The role of the legal department is becoming more and more strategic for the company. We talk about ROI, KPI, but can we measure the performance of legal departments? What are the changes that need to be understood by the legal profession? These are the questions we will address in this interview.
Stéphane Baller is passionate about legal innovation and has been an EY partner for 18 years. He shares his vision of the market and his advice on how to help lawyers digitalize their activities.
Can you quickly introduce us to your background?
After a dual legal and commercial training, I started my career as an associate in a law firm, before joining Ernst & Whinney as an auditor. I have always been fascinated by business and more particularly by the human adventure that business should be.
In 2001, I returned to the law to create a development department at EY Société d'Avocats, where I was in charge of tomorrow's clients and progressively of tomorrow's resources. It was at this time that I noticed the asymmetries that could exist between training and business needs. I then decided to invest in training and education, both for professionals and for the firm's clients, in parallel with my marketing and sales development activities.
How did you discover legaltechs?
I am one of those professionals who have always worked with a computer, and moreover, in an organization which, because of its size, is constantly streamlining its work processes: a real law firm. I therefore encountered legaltech very quickly because of my obligation to be ahead of the market, my fascination for innovation and perhaps my past environment as an auditor.
In your opinion, how will the legal profession change?
With the demanding business agenda, legal departments have become both more visible and vulnerable. They are asked to do more with the same or even with less.
Today, legal departments are faced with the obligation to prove what they do. And how do you demonstrate what you are doing? With tags, markers, identifiers... used and understood by the management of companies, the KPIs in short.
Faced with this transformation, the challenge is to prove the value of the law for the company and its competitive advantage. This is as much a question for lawyers as for managers and their advisors.
The risk, if the lawyer does not take up the issue, is to see other departments of the company take care of it by putting the law in technological tools as a proof of compliance and not a strategic advantage.
Is it possible to measure the ROI of legal departments like in other departments (marketing and sales for example)?
What you need to understand is that historically, lawyers have not necessarily had a culture of indicators and there has not necessarily been a formal demand for them. In the collective imagination, in France, the legal department is not considered a key function of the company, like the finance department for example, but as a support element for other departments, or the pen holder for the board of directors and business life, forgetting the strategic dimension of the law and its consequences in terms of value generated. In fact, how many reference organization and management manuals devote a chapter to legal and tax processes?
This past operation raises questions about the place and tools of legal experts. Is the flow of legal information a by-product of financial and commercial information, or is it a separate element that deserves a specific place in the IT department's master plan?
Should/could the lawyers use the company's existing information systems, or should they fight for independent tools and a corresponding investment line?
Legaltechs have the chance - or the misfortune - to be the revelation of this questioning. Often, the first approach of legal departments is to look for a technological equipment only to align themselves with the company's digitalization strategy and to lower its costs. They have not necessarily formalized their tool needs and above all have not anticipated the preliminary work involved in setting up the applications, particularly the expression of the specific features required
In their defense, they are asked to make a considerable leap in time... These professionals who still like paper and beautiful demonstration sentences are asked overnight, without training, without time available and with few means of support, for results, artificial intelligence or blockchain!
So how do you enable legal departments without this process culture to be at the rendezvous? Lawyers are under the mistaken impression that technologies are delivered turnkey, without any upstream work. However, there are many questions to ask before digitizing, beyond the why and the process chosen, in particular the volume and quality of existing data: where are the contracts stored? On which media? What languages? What are the proof systems? etc.
We realize that the path is full of pitfalls for lawyers. Not only are they unprepared in terms of project management, but technology is not their preferred field and the company does not always help them by authorizing the creation of LegalOps positions or by releasing budgets for support by specialized consultants who are rare on the market.
And in terms of KPIs, which ones do you consider relevant for the legal department?
The KPIs proposed by the legal departments, consistent with their day-to-day work, do not always speak to the company, as I was able to demonstrate during the Observatoire des Directions Juridiques in 2013. Calculating the number of contracts managed, the rate of litigation, the time taken to resolve disputes, etc., makes it possible to manage the legal department, allocate resources, and arbitrate between internal and external parties.
But is it really the volume of contracts that defines the legal performance of a company? Wouldn't the criterion today be the level of understanding of the contracts by the sales force, by the customers?
Isn't litigation necessary in certain situations and its absence may reflect the absence of a litigation strategy agreed upon with general management? These KPIs, in order to reveal the contribution of the law to the company, go beyond those of the operational performance of the legal department and the difficulty lies in finding and combining the right KPIs: operational management by the legal director of his or her function and of the processes for which he or she is responsible; index of the company's legal and tax culture, performance of the legal and tax strategy at the company level. These last elements could also be useful to compliance officers, risk managers, DPOs, internal auditors ... who work on the same value issues beyond the protection of the company!
Finally, a good KPI might be the satisfaction of the internal customer. Applied to the legal field, this implies asking oneself: am I a lawyer who is useful to the operational staff and accepted as part of the front line? This usefulness translates into the person who helps his company to progress in its level of legal, fiscal and social culture and the person who allows his operational staff to use the law as a commercial weapon. Because you have to be convinced of the usefulness of the law in order to invest in it, and it is up to us to convince people, because even the education of the elites does not include a minimum positive legal culture.
What advice would you give to lawyers to sell their digitalization project to their internal teams?
First of all, I don't believe that you sell value-added services with the same appetite as a consumer product that you need/want: you make them buy! Very often, the lawyer has no budget to devote to digitalization... The only departments that might have a potential budget are the Information Systems Department or the Finance Department. But how do you get a legal department's software investment under the IT department or the finance department when you don't know the IT master plan?
The lawyer must be involved in the company's major projects (purchasing, customer relations, IT, financial information, etc.) and do so at the right time. This is ultimately complex internal sales and why not use the same methods as consultants?
Before asking for a budget, you have to start by learning the codes, the language, anticipating the questions to establish a dialogue and thinking on a company scale
If the legal director comes in and says "I want Hyperlex to manage my contracts" it will have no impact. But if he comes in and says "I want Hyperlex to be able to share the management of contracts with all the sales people and to contribute to the development and securing of the turnover and the margin" it will have much more impact.
Contracts must be valued outside the legal department. Thus, the ROI will no longer be sought at the level of the legal department, but at the level of the company.
What advice would you give to the lawyers who read you to approach their digital transformation and the integration of a legaltech in their daily life?
First of all, you need to start by taking stock of the situation and why not do it by training yourself in some simple methods used by consultants. This implies having notions of volume, time, formalization of processes, analysis of the added value of tasks... methodical. Lawyers will have to work differently, like everyone else I think, which already implies knowing what they are currently doing and recognizing the value of the tasks, their necessity without questioning the people who carry them out, but imagining how to make them evolve. So it's a great management exercise!
The second thing to do is to establish your priorities and formalize them. This does not imply, in my opinion, knowing the entire legaltech market, which is currently very dynamic, at the risk of getting lost. I think that the legal director must remain free in expressing his needs if they are prioritized so as not to be influenced by the existing market. The market being new, we can be daring and I know some LegalTechs who are ready to feed themselves with ideas from legal departments. We are facing entrepreneurs who often come from engineering or business and are looking for dialogue with curious lawyers to make their product evolve in the direction of what the legal departments expect?
Thanks Stéphane !
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