Rethinking the legal function is no longer optional for corporate legal departments. It has become essential to ensuring that companies continue to operate effectively during times of business uncertainty.
For financial services and insurance companies to thrive, rethinking how Legal operates is a must. Legal workflows have always been labor intensive and costly. With limited automation, it’s clear that Legal is ready for a technology upgrade.
The good news is that advances in machine learning are empowering Legal in new and exciting ways. Breakthrough innovations in artificial intelligence (AI) are speeding legal workflows and slashing contact review time and effort, freeing legal teams to focus on more strategic work.
For financial services and insurance companies to thrive, rethinking how Legal operates is a must
AI, machine learning and legal processes are a natural fit. Both machine learning and the law use historical examples to infer rules that can be applied to new situations. Legal now has the unique opportunity to leverage AI to impact the bottom line by slashing costs and improving accuracy.
So, why aren’t legal teams jumping onboard for this obvious opportunity?
The likely answer is that, while legal teams have an appreciation for what “transformation” means for business at a high level, they haven’t grasped what it means for their own discipline. This should come as no surprise, given that over the past decade, companies have focused on transformation in terms of streamlining business processes and/or consolidating applications.
Before now, however, no one saw transformation as something that applies to even the most basic legal work. Many organizations have retained consulting firms as part of their corporate transformation initiatives, and yet implementing more efficient legal processes has not been part of their strategic plans, nor were LegalTech plans aligned with corporate governance initiatives.
Fast Forward to 2020
Many legal teams are now realizing the value of transformation with the advent of AI-powered contract automation, a digital fast-track to increased efficiencies and higher quality services.
Legal teams across the financial services industry have recognized the importance of taking a more active role in managing risk.
As Forbes succinctly puts it , “For better or worse, the field of law is tradition-bound and notoriously slow to adopt new technologies and tools.”
But the question remains: How can legal teams that are increasingly responsible for protecting their organizations from risk and wrongdoing leverage new technologies?
The answer: By leveraging automation, AI, and new delivery channels, lawyers will be able to offload and automate routine work and refocus their time and effort on more strategic matters.
It has become increasingly evident during the COVID-19 pandemic that, more than any technology before, AI stands to transform the practice of law and influence the LegalTech landscape in dramatic ways. What I find most exciting is the promise of innovation to amplify the practice of law.
AI is ideally suited to pre-signature contract review, and with advances in machine learning is now also being used for post signature extraction, analytics and reporting. These processes can be extremely time-consuming and error-prone, thereby delaying deals and impeding companies’ business objectives.
Legal teams across financial services have recognized the importance of taking a more active role in managing risk
AI is critical right now due to impending upheaval related to the economic downturn. Two recent surveys of legal professionals reveal tension between a likely uptick in litigation and budget pressures.
In-house counsels need to plan for COVID-related litigation hitting just when they will likely be tightening their belts.
AI can help reduce risk by future-proofing contracts for recession-related legal concepts, ensuring consistency and governance for clauses such as force majeure, renegotiation, hardship, and material adverse conditions.
What the Future Holds For Financial Services
Private Equity (PE) is ripe for process enhancement as a means of cost control, for both the firm internally and their portfolio companies. PE firms whose legal teams take a labor-intensive approach to their portfolio companies’ legal service operations increase costs, depressing revenue.
Using AI tools to automate standardized tasks such as contract negotiation can slash the labor costs associated with reviewing and managing contracts.
PE firm InvestIndustrial reduced risk with LawGeex, allowed its legal team to focus on the less routine parts of the firm’s complex agreements, thereby maximizing the team’s time and resources.
AI can help reduce risk by future-proofing contracts for recession-related legal concepts
In addition, a global Swiss Bank was struggling to streamline its work processes and reduce the time needed for routine contract review. Improvements to the bank’s costs and productivity with LawGeex were notable.
With 90% cost savings and 50% time savings, there’s no question the impact AI has on Legal’s ability to execute, providing a virtual safety net that is critical to risk cap the business.
Unleashing the Value For Insurance
MetLife’s legal team faced complex challenges in servicing the business efficiently. They understood leveraging AI could have a massive impact on their ability to provide the business with vital information required to make decisions.
Senior Legal Counsel Robin French recognized AI as crucial to help free the legal team to function more as advisors to the business.
A Final Thought On Rightsourcing
Rightsourcing (ensuring you apply the right resource to each type of legal work, to reduce legal expenses while maintaining workload capacity and responsiveness), will be essential to expanding innovation across the legal landscape.
It’s not a matter of applying innovation to legal, but rather ensuring that the right resource is applied to each type of legal work.
With 90% cost savings and 50% time savings, there’s no question the impact AI has on Legal’s ability to execute
Legal teams want the benefits of offloading routine work to the right resources, but not at the cost of compromising quality and increasing risk, and companies can be certain that risks will be examined more closely now than ever before.
Historically, for most legal teams, the typical response to increased legal and compliance needs is to add headcount. This is still the most expensive option, but fortunately, it’s no longer the only one.
Given the availability and convenience of AI tools, the choice is easy. And that’s good news for the financial services and insurance industries.