Change doesn't always come easy for a 124-year-old insurancecompany. Nor does it come easy for the most traditionallyconservative and insulated department within that company: thelegal department.

Liberty Mutual's legal department is nonetheless engaged ina technology initiative to modernize itsoperations — an effort that will require leveraging data,updating in-house software, and a decisive shift in workplaceculture.

This ongoing effort is aimed at making the department morecost-effective and efficient. It also is an opportunity tostreamline one of the company's core business offerings.

See also: Insurance 2017: Priorities for innovation,automation and transformation

Integral to business

At Liberty Mutual, the legal department needed financial andoperational support from company executives and leaders to take onits modernization initiative, which can be challenging to secure inany corporate business setting.

"Capital expenditure budgets are [usually] extremely tight incorporations, so it can be a whole lot harder to free up thesebudgets for noncore costs like a legal department," says BradBlickstein, principal at the Blickstein Group, a consultancy thatworks with corporate law departments and law firms.

But Liberty Mutual executives, along with most others in theinsurance business, now recognize the urgency to innovate in orderto remain competitive.

See also: The 3 stages of the P&C insurance softwaresystem selection process

The pivotal role of data

Liberty Mutual creates and stores ever-growing volumes ofunorganized data, from settlement information and contracts tosensitive client records. Its legal team knowsthat taming this data through identifying, indexing andenabling access to it is the foundation for every technologyprocess and product they seek to deploy. But this essential firstfoundational step does not happen overnight.

"To be able to build up a capability to understand unstructureddata takes a long time; it takes a really long time," says JeffreyMarple, innovation director, corporate legal at Liberty Mutual, whois tasked with turning the team's technology ideas into reality andinstilling a tech culture in the department.

The company's data scientists have made their way into the legaldepartment over the past 10 years, and they have since becomecritical to its operations.

"If you think about the insurance industry in general, we selltwo products," says Kiran Mallavarapu, senior vice president andmanager of legal strategic services at Liberty Mutual. "One is theindemnity, and the other one is [legal] defense."

Having experts mine and translate data into measurable metrics,Mallavarapu explains, has enabled the department to "figure outvery simple questions, such as how many cases have we handled, howmany cases were in a particular week, how many were in particularjurisdiction [and] how long does each case take."

This data is presented to legal staff primarily through datametric dashboards, which Mallavarapu calls some of "the mostimportant tools" for the legal team. "I've seen a realtransformation in the legal department just having that informationvisually available."

The data these dashboards offer is not just helpful for what itindicates, but also for what it leaves out. Since the datapresented shows what measurements and metrics are possible in thelegal space, it spurs legal department managers "to ask the nextbig operations questions" about what new information can be minedand leveraged in the future, Mallavarapu says.

See also: Fully leveraging data analytics ininsurance

Though the specific data desired will differ depending on eachgroup, the overall legal department has a general blueprint forwhat it would like to see in the near future. In contrast to whatMallavarapu classifies as "descriptive analytics," which looks at"what happened, [and] why did it happen," the legal department isnow working "predictive and prescriptive analytics," i.e. ways toanalyze data that enable forecasting for legal issues.

Not all modernization steps need to be complicated,according to the legal tech innovation team at Liberty Mutual. Somesteps are as simple as strategically updating relevant news andinformation alerts. (Photo: iStock)

Updated metrics, benchmarks

"Generally, we try to provide the right information at the right time forpeople that are making decisions on litigated matters," says RobertTaylor, Liberty Mutual's vice president and senior corporatecounsel.

And there are simple, low-tech ways in which this can beaccomplished. "That may come in a simple alert to someone from thelegal department as to the status of a particular case," or analert to inform them "that this case looks like other cases of asimilar type, and that you should pay attention to it for thefollowing reasons," he says.

While such alerts are invaluable for those throughout theorganization, they are far from the only way Liberty Mutual's legaldepartment is enabling access to data to support betterdecision-making. One method being employed for increased sharing and collaboration both withinlegal and with outside departments is its knowledge managementsystem.

The system includes document management repositories to help thelegal department ensure there are specific controls on sensitiveand confidential documents handled by their staff. Taylor notesthat document management repositories "create proper securityaround documents that the practice groups need, but also at thesame time allow them to share and reproduce that material as it'srequired to be shared and reproduced."

Jeffrey Marple is Liberty Mutual's innovation director forcorporate legal. He calls the system "key to [the legal department]doing their job every day. They need a place to put things and findthings easily, making the knowledge management system crucial."

