Bob Jett, chief privacy officer at Crawford & Company notes ‘People used to joke that when a GC hears of a cyber attack or data breach they breathe a sigh of relief and say, “Thank God, that one falls to the IT team”. Today that joke wouldn’t make sense. No serious corporate legal professional thinks cyber and data risks are off their radar.’

Britton Guerrina, deputy global general counsel for technology and shared services with Deloitte Touche Tohmatsu Limited, echoes this view. ‘Cyber and data protection are increasingly important and should be top of mind for any legal team. The legal and regulatory risks in these areas have increased and continue to do so, with countries introducing increasing regulatory requirements, many of which are contradictory.’

Corporate counsel may be increasingly aware of the dangers posed to their organisations from cyber attacks, but the results to our survey of over 200 senior counsel across the US and Canada suggest their organisations take a very different view.

While 91% of legal teams were aware of their organisations’ cybersecurity efforts, only 18% said they were heavily involved in these efforts. In fact, an alarmingly high number of teams (39%) were not involved at all, while nearly two thirds (63%) were either not involved or only involved to a small extent.

Even legal teams that are involved in their organisations’ cybersecurity strategy are typically confined to a fairly narrow role. By far the most likely task falling to legal teams is ensuring the security of their own communications, data and files (84%) or providing strictly legal opinions on regulatory compliance (47%). Just under a fifth of teams (19%) reported being involved in their organisation’s wider cyber response planning, while only 7% were monitoring cyber threats across the organisation as a whole.

Businesses not involving legal teams in their cybersecurity efforts should take note: over half (53%) of the senior counsel surveyed rated their organisations’ cybersecurity defences as either poor or average. Just 13% said their organisations had excellent protection against cyber threats.

The limited involvement of legal teams when it comes to cyber security efforts is particularly puzzling given the obvious advantages lawyers would bring to the process. As Britton Guerrina notes:

‘Legal involvement is critical for various reasons, and lawyers are able to guide efforts in a wide range of areas, from helping to design the security programme to comply with privacy, employment and other local laws to advising the cybersecurity team on cyber regulatory requirements.

Legal teams can also assist with the roll out of security tools while addressing any legal impediments. They can advise which legal and regulatory requirements apply to a breach based on the facts and circumstances presented, determine whether breach notification requirements (regulatory or contractual) have been triggered, and craft notifications, interact with regulators, law enforcement, and so on. In my view, legal and cyber need to partner together, along with risk, in order to protect the organisation effectively.’

However, as Michael Shour, general counsel and secretary for Banyan Software, observes, this is likely to change as the regulatory and reputational stakes increase.

‘Legal is actually very well positioned to spearhead this area, but it is often not an area where management wants legal to focus, due to the limited resources. As class actions and cyber-related litigation increase over time, I suspect that this will continue to require an increasing amount of legal involvement.’

Plugging the leaks

Monitoring cyber risks may still be deemed a low priority for legal counsel, but the related issue of data privacy is fast becoming a key part of the legal team’s role. As one respondent, senior counsel for data and privacy at a global media and telecoms business, puts it:

‘Data protection is a growing issue, and not just because of the rise of serious and very damaging incidents which we all read about in the news. From a compliance perspective, it is the increase in country-wide and global regulations. Business has to operate as smoothly as possible, and it is our job as legal to help it do so within these regulatory boundaries.’

When asked to identify the most pressing cyber threats their organisations faced, nearly half (49%) of corporate counsel pointed to the risk of customer data being compromised. Theft of confidential business information was seen as the next most pressing risk, reported by 28% of those surveyed. As Naseem Bawa, general counsel for InteraXon, a leading maker of brainwave-controlled computing technology and applications, points out, in the digital economy data is a chief driver of value. ‘Data is part of a company’s IP and without stringent safeguards to protect and enhance its value you are leaving your doors unlocked.’

For comparison, just 2% said that direct monetary loss through theft was their organisation’s most pressing concern. While theft can be costly, it is often nowhere near as expensive as dealing with the regulators. For businesses that have yet to experience a significant data breach, comments one senior legal and compliance counsel at a large retailer, the uncertainty over consequences can be troubling.

