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FIVE TECHNOLOGY CHALLENGES THAT ARE HOLDING BACK LEGAL INNOVATION

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Damian Enskat, Programme Manager and Akber Datoo, CEO of D2 Legal Technology

 

The “in house” Legal function has been arguably the most under-invested in department over many years in terms of IT spend, and has missed out on the benefits of available technology enablers. Yet, as an often-unrecognised consequence, so has the business the Legal function serves. Indeed, Legal has historically been viewed as a cost centre, despite the role it can play in business optimisation. As one general counsel of a major investment bank said recently during a legal transformation programme, “There is no “P” in the Legal P&L but there is an “L.”” 

This approach has created a plethora of manual processes, physical documents – and haphazard software selections (often tactical solutions chosen on cost considerations only) leading to manual and often broken processes with a negative resultant impact on risk, cost and the service provided to internal and external customers. Furthermore, it has simply ignored the business value and optimisation an in-house legal function can provide.

The flipside is that there are often huge potential benefits that can be relatively easily achieved through the use of LegalTech, be it e-Billing or time-tracker systems, document automation, clause libraries, knowledge management, document storage or NLP/AI applications to extract data from legacy document portfolios. This, coupled with the drive for legal innovation, (recognising that the business processes in legal must now be scaled to address the complexity of regulation and the increasing cross-border considerations) – has to make a stronger case for investment than ever before.

Legal teams are at a tipping point. They know they need to take advantage of legal technology, but, as Damian Enskat, Programme Manager and Akber Datoo, CEO of D2 Legal Technology explain, there are five key challenges legal teams face when it comes to selecting legal technology software. The question is, how can these challenges be overcome to progress legal innovation?

 

Challenge One: Playing a different role 

Time to shed the naturally cautious legal perspective and embrace change, including a programme leadership role.  

Of all the business functions, the depth of knowledge and expertise of the legal function is almost unrivalled, however the level of cross-functional project delivery experience within the legal function may often be limited to the negotiation of supplier contracts which support these projects. Yet, legal transformation projects (many of which have a software selection component) require the legal team to play a different role on these projects entirely.

From supporting the software contract negotiations on programmes in other functions, senior members of the legal team now must become business leads of programmes which benefit the legal function itself. They are now at the heart of defining and ensuring delivery of the business benefit of the programme. This means that cross-functional project experience becomes crucial as the legal business lead will need to mobilise stakeholders from not just within legal, but also IT, COO office, procurement, finance, risk, and front office and to fully engage with project teams if these initiatives are to succeed.

 

Challenge Two: Allocation of internal resources

Not having the right change management expertise is truly a false economy.  Not having a dedicated independent project manager, or accepting a “free” partial resource from the software vendor to manage the project are just some of the common paths to failure.

Due to the growth in digital transformation programmes in recent years, much of an organisation’s Capital Expenditure (CapEx) – and hence the most experienced Business Change, Procurement and IT professionals – have been diverted into those functions with greatest perceived transformation potential such as the Front Office, Risk and Finance.

This means that historically, legal transformation programmes have been allocated internal resources who have less experience than is required for the role either to save money or because the resources with sufficient levels of experience have been allocated elsewhere. This often means that best practice approaches are not followed. Governance/oversight models are often not fully developed, leading to unclear roles and responsibilities and insufficient accountability for business and supplier teams.

Software providers often offer “free” partial resources to help to manage the selection. This can lead to sub-optimal decision making and a final solution which is too expensive and does not meet the needs of the legal function or deliver the intended business benefit.

 

Challenge Three: Access to software selection tools and templates

Utilisation of best practice tools and templates to help the process is critical. Managing the intended business benefit of the project through the requirements gathering process, functional and technical specification documentation, through to implementation is vital for the project to be a success.

