The Tipping Point for Legal Technology

After years of talk about technology-enabled disruption in the legal operations industry, the content and conversations at this year’s LegalTech conference demonstrated that the tipping point is finally here. Instead of conjecture about what could happen to fundamentally change the corporate legal ecosystem, panel after panel shared specific examples of what is happening – transformation in action.

Currently, there are four topics in legal technology that are gathering serious notice, discussion and momentum. These topics include:

1. The Ascent of Legal Operations and the Business of Law
2. Robot Lawyers
3. Millenials and the Younger Generation of Technology Users
4. The New Face of Innovation

The Ascent of Legal Operations and the Business of Law

You don’t have to look farther than the explosive growth in size and influence of the Corporate Legal Operations Consortium (CLOC) movement for proof that corporate CEOs are actively and aggressively managing legal departments. Like other corporate functions, legal departments are now measured and evaluated through the lens of spend management, efficiency improvements and favorable financial outcomes.

As a result, a growing cohort of data-driven legal operations professionals at corporations of all sizes—many of them non-lawyers—now define the rules of engagement with outside legal service providers. This new world order manifests in several significant ways.

• Alternative Legal Service Providers (ALSPs) are now on equal footing with “panel” law firms in terms of preferred vendor status for specific capabilities. Corporations still rely on Big Law and high-end boutique firms for high-stakes litigation. However, with the advantages of lower cost and higher efficiency, ALSP players have expanded their reach beyond low-risk or standardized, high-volume tasks. It’s now common for law departments to engage ALSPs for regulatory risk and compliance services, as well as specialized expertise.
• Cost-benefit analysis also favors the hiring of more in-house lawyers. In addition to lower costs, the quality of the available talent pool is high because the current generation of early-career lawyers is more willing to choose work-life balance over the hyper-competitive, stressful and demanding Big Law track.
• Perhaps the most significant threat to the traditional legal services model is what one panelist at LegalTech called an “existential threat” from the Big Four accounting firms—Ernst & Young, PricewaterhouseCoopers, Deloitte and KPMG. Given the range of consulting and professional services these firms already perform in core business operations, they are extremely well-positioned to grow their already significant legal services footprints with large global enterprises.

Robot Lawyers

While artificial intelligence (AI) and business intelligence (BI) were popular buzzwords at LegalTech 2018, the promise of game-changing data science still outpaces the reality.

Speakers and panelists noted that as a practical matter, the current state of artificial intelligence is better described as machine learning, and machine learning right now is an advanced form of pattern recognition. So the most likely place to find AI at work in the law firms and legal departments of today is in the management of matters of similar types (e.g. contracts). That’s no small achievement, though, when you consider the significant cost savings that can be achieved through automating high-volume manual processes. It won’t be long, though, before high-powered data processing and analytics are applied to risk management and the development of winning legal strategies.

Millennials

Demographics might be the single largest catalyst for innovation and adoption in legal technology today.  The generation of “millennial” lawyers and legal operations professionals now moving into leadership roles don’t have to be persuaded about the value of legal technology. In fact, they assume and expect high levels of adoption. However, they also expect legal tech to mirror the look, feel and ease of the consumer technology they’ve been immersed in since birth. This means that moving forward, legal technology should be:

• Mobile – With the ability to easily access and use business applications on any device, anywhere.
• App-driven – Include a collection of standalone, best-of-breed applications for specific tasks that require minimal setup.
• “Sophisticated” in look and feel – Use colorful, design-driven user interfaces and intuitive user experiences
• Customization – Users should be able to easily configure workflows to accommodate their own unique processes.

The New Face of Innovation

My chief takeaway from current trends in legal technology has little to do with the technology itself. Rather, it’s the emerging role of technology as a catalyst for fundamental changes in the legal ecosystem.

Trepidation about the risks of legal technology is being replaced with impatience for the benefits. And instead of jostling for their own share of the shrinking legal spend pie, the successful players will be the ones that harness legal tech to collaborate and execute with a 360-degree view of the client’s business.