The transforming landscape of in-house legal work
A significant shift is being witnessed in the daily operations of law departments – and, in an increasingly digital world, new technological skills and a forward-thinking mindset will be vital in 2024 and beyond.
New technologies are spearheading change and redefining strategies for in-house and outsourced legal work, with legal departments implementing automated solutions, chatbots and other generative artificial intelligence (GenAI) tech to enhance efficiency and deliver solutions for a variety of stakeholders.
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For in-house lawyers and general counsel in Australia, these developments herald both challenges and opportunities. But while recent years have brought progressively changing environments for in-house lawyers, many are reportedly expecting more changes throughout this year.
KPMG recently predicted that as the digital transformation takes shape within the legal operations space, lawyers will become minorities in legal teams, and legal advice will be overtaken by the need for legal services, resulting in the growth of alternative legal service providers and a change in the composition of legal departments and in-house teams.
GenAI and other emerging tech will drive efficiency and agility within legal departments and create new roles for non-legal specialists, according to professionals from the KPMG Legal Operations Transformation Services practice, which also predicted that “enterprise technology and GenAI will obliterate the line between legal tech providers and technology”.
But do these predictions ring true for those within Australian in-house environments and legal departments?
Technology impacting every facet of in-house life
Tech has become a must for many legal departments, particularly with the rise of artificial intelligence. Used correctly, tech can also be used to create efficiencies and “make a big impact” with minimal effort and spend, Lawyers Weekly was told last year – despite the Wolters Kluwer’s In-house Counsel Trends Survey Report revealing that budgetary constraints were holding legal departments back from taking full advantage of new technology.
NAB general counsel Sharon Cook told Lawyers Weekly earlier this year that she has never, in 30 years of practice, “seen such a dramatic pace of change” in Australia’s legal profession, in terms of the growth of technology.
“The pace of change just gets faster and faster. It’s terrifying in a way but also very exciting and presents our lawyers, and the people associated with the lawyers, with incredible opportunities for the future,” she said on an episode of LawTech Talks recently.
“As it applies now to technology and AI, we’ll need to be experts in cyber security and privacy and copyright data security, ethical safeguards, confidentiality, legal, professional privilege,” Ms Cook added.
“The toolkit that lawyers have [will be] updated for this new world of technology, [and] lawyers will need to apply it to what they’re doing and use technology to do their roles better and separately, and use technology to help customers and stakeholders in the business. Lawyers just can’t sit back and advise. They need to roll up their sleeves, get their hands dirty and get involved in the technology themselves.”
Tech is also impacting (and will continue to impact) recruitment and talent retention in-house – with Dovetail Law managing director Andrew Murdoch citing an “emphasis on recruiting and developing talent with a keen understanding of legal intricacies and technology” and professional development programs including “training on legal tech tools and data analysis” moving forward.
“The in-house legal team will need to scope the technology market actively and decide what to use. They must work closely with other internal functions, particularly IT, to integrate and embed the tech throughout the organisation. This will require greater communication and collegiality throughout the business and external providers.
“Not enough credit is given to lawyers and their ability to adapt to technological change. Over the last 40 years, lawyers have moved from typewriters and filing cabinets to cloud computing and paperless offices. As with previous changes, lawyers will adapt well to technology changes, including AI,” he explained.
“AI will be used in-house to provide the business with more accurate, effective, and faster legal assistance. Examples will include automated solutions to streamline routine tasks, more and improved self-help tools for the business, a review of contracts, and the first draft of advice.”
AI has already “changed the game” for in-house legal – and Youi general counsel Bianca Lau emphasised that lawyers who embrace new technology will be well placed in years to come. AI can also help legal departments drive better outcomes for clients and their own practice in an increasingly digital world – with training being key for delivering high-quality results.
“For certain types of matters, I consider we are obligated to consider technology and how it can be utilised to reduce costs and prevent delays and recommend the right approach to the business (whether this is for large-scale matters or repetitive work routinely undertaken by the legal team),” Ms Lau told Lawyers Weekly.
