TruthBeTold

I want to tell it like it is, by starting with a fictitious interview (inspired by real events and conversations) in which I ask imagined colleagues (from in-house legal department and law firm) about their experience and give them an opportunity to speak freely about their specific needs and challenges.

3.1 A Fictitious Interview (... and Real Pain)

Moderator: There is so much talk about the “end of lawyers” in legal tech publications, so I want to kick off with this question: What it is like to work as a legal professional in today's legal world?

In-house legal: We work endless hours, and it seems we are always behind, constantly trying to catch up with the work, trying to get on top of our emails, projects, tasks... The regular working hours stated in my labor contract are far from reality. There is rarely anyone in my company who works less than 60 hours a week!

Law firm legal: Worse - Ifeel like I could not do my job the way it should be done even if I worked 80 hours a week! It is frustrating to always find yourself behind schedule. Getting pushed from all sides to deliver, being confronted with unreason­able timelines, oftentimes being involved only in the very last minute - it's just crazy. Instead of fighting the fire, I would rather like to prevent the fire or even better, eliminate the causes of fire. I would rather, to stay in this picture, invest my time in installing an early fire warning system, so I can use my freed up time to do the interesting things, the things that would truly add value for my clients.

Moderator: Why all this time pressure and communication overload? How do you get engaged and how do you work? In other words, what is your current infrastructure like - can you describe how you work with IT?

Inhouse Legal: To be honest, our infrastructure is a mess.

Law firm legal: Same here. I would work differently if the systems were built by someone who has a clue about how I work. All these overly complex solutions we are forced to use bring no real benefit to me - I admit they make sense from a company perspective, so things are centrally organized and structured and so on - but hey: at what cost? They bother me to work in a tool that requires 10 clicks to open the document, the performance is lousy, so I have to wait endlessly - only to find out that they sent the wrong version... I don't want to come across as a technophobe - I'm interested and open for IT solutions. But as long as the tools are not “Google like” simple, my idiosyncratic no-technology way of working is superior and faster! Send me your stuff via e-mail or fax (yes, we still use faxes a lot!), and I turn it around as fast as I can.

Moderator: Could you give us a concrete example, e.g. how do you manage your contracts today?

Law firm legal: How many times have I heard and read about “The year of Contract Management.” Okay - so where are the legal software solutions that make our life easier? We are waiting now for decades and it is still a pain to find relevant information. I remember the software provider who promised us to manage all our contracts in one place. Too good to be true, we thought, and we were right: after the consultants declared successful delivery of the implementation project, they left...

In-house legal: That reminds me of our own project. We implemented a beauti­ful, well designed and thought-through Contract Management Solution for our Procurement Department - only to find out during deployment that no one in the Procurement Department is actually willing to work outside of emails, shared drives and file cabinets. As there was no push from the top management, the tool silently died - like so many other initiatives. We weren’t lazy - over the years we introduced many tools that support our daily business. But looking at the big picture that is exactly our problem today: we have more than 30 Apps and none of them is consistently used.

3.2 The Basis: Contracts

When I started my career at Lufthansa System, as the Lawyer responsible for legal matters in the procurement department, I asked my boss: “Where do we store our contracts?” and the answer was: “in SAP”. Digging deeper, I said: “Well, in the SAP system, we have some data, such as the start- and end date of the contract and the contract volume, but where is the contract itself and all other necessary information that allows us to manage the contract?”. The answer came unexpected: “Ahh, you mean the “paper”! You’ll find it in the file cabinet down the hallway, and the important contract data is in this Excel which we have on our team share!”

That has been my first fundamental observation regarding our profession: legal information (here: contracts) is loosely managed in systems that are not designed for this job: SAP and Microsoft!

In SAP’s ERP (e.g. MM or SD) only very few header data is stored, sometimes together with a scanned version of the document, attached to a “leading SAP business object” such as the Sales Order or Purchase Order. Microsoft’s Excel is supposed to allow for complex calculations, and is misused by people around the world as a workaround for any kind of contract related project -, obligation- and risk management.

