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Breaking Barriers: Adjusting to Change

Summary

Having an appetite for technological solutions is one thing, but it's not the only thing. It is apparent that what is needed is leadership - within the team, from the wider business, or from trusted external partners. Only 35% said that they were satisfied with the use of technology by their external firms, despite 86% saying it was somewhat or very important to them that their law firms keep abreast of new technologies.


Most in-house counsel interviewed agreed that technology was a partner in the process - an increasingly unavoidable one - but not a rival. Yet support for technoloy in corporation, particularly legal department, nevertherless butts up against frequent barriers.

LEADERSHIP

Unsurprisingly, support from corporate leadership is a prerequisite when it comes to weaving technology into the fabric of internal teams. Those at companies already well versed in technology often gravitate more quickly towards technological solutions.

There was a sense among some interviewees that timescales for innovation in more tech-based industry sectors could be truncated compared to more traditional sectors, or those with less of a technological provenance. Tech companies, for example, often enjoy a head start in the mindset of management, and a supportive attitude among the general workforce to tech or innovation-based change. These elements can help teams enjoy quicker productivity and efficiency gains than more traditional companies, who might be less open to technology culturally.

And, of course, expressions of support from leadership much be accompanied by practical encouragement - namely, financial support. Of those who participated in our report, 60% said their department had received an increase in budget for technology over the past five years. Those who had received an increase in budget were much more likely to cite technology as a strength of their legal team, at 71% (compared with 30% of those who hadn't received an increase in budget), and to think that their company was well positioned with their use of technology, at 76% (versus 40%). Of course, the leadership of the legal team must be live to the necessity of obtaining budget specifically for technology - and, according to some, it's a matter of outlook.

'If the person that is leading the legal area doesn't take the fact that they will need money for innovation or applying systems or technology into account when they are developing that budget, well, that's a failure. It's just because they haven't thought about it,' says Pablo Enrique Urrego Hernández, head of legal at Diageo Colombia. 'What normally happens is, in the middle of the project, you ask the CEO to give you money for something you haven't taken into account. Probably you can ask for some more money, but you must have already had the idea of developing that technology. You have to be smart. That's why I say everything is part of the culture. If you have that in mind and it's part of your DNA as a lawyer, you will be able to get the resources.'

For this, Urrego Hernández believes it is important for the GCs themselves to lead any example and model a progressive attitude towards embracing technology. 'We need to develop leaders on these issues, and my challenge is to become a leader. I probably won't be the one that will develop the systems, but I could be the one who can push everyone to understand that adopting these kind of systems is a good thing.'

PRACTICAL MAKES PERFECT

In a region as diverse as Latin America, practical constraints can be a common source of frustration among leaders eager to implement technology in multinational corporations. 'We do have countries and projects where internet connectivity is an issue. In those cases, having world-class technological tools available to us can actually be time consuming and frustrating,' explains Selim Guvener, general counsel for the International Potato Center. 'We've been looking at how much can we do by teleconferencing rather than travelling, allowing us to have as much face-to-face interaction as possible - without having to travel across the world and contribute to global warming. On one hand, technology is developing significantly, but on the other, there are still parts of the continent that are lagging behind.' Even when accessibility is not an issue, there might be competing systems in play. In rolling out a global contract life cycle management system, Bayer found it had to abandon systems in certain jurisdictions, for example. 'In the past, each region had developed their own IT tool for contracts. Now that we are migrating to the new tool - which is the single tool which will be used by everyone - it creates an additional challenge for areas or regions that need to leave the tools that were already developed, and migrate to this too,' says Alejandra Costa, head of law, patents and compliance for Central America, Caribbean and Andean region.

'If you're a big, global company, you also need to prove that this technology is in accordance with the entire IT project globally. Not just in terms of local security - because what you are doing on a local level can interfere in security - but you need to understand that everybody has to approve,' adds Patricia Ulian, general counsel for Archer Daniels Midland Brazil.

