Legal transformation requires (a lot) more than tech

Mark Cohen contributes Legal transformation requires (a lot) more than tech, adding to Ken Grady‘s recent contributions. I admit to exercising editorial prerogative and adding (a lot) to Mark’s title. I did so based on research my consultancy released earlier this month: Client-led innovation in legal services. One stunning statistic from the report justified (a lot): When clients are asked what comes first to mind when thinking about innovation and legal services, only 15% answer ‘technology’.

Legal tech is attracting plenty of interest, money, press, and hype. It is law’s shiny new object that has transfixed the industry. Artificial intelligence, blockchain, and a daily rollout of new tech solutions are touted as game changers.

The proliferation of tech incubators, record crowds at tech conferences, the recent Global Legal Hackathon, and the explosion of tech vendors lead many to believe that law is about to be co-opted by technology. This is reinforced by uninformed, sensationalist speculation that: (1) any day now, technology will disrupt the trillion-dollar global legal industry; (2) if it doesn’t, that’s because the disruptive tech tool has yet to surface; (3) technology poses an existential threat to lawyers; and (4) the relationship between human and technological legal resources is a Darwinian struggle.

Stop the presses! Technology alone will not transform law. Nor will it marginalize lawyers. Transformation will be driven by lawyers and other professionals, paraprofessionals, investors, and consumers committed to improving legal access and delivery. A  new paradigm for integrating legal, technological, and process expertise is emerging to counter law’s strong headwinds—its culture, values, buy/sell dynamic, excessive risk-aversion, and focus on precedent, not improvement and outcome.

Technology’s impact on transformation

Technology has certainly played a central role in the industry’s change, especially during the past decade. It has contributed to altering law’s workforce, division of labor, economics, organizational structure, providers, skillsets, career options, education, training, customer expectations, and culture. Technology has recast what ‘legal’ work is and when lawyers are required, substituted products for services, and propelled law into the digital age. Lawyers now work side-by-side with other professionals, paraprofessionals, and machines.

A legal supply chain has emerged because technology has helped to separate legal practice from legal delivery–the business of law. Expertise is no longer housed exclusively in law firms. Legal delivery has become a three-legged stool supported by legal, technological, and business expertise. All three elements are essential to legal delivery, but no single provider source can presently ‘do it all’ on a scalable basis. The legal delivery riddle is to engage the appropriate resources–based on expertise, risk tolerance, cost, etc.– to the task.

Just as law is no longer solely about lawyers, neither will it become the exclusive domain of techies. Technology is a means—not an end—to improving access to and performance of legal delivery. That requires collaboration between and among professionals with different expertise, perspectives, and economic objectives. Lawyers were the colonizer species of an ecosystem that now includes other professionals and machines. They are not in peril of becoming extinct, but their role is changing. People skills (EQ) are more valuable than ever, because those working in the legal space must collaborate as never before. Empathy and persuasion differentiate human beings from machines.

Don’t expect disruption; the legal industry is changing gradually

Trying to change an industry—especially one as insular, pedigree driven, parochial (‘lawyers and non-lawyers’) large, balkanized, risk-averse, and monopolistic as law– is neither a fast or easy proposition. My Clearspire experience taught me that. Even when you build it, they may not come. There remains a divide between what buyers say they want and what they are willing to buy. Inertia, risk aversion, ‘you don’t get fired for hiring Cravath’ (a/k/a ‘CYA’), and ‘relationships’ are all reasons for this dichotomy. It will persist until lawyers no longer control both sides of the buy/sell dynamic. That’s happening—procurement, CFO’s, and consultancies are often involved in legal buying decisions, and that’s driving change in who does what in the industry. Why?

Causes of legal industry change

Legal industry change was precipitated by a ‘perfect storm’ of macro-economic global developments–the confluence of globalization, the global financial crisis, and advances in technology. Those forces have penetrated law’s cultural and regulatory barriers. They have led to disaggregation, new business models, legal re-regulation (in some markets but not the U.S.), investment, ‘outside’ interest in modernizing legal delivery, and pressure from consumers to elevate value and to solve complex business challenges instead of providing legal answers.

