Law firms look set to update their technology systems in a bid to steal a competitive edge over laggards who fail to see changing business needs
So far history has been on the side of the sceptics. For all the hype about a revolution in legal services since the 2007 Legal Services Act came into force, we have yet to see a technology-enabled new entrant disrupt the sector along the lines of Amazon or Uber.
New entrants such as US giant LegalZoom, whose UK chief executive Craig Holt describes as “preparing to revolutionise the market”, still seem to be testing the water before all-out launch. Meanwhile “Tesco law” contenders such as Co-operative Legal Services have publicly replaced their early ambitions with more modest aspirations of growth. Even the private equity investment sector seems to be having second thoughts following Duke Street’s experience with its investment in Parabis Group.
What united these ventures was the assumption that legal services was a sector where the fruits of adopting information technology were ready to be picked by anyone bold enough to grasp them.
However, just because the revolution has not come from newcomers does not mean it is not happening. And awareness is building not just from the neophytes. According to the current president of the Law Society, Jonathan Smithers: “Artificial intelligence is dictating the way that we do the law. We, as a profession, seem to be playing catch-up.”
Massive market changes, from the decline of hourly billing to the Jackson civil litigation reforms, aimed at boosting efficiency and reducing costs, are forcing changes in the way that all firms work. In response, they are dipping their toes into new technologies to generate efficiencies. But both are capable of underpinning more fundamental changes.
Two technologies in particular could be enablers of disruption.
Slowly and behind other sectors, such as technology and management consulting, the legal sector is getting used to mobile. One sign is that fixed PC terminals are on the way out. In a survey of the sector due to be published next month, 38 per cent of respondents said their firms are already moving away from desktops towards laptops for most of their people and 17 per cent said their firms are considering such a shift.
The point of mobile is not so much to be able to deal with clients’ urgent inquiries from the yacht club (useful as that can be), but to change the way firms are organised and especially how they relate to their clients.
The next step is to replace multiple channels of electronic communications – e-mail, voice messages, shared editing of documents, and online chat and video – with seamless working. Thus equipped, members of an organisation can see at a glance which of their colleagues is available and instantly ask a quick question, glance over a document or set up a future formal meeting without e-mail ping-pong.
Research to be published next month by communications firm Arkadin, a subsidiary of Japanese telecoms giant NTT, suggests the sector is ripe for the revolution. Nearly two thirds of respondents agreed that people in their firms were “more tied to their desk than they should be”.
Unified communications can enable innovations such as hot-desking, which after a slow start is beginning to accelerate in the sector. DAC Beachcroft is the latest to announce agile working this year.
More significant, according to Alan Heals, business development manager at NTT Communications, is the potential for integrating clients in the system. Even in a world where firms are organising more by client teams than professional specialities, this is a novel concept. According to Arkadin’s research, 76 per cent of respondents said their firm uses some sort of “presence” system to enable instant communications in-house, but only 5 per cent shared this with clients.
In future, Mr Heals says, this will not be good enough. Guaranteeing access to a paralegal 24 hours a day might be a key competitive advantage in winning clients, he says. The client will see a “mirror image” of the in-house system so they will always know who is available.
But is the kind of off-the-cuff instant communication implied by presence systems really appropriate for the legal world? “The legal sector is highly regulated, but so is financial services,” says Mr Heals. “In a sector where a second is worth millions, they have obviously seen the value of instant communications.”
The first applications are already becoming mainstream in technologies such as e-discovery. Simon Price, managing director of specialist IT supplier Recommind, says sifting electronically through documents, e-mails and other material can save 95 per cent of “lawyer time”. This not only makes litigation more accessible, but improves the reliability of work.
“If you have seven people looking at a corpus of documents, they will come up with different ideas of what might be relevant. E-discovery comes up with a consistent picture,” he says.
Mr Price stresses that e-discovery does not imply replacing lawyers as human professional skills are still needed to review the results. However, he says it does offer the chance for innovators to change the shape of law firms. For example, systems that were once available only to global giants are now available as online software-as-a-service offerings on pay-as-you-go subscriptions to much smaller, including “virtual”, firms.
Last month, chief technology officer at top-25 law firm DWF Richard Hodkinson revealed it has been in discussions about developing artificial intelligence for the last two years. “It is not a passing fad,” he says.
New technology can drive efficiencies, increase accuracy, assist with client retention, and have the potential to reduce overheads and drive greater profits
The firm already uses big data analytics to help insurance clients identify potentially fraudulent claims. The software maps connections between different entities to identify potentially fraudulent patterns of activity. A complex algorithm analyses the documents associated with each matter and gives it a score between one and ten, which will indicate how much or little lawyer input the case is likely to need. Given the pressures on sectors such as personal injury, the use of these systems can only spread.
However, it is possible to be an enthusiast without subscribing to the view that robots will replace lawyers in the near or foreseeable future.
As the Law Society’s Mr Smithers emphasises: “An artificial intelligence system is designed to stimulate human thinking, but not creative or independent thought. Both of these qualities are essential for the legal profession and the discharge of our professional legal obligations of upholding the rule of law and the proper administration of justice.”
But while stating that “no algorithm exists to replace us and the work that we do”, he says lawyers “should, however, continue to use artificial intelligence to improve their work”. New technology can drive efficiencies, increase accuracy, assist with client retention, and have the potential to reduce overheads and drive greater profits, he says.
Adopting new technologies
In their book the Future of the Professions, Richard and Daniel Susskind identify what they say are common biases that inhibit professionals from thinking freely about the future. Apart from the strong “status quo bias” there is “irrational rejectionism”, the dogmatic dismissal of a system with which the sceptic has no direct experience or because their own profession is unique.
“We ought to be suspicious when a professional claims that all professions are dispensable other than their own,” especially when this special pleading is based on arguments from hard cases, they say.
Another is “technological mystopia”, the tendency to underestimate the potential of tomorrow’s technologies because of the shortcomings of today’s – a bad experience with Skype should not rule out the use of web-based multimedia channels in the future.
In other words, just because the disruptor sceptics have been right up to now does not mean they will continue to be.