Legal DX creates new business opportunities in an increasingly complex global business environment
Article｜2024-12-16
10 minute read
The tide of "digital Darwinism" is sweeping the global society and economy. If Charles Darwin, one of history’s most revered naturalists, applied his theory of evolution based on the survival of the fittest to today’s business landscape, he would see a world in which companies that lag behind in responding to technological evolution may lose their competitiveness at an accelerating rate. After all, survival isn’t guaranteed.
As a company that both creates and uses technology, Fujitsu is rapidly advancing digital transformation (DX) efforts that transcend national, regional and departmental boundaries. Linking DX to sustainable growth means that we are also working on company-wide reforms and pioneering new growth areas.
In this article, Kyoko Mizuguchi, Executive Vice President and Fujitsu General Counsel, presents an in-depth look at the role of legal functions within organizations in this era of discontinuous change, as well as the practices and challenges of utilizing technology and data in “Legal DX,” the latest in generative AI (artificial intelligence) applications in legal affairs, and the key business contributions that Legal DX is expected to bring. Building a strategic DX foundation together with Fujitsu will put your organization on a future-looking journey towards enhancing corporate value. Let’s begin!
Establishing a legal team that adapts to change
In 2021, Fujitsu launched Fujitsu Uvance, a new business model consisting of seven key focus areas for bringing about a sustainable world. By fusing technology with cross-industry expertise, Uvance is spurring business growth for customers across diverse industries and tackling social issues worldwide.
To develop a business that is current with global standards, the legal department must also provide globally consistent services to business units, while supporting and enhancing business competitiveness by providing fast, efficient, and high-quality legal services. At the same time, responding to rapidly changing environments means there are increases in productivity. At Fujitsu, we constantly strive for transformation through a legal team that adapts to change. This was the catalyst for the Legal DX initiative that began in 2022, centered around the UK team.
Starting small in overseas offices
We created a legal platform in-house called "AskLegal," which was built on ServiceNow and initially developed in the UK. It categorizes legal cases into three levels of difficulty; high-difficulty cases receive prioritized resource allocation, while routine requests and inquiries are answered by a chatbot (Figure 1). It also visualizes the number of ongoing cases in each region, improving the overall view of legal work. Understanding workload imbalances facilitates collaboration among team members, leading to improved service through an optimized work balance.
The development was driven outside Japan since that environment proved to be more agile and conducive to powering a small start. Overseas offices have a more focused workload than the headquarters’ legal team, and the businesses they support are also relatively few in number, making them ideal for iterative testing and performance enhancement through practical application.
Since fiscal year 2022, we've progressively rolled out AskLegal to Europe, APAC, and the Americas, refining its usability as we go. We are now also undertaking a full-scale rollout in Japan, the region that represents the majority of Fujitsu's profits. However, simply transplanting the features developed overseas won’t yield maximum effectiveness, so we are continuously improving the system through trial and error, constantly incorporating feedback from business units.
Source: Created by Fujitsu
Legal expertise is becoming increasingly specialized, making talent acquisition even more challenging
We believe that leveraging data and technology to overcome uncertainty and enhance productivity with limited resources will be a crucial challenge for legal departments going forward. This is exacerbated by the increasing specialization of legal expertise and the growing difficulty in acquiring talent.
For example, consider data protection. The EU implemented the General Data Protection Regulation (GDPR) in 2018. Previously, the same team within the legal department handled advice and contract negotiations related to personal information protection. However, the GDPR's requirements are so varied, encompassing organizational and technical considerations, and violations pose group-wide risks, necessitating a dedicated team. Meanwhile, we anticipate a significant increase in globally deployed business activities requiring similar services in the future.
To adequately address these changes, data- and technology-driven shifts brought about by Legal DX are imperative. The specific impacts of Fujitsu's Legal DX are detailed in Section 3—and while the transformation is ongoing, the path forward and the end goal are clear.
Technological proficiency now determines global competitiveness
According to the "Economic Policy Survey 2024" (*1) published in April 2024 by the Business and Industry Advisory Committee (BIAC), comprised of economic organizations from OECD member countries, 71% of respondents cited "digital technology adoption" as a key source of competitiveness for further development in 2024, second only to "access to finance" (73%).
Meanwhile, in response to the question of "priority structural reform issues," the highest-ranking answer at 75% was "digital transition and infrastructure." That represents a five-point increase from the 2023 survey, highlighting the growing need for digital adoption while simultaneously revealing the current underutilization of its benefits.
Now let's take a look at where Japan currently stands in the world. According to the "World Digital Competitiveness Ranking 2023" (*2) published in November 2023 by IMD, a Swiss business school, Japan ranked 32nd, a three-place drop from the 2022 survey and its lowest ranking ever. In particular, "business agility," a component of "future readiness," languished at 56th place. This clearly shows Japan lagging in global digital competitiveness.
