Planning for the future—law firms and new technology

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David Halliwell, Director of knowledge and innovation delivery at Pinsent Masons and Dan Wright, Partner at Osborne Clarke discuss the uptake of new service technologies for law firms, the opportunities and challenges it presents and predict exciting times ahead.

Why is it important for lawyers to understand new technology?

DW: Clients. New technology simply enables us to adapt what we are delivering to clients to better suit their needs. Client demands are changing, and at an accelerating rate. The market is rightly moving away from what firms want to sell, to what clients want to buy. New technology is key to enabling firms to meet those changing demands, and to ensure they have a client-centric approach to the development of future products and services. This includes going beyond law and helping build common sense solutions that in-house legal can take to other parts of their businesses, to further increase the value delivered by their teams.

DH: It [technology] has the potential to transform the majority of the work they do,and unless they really embrace the opportunities it presents they are going to be left behind. Some of the most challenging positions these days are in-house, and the new breed of in-house counsel are being required to transform their businesses. They have high expectations as to what technology can do for them, and they need to be creative, innovative and demanding to achieve that. Unless private practice lawyers start to engage with new technology, they are not going to be relevant even to their clients.

DH: The other challenge for law firms is that they run the risk of being cut out of the picture by technology providers who will be able to go directly to in-house legal teams and provide them with solutions that don’t need to be underwritten by a law firm.

DW: If lawyers aren’t willing and keen to engage with new tools, they risk missing these opportunities to deliver what clients want.

Unless private practice lawyers start to engage with new technology, they are not going to be relevant even to their clients.

What factors motivate the adoption of new technology in law firms?

DW: It depends on what the law firm is trying to achieve. There can be a focus on improving the internal performance of the firm. That’s clearly no bad thing, but I think process and performance improvements will also generally be available to firms if they look more outwardly for their core motivation. Our approach is to be motivated by building what clients (and their stakeholders) want, and what will hopefully create us longer-lasting, successful relationships. As part of those new solutions we can build the opportunity for better execution by us, as well as by the client and others using the systems we put in place.

DH: We see people getting excited about the tools which improve their ability to work in a flexible and agile manner—not necessarily client-facing tools, but ones that let our lawyers advise and find out what’s going on while they are on the go. For example, we have been working on an enterprise social networking platform within Pinsent Masons, and have had to accept that take-up has not been good so far because we have not had a mobile interface for it. We are building that interface now, and we think that it will be the next stage in getting people to use the product as a better means of communicating internally and on the go. Ease of use and fitting seamlessly with the way people work is a big factor in helping uptake.

DW: The motivation is to enable the client and others to use, and benefit directly from, our technologies. On premise solutions made this challenging, but cloud-based solutions are allowing this leverage of our technological infrastructure in completely new ways. If the solutions we create with in-house teams involve other parts of their business and third parties, everyone benefits from a single process management system, using common data, and we should be able to produce really valuable tools. That gives us the best chance of the long term relationships that we’re after, not least as we can then continue to invest our time and effort in improving the solutions so they better fit the broader operational needs of the client.

In order for us to be distinctive and relevant to our clients, technology is a massive enabler.

What are the impediments to law firms taking up new technology?

DW: As well as being a generally conservative profession, there’s also the fact that firm performances have been good, which makes it challenging to spot the right time at which to make some material changes to the products and services on offer, and to how they’re delivered. Law firms are now becoming open to the notion of using technology to do completely different things to sell different products and services and to go beyond law and be willing to have totally different economic models for the performance of the business.

DH: The challenge I face is not persuading people to change what they do, but communicating to them all that we are doing. The potential of technology and the opportunities it can bring, equips them with the skills and knowledge to let them have these kind of conversations with clients.

Law firms are now becoming open to the notion of using technology to do completely different things to sell different products and services and to go beyond law.

There are all sorts of barriers to change, of course— one of which is that lawyers are busy people and don’t always have the time to stop to think about embracing a new way of working. Billable hours still present a challenge in parts of the business, too. Between 40–60% of our work is done on a fixed fee at the moment, and in that environment all the technological efficiencies we are talking about are absolutely writ large. But we still have thinking to do about embracing technology in this space.

DW: Have a common sense approach to the design of new products and services. Historically, as an industry we haven’t necessarily delivered all of our services in the most common sense way—we have gone back to square one each time, rather than working out innate process efficiencies. The more common sense you can build into what you are doing and why, the better and stronger solutions you will create.

