Author: Onit

Some companies struggle with their current enterprise legal management (ELM) systems that focus on just core matter and spend management. But when the day comes that they discover there are other business processes that also need automated solutions, it’s time to issue another RFP and undergo another long, expensive and drawn-out path to implementation.

But we’d like to offer another solution. We believe we should be looking at the elements of enterprise legal management as processproblems instead of data problems. When we do this, we’re clearly taking more ownership in business process management (BPM), even though we may not immediately realize it. And in order for corporate legal to be a true corporate citizen, it needs to have a deeper stake in business processes. If you already use automated process solutions, congratulations. You already have a stake since business process automation is inseparable from business process management.

Again, ELM systems that are only capable of core matter and spend management have a clear disadvantage. But on the other end of the spectrum are systems that are loaded with features that will never be used; either because the company doesn’t need them or they don’t want to use them. These solutions were likely an outsize investment to begin with, which already puts the company at a distinct disadvantage. But the situation needn’t be so bleak, and it’s not even necessary to proceed on a quest to find a happy spot somewhere on the spectrum.

The ability to scale your Enterprise Legal Management System in a manner consistent with operational requirements is your key to success.

Seems simple, but how do we do it? By breaking up enterprise legal management into discrete, individual task-based processes, it becomes clear that an “app-based” solution is the most logical way to go. With these, users have the ability to develop and incorporate these discrete process capabilities into the larger enterprise system as they are needed – a la carte. The old “ELM as monolith” approach is, for the majority of legal departments, obsolete. The resounding answer is that we should be looking at ELM as a process problem, rather than a data problem.

Smart companies are now seeking core matter management and e-billing functionality that can be augmented with other process solutions as they are needed. With such systems, scaling could not be easier. In many cases, a company will already have an existing ELM installation, and augment it with process solutions from other providers. These add-ons will be completely compatible with their existing ELM system. There are off-the-shelf, focused solutions as well as platforms on which the company can build their own custom solutions. In any case, the ability to enhance and optimize your system without going the painful RFP route is always a good thing.

In our new white paper, Embracing Legal Department Transformation with Technology, we investigate the new legal department landscape and how a legal service request solution is a key player in the makeover. But this blog focuses on one section in this paper, “The Case of Consensual Neglect,” which we feel deserves a bit more airtime.

Successful transformation with technology usually comes with a price tag attached. Those who are willing to put in the time, effort, research and money likely stand a better chance of success than those who skimp on any or all of these four factors. Which brings us to another point on the spectrum where we find people who insist on being committed to an irrational or failing strategy. In some cases, the strategy in question was once successful, which can add salt to the wound by means of the “sentiment” factor. In the Harvard Business Review Professors Freek Vermeulen and Niro Sivanathan detail a number of biases that explain why leaders stay committed to failing strategies. Dubbed “consensual neglect” by Karl Weick of the University of Michigan this is a very real phenomenon that hurts businesses in the near and long term:

In combination, these biases lead a company’s decision makers to ignore signals that their strategy is no longer working. It is what Karl Weick, of the University of Michigan, calls consensual neglect: the tendency of organizational decision makers to tacitly ignore events that undermine their current strategy and double down on the initial decision in order to justify their prior actions. ¹

Here are six of the most common biases as described by Vermeulen and Sivanathan: ²

1. The sunk cost fallacy, in which people focus on the investment already made in a particular course of action and hope that, if the approach is continued, invested costs will be recouped and the prior investment decision vindicated
2. Loss aversion, in which people prefer to gamble on the future success of a previous commitment to a currently questionable strategy – even if it means the investment of additional resources – rather than to incur an immediate loss by changing direction
3. The illusion of control, in which people regularly overestimate their ability to control future events, thus reinforcing the first two biases described above
4. Preference for completion, the inherent bias of people toward completion of tasks, such as seeing a particular course of action through
5. Pluralistic ignorance, in which people who might disagree with a particular course of action remain silent because they think they are the only dissenters and that everyone else is on board
6. Personal identification, in which people perceive that their identities and social status are tied to their commitments and that withdrawing their support for a course of action they previously approved would risk loss of reputation or status

According to research, this phenomenon of consensual neglect is fixed deeply in our brains, making us more apt to stay the course with a particular strategy – even when it is clearly not the best, or even failing. Worse yet, some companies will double down on their old strategy instead of trying something new, sending them further into a downward spiral. This can easily apply to every facet of a company, but we’re focusing on driving technology transformations. Again, the right technology is readily available to those who genuinely want to avoid falling prey to consensual neglect.

^{1, 2}  Freek Vermeulen and Niro Sivanathan, “Stop Doubling Down on Your Failing Strategy – How to Spot (and Escape) One before It’s Too Late,” Harvard Business Review, Nov.-Dec. 2017, at 110-17.