Mary O’Carroll needs little introduction. She is now Chief Community Officer at CLM and digital contracting pioneer, Ironclad, but she is perhaps better known for having helped create and lead CLOC – the legal ops organisation that has had a major impact on the market. Moreover, during much of her time at CLOC – which ended last year, she was Director of Operations, Technology and Strategy – at Google.
So, if you want to talk about innovation and market change, who better to ask? Artificial Lawyer had several questions.
– Is CLM’s growth directly linked to legal ops?
Has legal tech such as CLM been propelled by legal ops? Yes. This is because it’s covering the area most in need of change: contracting.
There is also a huge upside to using tech such as CLM, so when legal ops teams turn up they see it’s so obvious that this is the first place they should invest.
It’s not just a question of a return on investment either, it makes the client (i.e. internal client) happier, it saves money, it leverages the headcount of the inhouse team better, it supports professional development (as lawyers are not stuck doing lower value work all the time), and it also raises the profile of the inhouse team inside the company (as they can deliver more value to the business).
– What is driving this change then, beyond legal ops? Are the owners of large companies actively asking for the legal department to improve how it works now?
Yes. The owners of Fortune 500 companies are focused on digital transformation of the business.
This is because they want to better leverage their resources across the whole enterprise. Now, that has already happened across the business, and legal is the last area to change.
So, we see that HR, for example, has its own digital tools and has been transformed so that the business can move faster. Everything else is modernising. Finally, the legal department is feeling that pressure.
– But, is the entire legal team changing? If you look at how teams handle contracting needs, e.g. around sales contracts, there does indeed seem to be real change, but when you look at the inhouse lawyers who engage outside counsel you don’t see the same kind of change. Is the reality that legal ops, CLM and other developments are only really being felt on the lower risk matters and not really altering how clients work with law firms?
I think the issue is that the incentives for law firms continue to be misaligned, so you can’t make a lot of changes when this is stuck in place. (I.e. efficiency is not incentivised, which it is internally).
Even with GCs putting pressure here, it’s not enough. The challenge is that most lawyers inhouse were trained inside law firms. It is all they know. They don’t know how they might structure anything differently.
It’s a mindset and inhouse teams still need to use law firms…….so….the thing is that inhouse lawyers are not always internally incentivised to get a better deal, or use a different model (to get the work delivered to them).
They do not get a pat on the back for saving $100,000. They just get asked if they did a good job. So, they are incentivised to hire ‘the best lawyers’.
We have to untrain people once they go inhouse.
– Would it make a difference if the people who eventually became GCs had never worked at a law firm? E.g. they spent their career in an ALSP or law company, or inside one of the Big Four’s legal teams?
Well that’s interesting. I think then yes, if you were trained and worked differently, in a law company or the Big Four, then that brings a different perspective.
But, even before that you have law school.
Law school is very different from business school. There is less focus on teamwork at law school. You are not trained to share knowledge, or really collaborate – your individual performance is how you progress (at law school and as a junior lawyer in a law firm).
If you have three lawyers in a room, and someone has information that can make someone else look good, will they help the other lawyers? Knowledge sharing between lawyers is not incentivised in training programmes.
But, in a corporate setting you have to flex that muscle, i.e. collaboration and teamwork.
The problem is that lawyers are trained to be the smartest person in the room. They don’t work cross-functionally in law firms. In a company however, every team has to work with every other team across the business.
– Last question: we hear that law firms have never made so much money, yet multiple reports say clients are demanding GCs cut legal spending. How can we make sense of this paradox?
Both are true. GCs are spending more as the pie is bigger, because the world is way more complex. There is more compliance, sometimes 20 different regulatory environments for many companies, so there is more spending.
But, there is also more pressure, as companies want to keep legal spending down as a percentage of revenue.
We have therefore seen more people coming inhouse (to help with that cost aspect), but now the pendulum is swinging the other way towards more tech, more ALSPs and the Big Four.
To conclude, when times are difficult it’s time to invest in legal ops and tech.
Thanks very much Mary.
Legal Innovators California – June 9, San Francisco
If you found this discussion interesting then come along to the Legal Innovators California conference – June 9, in San Francisco, created by Artificial Lawyer. Mary and many other great speakers will be sharing their insights on the field of legal innovation, legal ops and legal tech.
Check the event site for more info and tickets for the all-day, in-person conference.