3.3 Building a Contract Management Solution

Around that time, I came across the quote from a corporate CEO in the US who had just acquired a company:

If you are not in control of your contracts, you are not in control of your business.

It is as simple as this: contracts are—besides people—the main asset of each and every enterprise! You hire and fire people, you buy goods, you sell products, you partner with others—in short: whatever a company does is in the end based on contracts. Contracts are the lifeblood of any business, and to bring contracts back into the center of our daily work became my profession.

When I joined SAP in 2008, I asked the same question again. The answer I got from SAP employees was even more striking: “The ‘contract’ is the ‘sales order’”. The “legal (paper) document” doesn’t even exist in people’s vocabulary. No kidding - just pick up any dictionary at SAP. Once you challenge them, they might openly admit that in their processes the contract paper comes “out of the blue”—provided by some legal colleagues or contract manager. So if people are talking about “contracts,” you better ask: What do you mean, the “technical” order or the “legal” document?

Missing the contract as an object in your ERP system is a problem for various reasons:

• The contract is widely ignored as a reference document—important information is kept elsewhere (e.g. in Excel)), creating a significant grey zone in which all sorts of shortfalls and liabilities might start to pile up

• The contract is not actively managed (no automated reminders, alerts, no reporting etc.) bearing the risk of a drain of potential revenues

• The contract is not easily accessible in case of questions, making contract research a cumbersome and time consuming undertaking

So how did SAP and its customers manage contracts back in 2008? Well, simply ask the question to peers in your own company and you will receive answers which at first do not sound too bad. But as soon as the curtain lifts, the worrying truth appears: contracts were managed in disparate systems following heteroge­neous processes.

Of course, companies’ most critical contracts will always be managed by dedicated teams with high manual effort. But if you dare to ask about the full contract landscape, you might get puzzled looks. So my team and I, backed up by my boss, the General Counsel Field, decided to embark on our mission to close this contract gap for SAP—and for its customers.

True to the motto: If nothing exists, build something, we started to design our new Contract Management Solution (CMS) and teamed up with SAP’s partner organization, called GEPG, who had similar problems in managing their hundreds of partner agreements. Shortly after we introduced our ideas to the Quote-to-Cash team, an initiative aiming to streamline SAP’s end-to-end sales processes, we agreed to join forces and contributed a solution that closed the gap between the Sales Side (Opportunity/Quote/Deal Approval) and the Finance Side (Order book­ing, Invoicing, Cash collection). Within just one year, a team consisting of Legal and IT people created CMS from scratch—based on SAP standard technology.

From a very basic Graphical User Interface (GUI), the application matured in a few years to a web-based version and is currently in its 7th release, serving more than 15,000 users, covering more than 500,000 contracts and in peak times produc­ing several thousands of contracts a day.

In order to gain back “control of our business”, we did three fundamental things:

• We designed a solution that covers ALL contracts, excluding only HR, applying the 80/20 rule. Up to 80 % of all displayed fields in CMS were common for all contracts—only 20 % were customized for special areas of engagement (pro­curement, OEM business, partner business).

• We conducted a “full contract landscape analysis”. We asked all CFO’s to fill- out a simple online questionnaire related to the contracts in their area of responsibility. Within a couple of weeks we were able to report back the full picture and knew now our targets.

• We established and rolled-out a Global SAP Contracting Policy that gave us the mandate to ensure that all contracts follow the same processes, are stored only in CMS or a GCMS^[174] approved alternative system. Moreover, the Policy set out the task to bring all legacy contracts into our system. And last but not least, it gave us the authority to manage all legal templates in CMS as well.

We kept our promise and identified all contract types by end of 2015. While we are still on-boarding some laggards to our system, the vast majority of contracts have been managed well for a couple of years now.