‘The big unknown here is the way a regulators will respond. The marquee cases have been in the financial services industry, and there is some evidence that regulators will look at what a retailer is doing around data and compare it with the systems and controls that have been put in place by financial institutions. Obviously, these financial institutions have far more robust data-security arrangements in place, which is potentially something that could damage our position in any litigation.’

These risks are especially pressing, continues the respondent, in a world where customer interaction is increasingly digital.

‘Mobile payment apps and e-commerce are becoming the principal vector through which fraudsters are able to infiltrate business systems. It’s a data security issue but it’s also a cybersecurity issue that goes right to the heart of our business. That means the legal team needs to know how our IT systems work, with at least some degree of accuracy, and how those systems can sink us.’

For those unfortunate enough to suffer a breach affecting customer data, knowing how to respond is key. The advice from one general counsel at a large US medical insurer is to bare all. ‘If customer data has been compromised then you need to tell them, and you need to help them take whatever steps are needed to mitigate the risk they now face. In the first day or so after an incident everyone is scrambling around to collect as much information as possible before the company needs to report the incident, but often it will be too late for the customer if you wait a day. Bite the bullet and tell them what has taken place. And, of course, have a plan ready so you aren’t worrying about drafting the message during a firestorm. If you are facing a situation where you need to email potentially millions of customers, you will really be thankful that you planned ahead of time.’

This planning, many agreed, is among the most important steps that GCs can take. As Richard Brzakala, director of external legal services at Bank of Canada, comments, ‘The old maxim “Trust but verify” applies here. You may have best-in-class cybersecurity in place, but it needs to be tested continuously. It’s not a question of if things go wrong. They will go wrong. You will experience a cybersecurity incident or data breach eventually, so be prepared.’

On 7 May 2021, Colonial Pipeline, the largest petroleum pipeline in the US, was shut down following a cyber attack. It remained closed for five days, causing panic buying, fuel shortages and national security soul-searching. For cybersecurity experts, the most surprising element of this episode was that a key part of US infrastructure was not brought down by the actions of a hostile state (at least directly), but by a small group of cyber-criminals deploying a devastating form of online extortion software: ransomware.

After gaining access to a company or individual’s system, the attacker will make files inaccessible in some way. At the lower end of the scale, the malicious programme may simply lock the computer, an easily fixable situation for an IT professional and no great problem for a large company. But when deployed by more sophisticated attackers, the software will encrypt the victim’s files so effectively that recovering them without the decryption key is virtually impossible.

The Colonial Pipeline ransomware attack was just one of several high-profile events that have struck ostensibly secure organisations over recent months. May 2021 also saw a ransomware attack on meat processor JBS Foods, a $53bn company that is deemed vital to US food security. The attack, which led to closure of some of the company’s facilities, was reportedly ended after an $11m ransom was paid.

While the scale and severity of recent attacks has surprised many, the growing popularity of ransomware comes as no surprise to specialists in the field.

‘My first response to the upsurge in ransomware attacks lately was that we analysts have been warning about this for over a decade, and we all predicted this was going to happen’, says David Fidler, senior fellow for cybersecurity and global health at the Council on Foreign Relations.

‘Now it’s here we have another round of gnashing of teeth, but opportunities to mitigate the danger have been missed time and time again over the intervening years.’

Fortunately, even for those who may have missed the early warning signs, hope is not lost. GC speaks to some of the leading counsel and cyber experts to find out what the rise of ransomware means for business, and what lawyers can do to help prepare their defences.

The unlocked door

The rise in attacks affecting everything from water and energy utilities to fuel distribution systems is a sign of things to come. From a cybersecurity perspective, the truly frightening aspect of these attacks is that, once systems have been compromised, there is little IT professionals can do to regain control. Bhavani Thuraisingham, Founders Chair Professor of Computer Science and the Executive Director of the Cyber Security Institute at The University of Texas at Dallas, comments:

‘When the malware enters the system, it has access to almost everything, and in a ransomware attack [hackers] will encrypt everything and demand a payment in exchange for the key to unlock the files. As of today, AES 256 encryption cannot realistically be broken with modern computing methods. Unfortunately, this means that if the attack progresses to this stage, you have really no access to anything in the system unless you get the key to decrypt the data’.