Interface issues might also become apparent when engaging with external parties.

'When you are outsourcing your services to a large number of outside counsels, it is natural that each and every law firm uses their own system and has their own routine. It is difficult to make sure that the external company is using your system or actually providing the information that your company requires,' says Rafael Dantas, general counsel/director for legal and compliance Latin America at General Mills.

[DATA] PRIVATE: KEEP OUT

Thinking globally has not only practical implications, but also regulatory ones, meaning that companies must stay compliant across the board - preparing themselves to be fit for purpose in the most rigorous regulatory regimes, even if this means appearing heavy- handed in jurisdictions with a less prescribed approach. Nowhere is this more evident than in the context of data protection, as Catalina Morales, data privacy manager for Central America and Caribbean at Bayer, discovered when implementing a global system to ensure compliance with the EU's General Data Protection Regulation.

COLLABORATE AND INNOVATE

At World Services Group, technology is one of the three founding principles of our network. We firmly believe in the power of collaboration and actively encourage our membership to work both with each other and the wider legal community. In an effort to facilitate this, we provide our membership and clients access to our proprietary platform and tools to help drive symbiotic ways of working.

But while technology is at the heart of World Services Group and our member firms, in Latin America, the results of the research would suggest that the sector has more work to do.

'Latin American law firms are spectators rather than actors in the legal technology environment,' says Victor Manuel Baraja Barrera, partner at Basham, Ringe y Correa, SC - the World Services Group member firm for Mexico.

'We fully expect the Latin American legal sector to wake up to the potential of digital transformation in our profession in the coming couple of years.'

Private practice lawyers are all too aware that they need to do more, with their in-house counterparts vocal in their calls to see the bar raised.

Of the general counsel surveyed, only 28% said that they were satisfied with the use of technology by their external law firms. While that number in itself will raise some eyebrows, what truly stands out is the 43% of respondents who said that they were unsure. That speaks to the need for firms to rethink their external messaging and better engage with their clients - not just to convey what their firm is doing in the technology space - but to understand the needs and expectations of an increasingly sophisticated end-user.

What was disappointing though, was to see that only 18% reported that their firms had offered to share or help implement new technology, while just 26% of respondents said that they looked to their law firms for inspiration or guidance around new legal technology.

'In-house clients expect their outside counsel to at the very least be familiar with the best-known technological tools for communication and file sharing, but increasingly, to have the knowledge and ability to present them with technology that can make their jobs easier and improve productivity,' says Fabio Luiz Barboza Pereira, partner at Veirano Advogados - the World Services Group member firm for Brazil.

'At Veirano, we are constantly seeking new legal technologies - both internally and from several external tech partners - from whom we are constantly requesting complementary proposals that can be used I accordance with the scope of work presented to us by our clients.'

While some firms are working to do more in pockets, as a whole, with a law firms' use of technology being such an important factor for general counsel when selecting who to instruct, it would appear that too many are missing an opportunity to create a point of difference commercially, but perhaps more importantly, a chance to work together to help drive progress in the legal profession.

In-house counsel across Latin America have taken up the mantle and assumed a leadership role for pushing the practice of law firmly in the direction of a tech-based future. Now it's up to those in private practice to join them.

'Obviously there were, at the beginning, rejections: why do I have to apply GDPR, locally it's not applicable, I don't process EU data. But, even though you don't process EU data, you may be doing a clinical trial locally, and in that clinical trial the data is being sent to our headquarters in Germany - so there you should be complying with GDPR,' she explains.

'We had to explain every simple situation where GDPR could be involved to make them see that actually it was important for us to apply it, even though locally you don't have an obligation.'

In Bayer's case, the system in question acts as a repository for data processing activities, enabling swift and detailed mapping of what data is accessed and when. But, in other contexts, technology could muddy the data security waters in terms of risk and accountability.

'The more digital we become in our work, the more difficult it is to establish network safety and security. So, at the same time, we need to educate the people who are using and accessing our network in order to protect it. This will require training and capacity building for our workforce,' says Guvener.