“For in-house lawyers, a growth mindset and a curiosity to advancements in technology will set them up for success. It is important to be dynamic and willing to adapt to new ways of doing things. In my own team, success isn’t measured by just providing excellent technical legal advice (that’s a given) – success is continuously reviewing how we are providing legal services and asking, ‘is there a better way to do this?’, whether it is in a way that is more efficient, in a more user-friendly format, or perhaps in a way that reduces overall risk. Professional development within the team is focused on fostering this type of culture, and it flows through to how we recruit for the team as well.”
Similarly, Sydney Fish Market general counsel and head of property Michael Guilday said that new tech developments have long since influenced in-house teams – and will continue to do so in 2024.
“Unquestionably, technological advancements are influencing the structure and dynamics of in-house legal teams – as they have been for decades. Some people are talking about a diminishing market for legal services. I do not agree,” he said.
“Whilst there can be no doubt that traditional forms of legal work such as researching, reviewing and summarising information will increasingly be undertaken by non-lawyers and/or machines, the nature of the work of a lawyer will also change.”
Staffing will be impacted both internally in-house and from an outsourcing perspective by new technologies as admin and document review work becomes more automated. However, LOD head of business operations Anita Thompson emphasised that lawyers won’t be replaced; simply aided by tech.
“Lawyers aren’t going anywhere, but there will be an evolution of other areas of expertise making their way into a legal department. From a professional development perspective, this transformation will see huge opportunity for lawyers. Firstly, allowing tech to help support the time-consuming, low-level tasks will enable lawyers to focus on the high-value and less time-intensive work. Secondly, different career opportunities will open up, as will tapping into new skill sets,” she explained.
“The debate as to whether robots will replace lawyers has been going on for many years. The technology will no doubt revolutionise legal work and evolve the practice of law – the influence on the day-to-day role of in-house lawyers will both supplement and support what they do. Less administrative and repetitive work, streamlining workflows, and overall allowing lawyers to become more productive.
“However, there is a massive cultural shift that needs to come with the acceptance and adoption of these technologies as the business model will change. There could be tension between resistance to these technologies and a fear of not being left behind. Understanding the key elements of these technologies, getting data in order and creating specialist teams or engaging with a third party who can help create a strategy around AI and tech are just some of the ways that will help prepare.”
New legal skills required for changing team dynamics
According to the 2022 Annual Profile of Solicitors NSW, published in June 2023, the number of in-house lawyers more than doubled (104 per cent) between 2011 and 2022. While the number of private practices also increased by 40 per cent, many in-house legal teams have grown in recent years – meaning less work being briefed out to external firms and new and evolved in-house legal teams.
“Legal departments of the future will offer a much broader range of services. This concept is comprehensively explored by Peter Connor in his remarkable text ‘The T-Shaped Lawyer: A New Vision for You and Your Work’ and is conveniently encapsulated by the origination of his ‘business person mindset’ concept,” Mr Guilday added.
“In doing so, in-house lawyers may need to bear in mind that they are still performing non-legal work as lawyers, which brings into play their regulatory and ethical considerations such as the need for independence, candour, avoiding conflicts, and competence in relation to everything we do.”
While Ms Lau admitted that KPMG’s prediction of lawyers potentially becoming sparse within businesses “may ring true for very large-scale legal teams with a high volume of repetitive work”, acquiring legal services from a range of providers is unlikely to work for smaller legal teams who service a business with varying bespoke needs.
“It’s important legal teams remain pragmatic about what resources and technology are appropriate for their own circumstances, and always ask ‘what is the problem I’m solving for’ before rushing to adopt something because other legal teams are doing it,” she said.
Ms Thompson agreed – and emphasised that despite legal teams growing out their expertise and hiring non-legal professionals, lawyers are unlikely to be cut out of in-house teams.
“There is, of course, a rise in legal operations professionals, data analysts and project managers within legal teams; however, predicting non-lawyers to outnumber lawyers within legal teams is quite bold. There are ethical and professional standards to consider, and non-lawyers don’t attract important confidentiality and privilege protections,” she opined.
“So, while we’re seeing a boost in multidisciplinary teams, lawyers will always be fundamental to the legal team.”