Richard Forno, senior lecturer in the University of Maryland, Baltimore County Department of Computer Science and Electrical Engineering, puts it even more succinctly: ‘If you haven’t been conducting cybersecurity best practices and a sophisticated attack takes hold of your systems, you’re screwed’.

As a result, victims of high-profile ransomware attacks have been left with little option but to pay up. In the case of Colonial Pipeline, hackers demanded a ransom payment of $4.4m in the form of bitcoin, which they promptly received in exchange for codes to unlock the company’s systems.

More troublingly, the lines of attack hackers are exploiting are not easy to defend against. For example, phishing attacks in which members of staff are fooled into downloading malicious software by seemingly genuine emails are becoming increasingly effective. This, says Forno, is increasingly dangerous given the rise of social media as a means of validating an unknown person’s identity.

‘Using artificial intelligence and machine learning, you can identify, develop and even create fake personas that are very detailed. This can allow you to make a phishing email that is much more convincing to the target, particularly if
you’re targeting a particular individual, such as the CEO of a company.

What’s more, even those who follow every reasonable security protocol and measure can, unwittingly, become a victim of the more sophisticated hacks. Increasingly, [malicious] software is being downloaded through perfectly legitimate websites via ad networks. [If a hacker] is able to compromise a content or software distribution network, malware could be injected into this such that users of a legitimate website would then be downloading malware through the network.’

This type of attack, say the cybersecurity experts interviewed for this report, has already been detected on some of the world’s largest website, often with little or no awareness among their users.

Adds Thuraisingham: ‘Ransomware spares no one. It could attack an 80-year-old great grandmother, a major financial company or even critical infrastructure. With that said, the more pain the attacker causes, the more publicity they get and the more money they can extort; sectors that allow them to cause maximum damage may therefore be more vulnerable. These will include major hospitals, government organisations and, especially, financial companies.’

Of course, cyber experts are aware that ransomware attacks are now big news, and that reporting biases undoubtedly skew toward them. Even so, says David Fidler, senior fellow for cybersecurity and global health at the Council on Foreign Relations, the underlying reality is that such incidents are on the rise. In fact, says Fidler, the true extent of the problem has probably been under-reported.

‘There has been an increase in ransomware attacks, and that increase has been felt across the entire corporate sector in North America and beyond. Beyond this, there is a large number of institutions – typically hospitals or
other bodies that hold large volumes of data – that have been victims of ransomware attacks without the public or media ever becoming aware of it. So the problem is growing and the scale of the problem is perhaps larger than one would imagine.’

The GCs who came in from the cold

From the perspective of the US government, ransomware is a clear and present danger. The increase in the size, sophistication and public awareness of these attacks, as well as their ability to damage critical infrastructure, puts general counsel on the fault line of what, for some organisations, will be the most important challenge of the coming months.

‘The connection between criminal ransomware attacks and how the United States government perceives our adversaries as providing havens for cyber criminals is key’, says Fiddler.

The government has already accused Russia and China of tacitly allowing cyber criminals targeting US companies to operate free of constraints. We’re seeing movement toward more offensive actions on the part of the US government aimed at cyber-criminal organisations based in potentially hostile territories because, clearly, our defences are not effective in preventing these attacks.

If the government does move in that direction, that is a much more dangerous context for businesses to be in, because we do not know cyber-criminal groups are going to respond. They could become even more sophisticated and try to test how much further we’re willing to escalate’.

The thought that corporations might unwittingly get caught in this cat-and-mouse game of testing and defending critical infrastructure is no longer an abstract item on the risk agenda. Even smaller companies that are not deemed essential parts of the US economy now face the prospect of becoming collateral damage in the tit-for-tat exchanges brought on by the escalation of opportunities for cyber attacks and the escalation of deterrence by punishment.

‘For GCs, understanding the potential threat is key’, adds Fidler. ‘Understanding what the threats are from this potential escalation on the part of the government may help persuade the C-suite of the need to make more investments in their own cyber defence.’

Of course, only a minority of companies will fall victim to the most serious of incidents, but indirectly almost every single organisation will end up paying the price, whether through increased demands on security and compliance or changes to their relationships with customers and commercial partners.

Insurance has long been one of the major tools used by corporates to mitigate their exposure to cyber risk, but as the number of cyber-related insurance pay-outs topping seven figures grows, policies are being hastily rewritten.