A clear understanding of accountability in data processes must also be ensured, to avoid 'the machine' being blamed for data leaks, when the issue might be one of process or authority.

WINNING HEARTS AND MINDSETS

Across the board, a major challenge for those implementing changes in systems and processes is gaining the buy-in and support of team members. Those on the frontline of using new technology might raise myriad concerns, ranging from reluctance to adjust to a new way of working, doubts in the quality of the system itself, through to a more existential fear of being rendered redundant.

Those who participated in our research thought that, as a whole, the profession was not adequately prepared to adapt to technological changes. Only 22% of participants believed that today's lawyers were properly prepared and equipped to embrace technology, despite 97% saying that their team members were receptive to its use.

'I believe the first step is constructing a culture of digitalisation, automation and using technology so that people understand that these are tools that can make life easier and better. They are not competition, they will not replace a lawyer - in my team, every person is important. What I want to be able to do is to free capabilities - give my lawyers freedom to work on other issues,' says Urrego Hernández.

'If you have a lawyer spending time doing contracts, that's not right! You need to liberate, create time for them to do all those things and be able to develop other skills. What technology can do is become a partner in that development - it's their best ally for that. If people start to understand that technology is a partner and not an enemy, or a possible substitute for their job, that will change the progress of what we have been doing.'

For Urrego Hernández, such a culture change means not only approaching new technological systems and processes with an open mind, but with a willingness to share company information with external legal tech developers, in order to develop bespoke solutions.

'You might not be able to find what you want because it's not yet developed, but you can find someone able to develop it. But in order to find that ally, you have to be really open minded,' he says.

'They need information that might be confidential, or to understand problems that normally you would not talk about outside the company. But once you understand they are an ally and give them trust, everything goes more easily.'

It's an oft-repeated thought that lawyers are conservative and slow to adapt to change when compared to those in other professional sectors. But some believe that it's sometimes unfair to stigmatise lawyers in this way. Rather than comparing apples and oranges, it's important to compare apples and apples, this thinking says: areas that involve much human interaction can't simply replace entire thinking or decisionmaking processes, and perhaps those areas of the profession not seeing drastic technology-induced changes are those that require a large amount of additional insight on top of what technology can provide.

Not everyone agrees on the uniqueness - and, hence, immunity - of the law when it comes to technological innovation, however.

'I think that lawyers believe they are not comparable. This is why we have sometimes not implemented technology. But I do think that our services are totally comparable to other areas that have already implemented these tools, like in accounting and finance teams. We are able and we can implement those tools - and there is no need to be afraid of that', says Costa.

'I remember when we implemented digital signatures for several legal procedures, there was a lot of resistance from lawyers in the region, but now we use it on a regular basis and digital signatures are part of what we implement in contracts and data procedures. I think there are a lot of things that we can do and I think that legal departments are more than prepared to undertake this.'

THE CHICKEN AND THE EGG

Across the board, across continents even, there is a sense, even among many in the legal profession, that use of technology lags behind in the law. If there is a reluctance for legal professionals to adopt technology when compared to other professions, there was some discussion about why.

Some of those who provided input for this report speculated that, perhaps due to its difficulty as a subject, many were avoiding law, choosing instead to train in other business areas such as marketing, business administration, and other areas that are useful in a globalised business world, and currently popular career choices. Perhaps law struggles with its (perhaps unfair) reputation as a stopper, rather than an enabler, and this is a disadvantage it in the innovation stakes.

If it is true that law is at times seen as a less attractive choice for potential candidates, is it the very lack of technology and innovation in the law that is deterring minds from a traditional legal career, and attracting them to a newer breed of company? Bruno Feigelson, lawyer, entrepreneur and president of the Brazilian Association of Lawtechs and Legaltechs, thinks this might be the case:

'They asked associates in big law firms in Brazil if they dream to be partner one day. They don't want to be partners, they are not happy with the way things happen, so these new structures, these new law firms, these new ways, are attracting the best talent,' he says.

