As I look ahead to 2023, the world feels remarkably different to how it did this time last year. Having emerged from the pandemic, businesses everywhere are now subject to a raft of new pressures: a global recession is looming, whilst the ongoing war in Ukraine and global supply chain disruption remains. But, despite the uncertainty that 2022 has brought and 2023 will continue to bring, it is not all doom and gloom: those that do weather the storm will come out the other side much stronger and more resilient. Businesses are already spending much more time looking at and embracing innovation in order to tackle these fresh challenges, from keeping on top of compliance to dealing with increases in contracting and litigation volume.

Weathering Economic Headwinds

If the last few years have taught us anything, it is that there is no anticipating what the next major global, social or legal shift might be. Last year, a multitude of pressures combined to plunge businesses into economic uncertainity, leaving an estimated 79% of CEOs across the United States now planning for a recession.

Commonly, legal teams are now finding themselves at the forefront of dealing with the far-reaching implications of this global slowdown, expected to protect their organisations in what has swiftly become an environment of heightened commercial risk, as customers and suppliers alike explore terminating contracts as a way of reducing costs. Internally, new legal challenges are already arising in the form of increased Data Subject Access Requests (DSARs) following redundancies and unprecedented legal workloads, whether due to hiring freezes or major business changes like restructuring in an effort to gain market share.

Dealing with these issues at a lower budget poses a formidable challenge to any corporate legal department. And just as we saw during the pandemic, legal teams who embrace next-generation technology such as AI will better weather the storm, automating many routine and repetitive tasks, conserving precious time and resource.

Transforming Legal from ‘Cost-Centre’ to Value Creator with AI

Working more efficiently despite dealing with more complex business issues won’t be the only burden felt by legal departments in 2023. More recently, there has been increased pressure on in-house lawyers to deliver more value at a lower cost to their business. This is a trend we have seen across Luminance’s 500-strong customer base, with corporations like Colombia’s flag carrier airline, Avianca, and leading financial crime detection platform, Featurespace, using Luminance’s AI to keep more legal work in-house, with the former accelerating contract reviews by 90% and the latter reducing outsourcing costs by 50%. What this trend means for law firms remains to be seen, but I think we will start to see a shift in the type of work most commonly outsourced, such as contract management, litigation and regulatory compliance reviews.

In particular, we’re really seeing SMEs realising the benefits of AI. Just one example is UK-based tech start-up, proSapient, which is using Luminance to automate the contracting process. Their legal team has actually managed to cut the time spent on administrative tasks by a staggering 40% per week.

Where legal teams were perhaps once seen as a cost-centre, AI is set to help them to become real value creators for the business.

Contract Efficiencies Will Extend to Non-Legal Functions

I have always believed that ‘legaltech’ isn’t just for Legal and I’m convinced 2023 is the year we will see teams across an enterprise embrace it. Every function, from Sales and Procurement to HR and Marketing, interacts with contracts on a daily basis. Let’s take Sales teams, for instance. They are now using AI to rapidly locate and review contracts relating to successfully closed deals to analyse incentivised pricing and formulate future sales strategy. In other parts of the business, Finance could instantly look up payment terms and reporting periods for newly signed customers, whilst HR could rapidly draft employment contracts that comply with internal standards.

Just last year, we welcomed Koch Industries, one of the largest private companies in the world, to the Luminance stable. Koch chose Luminance for its ability to enhance the way that multiple businesses units interact with both their contracts and the legal department. I think Laura Pickle, CIO & Discovery Director, put it best when she said: “With Luminance, we can ensure the efficient flow of contracts around our organisation and provide transparency between legal and the business on handling requests. We have everything we need in one place to enhance our legal processes.”

Helping Businesses Adapt to New Challenges

As businesses around the world look to cope with the implications of the economic slowdown, we’re going to see technology adoption maintain its place the top of the business agenda. And I think we can all agree when I say that 2023 will be the year that legal teams in particular must deliver more for less. Fortunately, with next-generation AI, the opportunity for value creation has never been greater.