Due to the historic focus of corporate transformation programmes on other functions, legal teams may not have access to (or even be aware of the existence of) the best tools for the software selection exercise such as detailed selection plans, governance templates, requirements documentation, proof of concept methodology, Request for Proposal (RFP) documentation, self-calculating scoresheets, supplier briefing documents and commercial negotiation templates such as those which might support an iterative sealed bid. Where legal teams are able to source some of these tools from other departments with recent software selection experience, they may not know which ones should be prioritised for their selection and how these should be adapted to ensure success.

Correct use of software selection tools and templates means that legal will have the information they need to fully consider the options prior to purchase as opposed to feeling under pressure to accept the first available option.

 

Challenge Four: Future-proofing the software selection decision 

The LegalTech market is still maturing, and there is a dearth of standards that can be seen in more mature departments. Flexibility of the system is key and requirements should be introduced which build this into the decision-making.

Once approval for a software selection decision has been achieved, it is important to future-proof the choice of software as much as possible, as when new requirements emerge after the selection it may not be easy to adjust the software, change the decision and/or realign stakeholders for a new software selection process to begin. Future-proofing can be achieved by supplementing the current list of requirements with a small number of additional future requirements, which may already exist in other legal functions within peer companies from the same industry. Some requirements can be designed in a flexible manner such as introducing tables to allow users to “soft code” certain variables.

As legal teams may not know what these additional requirements might be or have an industry network through which these can be gathered, software selection decisions often become dated very quickly, meaning that opportunities may be missed for additional business value or additional costs to the organisation may be incurred.

 

Challenge Five: The fragmented legal sector software market 

There is a wide range of software options available to legal teams ranging from choosing a small number of products from large software vendors to buying from smaller vendors and new market entrants and integrating these products together. Larger organisations may also have the option to build part of the solution themselves. Careful navigation of these options is critical so a comprehensive solution can be designed which meets the needs of the legal function. 

The number of software products which target the typical legal requirements (document storage, legal agreement data management, data governance, workflow and document review systems) are numerous and often dominated by very large market players, and then a number of smaller companies and new market entrants – with very little in the middle. Larger organisations may also have the option to build part of the solution themselves. Whilst these software products can be combined in various different configurations to meet the needs of the legal function, it can be very difficult to find the right balance between software specialisation and enterprise-level features.

The number of possible permutations are huge and navigating these options without an in-depth knowledge of the market can lead to incorrect software product(s) being purchased (or developed), resulting in “regret spend” (non-refundable software licence fees being paid and substantial additional investment being required to rectify mistakes). It is important to choose a software provider which has a broader technology roadmap aligned to the vision and goals of the legal function.

 

Conclusion

It’s time for in-house legal teams to raise a hand and ask for help. Yes, the legal software sector is saturated currently with multiple vendors vying for business, but this also means there are plenty of options to give legal teams the help they need to become far more effective and well positioned to manage risk. Getting a new legal innovation project off on the right foot is essential, rather than facing the consequences further down the line, so getting experts in early and seeking advice is the best place to start. There have been far too many poorly executed or failed LegalTech initiatives – it is time to go back to the basics of change and transformation and think before you spend, so essential legal innovation can thrive to the benefit of the wider business.

 

Business

HOW WILL DIGITAL TRANSFORMATION EFFECT JOBS SKILLED IN TECH

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Maria Paola Resta, HR Manager at Auriga

 

The world of technology is constantly evolving, and digital skills are also rapidly changing over the years. The interaction with the end customer is becoming more and more digital since the pandemic, therefore tech jobs, particularly in the banking industry, may need professionals to “humanise” the interfaces used by customers.

 

Tech jobs on the rise

Tech talent is growing, particularly in the Artificial Intelligence (predictive, customer profiling, etc.) sector, and technical skills regarding augmented reality, the user experience, and interface design are also on the rise. The outbreak of the pandemic has led to an unprecedented acceleration in the digitisation of processes, therefore jobs that specifically require knowledge of digital skills has increased in order to meet the needs of customers. Tech jobs remain focused on specialised areas of tech, however as the technology industry is in constant flux, some areas might be in more of a demand in comparison to others.