‘[Last year] was an unprecedented year for ransomware attacks and the payment of related insurance claims’, notes Lavonne Hopkins, senior managing legal director for security, resilience and digital at Dell. ‘As a result, the cybersecurity insurance market is hardening as insurers revaluate how to keep their cyber insurance offers profitable.

I have observed that insurers are focusing more on evaluating organisational cybersecurity maturity and preparedness when making coverage decisions and determining premiums and deductibles. We can only expect this trend to increase. Organisations should start to prepare for a future that potentially excludes ransomware coverage from cyber liability policies and requires self-insurance models.’

A worrying thought. And even those who can find suitable policies should not be complacent against the threat, says Thuraisingham.

‘Certain insurers are now offering specific products that cover the threat of ransomware attacks but relying on this can be extremely risky. To activate the coverage a company must first lose its data in a ransomware attack; only then will the insurer release funds to pay the ransom.

This is obviously not ideal, as the protection offered does not typically compensate for the reputational damage or staff costs associated with the incident. I would advise taking all the preventive measures you can before relying on insurance.’

The price of this sort of ‘kidnap insurance’ coverage is also likely to increase markedly as insurers keep a watchful eye on cybersecurity developments. A report issued recently by Hiscox, an Anglo-Bermudan insurance provider that specialises in niche categories of risk, noted insurers faced a 50% year-on-year increase in pay-outs for cyber-related policies, with ransomware attacks accounting for the biggest contributor to this growth.

Outsmarting the hackers

Even the most generous insurance policy can only be triggered once a cyber attack has taken place, by which time financial compensation alone may not be enough to repair the damage. For general counsel, the only real way to defend against risk is to go on the attack.

David Mace Roberts, general counsel of transport information systems provider Electronic Transaction Consultants (ETC), has been working to keep one step ahead of cyber attackers for many years. For Roberts, the most notable feature of a good cyber risk plan is that it looks unlike anything else on the market.

‘A lot of companies will pull up a one-size-fits-all cyber response plan, but that’s really not good enough. A bespoke cyber response plan needs to be custom crafted for both you and your industry.

Thuraisingham echoes Roberts’ comments. ‘Just as with health concerns, the best method is prevention. Protect all your systems, data and processes so that the attackers cannot gain access in the first place. Perhaps most important, companies that do not mandate backups and do not have extremely stringent security policies are most in danger. Do continuous backups of data and processes. I cannot emphasise proper backup procedures enough’.

Indeed, as Richard Forno notes, none of these measures are difficult to implement, but business has tended to ignore expert advice for too long.

‘The problem I see is that a lot of companies and governments of all sizes fail to do basic cybersecurity best practices, things that we in the industry and academia have been urging people to do for 20, 30, 40 years. This can be things as simple as having a really strong password or using multiple forms of authentication for critical or sensitive systems’.

The most important aspect of effective defence against a ransomware attack, however, comes with employee training. Human error is overwhelmingly likely to be the biggest weakness in a cybersecurity defence package, as well as the first thing a criminal group will look to exploit. To guard against this, says Roberts, the only option is to train relentlessly, ‘If you only train once a year then training loses its impact and offers minimal protection.’

Lavonne Hopkins of Dell agrees. ‘Unfortunately, ransomware most frequently originates from human error, and over half of ransomware victims suffer repeat attacks. Training and education are critical to ensure a comprehensive cyber preparedness strategy and prevent these ransomware attacks. Organisations should mandate cybersecurity training, including phishing training, for all employees and contractor. Employees are the first line of defence and need to be equipped with the knowledge to help prevent an attack’.

Before any of the above can take place, senior management needs to take the risk to business from cyber attack seriously. As Thuraisingham notes, it is all too common to encounter business leaders who consider cyber strategy as a matter for IT professionals.

‘When you’ve hired the best risk analysts and cyber teams money can buy it is very easy to conclude that you’ve done everything you can. This is fundamentally wrong. Businesses will always be vulnerable to these attacks, so there needs to be a constant awareness of just how serious the consequences can be.’

Unfortunately, awareness of cyber risk as among the c-suite seems to remain limited. Our survey of over 200 general and corporate counsel in North America revealed that while legal teams felt there was a very high risk of cybersecurity breaches to their organisations, fewer than half were actively involved in shaping cybersecurity risk planning.

