LegalBusinessWorld Posts

The (R)Evolution of Law: Survival of the Fittest

April 10, 2019

The new normal for Legal Service Delivery

 

With the proliferation of legal tech startups and new apps on the market seemingly every day, lawyers are in a prime position to take advantage of innovations that offer the possibility to achieve what once seemed unachievable – doing more with less. 

 

Perhaps no legal technology has grabbed as much of the spotlight in recent years as artificial intelligence (AI). As AI’s capabilities in law continue to expand and its use becomes more widespread throughout the industry, lawyers are coming to a better understanding of what AI technology can offer. With the help of AI, streamlining legal operations is a real possibility, allowing lawyers in all walks of practice to improve operational efficiency while reducing both costs and risk.

 

It is clear that Technology is revolutionizing the work we do and how we do it. Increasingly, AI and other technological tools and solutions are taking over high volume repetitive tasks as well as other legal related activities, leaving lawyers to concentrate on work that requires critical thinking, and providing them with valuable modern tools.

 

As software solutions help to make available more efficient legal processes and management tasks, they’re helping proactive lawyers to do more, faster and simpler.

 

It is undeniable that AI is dictating the way that professional service is being provided. However, today, we as legal professionals, compared with the advancement and maturity level of other industries and professionals are playing catch-up.

 

Part of this is because of the fear and misconception that Technology will replace lawyers. It is obvious that human professional skills are and will continue to be needed to analyse and provide professional judgement and sound legal advice. However, it is true that technology (called in different manners…robots, Bots, digital systems, software, data management, machine learning, artificial intelligence, block chain, etc., offer the chance for proactive legal professionals to gain an incredible competitive advantage by re-designing the business of law and reinventing their practice, in order to remain relevant. 

 

New legal technologies can drive efficiencies, expand reach, gain and better manage information, increase accuracy, simplify processes, assist with client intake, satisfaction and retention efforts, and have the potential to reduce overheads, operate more effectively and drive greater profits. Who in their right mind would not want to pursue these results?

 

Only those in-house counsel and practice attorneys, who embrace legal disruption and make an effort to lead on its transformative power, will be able to gain such an important competitive advantage and survive in the (R) Evolution of Law. 

 

Juan Carlos Luna, founder of legal consulting firm Lawgistic, and co-founder of LAWIT a legal management consulting group, is leading an effort to share the knowledge and trends of this transformation, through a series of legal summits, addressing the need to re-design the business of Law. The first Legal Summit on Innovation & Technology was held in Mexico on April 2018, and there are already plans to expand it to Latin America and the USA.  The idea is to set the agenda to discuss the new reality confronting the legal profession and how technology and innovation are key elements to remain relevant in a disrupted legal industry. 

 

The upcoming LAWIT LEGAL SUMMIT – The (R) Evolution of Law, to be held in Mexico City on May 16th, 2019 will reinforce this message and shade light into these topics, get insights from experts, and feedback from the most influential in-house counsel and law firms in Mexico and Latin America.

 

The Summit will focus on how technology is changing the landscape of the legal profession, the law itself, and how these changes impact us all.  It will bring together industry experts, academics, entrepreneurs, lawyers, investors, policy makers, and leaders spearheading the tech-driven transformation of the legal system, to ignite conversation and debate on the latest legal disruption trends, and provide guidance on the opportunities and challenges that these changes present.

 

The Summit’s Speakers will examine how technology has irrevocably changed the legal landscape, with firms and law departments increasingly having to consider how best to deal with a rising tide of competition in services, increasing efficiency demands, talent acquisition and innovation tools and processes.

 

Many international and regional sponsors, partners and support organizations are joining forces to position this Legal Summit as a leading and influential forum to deliver an important message…embrace innovation and technology to remain relevant. 

 

A corporate perspective.

While legal departments have traditionally been viewed as protected from the challenges faced by the average business function, the aftermath of the global economic downturn has transformed the way in which legal services are provided.  Growing client demands mean In-house legal counsels are under increasing pressure not only to control costs, but to improve efficiency and productivity. 

 

“Both in-house legal teams and Law firms face new demands”, explains Luna. “Business is driving the change. In a world that expects speed and agility, everybody faces the challenge of how to be more effective and efficient, while generating value to the overall business operation.  Therefore, like many other business functions, legal services are no exception and need to be able to manage the new reality, of setting a plan to adopt and apply new operating models, new tools, new technologies, and at the same time controlling costs and carefully designing strategic and modern engagement approaches”, explains Luna.

 

Evolving with client needs 

Just a decade ago lawyers had a clear path ahead and little to none alternative competitors. It was a legal profession designed by lawyers, for lawyers - and run by lawyers.

 

Then it all began to change. In particular, clients changed and new legal industry players emerged. The upheaval of a global financial crisis made the customers of legal services more cost-conscious and value orientated. Where once they were satisfied with lawyers who understood the law, today they want much more for less. Law firms and legal departments are under increasing pressure to deliver faster and better service while becoming more efficient and agile.

