By Arnoud Engelfriet
Legal tech is coming, with Artificial Intelligence on board. The promise I quoted in the first article, and it is still very much relevant today. Computers aren’t intelligent, rolling in a big shiny tool will not change the way lawyers work but you’ll get far with a clear playbook and handy rules. In the final article in this series we’ll wrap the mythbusting up.
Robots as lawyers
Let’s get one thing straight: if you’re a lawyer robots will not take your job – unless your job was so tedious that a robot could do it. Robots calculate & automate, they cannot do (not now, and not in the future) the real stuff that lawyers do. Robots can help though: they can scan for patterns, identify clauses or phrases of interest and take programmed action based on what they encounter.
This is as true for classical programmed systems (if you see X, take action Y) as it is for artificial intelligence. Even though AI is promised to think creatively, in actual fact AI is just very, very good at pattern recognition, text analysis and conversational text generation. That’s not to say it’s bad or useless. On the contrary, an AI analysis can very much speed up legal work and identify issues or help with problems that humans may miss or need hours of hard work for.
The actual issue however is not so much how good an AI can work, but how systems using AI (or more generally: legal tech) can improve and transform the working of law firms and legal departments. This is much harder than programming AI – this is business transformation. As business consultant Peter Drucker famously said, “Culture eats strategy for breakfast”. Expecting a shiny AI tool to transform the company is a pipe dream merely because it works very well. The challenge is to understand the workflow that the company uses.
An early adoption example in the legal tech world is the digital signature tool. Putting an electronic signature where a 'wet' one was previously required is a good example of the ew really good ones: simple, clear and with a very precise advantage. You can almost calculate the business benefit of this. There is no downside, apart from the costs of the tooling. But training is nil, you can see what happens and that it is legal is also obvious.
For further steps, from contract generators to the use of chatbots for intakes or wizards who write advice letters, it is often not that simple. And the reason behind that is actually simple: it is not clear how you earn money by working with such tools. And that is again mainly because organizations are set up to deliver their services in a certain way, and new technology entails a different way of working.
The partner structure has often been mentioned at law firms as the reason why legal tech would not be there: the partners would earn less from billable hours, because those tools are faster and therefore fewer hours are worked. I don't think it's that simple. The argument is an exponent of the underlying reason: fearing less customer returns is an economic objection. Whether that literally means that your timesheets are getting shorter or that the customer wants to pay less at all or something else, it matters less.
The general problem is of course a very tough one to tackle. Especially because it is rarely explicitly put on the table: sorry, we are not going to do this tool because it costs us a lot and we see few returns. Especially with legal tech, because “we have to do something with it” and then the tool is rolled out with a lot of fanfare (or rather: a special team or a champion) after which we are allowed to see some interest and after that the use dies a slow death. Just because it doesn't feel useful enough.
So there must be an external incentive to bring about that change. In the legal sector, these are often the customers: large companies that do not accept an hour/invoice but want a fixed fee per job or per year, or even simply require that tooling is used. The only problem is that if the majority of the offices are not yet at that level, it is difficult for such a customer to get her way. There is, of course, a tipping point at some point, but when that will be reached remains to be seen.
Only: you are left with the point that a legal service provider is quite good at his job, and has also set up the workflow to work as well as possible in that way. Whichever way you look at it, introducing legal tech comes down to changing business operations, and there must be a clear economic reason for this. Why would you start working in a new way now, especially now?
Start small and end big
Change does not have to be strategic, does not have to be huge and does not have to be all at once. Change comes when the culture is open to it. This is often the case with small things. A slightly more convenient tool to check references. A service that not only looks up case law but immediately puts it as a reference in your Word document (and checks whether there was an appeal against the case found). A button in Word that completes and signs a draft letter. An Outlook plugin that says “Look out, the attached NDA is unacceptable.”
If you want more, you really have to work with the culture in the office. Why do people not want to extract documents from a tool, but continue to work with their own templates?
That could be because they don't trust the tool, or because they find the learning curve too steep. Or – very silly, but it happens regularly – because they can't log in (anymore) and then noticed that no one spoke to them about it. Or worse – but this happens regularly too – because their direct managers do not enforce using the tool, or even disparage its quality or importance to the business.
And addressing that is ultimately also a cultural thing. Because if you want to change as the leadership of such an organization, you must have a culture of leadership. Bringing people along and motivating them. And if there's no other option, make it mandatory. But then you have to fully support the choice yourself and take for granted that things will (temporarily) be less.