The ‘more with less’ mantra of business now applies to legal services. General counsel and senior in-house managers bear the brunt. Initially, their go-to responses were to take more work in-house and to negotiate larger discounts from law firms. But that no longer suffices because not all the expertise required to improve legal delivery resides in law firms or even large in-house departments. A handful of well-capitalized, tech-enabled, and process-driven law companies whose expertise is the delivery of legal services –the ‘business of law’–provide additional expertise for GC’s in search of new and creative ways to address management’s ‘more with less’ mandate. GC’s confront a conundrum that few have been trained for—how to manage expanded portfolios, new risks, complex and often conflicting regulation, and the dual role of corporate defender and enterprise partner. To achieve these daunting goals they must not only work more cost-effectively, but also smarter and collaboratively. That means that resources are mined and melded from different provider sources. It also means that traditional ‘silo sources’–firms, in-house departments, law companies–must be realigned to get the job done. NetApp’s collaboration with Elevate and DXC’s partnership with UnitedLex are two prominent examples.

Technology, like transformation, requires collaboration

Technology is a means to an end and has no inherent value or ability to transform. Technology must be thoughtfully applied by human resources—techies and others in the legal ecosystem—to material tasks and challenges. To be effective, technology must be user-friendly, free-up human resources for higher-value tasks, and drive measurable value to consumers.  ‘Measurable value’ means quantifiable (read: data, not ‘a feeling’) efficiency improvement (e.g. eliminating repetition, compressing delivery cycles, etc.) lowering cost, identifying and adhering to acceptable risk parameters, and advancing buyer objectives. Technology is an element of legal transformation, but it takes more than that to change the legal industry. Think of technology as evidence to support the case for change in the industry. To be admissible, that evidence must be material, reliable, and calculated to improve outcomes. To meet that threshold, technology requires collaboration between and among professionals with different skillsets, biases, economic motivations, and receptivity to change. Technology addresses specific operational and practice issues; it is helping to reform legal delivery brick by brick. It is not—as many incorrectly perceive– a pre-fab solution to legal reformation. Technology is a catalyst for providers with new delivery models, structures, economical models, expertise, and cultures to hasten the sunset of traditional legal buy/sell dynamics. There is a symbiotic relationship between these elements.

 Something’s gotta give

 Technology is driving operational, structural, and cultural change in the legal marketplace. It has propelled legal operations into the forefront of changes in delivery and is the ‘straw that stirs the drink’ of the twelve interlocking competencies of ‘legal ops’ identified by the Corporate Legal Operations Consortium (CLOC). Underlying the efficacy of technology is integrated solutions that transcend the anachronistic boundaries separating different providers—corporate legal departments, law firms, and law companies. This requires human collaboration whose unified mission is to improve legal services no matter who delivers them.

Whether it’s the integration of technology and/or human resources, the keys to legal transformation are what will move the needle for legal buyers and how can access to legal services be expanded. The outdated, protectionist U.S. legal regulatory system is in dire need of reform designed to better serve legal consumers, not lawyers. This will remove anachronistic structural restrictions on law firms, promote innovation, competition, and a ‘consumer first’ philosophy desperately needed in the retail and corporate segments of the industry.

Conclusion

Human behavior and values—not technology—are the key drivers of legal transformation. The profession and the society it is committed to serve can no longer be satisfied with only a small segment of the population having access to legal services. Nor can profit-per-partner eclipse net promoter score as the key metric of provider success. Technological advances must be accompanied by an industry commitment to expanded access to justice and constant improvement of legal delivery for the benefit of legal buyers.

Anything less is not legal transformation.

Author

Mark Cohen is a lawyer, law professor, legal innovator and strategist, and founder of Legal Mosaic

Mark says of himself I write about changes in the global legal marketplace”.

This article was originally published in Forbes March 22, 2018 as Legal transformation requires more than tech, and is re-posted on The Dialogue with Mark’s kind permission.

 

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