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  • By Tobias Steinemann

Aim for value not (just) Tech!


A Job to be Done

I. Intro

This article intends to describe my personal perception of “Legal Tech” as a lawyer and users of technology. It also outlines some of the main challenges for the involved stakeholders as well as potential solutions and developments in the “Legal Tech” market.

II. The Lawyer or User

I think it is fair to say that at the age of 33 I can still consider myself fairly young and in the early stages of my career. Even though some might disagree as everything is a question of perspective, it at least means that my education is only a few years behind me. One could therefore think that I should currently be in a pretty well-equipped position to respond to what the market’s needs from lawyers. While this felt true when I practised in a corporate law-firm where traditional legal skills were highly valued, the situation looks different from an in-house perspective. When I joined Yerra Solutions to lead their in-house legal and compliance function, I suddenly faced very different tasks. Very quickly, I had projects instead of cases and my professional life felt much less legal than it used to. Over are the times where I was “just” a lawyer as I am more and more also a user.

I was asked to participate in software-demos. I needed to determine the requirements for specific processes of my department as we are looking to automate tasks to increase efficiencies. With my team, I created e-learning courses on our Code of Conduct for our employees all around the globe.

Research now means studying available software and their capabilities with the hours of legal research shrinking. As soon as you begin to look into the topic of automation, you start getting the feeling that the whole world is “Legal Tech”. Conferences, webinars, roundtables, blogs – everywhere.

Let’s face it: I am a lawyer and as such everything but destined to be an expert on technology. Like most of my colleagues I am not able to code and have only a broad understanding of of what IT is doing around the software and systems that I am using every day. At best…

But what do you expect? I have enjoyed a tech-free education at the University of Basel where I was taught traditional legal skills and many latin words, which I have never used again after completing the subject.

III. The Tech in Legal

Discussing the topic of “Legal Tech” can be overwhelming because it means so many different things to different people. The extent of the implication of technology not only depends on the area of law but also varies across geographies. Further, different players in the legal market are more or less affected by technology. For instance, an eDiscovery vendor in the US is at a different level of maturity with regard to technology compared to an in-house M&A counsel in Asia or a veteran partner of a continental European law-firm.

Overall, there are many success stories around “Legal Tech”. Already today, for many lawyers or in-house legal departments, life without software is unimaginable as technology is used to complete different tasks without or minimal human interaction. Going forward, this will increase and technology in law will be unavoidable. It will – like in any other profession – be an opportunity but one that of course comes with risks and challenges. It is not news anymore that technology helps to release lawyers from many repetitive tasks and help them to focus on their actual jobs. Automation done right can be a game changer for many legal departments, particularly for those who operate at a big scale. Unsurprisingly, the excitement around “Legal Tech” has increased over the last couple of years. New start-ups and products continue to mushroom not only in the US but recently also in continental Europe.

Technology will affect professionals in all legal markets even if it is happening at different speed. Not only will it change the way we work but also the way the customer accesses the legal system. One of the big advantages of “Legal Tech” is that it has the potential to give access to legal services to those who have not yet been able to afford it. In October this year, CaseCrunch Alpha, a technology which is claimed to be artificially intelligent, has managed to reach a higher accuracy in predicting the outcome of PPI mis-selling claims than a group of high-profile lawyers from big law firms.[1] It is a new chapter in the history of humans being beaten by a machine: Artificial intelligence beats Big Law. Even tough there are limitations to this experiment, the outcome tells us that for clearly defined questions, a machine can outperform humans if it has access to a certain amount of data.

Despite all the successes and developments in “Legal Tech”, change does not happen overnight. Some people who have hoped for quicker progress and substantial savings on lawyers’ fees or in-house salaries might find themselves disappointed. Even if AI is dominating the headlines also in legal markets, we are not that close to having “robot lawyers” and many law-firms today make even more money than they used to. The blame for the lack of progress in “Legal Tech” was quickly put on lawyers. One can often read that lawyers are “resistant to change”[2]. Also, law-schools are being criticised for refusing to adapt to this new world and holding on to outdated curriculums that prepare students for a world that does not exist anymore. No doubt that many skills I currently use in my daily professional life as the head of an in-house legal department were not taught at my law school.

It might be truth that some of us lawyers still have a negative perception of “Legal Tech”. Developments like the success of CaseCrunch Alpha might scare lawyers, who are afraid of being replaced. However, it is not only the lawyers who can be sceptical. Even as an open-minded customer in the market for legal services, I must admit that, I also do have some reservations. The main pain points that I see around software are:

1. Over-promising vendors and

2. Implementation

Some sales-driven vendors can have the tendency to give all kinds of promises of what their technology can do. Of course, the disappointment on the customers’ side is quite big when they find out that the tool does not work as claimed beforehand. As a customer, I will not give a product a second or third chance if it doesn’t do what I need it to do.

The second problem with software is the implementation process. This is often a long, painful and expensive exercise for companies. It can take multiple years for big companies to equip their legal departments with technology and to train their people in using the new tool. Even if a software is carefully selected and implemented, the company might still realize that it does not fully fit the requirements. The dilemma is that the more customization a customer asks for, the longer it takes to build and implement the system. Adjusting the tool to specific requirements naturally also has substantial effect on the cost of the project. The ironic part of the story is that once the “new” system is finally up and running, the customer has to accept the fact that the software is already outdated as they are using it for the first time.

