How Legal Innovation Is Changing Corporate Legal Departments

icon-contractLegal innovation is driving changes across corporate legal departments. And while the pandemic has accelerated technology adoption throughout the legal field, the roots of legal innovation predate the pandemic. For years, corporate legal departments have faced increased workloads, reduced budgets, and a reliance on remote work. As a result, legal departments have increasingly relied on technological advances. Artificial Intelligence (AI) powered contract review solutions, workflow management software, and legal business intelligence technology are all helping departments increase their productivity and quality of work.

Attorney using legal innovation technology while working on a document

How Does Legal Innovation Differ from Legal Invention?

As the legal industry enjoys a period of invention and accelerated innovation, it is important to highlight the differences between these two terms that are often used interchangeably.  

Legal Invention

Legal Innovation

An invention centers on the creation of a product. While the product may make traditional tasks easier, it may not change the underlying process. Examples of legal invention could include time management software. This kind of software does not fundamentally change the process of monitoring attorney hours for billing purposes. It just makes it easier to manage.

An innovation introduces an entirely new concept that could alter the way people complete an activity. Examples of legal innovations include AI-powered contract review solutions that replace the need for attorney review. As an innovation, this technology fundamentally changes an existing process. 


While invention and innovation often go hand-in-hand, powerful innovations like AI contract platforms can reframe or alter the prevailing operational paradigm and enable legal departments to achieve previously unimaginable gains in negotiation efficiency, productivity, and playbook adherence.

Problems to Tackle with Innovative Legal Technology

Economic changes resulting from the pandemic, in addition to overall industry fluctuations, have created new challenges for corporate legal departments. Some of the most prevalent include: 

Increased workloads

Budget cuts

Remote work

Workloads for corporate legal departments have increased by 58 percent since the start of the pandemic. Individuals handle higher caseloads that may cover new subjects outside of their areas of expertise. 

Budget cuts were expected due to the effects of the pandemic. A recent Thomson Reuters study suggests that about five times as many legal departments experienced budget cuts compared to those departments that received budget increases. 

Attorneys are slowly beginning to return to office work, though some remote work aspects seem to be here to stay. About 25 percent of legal experts surveyed report they expect at least some of their attorneys to work remotely two days a week. 

Recruiting

Technology barriers

Nonlawyer staff transitions

Even if firms wished to hire a junior attorney cohort, they might lack suitable recruits. Only about 11 percent of graduating law school students in 2020 reported they were considering in-house or corporate legal department careers.

Technology represents one area where legal department budgets continue to increase. However, learning barriers persist that corporate legal departments will have to overcome when adopting new technology.

Nonlegal staff is responsible for most administrative work in corporate legal departments. By 2024, it is anticipated that 20 percent of generalist lawyers in corporate legal departments will be replaced with nonlegal staff. 

All of these challenges will impact office workflow and slow down operations. As a result, innovative options are emerging to help corporate legal departments control resources. 

Five Solutions from Legal Innovations

Companies have introduced leading-edge software and platforms to address the legal industry challenges described above. These solutions facilitate collaboration, contract review, business strategy, and communications. Five forms of legal innovation receiving significant attention are:  

AI Contract Review

 

AI contract review leverages data and other strategies to read a contract and make context-based suggestions. The most advanced of these programs can assess contract risk and even guide negotiations. 

 

Document Management 

 

Document management software helps offices go paperless and save time on filing and organizing. Legal staff can locate key text, write it to a database, and forward documents to a suitable digital repository. 

 

Legal business intelligence

 

Legal business intelligence software acts as a strategic hub, allowing corporate legal departments to gain insight into their productivity, revenue, expenses, results, and overall effectiveness. 

 

Workflow automation

 

Workflows in a corporate legal department can become complicated. Workflow automation software allows staff to obtain assignments and forward them when complete without manually assigning tasks. 

 

Contract management 

 

Contract management differs from contract analytics, as it focuses on bulk document control. The software can keep track of various due dates and contract milestones and send follow-up reminders when deadlines draw near. 

All of these innovations improve legal operations by eliminating many traditionally manual and time-consuming tasks. And if you’re considering a legal innovation that leverages AI, it’s important to know it fits your application.

When to Use AI-Powered Innovations

Corporate legal departments are often intrigued by AI options. When considering whether a task would benefit from AI, a few common attributes can help indicate the usefulness of these more sophisticated solutions.

  • Oversight is minimal: If a task does not have a clear and established process in place with regular follow-up, it could be a good candidate for AI. Contract management provides a useful example. A legal department may use a simple Excel spreadsheet to monitor outdated provisions. An AI solution could automatically flag contracts with such provisions and suggest standards-compliant revisions. 

  • Subjective topics: AI is often the best choice for managing subjective tasks that require a high level of independent thought and contextual knowledge. For instance, AI contract review is capable of reading contracts, weighing risks, and authoring suggestions to improve negotiating positions. 

  • High risk: The higher the risk of a given task, the more suitable it is for AI. AI can quantify risks and create strategies for resolution. This is a beneficial attribute in business intelligence. AI can use its data repository to draw conclusions and then make suggestions for improvement. 

  • Limited time: Tasks that require rapid turnaround are ideal candidates for AI innovations. Since an AI solution “thinks” like an attorney, it can complete tasks efficiently when time is of the essence. Time-sensitive tasks like business intelligence, contract review, and contract management are all accelerated with AI. 

  • Low expertise: Many attorneys have been asked to take on unfamiliar tasks due to reduced staff. The AI can help guide attorneys by providing guardrails. AI-powered contract negotiation, for instance, allows legal departments to use their negotiation playbook as a dataset to ensure more favorable negotiation positions.  

  • Template use: Corporate legal departments often rely on templates when initiating agreements. However, templates can encourage oversights as they become dependent on the pre-written language that may not serve specific contract needs. To transform a template into a customized, bespoke contract, corporate legal departments can take advantage of AI solutions. 

Legal innovations are providing solutions for corporate departments overwhelmed by increasing industry requirements. The right software can guide contract creation, improve strategies, and enhance legal operations. For tasks like contract negotiation previously completed by legal professionals, an AI solution can revolutionize the contract approval process.

LexCheck's AI-powered contract analytics solution helps attorneys by providing a second set of expert eyes for contract review. Contact us at sales@lexcheck.com to learn more or request a demo.

gary-sanghaGary Sangha | Founder & CEO

Gary Sangha is the Founder and CEO LexCheck. He's a serial entrepreneur and an academic. Gary previously founded Intelligize, a legal technology company that was acquired by LexisNexis. He's affiliated with the University of Pennsylvania and Stanford University and started his career as an attorney at Shearman & Sterling and White & Case.