Since the inception of CMS, we faced resistance to change and were confronted with long lists of reasons for why CMS would not work for the one or other contract type. We listened and tried to improve as much as possible: we beautified the UI (user interface), significantly increased the performance, reduced unnecessary fields, reorganized the attachment tab for better usability and so on. But an unsatisfying adoption of CMS remained our top challenge.

Facing the threat of low adoption, we implemented three main innovations:

1. Without logging on to the SAP network, any SAP employee can leverage the Contract Request Form (CRF) using smartphones, tablets, laptops or PCs. With minimal data entry, thanks to drop-down lists and auto fill tailored to the type of request, the user provides the required information and attaches any necessary forms. Customized workflow rules move the request to a contract specialist that either creates a “case” in CMS, which triggers the creation of a contract, or simply responds to the requester and then closes the request. CRF's are deployed globally and are allowing SAP to save money, while better structuring the work of the Contract Management teams worldwide.

2. With the Document Approval Workflow (DAW) we added a flexible, mobile enabled, ad-hoc workflow to CMS, allowing for legal or other specialized parties approvals in case of a deviation from the legal template. The superior user experiences positively changed the perception of CMS and raised the adoption.

3. Finally, the introduction of DocuSign, as preferred eSignature partner, not only reduced our internal processes by 25 min in average and 30ˆ hard saving, but also allowed us to significantly reduce the overall cycle time of the transaction.

With the above three measures, we were able to reduce the processing time from 180 min per transaction down to 10 min in average—with instances of “no touch”, where contracts are created fully autonomously. We learned a lot in these last 5 years, but most importantly, it gave us a plan for the future.

3.4 The Future Contracting Management Solution

Our CMS was just a first step! In being true to our company's motto, we are striving to improve people's life, and allow all our customers to run better! So we set out on the mission to add CMS to the SAP standard, so all SAP customers would benefit from our work and close the same gap in their process landscape that we were able to fill with CMS.

We imagine LCMS, our proposed new Legal Content Management Solution, to be more than just a next generation of CMS. LCMS is meant to provide a central layer for all legal content, highly flexible in its use and powered by a document assembly engine. Thus LCMS provides full transparency on the digital content, speeds up processes and gives the agility to adapt easily to the ever changing business needs.

3.5 Legal Information

Returning to the CEO, it seems nowadays his quote should be adjusted:

If you are not in control of your legal information, you are not in control of your business!

Information constantly increases in value, simply because access to information allows companies to act and react way faster in an environment in which speed is of the essence.

Any organization is challenged to scrutinize itself and perform a health check once in a while, as the inevitable stereotype request to “do more with less” will come. The CFOs rightfully ask: “Can't this job be done more efficiently and effectively? Can we automate parts of the process or introduce extended self­service capacity? Can we outsource to a third party?” This pressure is new for legal departments and causes waves of unbelieving astonishment. The lawyer's typical answer “it depends” was never more true: it depends on the legal department's willingness and openness to embark on the transformational journey.

3.5.1 Control Your Data!

The first thing every legal department should focus on is to gain full control of its legal infrastructure: no data, no insights. So the basis for a successful transforma­tion lies in the ability to make use of your legal teams' data, what we call your legal information. This is all but easy, especially as we are challenged with the phenom­enon of information overload. The world's information is doubling every 3 years, while the processing power of our computers (aka Moore's Law) only doubles every roughly 2 years. This is aggravated by the fact that 80 % of the information the world produces every day is unstructured, while most computer programs are only able to process structured information. One could argue that the rise of super computers such as IBM's Watson, or in-memory platform, such as SAP's HANA might soon be able to process unstructured information the same way structured data is processed today.

Waiting can be a strategy—but for legal professionals, waiting is a strategy that will lead right into unemployment. In my mind, we lawyers should grasp the opportunity to train these machines! We can make our jobs easier, find new work and make ourselves once again indispensable by helping to create more autono­mous and automated workflows—and not arguing against them.