IV. The Real Value in Tech

Looking at these two downsides, customers really might end up spending a lot of time and money for a system that is outdated and will never really fulfil their requirements. Nevertheless, most buyers and sellers of technology still seem to take the approach that the best way is to purchase or license software directly, implement it and train their lawyers in it. In my view, at least in some areas, this is the wrong approach and the market will move away from this business model.

Of course, technology will remain an essential driver for the increase of efficiencies. However, we will change from a product-focus to a more client-centric view that asks for solutions. In-house legal departments are not in the business of owning fancy software or licenses for it. Essentially, we need to provide efficient legal services to our business. This is our job that needs to be done. Wherever we automate something, we do it to enable us to complete this job more efficiently and not because we like acquiring software(-licenses) or going through implementation processes. A product or technology per se is very rarely the solution to a problem. Value for customers is created where vendors manage to offer useful and problem-solving solutions. In-house departments should be asking for these solutions as we are looking to get our jobs done. Customers increasingly will want to avoid the costs and headaches of bringing all software in-house.

Lawyers are expensive resources. As an employer or General Counsel, I would much rather have my precious legal team focus on the tasks they are hired and paid for. Why should a company spend a lot of money in training its already expensive lawyers for something the vendor is far better equipped to do? After all, the vendor knows its software better than anyone else. It can use the software in the most efficient way to produce the desired result that truly solves the customers’ problems.

Of course, there will still be some systems that need to be brought in-house. However, if you accept the fact that not every technology necessarily has to be bought or licensed, this opens a lot of opportunities. Applying blockchain to a problem, adding a bit of AI-slang to the marketing message and selling licenses for a fancy-looking software is not going to be disruptive anymore in the future. If providers manage to enable in-house departments to better get their jobs done, they will create real value for their customers. Those providers of real solutions eventually will gain a competitive advantage in a market that is still dominated by products.

V. The Conclusion

In conclusion, it is my assumption that the main affect of technology will be that it will change the way customers and providers of legal services will collaborate in the future.

For software providers as the main

“Legal Tech”-vendors, the situation might not be as comfortable as they think it is. The market will change and some of the companies will struggle to adapt to these developments. Generally, I would encourage vendors to:

  1. Stop over-promising and be transparent on what their system can and cannot do. They need to manage the expectations and deliver on their promises. If they are transparent, I might not use their product to the extent they initially wanted to sell it to me but I might find a good application for it, where I gladly use it - Without disappointment.

  2. Not to complain about lawyer’s resistance to change. Learn our language and challenges. Most of us will listen and learn as well.

  3. Not stop where the development of their software ends and start thinking what solutions the technology can offer. Generally, I do not care how fancy their algorithm is or how artificially intelligent their tool can be. I am also not in the business of understanding how the technology works in detail. What I care about is how the vendor will help me to better get my job(s) done: how they will solve my problem, how fast they can do it and how much it will cost me.

The in-house community needs to make sure that they open their minds and include their supply chain into their processes. Real efficiencies are created where the right people, processes and technology are in place. And this place does not necessarily have to be in-house. If we start asking for solutions and not for technology, there are exciting times for us ahead.

What all of this means for law-firms? Even if today, the birth of the “robot lawyer” is not around the corner, law-firms should not make the mistake and think that technology will not affect them. I generally have very little sympathy for the fear of law-firms that their earnings will suffer through the rise of tech. First of all, the stats do not confirm a trend of shrinking revenue for law-firms. On the other hand, there are still many practicing firms out there, who are inefficient, expensive and operate like they have 20 years ago. Obviously, as a customer I am not willing to accept paying for inefficiencies anymore. One can only hope for these firms that they wake up and become a bit more client-centric.

And what about us individual lawyers and our claimed resistance to change? Of course, some skills beyond what universities teach us are required today. It is also obvious that new technologies will bring challenges for many legal concepts that have worked for centuries but just don’t fit anymore in a digital environment. For the sake of understanding the legal problems behind a technology, lawyers need to learn and be taught how these technologies really work. Those of us who refuse to add to their competencies after law-school might have a tough time building a successful career in the future. Nevertheless, law is a complex matter. Everyone who went through law-school knows the feeling of not really understanding the subjects in the beginning. In my view, it takes a few years and lectures to be able to start connecting the dots, create a picture and start “thinking legal”. Today, these are still the skills that are highly valuable in the market and bring us jobs in law firms or in-house legal departments. I would not consider myself a very good lawyer if it wasn’t for the training that I had and I certainly wouldn’t be where I am today without these capabilities. We have to accept to a certain extent that these competencies come with a healthy tendency to identify risks and to not accept innovation without questioning it

Notes

1 See for instance http://www.bbc.com/news/technology-41829534 (last accessed 29.11.17) or https://www.legaltechnology.com/latest-news/machine-beats-man-in-casecrunch-lawyer-challenge/ (last accessed 29.11.17).

2 See for instance http://legalsolutions.thomsonreuters.com/law-products/news-views/corporate-counsel/legal-department-2025/overcoming-laywers-resistance-to-change (last accessed 29.11.17).

About the Author

Tobias Steinemann is a licensed Swiss attorney. After being admitted to the bar in Basel, he practiced in a commercial law firm, where he mainly focused on the areas of corporate and commercial law. Tobias holds an LL.M. degree in Intellectual Property from the University of Stellenbosch in South Africa and recently completed his MBA at HEC Paris.

As Yerra’s Legal Director, Tobias directs the global internal legal and compliance department. He works on the structural and operational development of this internal function as well as the support of the consulting practice and external clients.

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