Today's episode of The Contract Lens Podcast features Co-founder and COO of Malbek, Matt Patel, joined by Lourdes Slater, Founder and CEO of Karta Legal, as they discuss some of the latest trends in legal tech. With a wealth of experience as a litigator, technologist, and process improvement expert, Lourdes provides candid commentary on how the pandemic has forever disrupted digital transformation in the legal world. She points out that tech is part of your "lawyerly duties," but encourages listeners to first start with a clear legal tech and innovation roadmap before selecting any vendors. Lourdes emphatically makes the case for why law firms, not just in-house legal teams, should embrace contract management software, and she shares her perspective on the traits that are essential for effective Legal Ops professionals. So grab a glass of wine, and let's talk contracts!
Intro:
Welcome to the contract lens podcast, brought to you by Malbek. In this podcast, we have conversations with contract management thought leaders and practitioners that everything contracts and its ecosystem. In today's episode, we discuss trends in legal technology. The conversation is led by Matt Patel, co-founder and COO of Malbek. And he is joined by Lourdes Slater, founder and CEO of Carta Legal, a legal operations and technology management consulting firm with a focus on design thinking and process improvement. Lourdes is also a partner at a litigation law firm in New York City. She describes herself as part lawyer, process maven, technologist, educator, lean six sigma facilitator, and innovation driver. So now it's time to relax, grab a glass of wine, and let's talk contracts.
Matt:
Hello everyone. And hello, Lourdes. Very nice to connect with you again today. And today over the next half an hour or so we will talk about three or four trending topics in the legal technology and legal services space. And with Lourdes's vast experience in this area, it would be great to hear your experience and your perspective on these things Lourdes. So I look forward to the conversation.
Matt:
So the first thing we will talk about is this year, more than ever, we saw a lot of disruption in the legal space, whether it is with process changes or technology. And in many ways, I think legal team feels very empowered, empowered by new possibilities and options with so much technology coming to legal tech space. But I also see many folks getting very confused with so many options. What's the right balance, right? There's so many things that you can do within your own organization, whether it's changing the way people work, what technologies are you using today? What should you change? What new technologies should you implement? So Lourdes, as you work with your clients, and you've seen some of them evolve this year, especially working remotely and changing the way they operate, can you share some perspective and insight on whether this disruption has been healthy and what they have done to make the best of it?
Lourdes:
Sure. And what a year it has been. If you were to tell me last year, when we were all at legal week in New York City in February that this was going to be a year where everyone was going to be working remotely and using e-signature, I mean like the real basics that [inaudible 00:03:13] happened so quickly that had not really taken on for years. Those of us in the legal technology and innovation space, both at law firms and legal departments are always trying to push change, but change management is very, very hard.
Lourdes:
So I think that disruption has been very healthy in the business sense of transforming or beginning that transformation that you need to truly become digital and to truly become the legal department or law firm of the future. And there's a lot of work to be done. It is healthy, it has to happen. It has been demanded by clients and now it's being demanded by circumstances. The one insight that I have and what I have seen before as the key to success and what I continue to see now as the key to success is to have a very clear strategic, legal technology and innovation roadmap.
Lourdes:
And that requires a lot of planning and thinking and budgeting. And that has to be the first step I. When I talk to clients and they say, well, we must have a contract management system installed by the end of the year, and it's December 1st, you have to stop them for a second and ask all of the other questions that need to be asked to make sure that that is the right first step, and how do we go about it.
Lourdes:
We have seen innovation initiatives fail over and over again, or not been embraced or adopted by lawyers because the process has not been in place. So what we work on with clients on what I think is the only way to truly ensure or optimize your initiative is to create a legal technology and innovation roadmap to prioritize what you need to do to have team meetings so that everyone is on board with the technology that you're choosing and why, and to create the process whereby the best potential for success can be optimized.
