Legal Innovation: 5 Experts Predict Future Challenges and Opportunities
“Innovation distinguishes between a leader and a follower” – Steve Jobs.
In spite of the growing uptake of technology based solutions by firms, the truly disruptive technologies revolving around AI and blockchain for instance, that will be making waves for the next few decades are still, arguably, in their infancy. In this Q & A we ask five leaders what the future holds for these technologies, what challenges a law firm faces in embracing an innovator’s mindset and some tips for those potential intrapreneurs just starting their legal careers.
Partner in Financial Services
What changes can you see happening over the next 5 years in legal tech?
I think the key changes will be a more sophisticated offering that’s more closely aligned to legal work. At the moment, I see a lot of technology solutions that deploy great technology, but aren’t fully adapted to the legal work they are trying to support – this is why we developed our own tools. As the legal tech market develops, I would expect (hope!) to see more purpose built “legal” solutions. Key developments I’d expect will be much greater use of automation, whether that’s using more workflow tools, more “AI” to do routine work and greater use of contract automation. Finally, and possibly the change that will have the greatest impact on how we and our clients do legal work, I think we’ll see more integrated legal tools. At the moment we generally see “point solutions” – tools designed to solve a particular problem, or perform a particular task. As the market matures I think there will be greater integration of tools (we’re already starting to see some of that, with increased use of APIs to link technologies together) which will further increase the automation of legal tasks.
What’s holding back law firms from innovating?
This is difficult to comment on generally, as each law firm will have its own particular challenges. My own personal view is that the biggest challenge to innovation within law firms is the way they are structured. The partnership model doesn’t generally encourage investment in innovation and we are starting to see law firms spinning out their technology and innovation businesses into separate entities to enable them to invest more heavily in that business.
The other challenge is the focus on billable hours and chargeable time, which doesn’t encourage individuals or teams within law firms to devote time to innovation – although we, along with other firms, are developing strategies to counter that challenge.
The final challenge is around approach and skills – lawyers tend to be pretty conservative in nature and will often default to continuing as they always have done. They also often don’t have all the skills they need to innovate, particularly in terms of how they think and technology skills generally, although this is changing.
What advice would you give to young legal professionals?
The profession is changing massively, so think about that when choosing your firm and developing your career. You will need different skills from those lawyers have relied on in the past – a lot more creativity, flexibility and inventiveness. You will also find that the “entry level” work that junior lawyers have historically cut their teeth on is increasingly automated, so you will need to learn those skills in a different (and hopefully more interesting!) way. Be open-minded and always think about how you can do things better, because those skills will be really valuable as the profession changes.
Partner and co-head of The Global Finance Division
What changes can you see happening over the next 5 years in legal tech?
The term "legal tech" evokes leading edge technology which is in the process of being adopted by the legal community. As the technology becomes more broadly adopted and used in the ordinary course of business, people stop referring to it as legal technology. It simply becomes another tool to carry out certain tasks within the organisation. Fifteen years ago the use of virtual data rooms was revolutionary 'legal tech' but is now common place. We are starting to see the use of document automation to produce certain types of legal documents become routine and 'the way we do things'. Likewise, in some practice groups, the use of machine learning natural language processing to parse contracts and extract provisions is becoming normalised.
We think that the term 'legal tech' will persist, but the content will change. There will be a greater emphasis on tools which can operate autonomously or semi-autonomously such as robotic process automation, advanced machine learning and process automation. People will spend a great deal of time thinking about how they can create more efficient processes for long term, sustainable efficiency gains. We will think less about the risk profile of individual documents, and more about the legal risk profile across the client's entire portfolio, measured with statistical tools.
What’s holding back law firms from innovating?
According to Altman Weil's 2018 "Law Firms in Transition" survey published in May of this year, partner resistance to change is the biggest impediment to law firms innovating. Certainly a partnership structure can raise various difficulties when it comes to innovation. Whether it's the most pressing factor, I'm not sure.
In my mind, there are two other key factors that hold back law firms from innovating:
1. Law firms are out of necessity cautious organisations. Our clients trust us with their most valuable information and it is our duty to protect that information with the highest level of security. So embracing new technologies and ways of working needs to be balanced against the need to uphold other duties and that can cause us to err on the side of conservatism perhaps more than we should.
