Law Firms Must Embrace Innovation6 min read

Blockchain, AI, automation, eDiscovery, eSigning, chatbots and virtual assistants – the legal services market is shaking with buzzwords fever, filled with hype for new technology, and saturated with expectations for change. The Global Legal Blockchain Consortium, uniting leading market players in the effort to develop standards and governance for blockchain in the legal industry, has recently been reinforced with the entry of the Canadian top law firm Fasken. Legal AI vendor Luminance, one of the most advanced language-agnostic contract analysis platforms, has just bagged McCullough Robertson, an Australian law firm, thus expanding its already impressive clientele comprising such giants as Slaughter and May, Gilbert + Tobin, and Roschier. Australian Ailira has been providing a “law firm without lawyers” experience powered by its virtual assistant with a chatbot-interface allowing the clients to receive basic legal advice on-site. Thomson Reuters has launched a comprehensive IBM Watson-powered data protection platform Data Privacy Advisor allowing international privacy professionals to ask simply formulated questions and receive intelligent answers back. ROSS Intelligence made a first step towards democratizing AI by launching EVA, a free legal research portal based on the core ROSS AI platform. Innovation is happening now, and it is lightning-fast.

However, the practice shows that only a small fraction of legal departments is ready for disruption. For example, according to the recent HBR Consulting’s Law Department Artificial Intelligence Survey Report[1], only 6% of the corporate counsel said that the focus on AI is of high priority, and the same amount stated that they already have an AI solution deployed or at a pilot stage.

Many law firms still lack digitalisation, let alone access to AI tools. Many lawyers do not even use eSigning and e-document management in their daily work. This results in the decreased cost- and time-efficiency and in increased costs for the clients. And many law firms that have announced the purchase of AI solutions have still not used them in client work and are struggling to incorporate such tools into their business models and processes. As a result, the association with AI is used primarily as a marketing technique rather than for bringing actual benefit to the clients. This is not to say that such a technology is pure hype without inherent value: digitalisation has been demonstrating for years its capability to significantly streamline business processes, while the more recent AI technology has shown the unseen-before optimization and performance in contract review.

There are many reasons why law firms are slow to adopt new technologies. First, the traditional business model of law firms does not reward digitalisation. The well-established business processes and non-flexible fee structures allow for a very small gain from optimisation by digital. Second, the technology use cases have not been made apparent enough to the end users. This is the problem that vendors are working on solving by simplifying their marketing and reducing its technical saturation, so that it is easy to understand for non- IT lawyers and developers too. Third, the lack of internal technical knowledge and expertise necessary for such an efficient integration. Traditional lawyers need not only to understand how the new technology works but, more importantly, how it can work with and improve what they already have. For example, if a new AI solution for contract analysis is deployed, it will not work by itself in the vacuum: it needs real data to process, and these data needs to be well-structured and organized to be fed to the AI system. How many law firms have processes and staff in place to organize their data in this way?

A key point to understand is that it is the client who will ultimately benefit from innovation. Digitalisation of legal services makes them faster, more accessible, and more cost-efficient. Another point to make is that law firms are starting to lose their monopoly on legal advice to alternative legal service providers which offer self-service solutions to clients in contract drafting, review, trademark registration, generic advisory, etc. Clients see these alternative solutions appearing in the market, and this results in the reasonable increase of expectations for service delivery, price, and efficiency. Today law firms must be proactive by embracing new technology while building the digital service delivery on their rich expertise, or they will be severely disrupted by such new players tomorrow.

The real innovation comes down to a few points:

  • Clients first! Think of where your service delivery is lacking efficiency to the client and this can be solved. Look for a technology vendor that has exceled at solving this specific problem. Digitalisation does not always mean big costs: there are service providers that can help you achieve the desired optimisation for a fraction of expense of what would have been incurred in the long run otherwise.
  • Analyse how good you are at understanding new technology and its benefits. Having new “cool” tools in place may boost your service delivery, true, but this optimisation will wear off in the long term due to the lack of understanding of the new trends, the intricacies of maintaining the deployed technology, and the competitive landscape with a growing number of more efficient and less costly alternatives. We at Synch, for example, have solved it by establishing the Digital Services business unit focusing specifically on digital service delivery and working with new technologies. Ideally, in-house development expertise should be present, to be able to internally evaluate and integrate with new vendors and help with determining what tools are needed and what can be easily built internally. This expertise also ensures a pragmatic approach when it comes down to any development and its costs. At Synch this is handled by two lawyers-developers, a perfect blend of expertise for such tasks.
  • Know your strengths and limits. Just following the hype alone and solely having marketing objectives in mind will not be an expected win for you and your clients. You should deploy new solutions only if you are confident they will actually increase your value proposition. If a tool provides a slight improvement of what you already have for a considerable price, this will not be money well spent. Make sure that the adoption of a new vendor provides a significant boost in value, be it the reduction of time spent on legal advice or a more convenient way to access your services. Then make sure that you have resources in place to maintain this solution.
  • Finally, and maybe most importantly, innovative mindset is at least as important as new technology. Engage and educate stakeholders by demonstrating what benefits this new technology will bring and how it will enrich their personal experience. To transform the legal services delivery and support the continuous digitalisation you need to gain the support and enthusiasm of those affected. As HBR notes, ‘all technology initiatives are 50 percent about the technology and 50 percent about changing employee mindsets.’

[1] http://www.hbrconsulting.com/wp-content/uploads/2018/01/HBR-Law-Dept-AI-Survey-Report-1801.pdf

Magnus Sundqvist

Head of Digital Services @ Synch

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