David Lowe
Partner
Head of Commercial Contracts
Co-Chair of ThinkHouse
Article
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During the first half of 2024, The Lawyer, in association with Gowling WLG, conducted an online survey of in-house legal teams as a continuation of its historical In-House Sentiment Survey.
The survey results contain both partial and fully complete responses ranging from a base size of to approximately 100 people spread across a range of different industries.
In addition to the online survey key themes in the research are explored during a series of telephone interviews with the same audience.
The research covers several different subject areas relevant to in-house counsel:
In the video below, our lawyers David Lowe, Head of Commercial Contracts, and Emma Carr, Commercial Litigation Partner, are interviewed by Lana McMenamin, Senior Research and Insight Analyst at The Lawyer, to discuss some of the key results from the survey and what they could mean for in-house lawyers and counsel.
Speakers:
Lana McMenamin, Senior Research & Insight Analyst at The Lawyer
David Lowe, Partner and Head of Commercial Contracts at Gowling WLG
Emma Carr, Commercial Litigation Partner at Gowling WLG
Lana McMenamin: The survey has found that senior in-house counsel is shifting away from strategic business advisory roles back towards the traditional legal advisory roles. From your perspective in private practice, what do you think is driving this shift?
David Lowe: Yeah, I think it's really interesting, because it's gone from 64% down to 42% and involved in general strategy. So, it's quite a big change and off trend from the previous years. And I think as a lawyer generally it's a bit worrying. I think as lawyers we have something to offer beyond legal advice, both private practice and in-house lawyers. We should be a key part of the commercial strategy making in the same way as the finance professionals are. So, I'm worried about that perception that the role has changed. I wonder whether it's a one off. I wonder when you look at the rest of the survey, which talks about the decreased expenditure on external spend, whether actually it's because internal legal teams have been under pressure to reduce their external spend, therefore do more law, therefore doing less commercial strategy. And therefore, that might rebalance, perhaps.
Lana: Hourly rates have long been called outdated, but 47% still use them. Why do you think the shift away from them has been so slow? And what alternative fee arrangements do you think might increase traction?
Emma Carr: I don't think the hourly rates dead, first off. I think it's still suitable, for example, where you've got a case which is really difficult to scope out and it's really familiar to people as well, and it's very easy to benchmark with. I think we are seeing alternative fee models come into play, so the cap fees and the fixed fees are very much mainstream at the moment, but we're seeing more experimentation with the likes of the success space, fees, volume-based discount, and also some kind of subscription-based fees as well. I think in the disputes field, we’re seeing a lot more creation. So, in terms of litigation funding, so whether that be via a third-party litigation funder or whether that be by way of a contingency fee with a law firm, such as a partial conditional fee agreement, for example, or even own costs and disbursements insurance we’re also seeing that a lot as well. So, I think those models that work best are those that really match the nature of the work, rather than the time it takes to do the work, if you like.
Lana: AI adoption jumped from 7% to 40% in just a year. What do you think the impact of AI will be?
David: Yeah, massive step change isn't it in AI? And you look back at the historical survey and it was constantly really low engagement in AI and then suddenly it shot up. I think is very much driven by the explosion of ChatGPT and the other large language models. People are using AI outside of the office, outside of their work, and I think therefore they go, well, why don't I use this at work? And it can make a real difference you can put into a large language model all kinds of questions, and it'll come back with a fluid answer. It can help you redraught an email in a better way. It can help you write a policy, for example, and you can quickly change the language. And it's really, really useful and great to see the significant uptake in use of it, because it is going to transform legal services over the next five years. It's early days because these large language models aren’t great at doing, say, legal drafting or reviewing contracts yet. And they will and they will get better.
So, if people get used to using them now for more general stuff, then they will then be well-placed to see how they can be used in the in the office for the contracts, for the legal work, and make the most of it going forward.
Lana: And how can in-house teams be trying to demonstrate the value out of this technology and the requirement of having resourcing to have this technology?
David: Yeah, you do need to bring a degree of scepticism to all this legal tech. It would be too easy to spend money on it and then get no return on that investment. It just creates work for you rather than reducing work. So, certainly people buying and then get no return on that investment. It just creates work for you rather than reducing work. So certainly, people buying legal tech and investing in legal tech should be working quite closely to identify how will this actually save time or money? Is this doing something that’s displacing something? Or is it just actually just creating more process and taking more time? So, people should be, you know, doing pilots of these technology, trying it out in the real world, trying it out in their department. Timing it, seeing how long it takes, using legal tech to do a task compared to how long it took without the legal tech, and see if it actually makes a difference. It's also important for legal teams to check that the tech is usable. Can it be incorporated into their systems? The whole organisation systems might need adaption, which will be challenging. And you want as little training as possible. We as lawyers and indeed human beings generally find it really hard work sitting for an hour or two being trained on IT. It needs to be intuitive; it needs to be really usable. And they’ll be the key focuses, I think, for any in-house team.
Lana: Looking ahead, what do you think will define the most effective in-house legal teams by 2030?