3.5.2 Information-Enablement

Irrespective of what legal practice you work in, in-house, law firm or alternative legal provider, a unified legal information strategy is the key to success! We describe Legal Information Management (LIM) as the way to gain full control of all relevant legal information—by leveraging your company's ERP system, your central enterprise documents system and any legal system you might have—if you have none, make or buy!

That might sound a bit vague for some or overly ambitious for others, but in essence it is no less than the answer to the digital revolution that is upon us. Legal Information Management organizes what we do, prescribes how we do it and allows us to measure how well we do it—providing full transparency of our performance as legal department.

While special knowledge about the law is still considered the key component of our LIM strategy, LIM is more: LIM encompasses everything the legal function needs to know or can re-use.

The biggest challenge for a user is to distinguish between “valuable information” and what we call “noise”. Everything a legal profession needs to know or can re-use is in fact already there—it is just hidden under a mess of useless, unstructured, ambiguous data! So the work starts with a kind of “spring cleaning” in which we tidy up our entire legal information system in order to become truly information- enabled.^[175]

In 2014 we launched an initiative called Legal Excellence (LEX) which aims to “information-enable” legal. Legal excellence can be achieved if

all information follows the same data structure,

is semantically categorized,

stored in a central database and

automatically discoverable, re-usable and adaptable.

Or in short: every piece of information that is required to perform a certain task must be readily available and accessible in real-time, instantly. Once “information- enabled” in such a way, loosely based on Salim Ismail, your organization is ready for non-linear growth, thus capable of adapting to all future challenges.

At SAP we information-enabled a team of lawyers, who used to manage their tasks for years in Excel lists, exchanged only via eMails and who stored important information on a team share drive. Applying our LEX strategy we replaced Excel by a central database, instead of eMail we set up workflows and a link in the tool which allows them to easily access their stored documents. The Case Management App was rather simple—but the results were amazing.

On the surface we just fixed a broken process, but soon, people who worked in the new environment cherished the new easy insights they got by just using a common platform. They engaged more actively in the tool, gained deeper knowl­edge about the process and came up with ideas how to improve the whole system. Later, they started to explore the new information source, which resulted in innovative ideas for App's that went far beyond the initial request...

This examples shows, once people get deeply involved, we sometimes experi­ence the so called TAV paradigm:

TRANSPARENCY=people understand and see the full picture on what a solution does

AGENCY = they take ownership and learn how to proficiently use the solution VIRTUOSITY = some are eager to bring the solution to the next level or start experimenting new solutions

Take any business process: Once the workarounds are replaced and e.g. the Excel converted to an information-enabled environment, owned by people that are technical affine, process minded and open to new technology, then todays' boundaries are no longer valid. Since its inception, LEX has incubated up ca. 30 Apps that help our organization to run better, faster and cheaper.

Another example we often use to illustrate the progressive information­enablement of legal is how we work with documents.

3.5.3 From Folders to Artificial Intelligence

Becoming information-enabled means to get as much as possible out of the information that surrounds you. Take any document created in MS Word—a contract, for instance. The Word file is obviously in a digital format—it's not paper anymore. But the information provided is limited to what you can read on screen: words, formatting (if correctly applied) and some layout.

When MS Word was introduced, it revolutionized the world—with formatting, people were, for the first time, able to see what they finally will get (WYSIWYG, what you see is what you get) once the document was printed. But is such a document information-enabled when it comes to automation? Do we actually control how the content of the document—the clauses—are used? We don't! And when it comes to contract automation, MS Word actually is a source of errors.

Information-enablement is about making the right pieces of information useable by a computer—the ones we need to solve a problem. Although MS Word is a powerful tool, it is pretty much a “black box”, if your aim is to control the content that is in the file.

You cannot easily report on those files or measure its degree of deviation from a perceived standard. We can count the words or compare versions—but do not gain real insights.

So, in order to organize the growing amount of MS Word files, people started to assign sophisticated names to the files. Most started with adding a date code

20160712_filename

to have all files in ascending order, others came up with acronyms to better structure the content

20160712_CUSTOMER_SALES_EULA_V19_FINAL

Very disciplined teams even managed to apply the same standard file naming convention all over the world—but a missing letter or number or false acronym could crash your system.