For many organisations, it may come back to haunt them. As Roberts concludes, ‘If you are a senior member of a public company, you’d do well to look at the SEC, the NYSE and NASDAQ who are all really pushing cybersecurity. Do you want this on the front page of the Wall Street Journal or the Washington Post? Do you want to have to answer to the boards, or to the securities regulators? If not, then taking the risk seriously now is the best defence.’

When legal moves fast, business moves fast. Time kills deals, and often moving at speed is imperative. For in-house counsel, the need to move quickly can be a source of tension. No lawyer wants to hold business back, but it takes legal time to review a contract and ensure compliance. Rushing can generate risk that comes back to bite you.

This longstanding tension is not only a problem for GCs. At a basic level, all lawyers are contracts lawyers and all the businesses they serve are contracts businesses. The contract is the most fundamental unit of commerce. Whether it’s an offer letter, an employment agreement, a stock options agreement, a vendor agreement with a third party, a sales agreement, a marketing agreement, or any other form of agreement, business relies on processing contracts at speed.

The sweet spot is when you’re moving quickly and responsibly. The tension between speed and risk is something lawyers have struggled with for a long time. You cannot put yourself in harm’s way just to move quickly, and you cannot put yourself in a position where you’re losing deals because legal is taking too long to process contracts. When you’re moving at speed without compromising internal rules or policies, you’re doing well.

At Ironclad, and among our hundreds of customers around the world, we have worked to tighten the relationship between legal and commercial teams. Ironclad is the preeminent digital contracting platform for business. Our focus is on the end-users, whether they are in sales, HR, marketing – any function or professional that deals with contracts can benefit from the platform. We do not consider ourselves a legal tech company. Our enterprise-wide software is often deployed and administered by the legal department, but it frees lawyers from having to generate contracts.

When I run orientation sessions for clients, I like to begin showing a painting from the seventeenth-century, The Village Lawyer by Pieter Brueghel the Younger. It depicts a lawyer sitting at his desk surrounded by mountains of paper. A queue of people stands around waiting for his time. The one thing blocking them from going back to business is waiting for an interpretation. And that interpretation is likely to be something relatively simple. “What does the contract mean, what terms or provisions are contained within it and who owes what to whom?”

Too often, this is still the case today. Legal is the central hub for contract review. It is also the chief bottleneck when it comes to speed of business. At Ironclad, we are changing that by powering the world’s contracts in a way that legal teams love.

For example, using our no-code workflow builder the legal department can generate contracts and templates for any number of purposes. With Ironclad, a single workflow can produce hundreds of different versions of a document, whether it is a Non-Disclosure Agreement, Enterprise Services Agreement or any other commonly encountered legal document. This means various teams across an organisation can generate their own contracts while staying safely within the guard rails set by legal: Who can sign which contract? Who is part of the approval authority matrix? Does that change if the contract rises over certain financial thresholds? All this is stored in a fully searchable repository so things like data breach notification obligations can be identified at the click of a button.

Ask not what your company can do for you

As legal tech matures it is not only allowing GCs to do their jobs faster. The really exciting thing is that tech is now changing how GCs can bring value to their companies. To take one example, I can now look at our sales contracts and know which of them has gone through one round of red-line edits, and which has gone through two rounds of red-line edits. That allows me to identify patterns in the data. I can see that when a contract has gone through one round of red-line edits the probability of a deal closing is at a certain level. With two rounds of red-line edits that probability rises significantly.

That is the sort of data that GCs just didn’t have access to before. It means we can more accurately forecast what the quarter is going to look like using data generated and held within the legal function. That’s just one of dozens of applications you can put legal analytics to, and it is exciting to see what is now being done with this sort of information.

If you’re a GC and you don’t know where all your contracts are or what’s in them then there’s a lot of room for you to significantly up-level your compliance measures. Recently, Ironclad acquired PactSafe, an Indianapolis-based clickwrap transaction platform that enables companies to process high volume agreements. From create to review to negotiate to sign to store and repository, contract lifecycles do not just exist for B2B contracts. For a growing number of businesses, monitoring B2C contracts is becoming essential.

