Discover why it is time to include GCs in the data revolution.
The importance of data for in-house legal teams
Drowning in a sea of data
Everyone is talking about data nowadays. Who is collecting it, how we can opt out, whether it is ethical and how it is used. Data is everywhere, and we are amassing more data at breakneck speed.
This is an enormous volume of information. To put it into some context, 1.7 MB of data was created every second by every individual throughout 2020.
At this stage you might be thinking “interesting, but so what?” The answer is that there are compelling reasons why some many businesses are placing a strategic focus on leveraging actionable data – the principal being that data is offering businesses huge value in helping them to make smarter decisions, faster.
The business value of data
Data is already proving to be a source of serious competitive advantage. According to Forrester, businesses that rely on data management tools to make decisions are 58% more likely to beat their revenue goals than non-data driven companies.
Recent research suggests that 80% of decision makers believe that opening up access to data has a positive impact on their business.
Meanwhile, data-driven organizations are:
23 times more likely to acquire customers
Six times more likely to retain customers
19 times more likely to be profitable
Add artificial intelligence into the mix, and the benefits rise even higher. That is because crunching through all that data and making sense of it is practically impossible for humans, yet AI can power through huge volumes of data at breakneck speed. A report by Accenture concludes that AI has the potential to boost rates of profitability by an average of 38% by 2035.
What does this mean for legal?
While these are generic business stats, they apply equally to legal professionals. For example, we often hear that many GCs struggle to get access to the most basic information relating to their contracts. This problem is part of a larger issue with data management: For 60% of employees, it takes hours or days to get the information they need from their system and databases, while only 3% can find information in seconds.
In particular, it is common for GCs to be unable to answer the most rudimentary questions:
Where are our contracts stored? Paper or digital?
How many contracts do we have?
In our recent webinar, Rob Dinning, EMEIA Legal Function Consulting Leader at Ernst & Young, shared the story of a GC at a major international corporation who, within his first 100 days, approached the COO saying: “We do not know where our contracts are, and we do not know what is in them.”
This in itself is shocking, but far from a rare occurrence. And it only hints at other questions that are unlikely to be answered.
If we look at pre-signature, we can consider the following:
How many contracts are in progress?
From where, which suppliers or customers?
How do we create, review and negotiate them?
Who is handling them? Who is the best or most efficient negotiator for each type of contract?
What is our average contracting turnaround time? We know that time is the killer of deals, so how can we accelerate the process?
What are the main causes of delays?
What wording regularly needs to be amended?
Which positions do we always accept even though it goes against the playbook? And should we simply update the playbook?
What value of the negotiated deal are we actually realising? And how can we improve this metric?
While other business functions regularly use data to uncover performance metrics and identify areas for improvement, GCs often work in the dark.
Similar issues exist post-signature, where the emphasis is less on operational efficiency, and more on compliance and business opportunities.
Are we taking advantage of price index clauses?
Are we aware of renewal dates?
Are we meeting our regulatory obligations?
Are we realising the deal we thought we had negotiated?
Do we understand how a change in circumstances affects our obligations and liabilities?
How are we leaking value?
Without access to data, these answers are difficult, if not impossible, to answer.
However, with easy access to on-demand data, legal professionals can then use insights to:
Better understand and take advantage of the data stored in their contracts
Analyse how efficient their contracting process is and improve where necessary
The issue around regulatory obligations and compliance is an important one. Being unaware of a failure to meet obligations, or fully understand how an event has changed your obligations, is a worst case scenario for an in-house lawyer.
Data is a huge asset here. Companies leveraging data see a 173% advantage in efficiently complying with regulations compared to non-data driven companies. By contrast, less data-mature organizations are 55% less likely to say internal data management strategies lead to optimal business decisions.
This is unlikely to be news to senior legal professionals. GCs report compliance, data privacy and cybersecurity are key risks – but under one-third say they have the tech to do their job.
In other words, GCs are well aware of the risks, and understand how legal tech can help, but struggle to get support from their board. According to an Ernst & Young report, 98% of GCs surveyed say they struggle to secure budget for legal tech investment, while only 50% of GCs have made greater use of tech in the last year.
Without digitisation, companies rely on an army of paralegals to meticulously scan each paper contract to understand their obligations when circumstances change – for example, the global pandemic, GDPR, or the end of Libor. These manual contract reviews need to be repeated for each new change in circumstances, making the process repetitive, slow and expensive.
With a sound digitisation program that process is fast, scalable and simple. Analogue contracts become digital assets, structured and ready for speedy analysis as frequently as is needed.
Data boost accuracy – and business performance
There is no doubt that giving GCs and the legal team greater access to data benefits the business. Ernst & Young report that 61% of CEOs said they would like their legal departments to take a more data-driven approach to their legal department’s risk management practices.
The reasons are clear. Being truly data-driven reduces risk, increases the speed with which a company can move, and enables the business to operate with greater efficiency and profitability.
It also promotes a culture of constant optimisation. Without data, you can’t measure how well you are performing. And if you can’t measure, you can’t improve.
Data drives meaningful transformation. It is the foundation of continuous optimisation and improvement. And it is time that GCs took a leading role in the data revolution.
Intelligent Contract Pre-screening
Automated and bespoke interrogation of your contracts, providing a risk assessment and recommended next steps.