C-suite executives and boards have already centred entire corporate strategies around digital transformation. With one of the most advanced legal environments in the world in terms of the relationship between law and business, digital has naturally remained a top priority for UK businesses. Given the economic value these initiatives can bring to a company, it often falls to the CFO to lead the conversation internally.
Legal departments have typically not received the process and technological resource investments that other shared services functions such as finance, HR, and IT have leveraged through their respective transformation efforts to reduce costs. In the meantime, legal spend has risen dramatically. The proven associated economic and performance benefits demonstrated in other departments can be realised in the legal department as well.
As we charge into a new decade amid an uncertain economic outlook, forward-thinking CFOs have the opportunity to partner with legal to embrace and leverage digital transformation—ensuring the legal department closely aligns with the company’s digital strategy to become even more of a business partner and trusted adviser to senior management.
The pathway to become digital involves a commitment to fundamentally evolve the company’s legal operating model. It entails a transition from manual to digitised processes to harness the power of data and fully embrace artificial intelligence (AI). In the context of the law department, many c-suite executives recognise this as digital legal transformation (DLX).
DLX enables law departments to change their operating models, transitioning certain costs from fixed to variable, with immediate up-front and ongoing cost savings. In leveraging digital, Legal gains insight across the spectrum of legal work to enable faster, better-informed business decisions, improved legal risk management capabilities, and enriched business processes that create expansive value across the enterprise.
Most law departments, and indeed law firms, have focused on point solutions that provide incremental benefits, but have not yet fundamentally changed the delivery model nor the cost structure of the organisation as a whole. This approach has precluded the benefits of full-scale digital legal transformation.
The CFO’s perspective and experience can help the general counsel to uncover new value capture that benefits the business in areas such as increasing speed-to-contract and legal team productivity gains. Process-driven data capture provides management information that informs day-to-day legal operations and improvement opportunities throughout the business.
Using a case study to illustrate potential benefits: Three years after transforming, a Fortune 150 law department realised a 35 percent speed-to-contract improvement while also reducing spend by over 30 percent and ensuring conformity with the company’s compliance standards. These gains are available to those who embrace Digital Legal Transformation with a progressive mindset as well as with the right business-grade technology.
As finance was among the first shared services to fundamentally change and digitally transform, CFOs can advise GC of the way forward. The CFO’s responsibility for profitability and the bottom line sets the stage for an elevated conversation beyond budget allocation and reduction of spend.
CFOs can influence using their own experience as an example by:
- Evangelising the adoption of digital transformation across the wider enterprise, including Legal
- Actively supporting evaluation and adoption of new options for sourcing the spectrum of legal service
- Supporting deployment of technology to support agile delivery models
- Quantifying the new value contribution that will be created as a result of a digital legal transformation:
- Reduction of overall legal budget and spend
- Acceleration of business decisions with data-driven insights via proven analytics and AI
- Simplification of legal processes enabled by digital workflows
- Improvement of business agility, speed-to-market, and ease of transactions
- Proactive enterprise-wide risk identification, mitigation, and dispute resolution
- Clear articulation of potential commercial and regulatory risks
- Asset monetisation
- Acceleration of product development and business growth
- Faster detection of, and counter strategy to, competitor moves
Digital transformation will remain a top priority on board agendas for years to come, and CFOs will undoubtedly be at the centre of strategic direction. Digital legal transformation is complementary to, and ultimately provides assurance for, the success of your company’s existing digital initiatives. Today’s CFO is indeed uniquely position to drive a stronger market position and sustained performance benefits for the enterprise.
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Nicholas Hinton is executive vice president and CFO, UnitedLex