Lourdes:
That is really what I have seen. The one thing that I want to point out that I think is different about this pandemic is that when we hit the 2008 financial crisis, law firms adjusted at the margins. They reduced the [rat 00:05:58] rates, there was some internal cost cutting measures. The rise of the legal project management professional was then what I see now is the rise of the process improvement professional and the process improvement expert, because there needs to be a process for it to be managed. You cannot just have a team of project managers that are managing processes that have waste and errors in them. So I think what we will see now is truly embracing design thinking and process improvement as part of that innovation journey.
Matt:
All, all valid points. And I'll share a couple of things that I heard to piggyback off of that, Lourdes. Oftentimes when we are meeting with an organization that wants to implement contract management technology, and they come to Malbek or what we can do for them, one of the popular questions we get asked is, hey, this year we're working remotely. We don't have a system in place and we need to get something going. How quickly can you get us live? I love that question, because I can say, well, we can get you live in a couple of days or a couple of months, or however long it takes you because process before technology, as you said, right? Are you ready as an organization to implement technology? Because it isn't about how long it takes to put in the system. It's about how quickly can you map your process to the technology and roll it out to your organization.
Lourdes:
I totally agree. I think that technology comes in to solve a problem, but you need to know what the problem is. And sometimes it's not what it seems. We have had contract management tools for a while. And a lot of the older tools that have been around for a long time, what I hear from my clients is no one uses that, it's clunky, people do it manually anyway. So there has to be a discussion with the attorneys. And that discussion with the attorneys, and that's what I love to do, the workshops that we give really talk to them about the importance of not only managing their time, but managing the client's data in a way that complies with their professional and ethical duties.
Lourdes:
Because we keep forgetting that the elephant in the room, both for law firms, even if they build by the hour and for legal departments, is that they have a duty to the client to not only provide work that is efficient, and at a rate where it is fair to the client, we have to be very client centric. So we have to think of who our client is, what does the client want and how can we protect their confidences, and deal with information governance and all of those legalities that when we talk to lawyers about technology, they immediately say, well, I'm a lawyer. I'm not a techie. Just tell me what I need to do and I may or may not do it.
Lourdes:
What I need to do is I need to explain to the lawyers how the technology is now part and parcel of their lawyerly duties. And that is a very important component that I don't think a lot of people address, but it's really part and parcel of what Carta Legal addresses when we are dealing with an innovation initiative.
Matt:
If you look back last 10, 20 years, CLM technology is not a new thing. It's been around for over 10, 15 years now. Back in 2000 or 2005, or even 2010, systems like Oracle and SAP and even CLM applications like that were... heavy IT services were required and there was a whole team managing. It was quite normal. I'll use an analogy like a flip phone or a mobile phone, where if you remember the days, and I'm dating myself, but-
Lourdes:
I remember. There we go.
Matt:
And to be fair to all of us, that wasn't that long ago either. I'm not talking about a rotary dial phone here, but we had to go to the store, whether it was Sprint or AT&T or Verizon, to switch a phone and to upgrade or move your data or do anything with it. It was not an easy process to switch a device. Or you want to configure it. And that was the case even with systems like contract management. You needed an army of people.
Matt:
But this decade and coming into the next decade now, the newer professionals are expecting what they are used to with their smartphones or tablets or smart TVs, where upgrades are just automatic while they sleep at night. Configuration is in their hands, they don't have to go to a technology vendors or IT services. I think the whole perception is changing, right? You see professionals, legal professionals now wanting to do this on their own. And the newer CLM solutions have to support that.
Lourdes:
You touch on many topics that we could be talking about forever, one of which is the difference between millennials and generation X, and the point that, yes, the younger professionals, want support as a service, want instant gratification. They don't want to deal with an IT department. And all of that is now possible. In fact, all of that is now more efficient to embrace that way than do it the old fashioned way with a huge internal IT infrastructure. Moving to the cloud is the way to go. I advise my clients, with the right security measures.
Lourdes:
But the leaders of a lot of these companies and law firms, especially law firms, are still of the older generation, and they have not quite embraced change management in the way that they should. And the pandemic, I think, is tipping point for a lot of those folks to really move quickly from the, we've always done it this way pedestal, to we better figure out how to do this better, or we're not going to get the best people, clients are going to leave, we're not going to be able to provide efficient services at a good price, we're going to lose money to the alternative legal services providers, the big four, and you can go on and on the list of threats that are existential, I believe, to the law firm life as we know it.
