Now is an exciting time to be an in-house lawyer. Business stakeholders realize the tremendous value General Counsels can add to an organization, which is no surprise considering the role legal leaders have played in guiding companies through what has been, on many levels, a tumultuous 2022. As the past year’s challenges carry over into 2023 and new issues surface, in-house teams will be expected to continue driving substantial value to the business.
While adaptability remains critical, GCs and senior legal leaders must understand the three core trends guiding the industry in the year ahead, regardless of how 2023 shapes up. These trends include the adoption of legal tech, the increasing importance of legal operations, and how General Counsels and in-house teams must help the organization during an economic downturn.
1. Increased Adoption of Legal Tech
Despite economic headwinds and reports of a looming recession, the legal tech boom shows no signs of slowing. Legal tech companies continue to lock up significant investments while other startups struggle to close funding rounds. The legal tech sector’s ability to maintain momentum is an excellent sign that the widespread adoption of legal technology will increase for the foreseeable future.
Products like e-Signature, e-billing, and contract lifecycle management (CLM) are legal technologies lawyers invest in and rely upon to drive greater efficiency. Adoption of all types of legal tech appears to be increasing as businesses lean on software in the face of tighter budgets and reduced hiring. In-house legal teams across every industry, from healthcare to manufacturing, are using these tools to augment growth, gain efficiency and further drive business value.
2. The Emerging Role of Legal Ops
Businesses are positioning for an environment of economic unpredictability as we approach the next 3−4 quarters. This includes being deliberate with expending resources and using both technology and headcount to raise gains while keeping costs under control. Investment in legal operations fits squarely in this bucket, and companies that invest in high-functioning legal ops teams will play an essential role in helping enterprises navigate challenging times ahead.
Legal operations staff are critical for boosting performance during slowdowns, increasing efficiency, stabilizing knowledge sharing, and reducing costs. Legal operations teams see most process inefficiencies up close and take pride in eliminating friction across the business (usually using technology and automation). These improvements involve standardizing workflows, developing and implementing best practices, and applying core, repeatable processes to ensure consistent, quality, Q&A delivery, and output.
3. Navigating Risk in the Economic Downturn
The legal function plays a significant role in shoring up business operations against unfavorable economic impacts. GCs must double down and keep the controllable aspects of doing business buttoned up. Some examples may include:
- Maintaining contract visibility: Legal teams need consistent insight into contracts to understand whether specific customers are at risk. Maintaining your customer base is critical, and understanding your contracts with your customers allows businesses to focus on retaining key customer segments. The GC will also need insight into agreement terms if a customer defaults, breaches, or attempts to renegotiate. Ensuring processes are as efficient, effective, and productive as possible can minimize the negative impact of any uncertainties stemming from customers and prospects.
- Protecting customer data: Companies place a strong focus on protecting customer data, especially during times of vulnerability. Legal teams must continue to prioritize data security and customer privacy to reduce perceptions of increased exposure that may exist among the customer base. Being proactive in how data security is prioritized is essential to provide the customers with peace of mind, and builds trust in the business relationship. Maintaining those critical relationships with key customers and vendors is essential to success in uncertain times, and starting off with keeping data secure and private sets the right tone.
- Preparing for layoffs: Some companies may experience layoffs during a recession, so legal teams must ensure the business remains compliant with jurisdictional laws, and acts with transparency and empathy with regard to any reduction in workforce that may occur.
Doing More With Less
2023 will see legal teams operate as efficiently as possible amidst tighter budgets. Many in-house teams see legal technology as the key to managing through times of uncertainty. Maintaining consistent insight into the legal work being performed and being able to measure the results will be critical for GCs in the year ahead. Coupling this with gaining visibility into the company’s agreements and other relevant data allows legal leaders to best position the legal team to gain efficiencies and continue to drive the business forward, even when resources may be scarce.
This article was originally published by ALM's Legaltech News. Check it out here.
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