Digital migration is also a major global challenge. Without consolidating all management functions within the scope of digitalization and advancing DX, capitalizing on growth opportunities will be impossible. Naturally, the legal department should play a central role in this effort.
Elevating the legal team’s business contributions through Legal DX
This section introduces the benefits we’ve already achieved through Legal DX centered around AskLegal. I’ll also showcase how generative AI is being used in legal affairs.
Data: The common language
We are promoting data-driven management through a global legal dashboard. Every month, we collect over 150,000 data points from various information sources around the globe, helping us visualize trends such as workflow operation status, automated response rates, real-time risk assessment, user feedback, and financial conditions. This collected data is used for tracking and analysis, leading to optimized personnel allocation and service improvements.
This has been a reminder just how challenging it is for the legal department of a global company headquartered in Japan to lead fit-to-standard efforts; legal work is inherently language-based, after all.
Finance and accounting departments, for example, can communicate relatively easily through numbers. In legal affairs, however, differing languages across countries and regions, coupled with varying legal and judicial systems, make it difficult to collaborate on complex issues with global members. However, simply entrusting everything to local legal counsel in each country may result in a failure to adequately reflect group values and risk tolerance.
Most legal departments in globally operating Japanese companies likely share this challenge. The solution is data. Data becomes the common language of legal affairs.
For instance, by analyzing data in managing legal departments, we aim to create a positive cycle of improving legal services for business units and increasing the utilization of these services. In addressing individual cases on a global level, using data as a foundation allows us to share the same perspective, view the same facts, delve deeper into discussions regarding risk tolerance, and establish consistent decision-making criteria.
Fit-to-standard legal operations and services
We have also made fundamental revisions in our reporting system. A global legal reporting tool platform now enables real-time report sharing between Japan and overseas offices. We have established a system where headquarters can quickly review risk reports for over 120 key global projects.
By establishing data as the common language of legal affairs and consolidating reporting on a single platform, we are promoting a "One Legal" approach globally. We believe this will bring us closer to standardizing not only operations but also services.
Enhancing the true value of Legal DX with generative AI
Our Legal DX initiatives have resulted in a global reduction of approximately 4,000 person-days of work over the past two and a half years. This calculation is based on the actual work automated by technology, compared to the time it would have taken human resources. We are also looking closely at the ways that generative AI can further enhance productivity.
One initiative we are working on is using generative AI to develop a replacement for the chatbot currently embedded in AskLegal. Previously, the system guided users to links of stored knowledge and know-how documents. By switching to generative AI, the responses will be closer to natural language, directly providing users with the information they need in the correct context without requiring them to open documents (Figure 2). Overseas implementation is scheduled for the autumn of 2024, with a target of rolling it out in Japan during fiscal year 2025.
Source: Created by Fujitsu
Moving beyond reliance on experience and knowledge alone
A common issue in legal departments is the tendency to rely on the experience and knowledge of veterans. The risk of this approach is that it can lead to inconsistencies in service quality depending on the individual handling the case. From the business unit's perspective, inconsistent legal service quality is a significant source of stress.
With Legal DX, we aim for standardization with the highest possible service quality. The chatbot and generative AI measures I mentioned earlier are infused with the knowledge and expertise of veteran legal professionals. This not only enables high-quality standardization but also creates an environment where junior and mid-career professionals can fully leverage the knowledge and expertise of their senior colleagues.
Conclusion
We believe there are three keys to making Legal DX effective. The first is executive-level commitment. The head of the legal team must proactively stay informed about technology, continuously study its applications, and communicate its necessity and benefits to team members. Second is starting small. Achieving significant results from the outset is not easy. Iterative trial and error, accumulating small successes, is the best path to advancing DX efforts.
Third is mindset. By constantly focusing on supporting the business and working closely with business professionals, I’m confident we can improve the speed and quality of outputs. This approach and behavior create excellent user experiences. All members of the legal team sharing the commitment to do whatever it takes to support the business is of utmost importance.
There is no finish line for Fujitsu's Legal DX. We aim to leverage data and technology to navigate this era of discontinuous change, creating and providing optimal services as a partner to global business. I invite you to embark on this journey together, working toward sustainable corporate value enhancement by transforming the increasingly complex business environment from a source of risk into an opportunity for growth.
Kyoko Mizuguchi
EVP and General Counsel, Fujitsu Limited
Ms. Mizuguchi joined Fujitsu in 1998. While working in legal affairs, she studied at Northwestern University School of Law. She has served overseas assignments in Australia, the United States, and the United Kingdom for a total of seven years and is a member of the New York Bar. In 2020, she was appointed Executive Officer, Senior Vice President and General Counsel, concurrently serving as the Head of the Legal, Intellectual Property, and Internal Control Promotion Division. In 2022, she was appointed Executive Vice President and General Counsel, a position she holds currently.
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