This post was co-authored by Michael Dunne, Apttus Product Marketing.
Last week in NY, ALM’s Legaltech© conference once again lived up to its reputation as one of the most important legal technology events of the year. Along with coverage of the perennial topic of eDiscovery, the conference highlighted the fragile balance between technology innovating the legal practice and technology creating more risks while mounting reactionary regulations pile on the confusion.
Several conference sessions highlighted new corporate issues resulting from the explosion of data, while others focused on the shifting trend of harnessing “smart” data to counteract potential threats or vulnerabilities in managing risk.
Potential Risks Around Big Data
Big data was on the lips of many speakers, which wasn’t surprising, since the proliferation of information has always been a problem from a discovery perspective. However, the impact on compliance was also a rising concern, with how staff and agents of corporations have more ways to “say crazy things to clients” via phone, emails, text messages, etc. or just publicly, in general, through social media and other virtual broadcast outlets. One session pointed out that based on a 2015 survey “corporate data is growing 55 to 80% a year.” And the prospects of more intrusive regulation are forcing companies to more carefully curate their data and documents, notably with Life Sciences and Financial Services industry, which were showcased at the event (not unexpected with the conference held in New York City).
Related to big data was the issue of the proliferating number of devices, or “device density” as another speaker described it. Individuals now have multiple devices, and often simultaneously using devices provided by their organization as well as personal devices like tablets and smartphones. This “highly mobile workforce” opens the door to more vulnerabilities, whether it be from outside attacks (hackers, cyberterrorists, etc.) or inadvertent disclosures through lost devices or mishandling of security protocols (password sharing, lack of passwords and such).
The Impact of Globalization and Location
In addition, the significance of globalization and location was emphasized. The rhetorical question of “do you know where your data is” was constantly raised. With international operations, the myriad of outsourcing and business partnerships around the world, and the ease of migrating data cross-borders, the dispersal of data and computing resource to different regions, organizations of even medium size risk exposure to cross jurisdictional issues, between countries with conflicting laws. For example, an interesting case of the Sands Casino was reviewed, where the holding company based in the Cayman Islands was being sued in Nevada, but data identified in discovery was located in Macau – where Macau privacy laws directly contradicted the US-based discovery process. And in a moment of perfect timing, the “Privacy Shield” response to the invalidation last fall of the Safe Harbor policy hit the presses less than 24 hours before a session on the Safe Harbor defeat. In true LTNY fashion, the technology-adept speakers were ready with an updated presentation by show time.
How Contract Management Can Limit These Risks
So, what to do? Exposure to risk is skyrocketing due to a rapidly expanding set of technical, business and regulatory factors. This is where contract management can play a key role, both in terms of effectively managing a company’s own risks, but to also address those risks arising in the network of customers, suppliers and third parties around the globe.
Contracts underpin commercial relationships by stipulating the commitments and obligations between counterparties. A step change in how contracts are managed, how risk is mitigated, and how contracts can be wielded as assets (say in the protection of intellectual property (IP)) can lead to both greater organizational efficiencies and even competitive advantages, like with highly regulated industries or IP-intensive industries.
Contracting improvements yield an exponential benefit simply because more than half of litigation in a typical organization still stems from issues with contracts. In the session on “Contract Risk Management and Compliance” a disturbing statistic was presented on how “50 to 80% of global litigation is due to a failure to monitor and manage contracts.”
In the same session, an Aberdeen report was quoted, on the benefits of automating contract management – that is improvements in contract management can lead to “2-9% revenue increases (9% is reserved for certain industries)” as well as “ 30% lowered costs” with the contract management function.
Why Contract Automation is a Must
Such statistics stem from full visibility into contracts, both internal and third party paper, including the ability to understand what clauses are being used or modified, as well as from the ease of instituting changes (say mass edits, or revising contracts or authoring new contracts) that automation can provide with technology like Apttus Contract Lifecycle Management.
And excellence in contract management automation provides a strong foundation for making the legal department a strategic contributor to organizational success. This point was nicely underscored in a session hosted by Kevin Clem of HBR Consulting, entitled “The 21st Century Legal Department: Leverage Powerful Analytics to Create Value.”
Speakers from Apttus-client Hewlett-Packard were showcased in that session, who made the following incisive comments:
“Over the last several years, legal has slowly embraced the concept of big data and analytics to improve legal processes. But more importantly than “big” data is “smart” data… legal has been overwhelmed during the big data revolution and the trend has shifted to finding the important details among the massive stockpile of information. By combining strategic systems like Apttus CLM with other key systems deployed throughout the legal department, lawyers are not only getting a more comprehensive view of their world, but their getting relevant and actionable metrics that move legal away from an administrative cost center back to a more strategic business unit.”Apttus Customer
The world is changing, it is changing rapidly, and risk is escalating as a result of technological developments and related regulations. Addressing fundamentals like contract management will yield exponential dividends for legal departments. Managing risk in a digitally disrupted world is possible, and proving to be a competitive advantage.