Andrew Mellett, CEO @ Plexus outlines the top 4 contributing factors for Legal Transformation failure.
Why Legal Transformation Fails
The top 4 contributing factors for Legal Transformation failure.
Transcript: Why Legal Transformation Fails
When benchmarked against their friends in other strategic functions, legal is late to the party when it comes to implementing technology.
The good news is that they’re keen to catch up. In fact, our research suggests that, on average, general counsel has increased their investment in technology by 252% across the next two years. They’ll spend majority of that, around about 75%, on automated self-service solutions for the business and the remainder on productivity tools to help their lawyers get the job done.
Now, the good news is that those functions who’ve successfully introduced this report seven times higher client satisfaction than their peers and, indeed, are more likely to be first quartile in terms of productivity.
The bad news is that, as a result of most general counsels not having much experience in vendor selection, solution design, change management, etc., a lot of them are setting themselves up for failure.
So, what we’ve found is we could share some of the key insights we’ve learned in helping hundreds of legal functions around the world lead a transformation through adopting automation and technology.
Trying to DIY
One of the most extraordinary things we see when we speak to general counsels around the world about their technology strategy is the amount of them that have either attempted, or about to attempt, to build something themselves.
Now, what drives them to do this is pretty simple, is when they go to the IT function, there’s two biases the IT function have. One is they want to drive everyone to the enterprise tool, enterprise-wide solutions, whether that be an ERP system or platforms like Microsoft provide.
Secondly, members of the IT team naturally want to try, and build something. They’ve got friends in technology startups who are building cool things, and they want to add something to their CV.
Unfortunately, we have yet to see anyone succeed. In fact, many of our clients lament that they spend hundreds, if not millions, of dollars to try, and build a DIY solution for their function.
The reason behind these failures are multiple, one of which that the legal function doesn’t have a huge amount of competency in building or managing the development of the software. The second is that even if you could build a CRM system yourself now, for example, in a sales function, why would you when Salesforce not only has a thousand times the budget to spend on R&D that you have now, in the future, they will continue to spend that? So, while your system remains the same and, in fact, decays over time while the support costs grow, their solution grows and improves every day.
Our advice is to find the vendor who knows your function well and has a fit-for-purpose solution to support you.
Adopting Isolated Solutions
The second biggest issue we find legal function stumble upon is that they start off by adopting isolated solutions. So, they may say, “Look, we need e-signatures, they’re good by DocuSign. We need a contract management system, so we buy a contract management system. We need to automate some agreements, so we’ll buy an automation solution off the shelf.”
Now, this is not a problem in its simplest form, if that is all you want to do for your function. But, invariably, what ends up happening is that these different solutions end up being like train stations built out across the country with no train tracks leading into them. So, naturally, legal function spends all of its time not only managing those vendors and managing those systems, but actually just pulling and pushing data from one system to the next. Ultimately, not only the business, but the legal function feels incredibly frustrated.
Our advice is to work with a solution that integrates all of the components that you need, or if you’ve got a very large budget, work with a system integrator to try and build APIs and connect these things together. Of the two, the latter will be slower, more frustrating and cost a lot more. Certainly if you can find someone who’s got a legal operating system that does all or most of the things that you need on one platform, you’re going to be far better-suited.
Selecting the wrong team
I remember a quote Jack Wu shared many years that he preferred to back an A-grade team with a B-grade business, than a B-grade team with an A-grade business.
Selecting the right team to work on this project for you is absolutely critical and most legal functions make big errors here.
This is how it plays out. The general counsel says, “Hey, we need someone to lead this project. Sally, you’re an IT lawyer. We’ll get you to own it.”
The challenge is, although Sally has had some expertise in negotiating IT contracts, that’s a very different competency than what is required to project-manage, change-manage and do all the elements you need to have a successful deployment of a technology solution.
Our advice is to select a fit-for-purpose the three elements that you need for the team. You’re going to need a subject-matter expert that knows the technical aspects of the work you want to automate. You’re going to need a project sponsor, or an executive sponsor, to take the roadblocks out on the change management and ensure the project gets done. You’re going to need some end-users to provide their feedback of what they need in the process.
But perhaps, most critically, you need a technology partner who knows the in-house function, knows the issues and has done this all before multiple times, who can guide you successfully through the process.
Our advice is if you’re working with a vendor who doesn’t have that expertise or, in fact, focuses on working with law firms, you’re going to be in trouble. So, that final bit of understanding and having a fit-for-purpose solution and team to help guide you on that process is absolutely critical.
Poor Change Management
Consistently true throughout the history of technology, the biggest risk and the biggest destroyer of value has not been the selection of the vendor, the design of the solution. It has been the end-user adoption. Often, legal functions, like their peers in other functions, have under-invested in this phase.
Ultimately, the change management will determine whether or not value is realized, and the legal function has to be incredibly bullish to ensure this happens.
Some tips and tricks, and there’s many of them here, is looking at how you can partner with other existing processes within the enterprise to ensure that adoption.
So, things like the on-boarding process, corporate communications processes, etc. can help you get the word out and drive that behavior.
The last thing, and perhaps one of the greatest culprits here, is the legal function itself. Recalcitrant members of the team who are resistant to change the way they’ve always done things mean that the tool is ultimately not adopted, and the benefits are not realized.