More law firms than ever are also using alternative legal services providers (ALSPs) internally or externally – a sector of the legal market now valued at more than $20 billion. When asked if legal departments should be positioning themselves to provide a broader range of legal services beyond traditional advice, Ms Thompson said that “as progressive and forward-thinking” legal teams are already doing this – by “engaging with ALSPs and traditional law firms to tap into this expertise as and when they need it”.
This trend reveals an evolving legal market in which the boundaries between alternative legal services providers, law firms, corporate law departments, and technology and software firms are blurring.
“Many legal teams I speak with have set up self-service by the business for standardised legal work (including ourselves). Likewise, many legal teams have also pivoted to capturing and leveraging data, as this is critical to the success of the legal team in any data-driven organisation so that you can speak the same language as the business. However, when it comes to the composition of the legal team – there is no one-size-fits-all approach, and all legal teams are different (and the businesses they service are different),” Ms Lau outlined.
“I think the days of ‘just providing a legal answer to the question’ are long gone for legal teams – we need to have a thorough understanding of our business, its strategy and its risk profile, and the advice needs to embed all this information if it is going to be useful to the organisation.”
Mr Murdoch echoed a similar sentiment – and said that across the board, in-house lawyers should be embracing “continuous learning, keeping abreast of the latest legal tech trends and acquiring skills that align with fast-changing organisational needs”.
“The capacity or demand from the business to provide broader services will vary between each business and legal function. There is no size-fits-all solution; variabilities such as industries and the organisation’s size will play a significant role,” he said.
“A sole legal counsel and their ability to expand their services will differ from an organisation with 200 lawyers. Each in-house legal team needs to make a cost/return decision based on their circumstances.”
The continuing evolution of in-house legal work
With a plethora of areas to be across at any given point – contract management, employment issues, environmental, social and governance (ESG) issues, disputes, cyber and data regulatory challenges – the role of GCs and in-house lawyers has evolved greatly over the last decade, and are becoming bigger every day.
“In-house legal teams need to continue to evolve to meet the needs of their stakeholders by focusing more on their processes. The problem is that in-house legal processes and structures are not homogenous – no two are the same,” Mr Guilday explained.
“However, there is an increasing need for in-house lawyers to operationalise, be innovative, and uprate their ways of working to improve customer experiences, demonstrate sufficient competency, and mitigate the risks posed by misconduct.”
In light of the changing digital landscape within legal departments, in-house environments will continue to evolve to meet the changing needs of internal and external stakeholders – but will not necessarily lose legal staff in the process.
“In-house legal work is continuing its evolution towards a more technology-driven and multifaceted role. As legal departments adapt, the demand for professionals with a combination of legal expertise and technological proficiency will rise,” Mr Murdoch added.
“[However], while lawyers will be required to be technologically proficient, I can’t see them becoming a minority in a legal team. Understanding the law will still be a vital component.”
In-house lawyers’ skills will also drastically evolve moving forward, added Mr Guilday.
“In the past, newcomers to the legal profession were trained by incredibly mundane and boring tasks such as reviewing due diligence and discovery documentation whilst being locked away in a dark room for 12 or more hours a day. No doubt these tasks were necessary, but they were also undertaken as a method of training,” he confirmed.
“The new generation of lawyers will increasingly leverage technology such as CLM systems, data capture tools and AI for these tasks; but will also need to be more human-focused. This may require teams to double down on their efforts to retain and grow their people, including by calling out unmanageable workloads and unsustainable business practices.”
This is something Ms Lau said she is already “very vocal about” with her own team – and added that as a leader, she feels somewhat responsible to drive this evolution moving forward.
“In-house lawyers now need to have a constant eye to evolving technology and how it works, they need a continuous focus on business process improvements, and they need to be adaptable to change. These are just as important skills as technical capability in providing legal advice,” Ms Lau added.
“With technology advancements, it is also more important than ever to provide something more than ‘just legal advice’ – this is where human connection and stakeholder engagement sets us apart from output produced by AI or other technologies. It is important for leaders of legal teams to ensure they are future-proofing their people and providing them with the right tools to adapt to a rapidly evolving profession.”