Lourdes:
So, I do think that as millennials move up the ranks, we are going to see change. I thought we had to wait for that, but now I'm seeing change happen even when that is not the case. But yes, years ago, I'm talking about five years ago, it was the comeback to innovation initiatives that were made a lot of sense and the ROI was there. And we could give the data as to why you should do it. The response was, well it's always worked that way. We've always done it this way. Let's just not rock the boat. So now that the book is rocking and it doesn't matter what you say about it, things need to change.
Matt:
Indeed. And speaking of the legal professionals and how they are adopting to this change, you said it earlier that attorneys and in-house legal and legal operations, they have a billable rate, right? Even internally, there's a cost of legal services, whether it's direct or indirect. And the more time you take from legal or every contract review, the more it's costing the organization internally, whether it's time or money. And I'll be very clear. CLM technology is not there to replace the attorneys. CLM technology doesn't have a law degree. And AI is gaining a lot of traction. What technology can do is if an attorney has to spend one or two hours reading through a document, and if technology can highlight the key clauses so that they only spend half an hour, it helps, right. It helps reduce their time. It helps reduce the cost involved internally, and let the technology help you review contracts and process them faster, and only have to approve language that is really changed. Would you agree to that? And have you seen any organizations in that kind of a benefit?
Lourdes:
Yes. I think CLM technology has been around for a long time and has been poorly adopted. But I think mostly because of this concept of lawyers inability to do things differently, I believe that CLRG now should be embraced by both law firms and legal departments. So far, we see a lot of legal departments embracing CLM technology in a way that makes sense for them, because like you said, legal departments, companies are not a profit making machine. And because of that, a lot of times they are overworked and they end up sending a lot of work to outside counsel because they cannot do it themselves. So having the technology in-house to do more things themselves addresses the number one pain point of annual legal department, which is and has been forever [inaudible 00:16:45] legal spend. So it is a must-have and is must-do-well technology for legal department.
Lourdes:
And I do believe that the same way that document review platforms change the way lawyers conducted or conduct discovery and the same way that lawyers would got used to using predictive coding, AI, and analytics, to really cut down the time and cost of a document review, that same mentality needs to be applied and needs to be fleshed out for contract management. Because I think that lawyers... I cannot tell you how many legal invoices I have reviewed in my lifetime, where they're hours after hours spent on reviewing clauses in documents, that not only can be done at a fraction of the time and a fraction of the cost, but more accurately by a computer than by a lawyer.
Lourdes:
The reason why lawyers spend a gazillion hours looking at contracts is because a human cannot retain all of that information. And you have to go over and over again and recheck and have a proper legal retract and have your junior associates recheck. All of that becomes a crazy amount of time and money that the client is then asked to pay for. And frankly, why clients do pay for this is beyond my comprehension. So I am a hundred percent in agreement with you, that let's start thinking about contract management, the same way that we have embraced and adopted document review management.
Matt:
Historically, there've been looked at as a internal department and a bottle neck in house. Whenever someone's asking, hey, where's that contract? The answer is, oh, it's with legal. We don't know, right. That was the phrase. And that's a negative connotation. But the fact is, from what we have seen in the industry, one legal professional is supporting over 200 business users. So if you have a thousand person company, for example, you'll be lucky if you have three to four legal operations or attorneys supporting that business.
Matt:
Now imagine the number of contracts that are being requested, whether it's for sales or procurement or finance services, all kinds of agreements, even NDAs for that matter. So each resource in legal has a high volume of contracts to process. So clearly that's a bottleneck. But these days, with so much focus, whether you look at it from the technology, lots of new tools are coming out the market, or even VCs investing in this space, legal is getting a lot of exposure and they're now front and center limelight. And instead of being considered a bottleneck, I see legal organizations being positioned as a, as a partner for the sales and finance procurement departments to help them get contracts done so that they can conduct business with that external party quicker. Do you see legal operations feeling more empowered again and getting more attention within an organization rather than being looked at as a, as a back office?