DH: You must think first about the impact on clients. Unless you can articulate what that is, you are always going to struggle to support your business case. There are some things which are essential to the core infrastructure of a law firm. For example, you wouldn’t necessarily think an accounting system would have a direct impact on clients, but clients are now expecting live online financial information for individual matters, e.g, how close they are to a capped fee, spend and progress across a range of projects. So even purely internal systems will have a client-facing aspect

DW: Firms need to have the imagination, willingness and determination to work with their clients to create solutions with them. There is only so much you can achieve in terms of new ideas if you are coming up with all of them yourself.

You need to have people on board who can see what is likely to be useful in terms of tools which are currently available, but also those that are in development and gradually coming to market. Historically that was often the role just of the IT department. However, having both a technology and a practical legal input on this is extremely useful, and can be a very helpful way of knowing that the IT portfolio is going to feed directly into the production of solutions that clients want.

There is a lot of talk about ‘sparkly’ new legal tools, but they’ve got to be sensible, helpful, easy to use and deliver client value. Just because something is sparkly doesn’t mean it’s any good. I had a bike when I was a kid which looked great, and was very innovative. However, it seemed to weigh the same as my mum’s Mini, and so wasn’t great going uphills, or keeping up with my mates (nothing to do with my cycling obviously). That was an early insight for me into how the things that look and sound the best aren’t necessarily the best—unless you make them the best, that is.

Understand that the technologies you are using now cannot be the pinnacle of your abilities. As firms develop their tech road map, they need to have something they know they can ‘step to’ from where they are now. Otherwise they run the risk of everyone racing to the same level and playing musical chairs. The client is already expecting more by the time firms have finished fighting for the last chair. You have to be looking forward to the things that aren’t ready now, but will become ready over the near term.

DH: It’s also important to adopt an agile mindset where you can try things and get on with them quickly. If they work, brilliant. If they don’t, move on. Accept that not every piece of tech will be a raging success. Continue to iterate and improve.

Do lawyers have a lack of understanding about what is going to happen once technological advances currently in development have been fully adopted by the legal sector?

DW: I think as an industry we’ve become a lot better at looking forward, nowhere more so than around technological change and innovation. There has been a lot more talk over the last year about artificial intelligence, for example, and the potential challenges and opportunities it gives for law firms. It’s good that firms and clients are engaging to try and work out the best routes forward for them. None of us know what the answers will be, and they’ll change over time anyway, but a willingness to engage and explore is a great start.

DH: Communication will be transformed. If you look at what is already being done in the volume law space around conveyancing, for example, the major law firms need to start to understand and replicate that for more sophisticated work, but it’s some way off yet. The days of communicating via email will be behind us in five years’ time I expect, or at least will be very narrowly defined as to the particular circumstances in which we would use email. Instant communication will come much more to the fore. I wouldn’t be surprised if Microsoft Word was virtually redundant in how we present advice to clients. We are only just scratching the surface in terms of what machine learning can do in law firms. In five years’ time we will look back and be astonished how we hadn’t even considered some of the new and obvious applications we’ll be using. At the moment, the applications for machine learning for reviewing contracts and datasets are interesting, but I think it’s just the beginning. In general I think the scope for automation in the law is massively untapped. Machine learning is an opportunity for law firms to redefine the way they operate and provide different types of services in new ways. This is something we should all be excited about, not scared of.

DW: Certainly, it would be a lot more challenging envisaging how my career could pan out if I started as a trainee today instead of 20 years ago—not least as there are already a greater number of potential roles and inputs in the industry. We are in exciting times.

Are there any downsides to the effect that technology has had on the practice of law?

DH: Clients and lawyers have very high and serious expectations of what technology can deliver, because the technology they see on their smartphones and in the world around them is based upon a number of large, heavily-invested tech companies liked Google, Twitter and Facebook. Their expectations of what law firms can provide is judged against those. The majority of law firms are some way off being able to meet those aspirations.

What do you think will be the key IT development of the next five years?

DH: We will see some of our clients engaging directly with third party tech companies without engaging with a law firm in a traditional sense.

I wouldn’t be surprised if Microsoft Word was virtually redundant in how we present advice to clients.

DW: Unquestionably, the key IT development of the next five years will be the ways in which AI is leveraged in the delivery of legal services. This is a great opportunity for firms now and we’re in the best position to make something of that opportunity. For any industry facing disruption, the incumbents now know they need to move to protect the excellent relationships they have with their clients. There will be continued disruption around those relationships, but we have some of the best people and most willing minds to help firms evolve and make the most of the possibilities that this technology presents.

DH: Somebody will crack contract life cycle management, which is a big untapped space at the moment. The majority of our clients are very excited about potentially revolutionary change in the way they manage their contracts and how they can convert them from documents to data, and how they can manage the risks and maximise the margins inherent in their contracts. There isn’t a piece of tech out there as far as we can see that really does this. And somebody will implement a different application for machine learning other than document review—I’m looking forward to that.

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