2. Diversity of perspectives within law tends to be lower than in other industries. What I mean by this is that generally speaking, law firm talent pools are primarily composed of people from within the legal sector. Yet the most innovative companies in the world today are not law firms. Bringing in fresh talent from outside law is necessary for firms wanting to be at the cutting edge of legal innovation. In addition, law firms can work harder to reduce layers of hierarchy so that diverse voices and ideas are heard and that these contribute to the direction of a law firm.
What advice would you give to young legal professionals?
The range of occupations in law is broadening out substantially. For those still at university and studying law or with an interest in law, investigate the range of exciting legal roles that are of increasing in importance in today's law firms. Such roles include legal technologist, legal process improvement specialist, legal project manager etc.. Experienced professionals with these skills are in high demand. Put yourself in your clients' shoes. Think about their needs at every touch point. Legal advice is the core service we sell but a client's experience with a law firm spans every single interaction. And these interactions may shape your client's impression of you and your firm as much as the final advice they receive. Maybe even more. So ask yourself questions like: Is the format of the advice I've provided to my client easy for them to process? Can we structure it differently? Can we use an entirely different process or technology to produce it? Am I communicating with my client as often as they would expect? Do they really understand how their work is progressing? The answers to these questions are many times, the starting point for an exciting legal innovation to begin.
Partner in Intellectual Property
What changes can you see happening over the next 5 years in legal tech?
You will see a lot of new offerings from startups and tech companies and you will see a lot of law firms investing money into “AI” and “machine learning”. A lot of that investment won’t pay off – not least because “AI” and “machine learning” are buzzwords and a lot of lawyers are throwing money at them in the hope of creating the next big thing. But there will be some winners – with some products revolutionising certain aspects of legal practice. In other areas, we will see a gradual introduction of automation and machine assisted legal work. But it will take time.
What’s holding back law firms from innovating?
Cost – because “AI” and “machine learning” are so popular, the services of the experts are in demand, so they can charge a premium. It is very easy to spend a lot of money on software development and come out the end of it with not much to show for it, and law firms are not used to investing cash in products which could take several years to complete and potentially even longer to turn a profit.
The other is risk – part of what lawyers give is peace of mind. They give this by relying upon tried and tested methods for completing legal work. Innovation is the opposite – so a lot of work has to go into something new to make sure it won’t make mistakes or increase risk, because clients don’t want that.
What advice would you give to young legal professionals?
I would advise them not to be afraid to find ways to innovate, and also not just to think about innovation in terms of clever software. Young lawyers do have to learn enough about existing processes and ways of working to understand why they are the way they are, but having reached this point if they have new ideas, ways to save time, be more efficient or more accurate and so on, they should feel free to speak up.
Solicitor, Automation Specialist
What changes can you see happening over the next 5 years in legal tech?
I think there will be further growth in the number of legal tech start-ups as a result of top law firms forming incubators. I've seen that even banks like Barclays have now got in on the action so this is clearly something seen to be worth the investment. I expect that over the next five years some law firms will really get on board with legal tech, while others will be left behind. The firms that do well will see the benefit in using legal tech with clients and will invest their time and money accordingly over this period.
What’s holding back law firms from innovating?
There are a few reasons why law firms (or at least traditional law partnerships) are held back from innovating. The key reason is that innovation usually requires investment. For partners that are nearing retirement they are unlikely to put money into something they won't see come to fruition. New partners are unlikely to rock the boat so it's left to those in between to drive the innovation agenda in firms, which may or may not be successful. I'd say another reason is leadership, and in particular those driving strategy that either don't understand technology or don't understand the impact it's having on the legal market and/or their clients. I suspect finding the right expertise may also be difficult too as some areas of legal innovation are going to be quite niche.
What advice would you give to young legal professionals?
I'd say the best advice is to ride the wave of change. Keep up to date with the latest technologies impacting the legal market. Your firm's clients will go to the same legal tech conferences and clients will want to know your firm is dealing with their matters in the most efficient manner. By understanding what is out there you will know what tools are available to you, and will hopefully allow you to influence those within your firm so that you can provide a better service to your clients.
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What changes can you see happening over the next 5 years in legal tech?
