Technologies that Will Disrupt Traditional Legal Practice (ILTA 2009)
Real time blog post on ILTA 2009 session: Technologies that Will Disrupt Traditional Legal Practice with Richard Susskind, author of The End of Lawyers? and “legal futurist”; Gerard Neidistch, Executive Director Business Integration and Technology of Mallesons; and by John Alber, Technology Partner of Bryan Cave. (Posted at close of session without editing.)
[Note: this session is very well-attended. I estimate over 100. The hotel is bringing in more chairs.]
Will address three topics: (1) what is disruption, (2) who is being disrupted, and (3) ten disruptive legal technologies.
What is a disruptive technology. Cites Clay Christensen Innovator’s Dilemma, who talksa bout sustaining versus disruptive. Latter seem to come from no where and disrupts the market. Incumbent players – and their customers – often dismiss new technologies. They don’t see the potential for disruption. Cites Christensen’s illustration of many industries disrupted by new technology. Susskind distinguishes between technology and business model. The technology is not nearly as interesting as the model.
For whom is the tech disruptive? For innovators, the disruptive tech provides competitive advantage For customers, it can provide new value. So the threat of disruption is only for followers. Notes that law firms are far more interested in avoiding disruption or being left behind than in gaining competitive advantage. Law firms only worry about what their peers do; they want to be in the pack, not ahead. So disruptive tech here means its disruptive for law firms that want to stay in the pack (RF: which is all the leading law firms).
Remembers first reading about death of billable hour in 1981. Susskind’s research suggest that at least 50% of general counsels still want billable hour. But thinks we are now, finally, moving away billable hour. Disruptive technologies challenge the billable hour.
Ten disruptive legal technologies that collectively will transform the market – but it will take several years if not longer:
- 1. Document Assembly. Notes the CEOs of big companies assume this is already widely in use. Cites some examples from UK where doc assembly changed the market (e.g., loan documents). Distinguish between internal D/A and external. For internal, you need a big volume. But if you make available online, then economics change because volume can be much higher. So you can go from production level of 10s or 100s to 1000s or more. Disruptive because of hours required up front and then the charges don’t relate to hours.
- 2. Relentless Connectivity. We are increasingly connected and present online. This can mean procedures to make sure that someone at a law firm is always available. Calls on lawyers’ time are increasing. This is relentless but we have to learn to deal with it.
- 3. The Electronic Legal Marketplace. Cites eBay as example of auction market. Lawyers think auctions and other online markets won’t affect them. This is ungrounded. Clients will be able to go online to select legal services. Sees no reason why law will be exempt from this when most other markets are moving in this direction. Electronic market will also make it easier for clients to find alternative providers (e.g., other professional, outsourcers)
- 4. E-Learning. Worries that law schools in Anglo countries don’t teach the right things. Law schools promote a romantic notion of the law that does not reflect reality of practice and evolving, new models of delivering new legal services. New simulation techniques are far superior to traditional Socratic method.
- 5. Online Legal Guidance. Interactive advisory systems will offer advice. This is progressing slowly. Notes that there are, in UK, many public sector websites that offer legal help. References “latent legal market” (RF: a concept Susskind developed in his prior book, The Future of Lawyers). Online system can provide guidance or documents. Cites a UK solo practitioner who developed extensive landlord tenant system and community.
- 6. Legal Open-Sourcing. Make law freely available a la Wikipedia. Is particularly interested in communities of interests. Suggests that community can come up with better answers than individuals. Notes that consumers are more willing to talk to friend who had similar problem than a lawyer.
- 7. Closed Legal Communities. We will see communities of just lawyers and legal professionals to share knowledge and experience. Cites the 9 London banks that came together a few years ago to “coerce” law firms to deliver their collective know-how. Mentions Legal Onramp. It’s disuprtive for law firms because clients can go somewhere else to start.
- 8. Workflow and Project Management. High volume, low value work can be routinized. There is no reason this work requires bespoke / custom attention. Some lawyers now say they are project managers – yet they have had virtually no training! PM is a discipline that requires significant training. Disruptive b/c this makes lawyers more productive so threatens the billable hour. You need project managers to manage multi-sourcing. Multi-source legal work means finding the best set of resources to solve a problem. This can include other professionals and outsourced services. Pull together multiple sources and put together for just in time delivery. A big question is who will do the project management.