We’ve all been through the experience of signing on to terms of service in the B2C space. Whether it’s Uber, Spotify, or any of the apps and services we have come to rely on, we have all given manifest assent to a contract by clicking a box. Behind the scenes, companies need a way to manage those millions of clicks. When facing litigation or a potential class action, companies will need to identify which users signed what agreement. To get even more granular, they may also need to quickly come up with evidence that most, if not all, of a proposed class had signed an agreement containing the relevant arbitration clause. That sort of litigation is highly likely when you’re a successful company and having the tools to manage and process large volumes of data is key. We are excited to explore how this process of manifest assent – a process very similar to e-signing – can be used more widely in the B2B space.

No excuses

For many lawyers, legal tech has been a series of false dawns. It has often promised to revolutionise the way lawyers work, but it has rarely delivered. That, finally, is set to change. For the first time ever in the history of the legal profession there is cutting-edge technology that allows us to do our jobs more effectively as lawyers. The whole profession is now waking up to what it can do differently, and in-house legal teams are driving this change.

In-house teams used to ask their law firms about technology. Now it’s the reverse. GCs are encouraging their firms to adopt technology, and firms are hearing about the most useful software and tools from their customers. But technology is only one part of this transformation story. The rise of legal operations as a specialism has been just as exciting.

For years every department at a major company has had its own ops function. Marketing, engineering, sales – all of these departments have relied on operations professionals to keep them moving. Now we are seeing that in legal teams, and it is having a transformational impact on the way systems, processes, people and tech work together.

GCs have always faced the same question: how can the legal department cope with increasing work volumes as a business grows? Are you going to add bodies as legal departments have done for decades now, or are you going to use technology and smarter processes to scale up? Increasingly, technology is the only viable option. I have made it my goal as GC to practice what I preach. At Ironclad, we have one commercial counsel servicing over 60 salespeople who negotiate up to dozens of deals each day. The only way that’s possible is by leveraging our own system.

My goal as a legal leader is to have one of the leanest departments out there. A lot of GCs talk about wanting more headcount – I take the opposite approach and ask how I can keep the team as lean as possible. For legal teams struggling to stay on top of things, try this: instead of scaling by adding more people, scale with systems. Measure the success and improvements you can get through using the right tools and processes. The results will convince you that technology can have a transformative and liberating impact on the legal team.

In 1954, The Westinghouse Electric Corporation unveiled the world’s first colour TV. With a price-tag of $1,295 – or nearly $20,000 in today’s money – the H840CK15 was the type of luxury purchase that stood as a solid signifier of economic success.

‘I grew up in a world where lawyers were among the few middle-class professionals who could afford the latest technology’, comments one senior lawyer at a large multinational bank.

‘Now, we are among the few middle-class professionals that ignore technology. It’s a strange thing that so many lawyers have chosen to overlook the transformative power tech has had on the world of work, and I am part of a growing number of in-house professionals that seeks to address the oversight.’

To rephrase the problem – well-known in economics – why does the cost of technology consistently fall relative to the rate of inflation while the cost of services, encompassing everything from healthcare to education continues to rise?

The answer, in short, is that machines cannot (yet) do what humans do. What machines can do, however, are the things humans do not want to do. From this perspective, technology is not a threat but an opportunity. It allows lawyers to move higher up the value chain. And, let’s be honest, no one wants to be stuck doing low-level work.

‘Lawyers are afraid of technology taking their jobs’, comments Lisa Marcuzzi, general counsel and country counsel for ArcelorMittal Dofasco in Canada. ‘But I don’t know of a single lawyer that feels unhappy that they will have to give up reviewing NDAs or sales agreements. As far as I can see, technology will free lawyers to do the jobs they trained for.’

The wider in-house legal community in the US and Canada clearly agrees. While 90% of respondents felt that technology had disrupted the legal profession over the last five years, and nearly all (97%) felt it would do so over the next five years, over three quarters (76%) said this disruption was a positive outcome for the legal profession.

Far from fearing tech, in-house lawyers are waking up to the freedom it can grant them – 87% of those we surveyed said their wider teams were receptive to the use of technology, while 78% said their businesses were supportive of finding new ways to work.

