As technology continues to revolutionise the legal sector and the world of business, in-house counsel must constantly keep on top of developments. In-House Perspective asks how in-house lawyers – even those who don’t see themselves as working in technology – can ensure they’re not behind.

Technology has transformed the legal sector in recent years, making everything from the drafting of complex contracts to the convening of multi-jurisdictional meetings as simple as logging on to a laptop or phone. The general consensus is that this has, and will continue to, revolutionise the way private practice law firms operate, commoditising much of what they do and leaving the high-level, value-add work to be delivered with a human touch.

In the commercial sphere, technology has been transformational too, with companies across all sectors now considered tech businesses due to the way digital systems are embedded into their everyday operations. For in-house lawyers, this has created the need to be on top of several quickly evolving areas at once – not all of them necessarily strictly legal. This is redefining their relationships with external advisers after more than a decade in which general counsel have been taking more and more work back in-house.

‘If you’re using the cloud or working with contracts you can get away with doing a lot of the work yourself but the higher you go up the tech chain the more important the tech is to your business and if you’re not a tech lawyer you’ll be looking for advisers to help’, says Chris Holder, former Co-Chair of the IBA Technology Law Committee and a partner at Bristows. ‘You’ll be looking to go to seminars and listen to podcasts and glean information from external counsel. If you’re an in-house counsel now and you’re not a data lawyer you’d be following that route. If you don’t fully understand technology and your employer is installing a big IT system or outsourcing contracts then you probably don’t have the time or the expertise to advise on those things so you’d go to external counsel.’

While the internet has made the world a smaller place, enabling organisations to connect with colleagues around the world at a click, to some degree the level of digitisation a company can employ depends on where it’s operating. José María de la Jara, co-founder of Peru-based legal innovation business ODDS Legal, notes that general counsel across Latin America are still in the process of handling as much work as possible in-house, which means they’re taking some responsibility for evolving areas such as privacy law. At the same time, they’re faced with the prospect of having to lean more on external advisers for specialist advice. ‘We recently interviewed 67 general counsel from Latin America – Chile, Peru, Mexico, Ecuador and Columbia’, de la Jara says. ‘What we see in the data is that they have to do more in-house – over 70 per cent are having to assume compliance responsibilities on top of their legal role, 64 per cent are dealing with corporate affairs and 62 per cent privacy. They have more responsibility and almost half of corporate legal departments are planning to internalise more work – that’s the context.’

De la Jara is seeing tech innovation increasingly focused on software around contracts, and highlights that e-signatures are almost universal now – 87 per cent of those surveyed are using e-signatures and half of those that don’t currently say they’ll do so later in 2023. It’s a similar story for contract lifecycle management (CLM) software. ‘Huge things are happening here right now in Latin America, although we’re somewhat behind what is happening in Europe and the US, and general counsel are learning from internal clients’, explains de la Jara. ‘Everything in sales is going digital and the best general counsel are learning from the strengths of their sales teams. In my personal view legal departments gain more by being jacks of all trades. That gives them a holistic approach and a view to what’s going on in the company, but as general counsel have to venture into unexplored territory with cyber security, privacy, what’s going on with the blockchain and AI [artificial intelligence], they need expert knowledge so will need to leverage the knowledge of law firms. That’s an untapped market for some law firms.’

Not the same the world over

For Lweendo Haangala, Legal and Data Protection Lead and the sole in-house counsel at international non-governmental organisation (NGO) ActionAid, the Covid-19 pandemic has accelerated her organisation’s use of digital applications. As she is based in Zambia and as much of the work the charity does is focused on rural and remote communities across the global south, even just using something as basic as email can be challenging. ‘When the pandemic hit we had to suddenly change our ways of working – suddenly everyone was using the word digital’, she says. ‘We got into a space where we had to make sure we had the infrastructure in place to have meetings, but we’re an international NGO, not a huge tech company with huge funds to roll out infrastructure. Even rolling out something as simple as [Microsoft] Teams was difficult’.

Haangala adds that the NGO is not only operating in the global north or in the global south, but their activities are instead taking place around the world. ‘In the global north it’s very easy to access technology because it’s got fast internet. In the south we’ve not got that and the connection can be very unstable,’ she explains. ‘Our rights holders are in rural areas so might not have access to electricity, never mind the internet. The world is fast-moving but the people we work for don’t have access to that.’

Just how challenging that situation can be was brought home to Haangala when a local legal contact’s court case had to be adjourned because a huge rainstorm had caused floods and they were unable to physically access their case files. ‘I’ve grown up in the digital age and I thought “they don’t need those things any more because everything is on iPads”’, she says. ‘But we still have physical court files and physical note-taking so this matter was adjourned. Those things are easily avoidable in the digital world, but in the global south that’s still a work in progress.’

Despite this, because ActionAid operates around the globe, Haangala must remain on top of the fast-moving nature of the digital sphere. The charity receives donations from people in many different countries and so cyber security and data protection are key. Though she joined the organisation in a data protection role, her remit has widened during her time there, meaning Haangala has had to learn from colleagues in other parts of the charity, as well as from networks of lawyers in similar roles to hers.

