New York, NY — Legal departments, often seen merely as cost centers, have the potential to become strategic enablers for their organizations, according to recent findings from the International Data Corporation (IDC). The IDC’s report, titled “Legal Friction: The Real Cost to Your Business,” emphasizes that by addressing inefficiencies, legal teams can transform how they deliver value, moving toward a model that accelerates business growth.
Ryan O’Leary, a research director in IDC’s Security and Trust program, alongside David Lancelot, Chief Legal Officer at LawVu, argues that many in-house teams are currently weighed down by inefficiencies and inadequate resources. The IDC report highlights that while other departments benefit from centralized systems, legal teams often manage their workflows through disparate tools like email and spreadsheets, leading to what the report describes as “legal friction.” This friction reportedly results in an average annual cost of $141 million in lost or delayed revenue for mid- to large-sized organizations.
Despite the sobering findings, O’Leary sees this as an opportunity. Modernizing legal operations is crucial for improving efficiency and gaining a competitive edge. “Legal sits at the core of the organization,” he stated. “If we embrace a business-focused approach and improve our operations, we can shift from being seen as a department of ‘No’ to a critical strategic partner.”
Lancelot described this moment as pivotal, recalling a traditional legal paradigm that was reactive and isolated. “In the past, legal was often involved at the last minute,” he said, calling for a shift that allows legal departments to contribute earlier in the strategic planning process. He emphasizes that today’s legal professionals need to amalgamate their legal expertise with business acumen, adopting a proactive stance.
To achieve this shift, technology is vital. Both experts stress that scaling the legal function without technological support is nearly impossible. The IDC report reveals that fewer than one-third of legal teams utilize dedicated legal platforms, highlighting a significant gap compared to other business functions that have integrated comprehensive systems.
Lancelot pointed out the irony in how legal teams operate. “Imagine hiring a new head of HR and having them manage everything through email,” he said. “Legal has been historically behind in adopting effective systems.” He advocates for unified, purpose-built platforms that integrate various functions, such as contract management, intake, and analytics, to reduce the inefficiencies caused by scattered tools.
The advantages of platform consolidation, according to O’Leary, include improved efficiency and data reliability. A unified system not only streamlines processes but also provides real-time data, enhancing credibility in leadership discussions. “When I go to a leadership meeting, I want to speak the language of the business,” Lancelot added, noting the importance of using data to gain respect in decision-making environments.
With the right technology in place, legal teams can demonstrate their impact on key business metrics, shifting the narrative from merely reporting costs to showcasing contributions to strategic goals and risk management. “In a fast-paced business climate, this capability can be transformative,” O’Leary explained.
However, Lancelot strongly emphasized that modernization should not come at the cost of interpersonal relationships. Instead, efficient technology should free legal professionals from administrative burdens, allowing them to nurture essential connections within the organization. “Building rapport fosters goodwill,” he noted, highlighting the importance of relationships in influencing strategic conversations early in the decision-making process.
The urgency of adopting new technologies is heightened by the rapid integration of artificial intelligence across all business functions. O’Leary warned that legal departments need to catch up. “AI is only effective with quality data,” he noted, emphasizing that fragmented systems risk producing unreliable outcomes.
As legal tech continues to evolve, features such as AI-driven contract reviews and predictive analytics are becoming integral to modern legal systems. Lancelot believes that legal departments are on the brink of significant transformation, as business leaders increasingly acknowledge the benefits of unified legal technology.
The IDC report concludes that while legal friction incurs tangible costs, the potential gains from a modernized legal function are being recognized. Lancelot underscored the need for legal teams to communicate their value propositions effectively, using empirical data to tell their story. “Lawyers are natural storytellers,” he said. “The challenge is to leverage quantitative insights to secure the resources necessary for transformation.”
Ultimately, O’Leary suggested that the success of legal departments hinges on fully embracing modernization—both from a technological and a relational standpoint—to become the indispensable business partners their organizations require.
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