 

How remote working will affect the tech talent pool

The increase of remote working has already impacted the tech skills business, as the day-to-day working environment now exists in the digital realm. Tech skills are needed now more than ever, and employers have a huge role to play in helping people to continue their personal development while continuing home working. They need to focus on their personal development in order to build the workforce they need for tomorrow’s world.

 

Skills beneficial to the banking industry

There has been a massive shortage of skilled candidates in digital and technology disciplines. IT and financial companies need to upskill existing staff to fill these exciting new roles. In an age of high-frequency change, learning is truly for a lifetime.

In the debate about tomorrow’s skills in the banking sector, the rising value of each employee has often been overlooked. People are a valuable asset as machines take on the more robotic processes, and uniquely human skills come to the fore. How we develop these skills becomes a critical question for employers and workers alike. It will be many years before schools and universities nurture students well versed in these skills.

 

More tech talent required for business digital transformation

The process of digital transformation has already started with some businesses as a modernization process. This has undoubtedly accelerated strongly following the COVID-19 pandemic which forced everyone to overcome situations of technological immaturity and to radically review flows, work processes and models of consolidated business. Digitisation has entered even more pervasively into working life, becoming an essential and permanent condition, and making it necessary to acquire skills that are best suited to the new digital paradigms.

It’s inevitable that companies looking for ways to counteract the effects of the pandemic on their operations will ask their technology function to bear part of the burden. However, they must be strategic about any shifts made to the tech workforce. To ensure that vital digital services remain up and running, organizations must do everything possible to protect mission-critical talent. By showing their support now, companies can create goodwill that will carry over to when better times return.

Another of the direct consequences of remotisation is the emergence of new demands for soft skills suitable for managing collaborations and partnerships as well as specific technological talents that are increasingly specialized to support the new needs of businesses.

 

Tech skills that companies can use for their benefit

The movement towards technological areas are becoming increasingly crucial. Companies must necessarily equip themselves with professionals experienced in cybersecurity and train their people on the adoption of new operating models to protect all internal workflows from possible cyberattacks. In parallel, the need to acquire skills in the cloud, artificial intelligence, automation and user experience fields is growing exponentially in order to adequately support the changes in progress and allow work processes to be increasingly safe, intelligent and functional as well as suitable for supporting the new business models developed by companies following the pandemic.

 

How tech skills will support remote working

Soft skills are essential as they allow remote management and collaboration in virtual environments, but the importance of digital skills is growing. All HR departments are engaged in planning and finalizing training and learning projects whose main topic is information and communication technologies. The high complexity and technological vastness necessarily imply a high level of know-how and specialization in order to guarantee an optimal performance in the production and line areas, unlike the managerial or corporate areas where a disciplinary transversality of skills is generally privileged to allow a global overview.

Businesses have to work in order to build the right talent into the organization as a long-term plan during and after the pandemic, and this might be possible by applying AI, automation, and other exponential technologies to make workflows more intelligent. All of this affords a new opportunity to build better businesses and a better world. It starts with enabling a diverse workforce to perform optimally, and building trust and confidence among employees will be critical. How they are treated now will have an outsize impact on perceptions and value in the future.

 

Maria Paola Resta, HR Manager at Auriga

Maria Paola Resta has been a HR Manager at Auriga since 2018. Her role includes the coordination and overseeing of the group’s HR initiatives. She has a background in occupational and organizational psychology, and has been working in the human resources profession for 15 years. Her role focusses on talent acquisition, people development, training and employee relations. In the last 10 years she has worked in the HR departments of important companies that specialise in Information Technology, and her roles have increased in responsibility as she has progressed throughout her career.

 

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Banking

TO ENABLE BETTER LENDING FOR PEOPLE AND BUSINESSES, WE HAVE TO LOOK TO OPEN BANKING

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By Iain McDougall, CCO of Yapily

 

A recent FCA study found over 14 million people were grappling with financial issues at the end of 2020, representing more than a quarter of the UK adult population. The picture is similarly tough for SMEs, too, which have been impacted hugely by lockdowns, loss of earnings and more; it’s estimated the pandemic will cost SMEs an extra £173,000 in debt per year.