Greater consolidation through M&A and partnerships is a safe bet. Although still a young market, legal tech is showing early signs of adolescence. We’ve already seen some M&A consolidation led by larger vendors (e.g. Seal Software’s recent acquisition of Apogee Legal).
We are also seeing another form of consolidation through partnerships and integrations. For example, providers of case management and other platforms are providing plug-ins for its clients by partnering with vendors (e.g. like Clio, a case management provider catering to small- to medium-sized law firms has a portfolio of partners that integrate with its platform, such as Allocate for time recording). These partnerships are creating clustered environments that act as single points of access for legal tech users.
In the next five years, we could see a few key players win out, and the market converge on their offerings (think along the lines of SAP in the world of enterprise resource planning (ERP) and Salesforce in the world of customer services (CRM)).
At the same time, it’s still a relatively open space, as the barriers to entry remain low and current “key” players are still relatively localised (e.g. Ross’s services are largely limited to North America). The heavy guns of incumbent tech houses (e.g. IBM Watson, Microsoft, etc.) have yet to really wade in. This may be for a number of reasons – bigger fish to fry or trust that road-mapped features of their core business products (e.g. for O365) will solve for issues in the round (e.g. DMS, eDiscovery, data rooms). Meanwhile, new vendors that have built businesses around point-solutions (perhaps linked to existing versions of major products like Microsoft Office) risk being swept away by later releases.
In summary, it’s still possible for new entrants to gain traction quickly, off the back of a differentiated product. But watch for some emerging winners in the next two years or so.
As an afterthought on this, I think we’ll also see one of two strategies win out for vendor scalability. Currently, vendors are either gaining a foothold for a particular product, and then rapidly developing verticals to broaden their offering (e.g. InTapp), or keeping a narrow focus and iterating quickly to improve performance (e.g. adding layers of intelligence, such as machine learning, and advanced data analytics).
What’s holding back law firms from innovating?
For centuries, law firms have succeeded off the back of a culture of excellence. Long winning streaks can engender a culture of conservatism. I echo the oft-used saying that “culture eats strategy for breakfast”. Innovating involves risk, failure and new ways of working. The appetite for those ingredients in a culture of conservative excellence can be extremely low. It takes some brave sponsors and the empowerment of our fantastic global talent to break free of that. The pace of change in legal tech and the opportunities that are out there to tackle some of our known issues provide a welcome positive pressure.
In more detail, the attributes required for our client services (e.g. risk aversion, client confidentiality, etc.) do not always align with the attributes needed to succeed as a business (e.g. risk, new and flexible commercial arrangements, new business models, etc.). However, there are areas where they absolutely do align (e.g. problem solving, strategic thinking, intelligence, etc.). It’s about emphasizing the alignment, empathising the nonalignment, and leveraging diverse expertise to create innovative solutions for our people and our clients.
What advice would you give to young legal professionals?
You are entering the profession at a very exciting time as we become truly tech-enabled. There is a realistic hope that mundane process tasks will soon be a thing of the past, leaving more cerebrally stimulating tasks for all lawyers – not just senior ones.
Be open minded as to what it means to be a lawyer, and embrace both the expertise of others and the opportunities to expand your own skillset (e.g. a firm-sponsored course in coding). Our client services benefit from the convergence of a range of expertise – legal, digital design, technology, business development, marketing, etc. Your future clients will thank you for it.
Know that you are instrumental in effecting any positive change, by observing and being vocal about imperfect solutions, as well as any workarounds you have put in place to do your work efficiently. These are gold dust for innovation professionals, helping us gauge the severity of issues and how to prioritise resource. If you are interested, offer to get involved in developing a solution.
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All our contributors agree that over the next five years we will see greater use of automation and machine assisted legal work in not just law firms, but new vendors who have not necessarily entered the market as yet. The rigidity of the partnership model comes up time and time again as a perceived barrier to innovation with partners having little appetite for risk. Although as Collective Campus’ Disrupting Legal Services eBook explains, this change inhibiting mindset can and should be acknowledged and addressed to keep up with the ever evolving competition.
And for those just starting out on their legal careers, think about the questions your clients will be asking, thinking about their needs and whether the processes currently in place can be improved. Speak up if you think there are workarounds that could be put in place involving technology or otherwise as your colleagues and clients will thank you for it.
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