Emma: I think it'll be those legal teams that don't just keep up but help set the actual direction of travel. So, whether that's using more data or deploying more AI or just becoming more deeply embedded in the business conversation. I think culture will also be increasingly important too. Those teams which stay curious and commercial and collaborative and who stop to ask themselves, well, why are we doing it this way? I think those teams will be really best placed to move ahead.
Lana: Where do you see the greatest opportunities or risks for legal tech for in-house and legal teams now and by 2030?
David: I think there's huge opportunity. And I see little risk actually. And I think people are too focused on AI there's lots of legal tech out there that people can use now and make a real difference. I think lawyers generally are really poor at process, myself included, and I think there's loads of tech out there that can help people with process, and process can make efficiency. And so I would certainly encourage any in-house legal team to be looking at mapping out their processes, identifying how they can make them more efficient, more straightforward, and then working at how tech can help them with that.
There's also plenty of legal tech out there, which does a really good job at automating contracts and automating documents. So, you can choose the fields and type in some information that will then generate a contract for you. And that's here now. And it's really good. People should definitely be using that. And then of course, AI is then going to sort of supercharge all of that because at the moment, yes, okay, it's difficult with a process or automating a contract, you have to stop and think and work it out.
Where AI will take us in a few years is you'll just be able to feed it a load of contracts and go create a playbook that works with these contracts. Create for me a process or automate a contract for me, by using AI, and you can see how five years' time, all of that will come to maturity. And really make a huge difference in in-house legal teams.
Lana: How might private practice help in-house lawyers make the decision of what technology, or help them, help point them in the right direction of what technology in-house lawyers make the decision of what technology, or help point them in the right direction of what technology to be advocating for use?
David: So in-house legal teams should be talking to their private law, private practice law firms because all of these law firms are searching for legal tech now they're trying it out now. They'll have war stories telling you what was good and what was not so good. Now, of course, their perspective is different. What might be good for a private practice law firm might not be good for in-house legal, but some of it is. So, it's free advice really. There's plenty of, products out there that look great when you're at the fair, and they’re demonstrated to you, or when you have the online demonstration from them. But when you actually get to use them, you realise they're really hard work and they're not as good as they look on display. And so, the law firms can tell you that they can go, oh, we tried X. And it was really hard work. Don't do that. And that's really, really important. And they can also tell you what their clients are also doing. You know, which other in-house lawyers should you be talking to who've had good experiences or bad experiences in rolling out legal tech?
Lana: I know that there was initially a question about what do you think is driving this shift? And I do want to ask when we're thinking about shifting away from strategic business advisory roles back to traditional legal advisory roles, what is then in-house’s role and driving technology within the work environment if it's purely now going back to legal advisory roles?
David: As I said, it would be worrying if they are driven back to just a pure legal role. I think technology has the opportunity to free up the senior lawyers who’ve got the experience to advise on the legal side, but also give their commercial perspective, because that's where they’re really valuable.
They've seen it before. They can go, this is normal, or it’s not normal. Or if we do this then because of the way our organisation is structured, then it's going to have this consequence and maybe that's not what we want. So, I think helping people get there quicker on the legal advice should hopefully make those senior laws more valuable in guiding their businesses in their commercial decisions.
Lana: If budgets stay flat but expectations rise, what new models or strategies will in-house teams need to adopt?
Emma: I think very much the issue with in-house at the moment is that being required to do more with less, and so this is requiring some form of refocus, some kind of reprioritisation on what really matters. And you know, what work and value legal can really add. You've also got some departments specifically creating roles within legal ops or resources to specifically work out how the workflow can be better streamlined. So, it's not about spending less, but it's about more deliberate legal spend. I think as well, there's the opportunity there to kind of revisit some of the external legal relationships as well, and revisit what value you're getting from them, not just in terms of money, but also in terms of resource and additional added extras and flexibility as well. I think the aim isn't just to save money, it's about getting more value, more bang for your buck if you like, and being more deliberate with your legal spend.
Lana: With shifts in spend, structure and strategy. What do you think in-house teams should do with this insight, and how can they turn these shifts into an opportunity?
Emma: So, we've seen clients use these moments to kind of reframe and refocus legal more as an enabler rather than a risk mitigator. It's also a really good opportunity, I think, to look at your external legal relationships. Are you getting value for money and are they aligned to what the business is trying to achieve?
Lana: How do you think leaders within in-house teams can effectively move their team through a period of change and encourage adaptability?
Emma: I don't think lawyers are particularly good with change. Okay, I'm certainly not great with change. But I think it's about adaptation and it's about trying to see it a little bit more as an opportunity rather than a threat. And I think the changes that are afoot between now and 2030, with the use of AI, for example, and the reduction in external legal spend and the different way we're using teams and talent retention issues that we're all facing, I think it does present a real opportunity to look at what we want from our teams and to try and instil that culture that we want to take forward with us.
For further discussion about the results and more information about the In-House Sentiment Survey please contact David Lowe or Emma Carr.
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