Corporate Governance Modernization Legal Trends and Challenges
In addition, most legal departments are poorly planning such initiatives. A common mistake is to follow a legal technology roadmap without sufficient consideration of the needs of the business or end users. Typically, organizations that consider how a technology advances certain business functions or business outcomes perform better than companies that don`t. Efficiency issues have already led teams to consider the highest and best possible use of their teams` time and expertise, including shifting work from lawyers to non-lawyers. However, promoting significant improvement and innovation efforts is likely to require different skills or perspectives than those typically developed in traditional legal education. The share of legal budgets spent on technology will increase significantly by 2025, according to a Gartner survey of legal leaders. Eight to seven per cent of legal departments in 2020 expected their total number of full-time internal employees to remain the same or decrease. The above are the top legal technology trends you need to be aware of, but here are some honorable mentions. In this article, we look at five major legal technology trends that are shaping the industry. First, companies will continue to abandon hybrid profiles. It`s about increasing cognitive diversity and bridging the gap between professionals with knowledge of legal issues and those with sufficient legal expertise to manage the digitization and automation of workflows.
Modernizing existing software, for example for document automation, is becoming a common practice. Simplifying the drafting of high-frequency, low-complexity contracts and allowing clients to sign them digitally can save lawyers time. Demand for corporate transactions has already recovered from pandemic-related lows. M&A work will continue to increase over the next few years as companies recover from the pandemic, especially as the impact of the pandemic has often lowered acquisition valuations. In recent years, Russia and most of the continental countries (Germany, France, Italy) have carried out important reforms of company law. In Europe, these reforms aim to strengthen internal governance mechanisms, strengthen shareholders, improve disclosure obligations and strengthen public enforcement, which are the most effective tools to combat abuses by dominant shareholders. Legal technology is not a silver bullet. And yet, companies that have already integrated legal technology into their operations report increased profitability. AI has yet to have the promised transformative effect in the legal industry.
However, there`s no inherent reason why sexier apps don`t become common. Over the next few years, the in-house legal functions management will focus more aggressively on the ongoing evaluation of resource decisions for specific areas of work, whether they rely on in-house lawyers, in-house non-lawyers, law firms or non-legal service providers. In addition, they will improve the legal technology and innovation capabilities of their teams by strengthening the skills of existing staff; take on the expertise of other internal functions (e.g. through rotation programmes) or external parties (e.g. secondment); or hiring from new talent pools. Softphones allow distributed employees to manage their court affairs and communicate with each other and with customers from anywhere. AI is changing B2B marketing and enabling companies to optimize their customer experiences. And the legal industry can also use AI to create better customer experiences. The trend towards increasing workloads and fixed budgets focuses on efficiency. This means that legal departments need to improve their processes, the implementation of legal technologies, analytics and other digitization strategies to support this increased workload. Think of a role as legal operations.
What was once a new addition found almost exclusively in technology or financial services companies has achieved consumer status, with 58% of departments surveyed across all industries fulfilling this role in 2020, up from 34% in 2018. “Eighty-seven percent of the legal departments we surveyed in 2020 expected their total number of full-time internal employees to remain the same or decrease,” says Hutto. “Traditionally, larger workloads could only be managed by higher internal productivity or expensive external advice. Advances in natural language processing and machine learning (ML) technologies are opening up a third way to tackle these critical tasks. In-house legal departments have long been reluctant and risk-averse to automation, but the impact of the pandemic has forced many to move up a gear in 2020 and continue, or at least actively consider, more comprehensive automation of certain legal activities, particularly related to large corporate transactions. The challenge now is to decide which technologies to use to achieve real business results. The prevalence of the role tends to increase with the size of the organization. What could be the next innovative role in corporate legal teams? Gartner Research notes that increasing investments are being made in legal project managers (+56%) and data scientists in the legal department (+30%).
Manual processes can never be as efficient as automation for simple and repetitive tasks. This includes many elements in the business transaction work. Convergence of sustainability reporting standards. Global efforts to identify and report significant ESG risks have resulted in a variety of reporting standards, with many investors preferring standards such as SASB and GRI. In 2020, the authors of the leading sustainability standards and frameworks announced a Memorandum of Understanding to jointly create a comprehensive corporate reporting system. Investors will soon be able to get a complete and comparable view of a company`s significant risks (including ESG). As with many trends this year, we expect private equity firms and other private companies to focus more on ESG. All boards should expect to be held more accountable by their stakeholders for sustainability disclosure. It is widely discussed among lawyers in Russia that there is now an urgent need for a comprehensive review and modernization of corporate law and corporate governance. However, in the last two years, the Russian Civil Code and the Federal Law on Joint Stock Companies have been fundamentally amended. According to the new Civil Code, all legal entities (commercial and non-commercial) are divided into unitary companies and companies. From hyper-automation to using collaborative tools such as virtual whiteboards to using machine learning to get the most out of historical information databases, most legal technology trends rely on the cloud.
Those in the camp who advocate legal AI point out that the capabilities of computers are theoretically compatible with the nature of much of the legal work.