The trend towards commodification
Earlier I wrote about what is called commodification. Traditionally, legal advisors provided complete customization, just like the tailor of the past who delivered perfect customization for each customer with a roll of fabric. Smart offices standardize the process and provide customization based on standard clauses or quickly adaptable model contracts. They have semi-finished trousers and jackets in the closet and they trim the fabric for the customer. Standardization can be pushed further and further, and the inevitable end point is the product: a completely standard piece of service, at a fixed price and available in almost identical form from multiple providers.
For a legal service provider, productization can feel threatening, and for good reason. A standard product will yield less money per item than the custom-made service of the past, and moreover entail risks such as an incomplete or inadequate service with all the associated complaints. However, there are several ways to deal with this threat. The first way is to use the product as lead generation. The product is then actually the first half, the intake of the actual service. A slightly more far-reaching approach is to clearly separate product sales from customized services.
And yes, there will of course always be a need for pure customization in the market. But make no mistake: that market is getting smaller and smaller, because more and more customers are discovering that a standard product is actually good too. Just like many people prefer to buy their suit as ready-to-wear, with at most limited adjustments, such as taking in trouser legs, than going to a tailor. The tailor will certainly continue to exist, but increasingly become a niche. The large market share – and therefore the large turnover – will move to those ready-to-wear sellers.
It’s about the standard work
Of course, the legal profession started out as a specialty, and the legal knowledge today is specialized and quite unique. So it is not surprising that when you read about changes in the profession, you think about how your specialism can be safeguarded in the event of such changes. But I keep saying it: it's not about the specialized work, it's about the standard work. Although lawyers and lawyers often see themselves as suppliers of unique customization, a whole mountain of work is standard.
The only problem is that we lawyers can indicate much better than others why that standard work should also be delivered fully customized. After all, our services are looking for risks and problems, underlining their seriousness and proposing a solution that must be followed on pain of high fines and other legal calamities. (Few people can say that a mistake in their work can lead to criminal proceedings against management.) And that is often followed, partly because the specialism is shrouded in a certain mystique and the consequences sound very serious.
The above is not necessarily untrue. It is true that incorrect advice about an agreement with a competitor can have that consequence. Or that a mistake in an NDA can lead to years of litigation with millions of claims. But those are the exceptions, not everyday practice. It is about “can I sign this because I want to drink coffee with that supplier”. The advice must be proportionate to this. A standard case requires a standard answer. The particular risks should be capped or captured if their probability becomes high enough.
More important to me is the realization that if you as a lawyer don't do this, others will. Take the drafting of general terms and conditions. Protecting an entrepreneur with clear rules for his trade is typically something you use a lawyer for. What risks does the entrepreneur run and how do we cover them? Yet the product "general conditions" is something that can be obtained from so many sources, from handy bookkeepers to many online services where you can obtain them with or without a questionnaire for free, cheap or expensive. There are indeed still lawyers who can ask 12,000 euros for a set of terms & conditions, but that is not the bulk of the work.
As a lawyer, I think you can go two ways. Either you say, I am really a specialist and you should have me if your situation is not that standard, or, on the contrary, I can provide that standard work just fine and I pass on the difficult cases. I think the natural tendency is to immediately choose the first, but realize that this only attracts a limited target group (and therefore the amount of work).
On the other hand, whoever enters the standard work immediately encounters the Chamber of Commerce, handy bookkeeper and online services. Because they can do the standard trick too, and are smarter in bringing in standard customers at a lower price. And yes, he comes again with his Susskind: commodification in the legal world has already come a long way. For many products even to free.
Yet that also offers opportunities, especially for lawyers who can do more than that accountant but do not want to be the super specialist right away. Making yourself distinctive on top of commodity products is the best way to grow in such a market. So: what is your added value on top of such a generator? What does the customer want an accountant not to be able to do?
And no, the answer is of course not "perfect customization with all risks fully negotiated and put away". For me, this is exactly the sweet spot to use legal tech: it provides the standard work that is the start of your customization. To stay close to myself, thanks to NDA Lynn, my clients review their NDAs in five minutes, then pay me to get substantive answers to the crazy questions. As a result, I spend all day doing crazy stuff in NDAs and I like that.
That is how the lawyer of the future must redefine himself: where is my added value on top of the technology, on top of the commodity. I wish you good luck with that!
About the Author
Arnoud has been working as an IT lawyer since 1993. After a career at Royal Philips as IP counsel, he became partner at ICTRecht Legal Services, which has grown from a two-man firm in 2008 to a 80+ person legal consultancy firm.