- 9. Embedded Legal Knowledge. Uses playing solitaire on a computer as having game rules embedded in software. In the future, we will see systems with legal knowledge built into systems. You can embed knowledge into compliance systems. This will disrupt law firms because it reduces demand.
- 10. Online Dispute Resolution. Are courts a place or a service? Dispute resolution should be viewed as a service. Mentions CyberSettle service. This too will reduce demand for billable hours.
Focus on automating low end legal advice. A recurring problem for clients is understanding US import and export restrictions. A company came to firm complaining about another firm that charged high rates to keep solving the same types of problems repeatedly. Bryan Cave decide to apply tech to solve the problem. The firm conscisouly decided to cannibalize its own hours by embodying know-how in a system. The process to capture the rules was time-consuming but the technology is not. So the firm developed an online legal service. So GC can turn to a system instead of a lawyer to answer a certain set of questions.
How did the firm package delivery? The firm sold access to system for flat fee of a couple hundred thousand dollars per year ($200,000). The lawyers at firm were relieved from boring work. Client get better legal results at lower cost, with predictable cost. Firm uses the software to train new lawyers. A big benefit was that client shifted its higher end trade work (that system was not designed to handle) to Bryan Cave from another firm.
Another example is Streamlining Due Diligence. Problem is that wireless carriers regularly trade frequencies. Any sale / trade of wireless spectrum requires significant due diligence (similar to any asset transfer). Need to look at leaseholds, asset documentation, easements, etc. Moving a portfolio of spectrums can be very expensive. The deals can take so long to due diligence that the deal cannot be done. So the model has to change to support a company’s ability to move portfolios of spectrums.
Just dropping fees was not enough. Instead, the firm developed an automated workflow system. The firm created a system that allows contract lawyers to conduct the due diligence. Embedded know-how in software so that more junior (read cheaper) lawyers could do the work. The system takes lawyers through the workflow and captures information. This allowed capturing required documentation. Result is a “factory workfloor staffed with contract lawyers supervised by experienced lawyers.”
The firm reduced the cost per spectrum transfer by two-thirds and reduced turnaround time from months to weeks. The client can now do deals that it could not previously do. No other law firm can compete for this business. The hard part is the human process, not the technology.
Discusses Mallesons Connect. This is an extranet but doesn’t look like it. It has a lot of workflow built into it. Removes “black box” approach so that clients could see what work is being done and when. Mallesons wanted to provide predictable service levels, demonstrate value, provide round-the-clock service. For clients, system provides project progress, financial reports, alerts, current awareness, training, resource availability, secure deal and data rooms, automatic data generation, sophisticated security, and (in next release) correspondence and know-how.
References PeopleFinder, which is an internal system the firm developed, to locate lawyers in real-time (for internal use). Goal was to answer more calls in real time. Connect is an extension in some ways of this system but with different emphasis since it’s client facing.
Shows a screen shot of Mallesons Connect. It shows total projects, active projects, and unpaid invoices. Provides detail on Active Projects. “My Feed”. All Web 2.0 technology – everything is interlinked and dynamic. Mouse-over an active project shows key info including WIP and key contact and if that contact is currently available. A more detailed screen shows fee-earner calendars and contact info. Provides faceted search across portfolio of projects. Financial summary page provides graphics and tabular summary. All data are real-time.
So far, five clients use the system. Goal is to have 30 largest clients using.
From Q&A: when there was a change in key personnel at client, Connect helped provide continuity.
Questions and Answers
Q: Clients want to use own systems – how did you break down that resistance.
A: Gerard: clients did not have own system so we did not face that challenge. They were eager for tools.
A: Richard: if client is not willing, don’t push that hard; others will be willing
Q: What is legal spend in Australia versus US and is that a factor in Connect uptake?
A: Gerard: we see procurement and other non-lawyers getting involved in purchasing. But divisional business managers are also involved in purchasing decision.
Q: For John: with trade compliance tools, how did you deal with pricing? How do you make sure you are not actually losing money?
A: We took a flyer on pricing, guessing on both costs and value and what client was willing to pay, with ability to adjust. This is how a lot of business works.
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