The department is also looking to free up legal staff to focuson more high-level work by automating mundane tasks. This includestools for document assembly, which Taylor notes "are veryintuitive" and can be deployed "by subject matter experts in astreamlined fashion." These tools, however, may only be the tip ofthe iceberg when it comes to future automation.

See also: To foster claims excellence, begin with the rightmetrics

Not to be forgotten: AI

Despite the amount of work needed to implement AI, the technology is slowly catchingon in a growing amount of legal departments across variousindustries. The legal department at Cisco, for example, isdesigning pilot projects that use machine learning to automatecertain workflows and contracting tasks. While Cisco did notdivulge the specific applications it is considering, machinelearning can be used to easily draft and execute standard contractslike nondisclosure agreements. It can also be deployed in contractreview to "read" contracts to determine which clauses deviate froman established standard and what the types of clauses or terms arewithin each contract. Meanwhile, the legal team at Yahoo has turnedto machine learning to automate classifying and tagging invoices toensure the integrity of e-billing data, and by extension, e-billingmetrics.

While Liberty Mutual's legal department hasn't yet identifiedany specific areas for applying machine learning, they are optimistic aboutwhat artificial intelligence may be able to achieve in thelong-term.

"I have this thing in my head: I call it the 'Legal Jarvis,'"Marple says. The Marvel Comics superhero "Iron Man had an AI calledJarvis and Jarvis did everything — Jarvis brought him lunch, butwould also do some pretty serious computational stuff and give himadvice on certain things. I think there is maybe, down the road,room for a legal AI as well. Where it lives, who it talks to, I'mnot sure, but we're figuring that out. To me, an AI gets rid of thefriction of work and allows our attorneys and legal professionalsto do the work they should be focusing on."

See also: Keeping the human touch as AI takes hold ininsurance

Shifting the corporate culture

A future with "Legal Jarvis" however, will take more than just afew technological leaps. On par with the data it mines and tools itdeploys, Liberty Mutual's legal tech initiative significantlypivots on its success getting tech-resistant insurance andcorporate legal professionals to not only trust technology, but tobecome innovators themselves. It is a big part of the reason thelegal department launched a "legal ideation and transformationgroup," a type of mini-incubator team that encourages in-houselegal to think like tech disruptors, and oftentimes helps turntheir ideas into reality.

See also: How to bridge the insurance industry technologygap

"Within that group, it's not just about us coming up with ideas,or interesting vendors to work with," Taylor says. "The ideationprocess requires that we discover, develop and test new ideas. Butthat's not enough, because a new idea is only valuable if you canimplement it."

As a part of that process, the company's technology leaders werecharged with bringing different staff and decision makers acrossthe legal department together to participate in hearing from,vetting and ultimately choosing the technology vendors thedepartment works with. The group hosts two biannual "vendor days"where they feature "a collection of vendors we find interestingthat can be legal technology-based, but they don't have to be andhaven't always been. It can cross industries," Marple says. "Webring them in, and we have thought leaders in the room."

After each vendor pitches their technology, the participatinglegal department members will review the presentation andbrainstorm on how the technology can be applied in-house. "We findthat to be really a great way to first take the temperature on howgood we thought the product was — and the vendor, because those canbe different — and then ask, 'Is there a home for them at LibertyMutual?'" Marple explains.

The vendor days, however, are far from the only brainstormingsessions for the legal staff. "We also do off-site ideation dayswhere we get people out of the office for a little bit and try tosolve different problems or come up with new ideas or newproducts," Marple adds.

When not participating in these events, members of the legaldepartment are also invited to brainstorm via one-on-one meetingswith the legal ideation and transformation group, as well asthrough a community website the group hosts to discuss ideas andprojects.

While these communal ideation programs may seem more at home ina startup than a century-old insurance company's legal department,they have been a big hit with the legal staff, even those who havepracticed a certain way for years. "It's interesting. We find thatthe acceptance of tech [in the legal department] isn't based uponyears of practice experience whatsoever," Taylor says. "I wouldn'tpigeonhole that at all; we see people across experience levelsbeing willing to engage in anything that helps them do their workbetter."

This, of course, comes as little surprise to many of thoseleading this transformation. Technology, after all is helpingin-house professionals accomplish what many continually strivetowards — working smarter and more efficiently. "I've seen verylittle resistance," Marple says. "Many usually say, please help mewith this!"

Read this story in its original form at Legaltech News. To contact the author, sendemail to [email protected].

See also:

When worlds collide: Insurers andInsurTech

Data obstacles hamper cyber insurancegrowth

Here's how auto technology will changeclaims