Inevitable, as soon as the number of files managed by their filenames exceeds a certain threshold, folder structures were added.

Some started with years or quarters (“2015” or “Q2_2016”), some used the customer names (in alphabetical order) to structure content. Sub-folders were supposed to support the main folder structure (the examples are limitless: “Archive”; “Final”, “Draft” etc.).

That was the situation we found when we started our legal transformation— content management was a private domain, managed only by some lose naming conventions...

We experimented, and found a simple solution for managing files by adding a unique ID stamp on “box” I.e. each and every document.

This ID could not accidentally be removed from the file, as it was embedded in the file itself and not in the file name. As we were able to identify the document, we established automated workflows instead of attaching files to eMails. This improve­ment brought significant transparency into a process that was considered almost unpredictable. From its launch to only a few weeks later, we experienced high adoption—higher than any other tool we launched before.

Until that point, we had still followed the normal continuous improvement cycles of traditional software development. We measured, assessed root causes, changed for the better, deployed, conducted trainings etc.—but it was getting more and more difficult to improve processes which were already at a decent level of maturity.

The situation we found ourselves in was similar to that described by Clayton Christensen in “Innovators Dilemma”.^[176] Our thinking was centered on the question of how to improve the status quo? Until the question was raised, “why don't we just open the box?”.

Only after we understood our real challenge (i.e. >4400 word files were actively used, were of low structure and were failing on the attempt to automate or manipulate Word in a scalable way), we came up with the idea to change the paradigm and get rid of Word. De-Word-ification is the term we introduced to describe our bold vision of a legal department that is banning the use of Word.

We bring full transparency to the content, by decomposing the legal templates into their core components, the clause or text blocks.

This “little move” has a significant impact: It allows our Lawyers to disassemble the content of more than 4000 World templates into their core components: clauses or content blocks. These hundred-thousands of content blocks, organized by attributes, can be re-used to create unlimited new outputs “on the fly”—instantly. SAP now possesses the agility to react more quickly to the ever changing needs of Sales. And knowing every detail of all our contracts will change the sales game and reveal exponential opportunities.

Our next aim is to create the document model. Today's content is organized in a way that it is understood by humans. In the near future, content will be structured in a way that can easily be read and understood by machines—independent from national languages. So the attribute “language” only instructs the machine to output a specific document in a specific language—we just need to formalize the informa­tion. Once we transform text into a formula, mistakes will become obvious because the system will stop working. We will create a simple rule engine that allows end-users to set up the rules, to run tests, refine or learn, and then we can finally extract information and monitor every aspect on how legal content has been used!

For the sake of completeness a word on artificial intelligence or AI. Marvin Minsky provided us with a definition for AI : “The building of computer programs which perform tasks which are, for the moment, performed in a more satisfactory way by humans because they require high level mental processes such as: percep­tion learning, memory organization and critical reasoning.”^[177] I believe we reached the inflection point and therefore it is about time to change.

So what started as an excursion on how to manage documents can serve as an example for what Richard Susskind described as the disassembling of legal tasks. Colleagues who used to handcraft contracts, by using their own templates, harnessing their private clause library and storing the documents in their own folder system, for the first time now gain access to a central template repository—where all legal colleagues share templates. In a second step, the template itself is split up in clauses, allowing lower skilled people to make use of their pre-approved clauses. As a result,

• the amount of legal work is significantly reduced

• time to contract is shortened

• content can be re-used

• usage of clauses can be tracked

• contracts are available in self-service

• new roles are created: e.g. clause owner

Based on data that is produced in the course of the legal transaction, the team can now asses and make fact based decisions about which contract aspects are critical and require legal approval and which aspects can be outsourced or taken over by a machine. Teams using LIM are not afraid of losing their jobs, to the contrary: Such teams are invaluable because they have proven their ability to transform and thus are ready for the future.

4