By Clarilis Administrator

How automation can drive your ESG and digital transformation

How automation can drive your ESG and digital transformation

When it comes to levelling up your ESG score, how prepared are you for the road ahead?

Digital transformation and driving forward the ESG agenda are both journeys in their respective fast lanes, and they’re evolving fast. If you’re smart enough to link the two, you should accelerate the pace of your journey in both areas, without the risk of crash and burn.

Clarilis invited Mark Anderson from PwC, Emma Bichet from Cooley and Kirsty Green-Mann from Burges Salmon to share how legal professionals can thrive in the face of the mounting external pressure of ESG. Burges Salmon and Cooley are both recognised as ‘role model’ law firms in this area. And for PwC, Mark advises law firms and corporates at various stages of both their digital and ESG journeys bringing valuable market insight to the debate.

‘Ad hoc’ is no longer enough

First, let’s be clear, ESG isn’t going anywhere. It’s featured heavily on the corporate agenda for a while now and it’s set to get bigger. Yet, there’s a lingering inertia evident in how many law firms are tackling it. A recent report from Enablon and EY found 70% of law firms believe they’re only in the early stages of their ESG journey. In addition, 37% admitted their ESG actions were ‘ad hoc’ and limited to meeting reporting obligations and responding to external pressures.

“I'm quite surprised to see nearly 40% of survey respondents saying they’re still in the ad hoc bracket,” Mark adds. “It’s not the place to be – it means you’re being driven by an external agenda and slightly firefighting. ESG needs to be seen as a hygiene factor – for example, when you’re bidding for contracts, or getting onto panels. You need to demonstrate your credentials in this space just to qualify.”

And even meeting the minimum requirements is about to become a bigger undertaking for the business world. “There's a huge raft of legislation about to come out, with new sustainability reporting requirements in Europe and something similar in the US with the SEC,” Kirsty warns. “There are lots of different standards floating about and that's something that our clients are more and more mindful of.”

The onerous regulations and reporting requirements coming down the track will certainly add pressure to firms to do the right thing. Our experts predict this will force most law firms to take a more structured approach in the coming years.

“With legislative change on the horizon, if a company’s ESG capabilities are not compliant with the new rules, it could prevent them from doing business with other organisations in the future,” Emma explains. “It can become a business inhibitor if companies don't give ESG compliance the importance it deserves."

There’s a clear feeling that legal professionals today have no choice but to overhaul their work practices and embrace new ways of lawyering. And this is more than paying lip-service to ESG to secure compliance – it needs to be genuine.

“What I think we'll see in the future is more focus on following up on what firms are saying publicly,” Mark asserts. “The organisations doing this best will have ESG at the heart of their strategy.”

It’s not just regulation driving ESG adoption

Despite a slowness to adopt more sustainable ways in some corners of the legal market, there’s a growing realisation that ESG is something law firms must take seriously. And this is as much to do with client demand as impending legislation.

“What we're seeing on the client side is that ESG is becoming increasingly important on a number of levels,” says Kirsty. “We're seeing this in terms of requests for ESG information around our [Burges Salmon’s] performance and approach, and also requests to collaborate with clients on actual ESG delivery. Traditionally, ESG was linked more to our corporate practice offer, but it seems to be growing through other practice areas now.”

There was also a general agreement across the experts that the scope of a law firm’s ESG efforts needs to broaden. “It's really important to recognise how the E, the S and the G are interlinked,” Kirsty adds. “For example, good governance supports both social responsibilities and environmental stewardship. And if you're going to address environmental issues, you often must address people issues. You can't just be good at the E, you need to pay attention to all the ESG issues.”

As a result, health and wellbeing, diversity and inclusion, supply chain standards and modern slavery are increasing taking prominence alongside net zero considerations in more forward-thinking firms.

Raising ESG performance relies heavily on digital infrastructure

As our experts went on to explore how to put ESG strategies into action, the correlation with the rise of digital technology was raised. “A lot of what we're doing for ESG and digital transformation is following parallel journeys,” Mark shares as an observation. “In many ways, a lot of organisations are embarking on the two at the same time, so they're inexorably intertwined.”

Although it’s often a firm’s innovation agenda driving the adoption of legal technology, it is advisable to fully appreciate the impact of successful focus to deliver across all three ESG pillars.

If we take Clarilis as an example, yes, automation cuts the print queue and reduces the paper burden of lawyering, but it has wider impacts too. For example, we’re hearing more and more from clients that our technology, taking days out of the drafting process, is becoming a talent management asset. This helps to reduce lawyer working hours, creating a favourable ‘societal’ impact of encouraging better work life balance, reducing burnout, and increasing job satisfaction. Many of our clients tell us legal technology is frequently mentioned by candidates at interview stage. What was a ‘nice-to-have’ evolves, over time into a hygiene factor for many. Think about your smart phone, for another example!

Forging ahead or head in the sand?

The discussion with Mark, Emma and Kirsty highlighted a number of parallels between ESG and digital transformation. Firstly, there’s the potential for both ESG and digital transformation to completely overhaul how law firms and legal professionals operate.

Secondly, they’re equally sprawling topics, making it challenging for law firms to know where to start. Thirdly, the two are interlinked, with platforms like video conferencing, digital contract review, electronic signatures and automated drafting all playing a role in delivering ESG strategies and improving sustainability scores.

However, what’s currently less consistent is how law firms are handling ESG and digital transformation. Some, like Burges Salmon and Cooley, are forging ahead. Others may have their heads in the sand or have stalled, bamboozled by the depth and breadth of the topic. What is clear, is that even if you are at the start of your journey, you are probably further ahead than you think. You need to 1) collate everything you do (and aspire to) under the three pillars and then 2) tell the world.

For more information on how to do this, request a download of our webinar here

ESG webinar recording

Kirsty, Mark and Emma will help accelerate your journey in the right direction for a sustainable future in the legal sector.

“With legislative change on the horizon, if a company’s ESG capabilities are not compliant with the new rules, it could prevent them from doing business with other organisations in the future”

Emma Bichet

Special Counsel, Cooley

“What I think we'll see in the future is more focus on following up on what firms are saying publicly. The organisations doing this best will have ESG at the heart of their strategy.”

Mark Anderson
Business Support, Services/Legal & Professional Services