Welcome to Straight Talk, our series where Wolters Kluwer’s Ken Crutchfield, Vice President and General Manager of Legal Markets, and Jennifer McIver, Associate Director of Legal Operations and Industry Insights, discuss how generative AI (GenAI) is impacting legal professionals.
This month, Jennifer and Ken talk about how AI is accelerating corporate legal’s status from support function to strategic partner
Corporate legal departments (CLDs) have been making the jump from support function to strategic business partner for several years. What’s the situation like now?
Jennifer: For the past several years, the priorities for CLDs have shifted to include increasing business acumen and becoming better strategic partners. While controlling costs for legal services and reactively addressing risk are still important, the reality is that close ties between legal and corporate are beneficial to business.
For example, a CLO and CFO can work together to create more cost-effective contracts that benefit the organization’s bottom line. Likewise, a CLD can be instrumental in advising on the impact of business decisions as they are being made if they are proactively present. These are partnerships that work well for everyone.
How can AI help CLDs become better strategic partners?
Jennifer: We’re always talking about how AI is going to help us streamline operations, and it will. But we can’t forget about the opportunity to use AI for knowledge management.
Large firms are always struggling with knowledge management. They may have one attorney who’s been practicing in a particular area for years, and they’ve got all the knowledge. But what if the business had a way to capture that knowledge, build it into an AI model, and share that intelligence with the broader corporate team? That could be a very powerful tool for strategic thinking and analysis.
AI shouldn’t just be about managing case outcomes and invoice review. The technology holds a lot of potential for capturing tangential information that can be shared and used to drive business objectives.
Is there any risk in CLDs becoming more strategically involved in their businesses?
Ken: There’s risk in anything, but the good thing is that attorneys are, by nature, very cautious. I think that caution serves them well when it comes to working directly with their business partners.
I was talking about this the other day with someone and used an analogy to illustrate my point. Let’s say you have a child who you tell not to cross the street and just stay on the sidewalk, versus helping the kid learn how to look in both directions before crossing. The reality is that you might be doing the child a disservice because to be a functioning adult, you have to know how to cross the street. That’s part of growth and development.
Businesses are like the child. They must grow and achieve. They can’t just stay on one side of the street. It’s the corporate attorney’s job to help assess and weigh the risks versus benefits of moving forward before advising their business partner on what to do. If the risks outweigh the benefits, like trying to cross a six-lane highway, they should firmly advise the business to stay where it is. A truly effective attorney can help to guide the business to cross safely at a crosswalk, help the business learn how to look both ways, and watch out for distracted drivers. The effective attorney can counsel on risk while helping balance legal risk to support the achievement of business goals.
How can AI help attorneys communicate better with business leaders and “cross the street?”
Ken: There are a lot of AI tools out there that distill information in a way that makes it easy for attorneys to communicate risk and opportunities with business leaders. Large Language Models like ChatGPT are especially effective in this regard because they can take vast amounts of data and summarize it quickly, allowing attorneys to convey information in a manner that resonates, as opposed to legal speak. Attorneys still need to review the output of AI tools to ensure accuracy, though.
Switching direction a bit, what’s the biggest challenge CLDs face when trying to derive actionable strategic intelligence from AI?
Jennifer: The CLD, corporate, and different business units might not be sharing information. In this scenario, data becomes fragmented. That’s a problem for AI, which depends on complete data from across the business to provide the most accurate recommendations.
The key is to pool all that data into a single place, like a data lake, so that it’s collected and easily accessed by technology. We are starting to see that as CLDs and the business become more intertwined, and mature legal operations teams become more oriented toward business operations.
Those teams aren’t just asking about how they serve their organizations from a legal perspective. They’re also asking their corporate partners about their goals and aligning their work to meet those objectives.
Ken: Jennifer’s spot on, and AI will help accelerate that shift toward CLDs becoming strategic partners. As CLDs and businesses collect and share more data, they’ll be able to use that information to make strategic decisions that positively impact the business. Not just from a time or money-saving perspective, though that’s certainly true. AI will also help organizations manage risk, understand how to better comply with obligation,s including regulations, and take advantage of market opportunities, and more.
Stay tuned for upcoming Straight Talk blogs, where Jennifer and Ken will continue exploring the ways AI is helping CLDs become stronger business partners and discuss other emerging AI-related issues.