‘My role is legal and data protection so in addition to managing legal contracts and so forth I’m looking at data models, what we’re doing, are they in line with different regulations, do we have sufficient models, are they up to standard, what framework are we using to make sure we’re ticking all the boxes in terms of data protection’, she says. ‘I’m managing that role but leaning on the tech team’. She adds there’s a network for international NGO lawyers, through which members receive legal advice and access to certain information about developments in the space and an understanding of how other lawyers are handling these. ‘I need to make sure we’re using technology in a way that’s safe for rights holders and employers’, adds Haangala.

Holder notes that the situation is entirely different for counsel working inside large organisations such as banks and financial institutions. As so much of what they do is now driven by technology, they need to have teams of specialist tech lawyers, often broken down into specialisms, such as tech procurement, outsourcing and data.

Alberto Mata Rodriguez, Co-Chair of the IBA Young Lawyers Committee and Director of the Spanish legal department at Deutsche Pfandbriefbank, notes that, even within such organisations, technology needs to be embedded within the entire culture of the company for it to be a success. That means even lawyers without particular specialisms must have an understanding of how the technology works – but when they do, their jobs can become simpler.     

‘In the bank where I work we haven’t created any platforms or new technology that only legal uses, but that everyone uses’, he says. ‘We’ve created a knowledge management system and different departments have different inputs. As part of the culture of the company the bank has created a portal website where we interact directly and so avoid many emails with different versions of documents. The legal department interacts with everybody else and I can sign off pages of documents in that. With invoices, everyone can see who is doing what and I don’t have to worry about that any more – it takes a lot of risk out of who is dealing with what and gives a lot of transparency, although you need someone who is responsible to review that everything is working. You have to explain to people why you are doing that because if people avoid using the system, for example if they have too many passwords to remember, then not all information is put in and you might not get the outcome you want.’

While much of the digital processes being employed by businesses are relatively straightforward for in-house lawyers to master, Holder warns that general counsel need to have a solid understanding of what else is out there, if for no other reason than to advise their employers against using it if necessary. He gives the example of AI, which receives a lot of hype but may not work for every use in every company. ‘Lawyers are by their nature cautious and like to understand things as opposed to shooting from the hip so will go and find out what the business needs to do’, he adds. ‘It’s all very well for the business to say “we will go and buy AI” but what will they use it for, what problem is it being used to solve?’

Another revolution

Whether an employer does have a problem AI could solve or not, in-house counsel must keep on top of relevant regulations so they can advise accordingly. Countries including Canada, the US and the UK have begun looking at how AI could be regulated to ensure it operates ethically and that there are appropriate controls over its use. However, upcoming EU legislation promises to be the furthest-reaching move to date. First presented in 2021, the Artificial Intelligence Act (the ‘Act’) sets out rules for the development, commodification and use of AI-driven products, services and systems across all industries and, as an international first, is likely to be replicated around the globe in the same way that the EU General Data Protection Regulation has been.

The Act is a piece of legislation that all legal departments will need to familiarise themselves with, regardless of whether AI is within the scope of their business. ‘The Act has a lot of emphasis around companies appointing AI officers, like data officers’, Holder says. ‘When it hits it will regulate AI and how companies use it in their systems. Companies will probably have to have someone who understands what’s going on because if an AI system causes harm or financial loss the company will be sued. There’s bound to be a regulator for AI and that will drive companies to hire a specialist lawyer.’

Looking ahead, Rodriguez believes AI has the potential to yet again revolutionise the way law firms operate, which will in turn further transform the relationship in-house lawyers have with their external counsel. ‘In ten years it will be a robot I’ll be dealing with at a law firm and the impact on general counsel will be great because we are part of the business itself and so the robots will have to be managed by general counsel’, he says.

Though he admits there will be a steep learning curve, Rodriguez says that ultimately it’ll be good for businesses because – if managed correctly – the law firm bots will help to further reduce risk. ‘Twenty years ago there would have been a lot of invoice fraud, but now that’s pretty much impossible’, he says. ‘Now I basically go to my lawyers on transactions and say I’m doing the drafting, I just want a legal opinion. I already have all the information because it’s all there digitally. Twenty years ago external lawyers had to look for that information’.

At the same time, Rodriguez says the use of digital technology will enable in-house lawyers to operate more globally than ever before, redefining what it means to be an international lawyer. ‘Now, with technology and the possibilities we have with education I’m qualified in New York and Madrid’, he says. ‘If I was the same person 20 years ago I wouldn’t be able to practise in two jurisdictions because there was no internet. Because of technology, lawyers are going to be more global than ever because the technology will give us the tools to do that.’

For Haangala, that comes with its own challenges as countries adopt regulatory frameworks at different times. ‘Ten years ago fewer than 50 per cent of countries had data protection laws but we’ve seen an increase in that and an increase in cyber security regulations’, she says. ‘We’ll see an increase in legal advice around those things, particularly how it affects people’s privacy’.

In the immediate future, though, Haangala will be getting to grips with how cryptocurrencies work, as more and more people consider using digital coins to facilitate their charitable giving. ‘Part of the work we do is around getting benefactors and they have converted to crypto’, she says. ‘We need to be alive to that aspect and what we need to put in place to make sure we can receive that. Everyone knows that crypto has ups and downs – how do we make sure that donations retain their value? It’s very, very difficult to keep on top of it all, I’ll be honest. One thing that struck me is that the more you learn about digital the more you need to learn.’