This widespread optimism, many respondents pointed out, was based on direct experience of available technologies. ‘I spent many years reviewing and negotiating documents that were up to 100 pages long’, commented one general counsel in the finance sector. ‘Typically, 90% of that document would either be boilerplate or unnecessary. If I add up the time I have spent reviewing superfluous material and account for cost then it comes to a shocking level of waste.’

In short, corporate counsel are looking forward to the freedom tech will grant them, and few fear their jobs are at risk. As one respondent commented, ‘The idea that lawyers will be replaced is just not realistic. Imagine a Fortune 500 company dismissing its legal team and saying, “we’ll just rely on technology to do all this stuff.” It won’t happen – it would be insane.’

What will happen is a continuation of the trends that have been in play for several years. The in-house legal team will move closer to the time-critical or economically important aspects of the business, law firms will be brought in to help with the types of matters where it just doesn’t make economic sense to employ a team of internal specialists, and technology will be used to remove a lot of the work that was never strictly legal work in the first place.

Eleanor Lacey, head of legal and general counsel for work management platform Asana, comments: ‘In the knowledge sector, tech never works by replacing people. It works by augmenting people and freeing them up to work on higher-value matters.’

‘There is a great sense of freedom now that we as corporate legal teams can really solve a lot of the problems we have seen time and again by introducing often inexpensive tech fixes. It’s a great time to be working in the legal industry. Anyone who says otherwise is just not seeing the big picture.’

Moving up the value curve

What are the grounds for this optimism?

Let’s take the single most important item an in-house lawyer deals with – the contract. Lawyers deal with contracts. Lots of contracts. So too do their employers. As Chris Young, general counsel for digital contracting platform Ironclad, puts it, ‘At a basic level, all lawyers are contracts lawyers and all the businesses they serve are contracts businesses. It’s the most fundamental unit that commerce is based on.’

In this contract-driven world, the central hub for contract review runs through the legal department. When a business grows, how does its legal department choose to scale? Does it add bodies, or does it use technology to scale up and meet demand?

For the last several decades, the answer to that question would have been the former. General counsel had one demand above all else: more staff. As our survey of legal teams in the US and Canada shows, attitudes are changing, and the answer is increasingly likely to be “new ways of working”.

Central to the evolving skillset of the in-house counsel is getting comfortable with communication. Those we surveyed were clear: documentation can be automated, and any lawyer who is essentially reading a document aloud can be replaced at will. But that, many feel, is a good thing. The rise of legal tech means the in-house team can finally sound like the rest of the company.

‘We don’t need to tell business, “The documents say this”’, comments one respondent, senior counsel at a large US medical services provider. ‘Any literate person can see what the documents say. We’re guardians of nothing but the obvious if we tell them what they can read for themselves.

‘That’s great – being freed from routine tasks is not a case of lawyers being replaced. It’s a case of lawyers being able to use their skills for the benefit of business. We should embrace it. Lawyers have been trained to do some very sophisticated work, but large parts of the contracting process are not that work. If we can relegate that to a system or use technology to complete it then we are going to have a lot more time to do the work that is expected of business leaders. The days of pushing paper around may finally be over.’

Privacy law is a subject that has interested me for a long time. Even as a college student – although I was the paragon of a classic liberal arts major who avoided hard sciences – my best paper was on comparative law issues between French and American rights to privacy. However, it was not until I began working as a lawyer that I started engaging with cybersecurity and data protection as anything other than abstract concepts.

In my early career I was a communications lawyer and a litigator in the cable television and telecommunications industries. These are sectors that have had privacy protections for customer data for some time – in the case of cable television these protections date back to 1984. Working in that field gave me a lot of exposure to communications technologies and helped me to understand how various systems operate, the type of data flowing over them and what sort of information is captured by providers.

When I joined the Department of Commerce as general counsel in 2009, I was aware that privacy and cybersecurity were becoming increasingly important issues. Even before I was confirmed by the Senate, we spent time working on these topics, thinking about what we should be doing. Very early in the Obama administration, after I had deepened my familiarity with the matter, I advocated for action to deal with privacy issues.

The government seemed interested, and the White House empowered me to lead an Inter-Agency Committee to look at this more closely, which led to the development of what ultimately became the Consumer Privacy Bill of Rights Act in 2015. This was a compelling leap forward.