This is resulting in a lack of lending options for both consumers and businesses, as well as expensive or high interest loans, or worse, rejection from lenders all together. This in turn is driving unaffordable lending, and penning consumers and businesses in an ongoing and irresolvable debt cycle – at a time when they need the most support.

One of the biggest causes of this lies in lenders relying on credit scores and credit bureau data to inform their decisions, which simply aren’t accurate enough to truly get the full picture of a borrower’s financial situation.

The case for using Open Banking data in lending decisions has never been stronger.

Data accessed through Open Banking permits lenders to retrieve accurate information about the borrower’s financial history. This can provide more accurate assessments, and therefore enable fairer lending decisions.

 

Credit scores aren’t helping consumers

Take NHS workers as an example. Despite working tirelessly throughout the pandemic, NHS workers make up a sizable portion of the UK adult population currently struggling with debt.

Iain McDougall

An independent report from the University of Edinburgh Business School, in partnership with Salad Projects, found NHS workers are heavily reliant on long-term overdrafts and high-cost credit, where APR is as high as 1,333%. Almost all (93%) respondents said they use one or more types of credit or loan, compared with 75% in the wider UK population (according to the Financial Lives Survey). More than half (58%) use up to three loan providers and 68% use up to four loan providers.

This situation is the result of relying solely on credit scores. While these are the near-universally accepted method of determining credit terms, each credit reference agency has a different method for calculating a credit score. They rely solely on financial history, whether they’ve previously defaulted, or failed to get credit, and not a consumer’s actual financial position, whether they’ve recently got a pay rise or new income, to see how likely it is they will pay back any money borrowed. This can mean, no matter if a consumer’s financial position has changed, they can’t get a better loan because of a previous discrepancy.

 

The challenges facing SMEs

These issues are not just limited to consumers. SMEs, particularly those in the hardest hit industries like hospitality and travel, have struggled to access credit throughout the pandemic.

While many may have been thriving pre-pandemic, their lack of ability to turn a profit during lockdowns, meant they needed extra support. In an effort to keep these industries alive, we saw numerous government backed loan schemes launched, such as the Bounce Back Loan Scheme, to help struggling businesses survive. In total, these schemes have provided almost £180 billion worth of lending to date, supporting over a quarter of businesses in the UK.

However, the soaring demand from businesses in need of these vital funds meant lenders were unable to keep up and many businesses did not receive support quickly enough. What’s more, providers may register these types of loans with credit reference agencies, which means companies that previously had strong credit ratings may see their credit scores negatively affected by any delayed or missed repayments.

This is why it’s vital for lenders to get lending limits right the first time round, so SMEs can avoid potentially adding to their already growing list of debt and thrive in a post-pandemic world.

 

Enhancing lending with Open Banking 

Using Open Banking can add a much-needed layer of trust and loan personalisation for businesses and individuals. By basing credit decisioning on real-time financial data, lenders will be able to create a more accurate picture of their financial situation; and so make fairer credit offers.

Through adopting Open Banking principles, lenders will be able to onboard new customers and grant loans more efficiently, providing businesses with the cashflow required to maintain their workforce and support the economy.

With the borrowers’ consent, it will also give lenders oversight into how the economy is recovering, and enable them to monitor the rate at which the individual or business can expect the loan to be repaid. Meaning they can step in and provide extra support if and when required.

Open Banking provides what credit scores alone simply cannot – real-time insight into an individual’s or a businesses financial position right now, not three to six months ago. By leveraging the data that is readily available to them, lenders could achieve far better and more responsible outcomes. This will reduce the risk of loan default – for both businesses and individuals – and lead to more responsible lending decisions that can help people and businesses bounce back after what has been a difficult year.

 

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