Outside Counsel with Outstanding Legal Tech Preferred

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A recent article finds that in the past few years, law firms have internally adopted more technology; plus, they’ve also created their own legal tech for their clients. These can take the form of regulatory compliance portals and litigation risk management. The trend now is for more firms to investigate internally several avenues of software development. But the law.com article suggests that perhaps the corporate clients of outside counsel may not need or want these innovations.

GCs Looking for Innovation from Outside Counsel

General counsel and their consultants told Legaltech News that they want certain innovations from their outside counsel, but GCs can’t expect their law firms to become coding experts. They would rather firms stay away from digitizing workflows, contract management, and other primary tech priorities. Firms should leave these areas to traditional software companies. But general counsel may look to law firms for some of their legal tech. If they do, great software can be an outstanding asset and may result in a long-term client relationship.

That’s not to say that some legal departments view certain areas as opportunities for outside counsel innovation. Nauto general counsel and corporate secretary Ilan Hornstein, said that he’s excited for law firms to create document collaboration and benchmarking platforms.

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“The way we’re working with paper has been stagnant for 20 years and the idea that we’re still emailing documents around, someone needs to find a solution for that,” Hornstein told law.com. “I [also] think the idea around benchmarking and the idea of how to benchmark the activity of the client and providing value around that” is worthwhile, he added.

Outside Counsel Legal Tech Won’t Always be a Success

Nauto is an only real-time, AI-enabled driver and fleet safety platform that’s used to predict, prevent, and reduce high-risk events in the mobility ecosystem. Their products analyze billions of data points from over 1 billion AI-analyzed video miles. The company’s machine learning algorithms continuously improve and impact driver behavior before events happen, not after.

Nonetheless, this enthusiasm epitomized by Hornstein doesn’t mean that these outside counsel developed products will be a success. Zack Hutto, an advisory director at Gartner for in-house legal departments, commented that legal departments are fascinated by law firms’ legal tech, he hasn’t come across that many who are big users of the tools. But a few of Hutto’s clients have leveraged firms’ internally developed due diligence tools because of its specialty.

“Those kinds of use cases have been more desirable for in-house counsel because the law firm is [creating] a platform, often one the in-house has little experience in and isn’t a commodity to them,” he said.

Even so, Hutto’s clients primarily see digitizing workflows as their tech’s greatest opportunity. However, he remarked that it’s a task considered too big for outside counsel.

“There’s plenty of opportunities to explore these AI and analytical platforms,” he explained. “[But] the real burning need for most legal departments is much more foundational in nature. As a result, there’s some skepticism from in-house legal teams if they should place their critical data into some other organization’s solution.”

Tech can be a Differentiator

For outside counsel that do create worthwhile legal tech, Hornstein told law.com that it can be a differentiator to win his company’s legal work.

“Good legal tech and sophisticated [tech] makes me way more likely to work with a law firm and to stick with them,” he said.

General counsel might say they want their firms to leverage and offer this type of technology. But Hutto said GCs will have to use more discipline internally in order to motivate that behavior.

“In most corporate legal departments, law firm selection decisions remain highly decentralized,” he explained. “As you’re trying to promote significant change, those freedoms can stand in the way of more coordinated efforts to invest in technology or promote diversity for formal change. Without that coordination, I do remain somewhat skeptical of the penetration we’ll see in law firm-driven legal tech in corporate legal department.”