I resigned as Acting Secretary of Commerce in late 2013, since which time I have been a visiting scholar at the Massachusetts Institute of Technology Media Lab and at the Brookings Institution, where I am a member of the Center for Technology Innovation. My work at these institutions follows the ways in which public policy and the law is adapting to the evolution of technology, but also to design better governance for advanced and transformational technologies such as artificial intelligence.

Over the past decade or so, I have been involved in high-level exchanges on artificial intelligence policies among several countries – the US, the UK, Canada, Singapore, Australia, Japan, and also with the EU. Along with other experts, I have been looking at opportunities for stronger international cooperation on this front. The appreciation that such cooperation is necessary has certainly grown over this time, and the channels allowing for inter-governmental cooperation have become much more sophisticated.

My experience in politics and familiarity with legislative processes has undoubtedly helped me in this work – it is impossible to design good governance without appreciating how things get done at a governmental level, how to gauge what is possible, and how to frame issues in ways that speak to members of Congress or to the public.

This is especially important when it comes to topics such as analytics and big data. Because of their ability to discern unique patterns in a data set, or to link one data set with others, these technologies are turning things that have traditionally not been regarded as personal information into powerful and exploitable data sets.

In such an environment, defining limits and setting legal requirements can be more complicated than ever before. There is so much value in data now that society and enterprises have increasingly important interests in how it is used. That is why, even after a life spent in the field, I still consider the legal implications of technology to be among the most important questions we face today.

Chris Young, general counsel for digital contracting platform Ironclad notes that ‘In-house teams used to ask their law firms about technology. Now it’s the reverse. GCs are encouraging their firms to adopt technology, and firms are hearing about the most useful software and tools from their customers.’

For many firms, this will come as unpleasant news. But there is an upside. As Young points out, ‘In-house lawyers will always need law firms, and the industry won’t be transformed by one side alone. The more forward-thinking law firms should see this moment of change as an opportunity to gain a competitive advantage and become a true strategic partner to their clients.’

Judging by the results of our survey, it is an opportunity many have failed to grasp. Under half (45%) of the more than 200 senior counsel we polled for this report said their firms were using technology to deliver legal services and solutions, while a similar number (41%) were unsure how their external firms were resourcing matters.

As one respondent noted, ‘Knowing what goes on at a lot of firms is a game of Schrödinger’s Cat. They may be using some pretty sophisticated software to bulk process our matters, but they are unlikely to tell us about it unless we push them.’

This lack of transparency was widely cited as a source of frustration. Indeed, nearly three quarters (74%) of those we spoke to said they were not satisfied with their firms when it came to technology.

Law firms should take note: 88% of legal teams said it was important that their law firms kept up with developments in technology, with 32% saying it was crucial for them to do so.

We should not place the blame entirely on law firms here. In-house lawyers may complain that their firms behind the curve, but fewer than half (44%) are asking about their external advisers’ use of technology when undertaking
panel reviews.

With so many GCs either unsure of or dissatisfied with their firms’ use of technology, it is no surprise to see that few are looking to them as a source of inspiration. Just over a third of respondents (38%) said they now looked to their firms for guidance when it came to finding or implementing legal technologies, while under a quarter (23%) reported having been advised by their firms on the use of specialist legal technology. Only 21% of respondents said their firms had offered to share technology with them.

This, for some GCs, has been a dealbreaker. ‘One of the factors that motivated me to change firms was the lack of use of technology by my old external firm’, comments the general counsel of a large commodities business.

Of course, the technology used by law firms is often very different to the technology needed by corporate legal teams. Firms tend to operate in scales and volumes that are far beyond the requirements of their clients, making tech transfer a far from simple matter.

Even so, it may trouble those in private practice to know that legal teams are beginning to look for solutions elsewhere. Almost half (47%) of those surveyed said use of technology within the legal team had already impacted their relationships with external firms.

The good news? Law firms that take a proactive approach are winning clients. As Michael Shour, general counsel and secretary of Banyan Software, concludes:

‘If a firm is wise to the implementation of appropriate technology solutions, it can allow them to complete tasks more efficiently and cost-effectively. When I see a firm doing things like this, I can’t help but appreciate that they are driving efficiently for their clients and am impressed that they are on top of things – and that can only be a good thing for business.’