'The big challenge for the big law firms in Brazil is how to attract the better brains to the law firms. They want people that understand how to use software, how to use design, how to understand the legal system in another way, they start to search for new opportunities. We have a lot of special persons doing law tech, trying with new law firms, so we have a new evolution with these new young people and also the youngest people from the legal departments, they are searching for another way.'

Regardless, it seems obvious that the various arms of the evolving ecosystem for legal solutions - in Latin America and globally - could benefit (and are doing so, in many cases) from cross-pollination. Especially in the world of tech, recognition is growing about the importance of having people from different areas share ideas and explore how synergies can be created. Engineers, lawyers, people from different disciplines, can share experiences, generating improvements and new ideas in the process, which can then be applied to solutions.

WINNING THE INNOVATION BATTLE

But, as those in-house will be quick to attest, the legal profession is very much a profession of two halves - and it is often in-house teams, in close partnership with other business functions, who lead the game when it comes to tech adoption.

Interestingly, when it comes to using technology, looking to external law firms for guidance remained a rarity. Only 35% of our respondents said that they were satisfied with the use of technology by their external firms, despite 86% saying it was somewhat or very important to them that their law firms keep abreast of new technologies. Only 26% said that they looked to their external firms for guidance when it comes to new technology, with even fewer - 18% - saying that their firms had offered to share or help with the implementation of tech systems.

'In Latin America, and in Colombia specifically… there are just the typical law firms that have a hierarchical structure of partner, associate, staff and so on,' says Urrego Hernández.

'They have the old-fashioned way of working and trying to change that is like trying to break a bargain. They do not care much about innovation and, I have to say, it's frustrating, because in-house legal teams are far ahead of the legal firms in terms of using technology and using these kinds of tools.'

It's not true to say that law firms are trying to hold back the tides across the board, however, and some noted some flexibility and adaptability among external providers.

Eventally, predicts Ulian: 'Clients will demand it. Increasing sophistication in client technology adoption is (and will) apply pressure on law firms and lawyers, who will be selected for their technology-enhanced services and ability to focus on complex, higher-value work to solve their clients' legal and business problems. Some of the law firms that provide services to us also used to share with us their tools and inspire us to think about new possibilities to help our lawyers in their daily work.'

Feigelson is seeing the shoots of technological growth starting to show in the legal system in Brazil - evidenced by some law schools beginning to teach coding, and an increase in management approaches such as agile, conceived in the software development sector and often assisted by technology tools.

'It's very common in Brazil for the boards of the big companies to invite the CEO to go to Silicon Valley to understand how disruption is happening, in order to change the way of the future. So, the CEO goes there and they get completely brainwashed. They come back to Brazil, they hire a chief of innovation and they start to do things in another way,' he says.

'The legal department starts to be completely alone in the company, because the legal department knows how to work in the last century; they have some trouble connecting with and understanding these new ways within the big companies. So what we are living now in this moment is that the legal department is trying to be new. It's very common for legal counsel to be trying to understand innovation, going to legal class about innovation, reading books about innovation.'

'But I think the legal department is more advanced than the law firms - they are inside the companies, they are living this change, and they need to reconnect with this new world. So the reconnection of the legal world with this new reality of the fourth industrial revolution - it's easier for legal departments than the law firms,' he says.

THE FUTURE

Recent years have seen an expansion of the role of the in-house lawyer in a number of different directions. Legal qualifications now sit at the centre of a wheel with an

ever-increasing number of spokes, of which technology is one - in Latin America and across the globe - and to be equipped for future success (and relevance) legal professionals must keep their toolkit well maintained.

As Urrego Hernández aptly puts it: 'You don't have to spend your whole time being a lawyer, you have to spend your whole time being a lawyer that can fix problems, not just by using law, but by using other tools, other skills and other people to help you.'


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