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"We are as advanced in our thinking about this issue as most big corporates," says Mark Harding, Barclays general counsel, when asked about his department's use of technology. But although he is adamant that technology is making lawyers' lives easier, he says it will not replace them.

Harding, who joined Barclays as group general counsel four-and-a-half years ago from Clifford Chance — he had done a previous stint in-house at UBS — has responsibilities that cover Barclays' retail, commercial and investment banks, overseeing 750 lawyers. Already, he says, those lawyers are using smart IT systems to increase their efficiency.

One example is a "virtual data room", which has transferred hundreds of boxes worth of information that was previously only available on paper in one fixed location on to a web-based system ready to be accessed and searched from wherever his lawyers happen to be.

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Another is Barclays’ use of computerised billing for its external law firms, which Harding says will enable Barclays to become "more efficient in controlling the billing process overall" and will also allow them to "automatically check individual bills for individual pieces of work in a way that we just would not have had time for in the past”.

But while Harding is enthusiastic about the use of technology, he is acutely aware of its limits.

“We tend to distinguish between things which help practice management, ie the way we run ourselves, with things that actually help with the substantive practice of law.”

Harding says he struggles to identify anything external or in-house that used to be done entirely by a lawyer but is now done by either a machine or a lawyer in another country instead.

“I actually think that contrary to most peoples’ belief this process hasn’t gone nearly as far people think. The publicity is somewhat ahead of the reality.”

What aspects of technology's impact on legal services does he think are overblown?

Computerised drafting, he says without hesitation. For all the talk, he insists, it is "not used nearly as much as you might think”, especially on the wholesale and investment banking side of the business. That, he says, is “still quite traditional and where everything has human input”.

Harding acknowledges that there are examples of legal documents that are processed entirely by machine. But this is only possible in business areas, such as basic consumer lending, that have already become standardised and where there is little or no day-to-day legal work involved.

But if a computer can produce a credit agreement — a legal document — for a customer to borrow £100 with no lawyers in sight, why can’t a much more sophisticated computer produce a credit agreement for a private equity firm to borrow £100 billion?

Harding concedes it could “in principle”, but “we would need seriously advanced artificial intelligence to be able to cope with all the variables”.

For now, he says,”there are elements of that process [arranging a complicated loan] that could be done using technology, but at the end of the day those sorts of transactions are always going to be relatively complex and will require human attention.

"I think it’s going to be some time before you have, for instance leveraged lending, done of the back of a standard document with no lawyers touching it all.”

Harding is also keen to explore the potential time and cost savings of outsourcing. But he insists that sending work to New Zealand, Australia or India would simply swap an expensive lawyer in one location for a less expensive one in another, rather than removing them altogether.

While technology may not have replaced Harding’s lawyers, it has freed them up to get more closely involved in the business. Over the last ten years lawyers at most large companies have become “much more trusted business advisers than used to be the case," he says.

Consequently, either Harding or a member of his team is involved in all aspects of the group’s business from overall strategy to designing a new product. Although he is an adviser to, rather than member of, the executive board, Harding is present at all board meetings and insists he has the ear of his chief executive, John Varley. "John and I sit in offices just a few doors apart and like most days we have been in and out of each others offices a few times already this morning.”

Traditionally, the general counsel of a US company would have been closer to the business than his British equivalent, but Harding insists this is no longer the case. One reason, he argues, is that legal risk has become accepted as a fundamental business risk that needs to be managed at highest levels.

For an institution such as Barclays, operating in over a hundred countries, these legal risks are many and varied. One way Harding controls this is to rigorously police the use of external law firms.

Barclays has one main panel of seven law firms and “about a dozen” other panels focused on specific areas and locations, all of which have been personally vetted by Harding. The risk of getting the wrong advice is so great, he says, that his policy is to be “very, very clear that you can’t use any law firm unless it has been approved by the legal department”.

Harding says the “huge amount of competition” among law firms has shifted the balance of power towards big-spending clients such as Barclays. Asked whether he uses the bank's clout to push its advisers to offer cheaper and more innovative charging models, Harding says without hesitation: “Yes, we absolutely do”.

The concept of billable hours, he concedes, will be “very difficult to kill off” but the model is waning in popularity. In particular, what Harding describes as “straight billable hours” - where a law firm "charges for however long it happens to take them to do a certain piece of work no matter how inefficient they are” - is under considerable pressure.

Harding keeps a careful eye on how law firms develop. As one of the biggest spenders in the UK market, he cares "very much" about how private practice responds to the Legal Services Act, which could allow firms to accept outside investment or list on the stock market for the first time.

Harding would like to see firms become more businesslike, but believes a listed law firm is "neither likely nor palatable".

“I think most law firms would absolutely hate it. The gulf between operating in a collegiate law firm environment and having to comply with the sort of discipline if you floated is in enourmous.”

“I don’t think most partners would put up with it. You would radically change the way private practice law firms operate, they would have to be a lot more efficient and a lot more accountable.

"The complete concentration on the bottom line that such a change might produce might reduce both the services available to clients and also the willingness to go the extra mile and do the really professional job clients want.”

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