Lourdes:
I do. Legal operations, which is a particular discipline that can be done by attorneys or other business people or project managers or process improvement experts. It really means taking the business out of the legal work and running in-house legal departments like a business. So having one to three people, a department, dependent on your size, that is focused, that they're focused on competencies like financial management, analytics and [inaudible 00:21:15], to make legal efficient. And they are really the catalyst of change and trigger change management.
Lourdes:
We've had this concept, quote unquote legal operations, since I don't know, for about a decade. And the 2010s were a decade of really slow growth for legal operations. First, because you didn't have attorneys that were doing legal work, embracing this concept or wanting to move into the space. And then, because there was a lot of analysis paralysis because of all of the technology out there. And because they see technology as an expense coming in and they can't see past the very easy math of, if you bring all of this technology, then you can reduce your staff by so many people. And this technology more than pays for itself in the first year, for example.
Lourdes:
So there has been a lot of growth, slow growth, but I think again, the pandemic, it is a catalyst and a tipping point for legal operations to really now come in in full force. But the main problem that I see with legal operations, I think, and the reason why it hasn't been as successful and as forceful within a legal department as I think it should be, is because you need to find the right people to do this job. It is not easy for anyone, and I speak from experience, right. I am a very experienced lawyer. I'm a litigator, I'm a process improvement expert. I am a technologist. And I've been in a few firms where we've had to do major innovation and it's very hard to convince lawyers to follow this new path that you are presenting or forging for them. So you need a type of personality that is not that easy to find.
Lourdes:
So a lot of legal operation professionals tend to be on the younger, more inexperienced, very smart side of things without the gravita or the ability to talk to general counsel or a head of legal or law firm managing partner at the same level. And I think that hinders the performance of a legal operations department. So an advice, when legal departments are looking to ramp up or create a legal operations department, my advice is to pick the right person. It can be from within you can up-skill attorneys or experienced paralegals or people within your own department, or you can bring others, but make sure that you give them all tools that they need, including access to the C-suite, including the ability to get certified in project management, the ability to get certified in process improvement. The ability to really know what they're doing. It's sort of like a title that was given to people that were not ready to embrace the role.
Lourdes:
And now I am advocating for making sure that that is a profession that has to be filled by people with a number of skills that are really, really crucial to the success of that department. But running legal departments and law firms as businesses and enabling by doing so the ability of lawyers that want to practice law and write [inaudible 00:25:01] and take up positions or negotiate deals, to do that without all of the other stuff that really becomes a time suck and like a life quality issue for lawyers. A lot of lawyers hate what they do because they're not doing what they want to do. They're not practicing law, they're dealing with all of this other stuff.
Lourdes:
So separating these two things is really what I have been doing for the last 12 years in my law firms. Even the ability of taking the stuff that litigators, they don't want to really do, and moving that into another channel. So I think I am a big proponent for legal operations done the right way. That's the right way and embraced by the entire department the right way, which includes some training to management and leadership as to the importance of legal operations.
Matt:
Absolutely. Yeah. I remember the sales always had this group of professionals called sales operations to do exactly that, right? Letting the account executives focus on selling and the sales ops would manage all of the internal processes and technologies. Legal is now getting that legal operations is meant to support the attorneys, doing their jobs better. 2020, we all work remotely. And I personally feel I was actually more productive. But from what you have seen, do you see productivity improving with organizations or did it go down this year?
Lourdes:
I will tell you what my gut tells me. My gut tells me that, yes, it depends on organization, it depends on the people that you have working for you. It depends on many things. And legal departments I believe are maybe in a different position just because of the way that they're structured. But I think that law firms, as soon as they can get back to normal, they will try to do that. They may have a reduced admin staff in the office. They may reduce their real estate in certain cities. They may allow certain people of certain seniority to work more from home. They may do a hybrid between in-person and remote, but I do believe that law firms, and I don't think they're wrong about this, I think there is a very unique thing about being in an office with your associates and your partners and your support staff and doing work together.
