Legal IT Today asked several commentators, including me, to answer three questions about 2017. The questions and my answers appear below. You can download the entire PDF issue here. See the end of this post for list of other commentators who answer the questions.

Q: In your field of expertise, what do you believe will be the most important trend in 2017?

A: A slow move by large law firms to reduce cost and improve service delivery.

The new normal for much of the developed world’s legal market is low or no growth. In a flat market, makers are price takers. That is, law firms have lost pricing power; instead, they must often accept a market price. Market takers must compete on price and service.

Large law firms, in response, are doing what other price takers do: reducing their delivery cost and improving service. That explains the growing number of law firm professionals focused on knowledge management, legal project management, process improvement and alternative staffing. These and other approaches lower costs and improve service.

Despite market pressure, I believe the move to reduce cost and improve service will continue to occur slowly. This is because both require lawyers to change how they work. Few people willingly change until the pressure becomes irresistible. And many lawyers simply may not feel the pressure. With clients settling for discounts, switching law firms and bringing work in-house, the changes manifest themselves in ways that do not always make the pressure apparent.

Q: One of the hottest topics in 2016 was artificial intelligence. When do you think AI will significantly change the market for legal services?

A: It already has for document review in discovery, but otherwise, not for a long time.

The US market for litigation, specifically document review in discovery, has already changed significantly. Over the  last decade, machines have substituted for manpower in large-scale document reviews. Whether we call it predictive coding, technology assisted review or computer assisted review, computers have significantly reduced the human time required per gigabyte of data. This, combined with lower cost document review lawyers via staffing agencies, managed legal services companies and legal process outsourcers, has led to a big shift of document review work from law firms to other providers.

A rapidly growing impact of AI is machine learning to accelerate due diligence in deals, which requires reviewing many contracts. Relatively new machine learning products have rapidly gained mind and market share. Firms feel pressure to acquire this class of software to meet client demand for efficiency and lower bills. Even if most of the firms that do a lot of due diligence acquire such software, how significant is that? Perhaps firms will hire fewer corporate associates; perhaps revenue from this work goes down a bit. But that does not seem as market changing as the shifts we’ve already seen in document discovery.

Beyond these two areas, I do not see a systemic impact of AI in the legal market.

Q Legal tech start-ups dominated the news in 2016. Will they start becoming a threat to traditional vendors in 2017?

A: No. Anecdotally, I see no evidence that incumbent players are suffering from startups. (I wish we had good sales data, but we don’t.)

Many new software products meet new needs. For example, dedicated software for legal project management, contract analytics and deal management did not exist until recently. Consequently, the multiple offerings in each of these areas do not appear to steal sales from incumbents. Instead, customers likely just spend more on software to buy these new products. If customer software budgets are not growing, then cutbacks elsewhere appear dispersed rather than hitting any particular identifiable incumbents.

Separately, for a startup to displace an incumbent, it would have to overcome ingrained market dynamics. Law firms and law departments have long buying cycles and high switching costs. Provider market shares therefore tend not to shift dramatically year to year.


The article also has answers from, in order of appearance in print: Kathryn Hume Director of Sales and Marketing / Fast Forward Labs; Casey Flaherty Principal / Procertas; Niek van de Pasch Lawyer / Van der Putt Advocaten; Stephanie Abbott Director / Janders Dean; Jordan Furlong Principal / Law21; Jeffrey Brandt Chief Information Officer / Jackson Kelly; Mark van Rijmenam Founder / Datafloq; Jobst Elster Head of Content/Legal Market Strategy /; Christy Burke President / Burke & Company; Ian Raine Director of Product Management / iManage; Chris Bull Executive Director, Retained Advisor and Thought Leader / Kingsmead Square.

Legal IT Today #16, Dec 2016, What Will Be Hot in 2017