The era of digital transformation within corporate enterprises is upon us. A study of companies across industries, published by Forbes in 2019, indicated that firms pursuing a multi-year digital transformation strategy saw their stock price increase at an average annual rate of 30%. A recent Harvard Business Review study reported that firms embracing digital transformation saw an average 55% growth in gross margins over a three-year period. Another study by International Data Corporation predicts that by 2023, more than 50% of global GDP will be attributable to products and services from digitally transformed industries.
Results such as these clearly demonstrate that corporate organizations embracing digital transformation will thrive compared to companies that ignore or delay implementation. Digital transformation has direct applicability to corporate law departments. Cost savings and performance gains can be achieved through a complete redesign of how legal services are delivered, combined with the deployment of “force-multiplying” technologies that exponentially enhance efficiency and provides greater insights. This type of transformational change in the legal department requires a new definition of success, and metrics that measure the business value to the enterprise of the legal work, rather than the number of billable hours.
Multiple legal operations and industry surveys confirm that outside counsel hourly cost is the most common metric currently tracked by corporate law departments. However, there must be a meaningful pivot away from addressing legal spend based on traditional hourly discounts and other hours-based methodologies, and toward digital tools that can collect expansive data across the entire lifecycle of legal work. This data can then be used to streamline the assignment, allocation and management of legal work shared between in-house teams and outside law firms. More significantly, digitally transformed legal departments will leverage data through artificial intelligence and advanced analytics to make quicker, more informed, data-driven decisions, moving the value of legal beyond mere cost savings and enterprise protection.
The digitally transformed law department will be a key contributor in advancing the organization’s strategic direction and increasing overall business ability. Legal will help to drive competitive advantage as it will no longer be defined as a cost-cutting functionality. Instead, the digitally transformed law department will facilitate growth by enhancing the company’s speed to market and ease of transacting business. It will be value-focused, not merely cost-focused.
To learn more, visit the Digital Transformation page and download a copy of our white paper on Digital Transformation.