Lourdes:
I don't think that Zoom replaces that. I think that working remotely will replace, probably permanently things like mediation. So I was talking to one of my partners yesterday that said that they had a 13-hour mediation via Zoom, and how great it was because typically in a mediation, you're in a room with a mediator for 10 minutes, and then they go to talk to the other side for an hour, and then they go to their own office. And it's so inefficient, that mediation concept.
Lourdes:
So there are particular examples, meetings that we won't have people traveling from all over for an hour meeting. There are particular things that I think will forever be changed because we have now shown that they could be done. But I think that there is a need for face-to-face interaction. There is a need for face-to-face training. I think our younger lawyers are missing out on key training, and the friendships and the working relationships that you create by being in a ward room together, preparing for trial or being in a ward room together preparing for deposition. Those cannot be equal doing it remotely.
Lourdes:
So I think that is one thing that I don't want to lose sight of because I think it's very important. I don't think I would be the lawyer that I am today. I don't think I would be the anything that I have today without having been brought up the way that I was brought up, which was being in the office long hours, forming those relationships with the client and with your partners. So I think that's very important. But there's a lot of other nonsense work that can be done.
Lourdes:
The other thing, and I think it is very different, perhaps maybe even different for men and women, but it depends on what type of home setting you have. If you are in New York City and you have a small apartment and you have two small children and you have two working parents taking calls, it has been a really, really tough year for those folks. The numbers that I have heard a woman wanting to leave the workforce are really panicking me because I think that all of the gains that we have made as women in the profession could really be lost in a year, if we don't figure out a way to provide flexibility and provide a place for these women to go to, or these men that are in charge of running the children and work at the same time.
Lourdes:
So I think it really, in my view, going back to a normal state will be better for a lot of people, but regardless, I think that because of the economies of scale and what we have seen we can do from home and because of real estate being so expensive in so many big cities, we will see a hybrid model, especially for particular people in the law firms and maybe even legal departments.
Lourdes:
So that's sort of my prediction is that as a partner in a law firm, I would want my lawyers back as soon as I can get them there safely and go back to the way things were. And I would be more flexible when someone said, I want to work from home, or someone says, let's do this mediation via Zoom. Now I would be talking about as a managing partner generation X, the way that I was brought up and the way that I think, well, people have to be doing the same thing I did. Maybe not so. Maybe not identical, but there's some things that I really would want to put back into place, the way that they were.
Matt:
You know, I grew up in a very social environment. I'm a people person and I a hundred percent agree. There are tasks that you can do well remotely, but any strategic or corporate or any larger projects that require bouncing off ideas and thinking through things require you to be in a conference room face-to-face and remotely just doesn't work.
Lourdes:
As a change management instigator, it's very hard, has been very high this year. Because I need to be in the room with people, with the team. I need to be able to talk to people. I need to be able to see the setting. I need to be able to talk to the C-suite and the paralegals and IT. And I find this year has been very difficult for me to get things done. And very stressful because I much rather being there with you to do this.
Matt:
A hundred percent, I completely agree, and that day will come [laughs] where hopefully next year, we can resume some sort of a normal work-life balance. So with that said, just mentioned that something came to mind. I've seen a joke about how a plumber comes in to fix your plumbing, charges you 250 dollars. All he did is tapped one of the pipes to fix it. You get asked, hey, for tapping a pipe, you charge 250 dollars. The plumber says, well, tapping was $5. The remaining $245 was to know where to tap.
Matt:
When I think of legal fees, everyone always jumps at, wow, this attorney is charging 500 dollars an hour or a thousand dollars an hour. And all they did is red-line a couple of words. So same analogy, right? Red-lining those two words. Yeah. That was like $50. But the remaining $950 is knowing which words to red-line. So, I'll end with that.
Lourdes:
I agree with that a hundred percent.
Matt:
So thank you Lourdes. Amazing insight. Great talking with you today. And we look forward to the next one.
Lourdes:
Thank you so much, guys. I enjoyed myself as well, and there's so much to talk about. So I'm really happy that you guys are putting these series of podcasts together with people that are willing to share their experiences. That's great. Thank you.