turn means you can outsource less and further reduce costs. In fact, it’s a great way to help legal play a more strategic role in the organization as a whole.  

If you’d like to learn more about how technology can support your journey toward being a cost-saver instead of a cost center, and how iManage delivered a 370% ROI for our clients, read the Total Economic Impact™ report from Forrester.