Isha Marathe Marthe recently wrote an insightful article on Enterprise Legal Management (“ELM”) in Legaltech News (https://bit.ly/3Xq9nLD), examining how likely legal departments are to shift to comprehensive technology solutions providers to support all their legal-specific information needs. That article was timely because several solutions providers are trying to offer their clients a suite of legal department information services. Some providers acquired adjacent legal technology solutions, some developed new solutions as an extension of their current business, and some have taken a hybrid approach.
Legal departments must have certain types of information and data to deliver services efficiently, manage risk, and ensure they are in sync with the rest of the business. The solutions legal departments need include systems for tracking legal spending, paying outside counsel and vendor bills, tracking pending matters, managing their contracts, managing eDiscovery obligations, and tracking compliance requirements. While not exhaustive, this list captures much of the information that legal departments must have command of. No legal technology provider has the scale to cover all those needs adequately. Simply put, there are no legal technology solutions equivalent to large ERP systems like SAP or Net Suite.
However, the immaturity of the ELM market does not mean that a legal department cannot or should not take an enterprise approach to selecting legal technologies to power the delivery of services and financial management of the department. Taking an enterprise approach means applying a disciplined framework for selecting and implementing the systems and processes that will meet the information needs of the legal department and the business it integrates with. Below is some guidance on how to think about the acquisition, implementation, and integration of legal technology.
Perform an Organizational Design Analysis
Too often, legal departments get the budget to invest in technology, and they move forward without assessing the order in which they buy and implement solutions. An outcome that results, more often than it should, is that the technology purchased does not address the legal department’s most compelling business needs and does not align with the broader company’s technology and business strategy. Before starting the process of looking at solutions of any type, we encourage clients to undertake a holistic evaluation of the legal function. That includes:
A holistic assessment can help ensure that when a legal department invests in technology, it selects solutions that meet the company’s most pressing needs and that the department is able to embrace the technology it implements. That will not happen, however, unless the legal department is properly staffed, has the right mix of internal and external resources, and has determined how well-planned technology investments can address the legal department and the larger company’s pain points.
Engage IT, Business and Procurement Stakeholders to Understand the Entire IT Ecosystem
A legal department is an integral part of the larger business, and the legal technology it uses should be part of the larger company’s technology ecosystem. Neither the department nor its technology solutions should exist in a vacuum. When possible and assuming no regulatory barriers, the legal department should choose technology that can connect with the company’s other technology. Those technologies include:
Understanding the big systems will help guide the legal technology selection process because the diligence team will be able to focus on how well the technology being vetted will integrate with the company’s existing systems. The goal of connectivity is to be able to leverage information in as many ways as possible.
Prioritize and Organize the Company’s Legal Technology Needs
Understanding the legal department’s pain points and the company’s information technology and management backbone provides the perspective necessary to decide how and where to focus. For example, if the company has undergone or is going into a series of acquisitions, contract management might be a high priority because of the need to assess and integrate the acquired companies’ contracts. For a company with a large litigation docket and many outside law firms, an eBilling and matter management system might be the priority. The value of a holistic assessment is that it provides the factual context to make good decisions for the enterprise. The order in which you make technology investment decisions matters.
Prioritization enables legal departments to address purchasing decisions holistically. For example, if litigation is a major issue for the company, it may want to pick a cluster of tools and systems that address billing, matter management, litigation hold, and ESI collection. If keeping up with the volume of contracts is an issue from both an integration and day-to-day perspective, a legal department may want to look at building a cluster of solutions that cover contract management, workflow management, and data analytics. A similar analysis might occur as a legal department settles on handling IP portfolios or entity management.
While there is no true single-point solution to handle all a legal department’s technology and information needs, you can build a virtual ELM solution by taking an enterprise approach to the technology and solutions selected. Picking best-fit tools or clusters of tools that enable legal departments to have good data, drive efficiency and effectively manage risk will yield dramatic improvement in the ability of the department to optimize its performance. It all starts with performing a holistic assessment to ensure that the legal department has the right staff, the right mix of internal and external resources, and the right priorities to drive investments in technology.