 

Over the past decade, the in-house legal function has undergone significant changes as the pace of globalisation accelerates and the business world evolves thanks to technology. Today, In-house counsel have to contend with better tools, with a myriad of laws and internal management processes that can certainly pose a challenge in itself for any in-house legal team looking to control and reduce risks and protect the reputation of any organisation and its stakeholders, while adding measurable and practical value. However, trying to do all of this with old tools and with the added pressure of reducing costs and with increasingly limited resources, is a more complicated and difficult task. 

 

With all of these elements pushing for change, law departments are faced with far more than a strictly legal challenge. Client demands have changed and continue to do so and In-house counsel need to be able to respond to such demands through improvements in many areas, including planning, management, budgeting, staffing and operations as well as fulfilling their legal obligations with dramatic efficiency. 

 

“The reality is that there is a need to show continuous improvement in legal operation. Lawyers need to show that these improvements can be achieved all over again, as well as showing how you can reinvent these solutions to cope with new realities”, says Luna. Some companies have been applying such strategies for a long time, for example Toyota operated under the principle that continuous improvement was achieved through small, incremental changes that would yield massive results over time. Du Pont also took a more practical approach by defining a system that applied business discipline to the practice of law, which served as a framework to adjust to change and new challenges, and that happened 30 years ago.  

 

Clients continue to demand more efficiency, transparency, and predictability from their lawyers (internal and external) and each one is expected to add measurable value to the organisation, resulting in the internal legal function being evaluated like other areas of the company. It is therefore becoming more and more common for In-house counsel to be held accountable for costs and effective management as well as the provision of quality legal services. 

 

So what does In-house counsel need to focus on in order to improve and develop with their business? According to Luna, there are a number of skills that need to be nourished; nevertheless, operational business mastery is one of the most important. “You need to properly understand the business . . . you need to understand how and where the money plays a role and what it means for each business team, partners and alliances. Finally, you need to understand how it plays an important role in what you are doing, after all it is your budget and your responsibility”, says Luna.

 

A strong understanding of the business requires that In-house counsel be better equipped to understand the need for their legal services and be better able to know what tools are necessary to be deployed, as well as knowing when to seek outside help and which type of legal support formula and structure is best for you.  

 

Since the function of an In-house counsel is in good part that of a leader, a coordinator and a manager, the role could improve efficiencies by focusing on strategy, development and operations while ensuring best practices are implemented at all times. 

 

“You have to work creatively to find the best solutions available and use the best tools to transition into a value added organisation such as work process allocation and management” says Luna. Adopting the latest practices and legal technologies to improve efficiency, reduce risk and increase predictability can provide solutions to these problems. 

 

The new normal: Technology and Innovation…are disrupting the legal sector

Law firms look to update their technology systems in a bid to steal a competitive edge over laggards who fail to see changing business needs.

 

New technologies and innovative solutions have the ability to dramatically alter the way in which legal services are delivered and for this reason are fast becoming the most important foundations on which to build success and maintain a competitive advantage. 

 

Technology can create new value in the legal services market. It’s not just about clients pushing down on fees and firms introducing automation to deal with that. Technology can also create new value in the legal services market. The biggest risk is underestimating the importance of competitive issues such as these.

 

The 2018 Report on the State of the Legal Market, produced by Georgetown University in the United States, warns: “Flat demand for law firm services, declining profit margins, weakening collections, falling productivity, and loss of market share to alternative legal service providers and others are gradually undermining the foundations of firm profitability.”

 

Firms need to take a long, hard look at their business model, structure, offerings and what they can deliver to potential clients. Tech is going to become a differentiator. If a firm gets its strategy right in this area then it will gain a competitive advantage. Technology, different type of software tools and solutions, including Robot lawyers or artificially intelligent software offer law firms an opportunity to enhance and expand their practice while allowing the legal experts to concentrate on their core business. 

 

In-house counsel and law firms need to keep up and take notice of these changes to better understand the new expectations that come with them, or alternatively face a much more uncertain future, as Luna points out, “due to the nature of our profession, we are not at the forefront of these innovations. What we consider new and innovative may already be used in other departments and certainly in other professional activities, so we need to make an extra effort to stay on top of the changes or be left behind, with the risk of losing relevance and competitiveness” 

 

In-house counsel and law firms need to keep up and take notice of these changes to better understand the new expectations that come with them, or alternatively face a much more uncertain future, as Luna points out, “due to the nature of our profession, we are not at the forefront of these innovations. What we consider new and innovative may already be used in other departments and certainly in other professional activities, so we need to make an extra effort to stay on top of the changes or be left behind, with the risk of losing relevance and competitiveness” 

 

As the work of a legal department and a law firm becomes more complex, a focus on adopting advanced technologies and improving process has emerged as key to improving overall operations. In fact, in today’s digital environment, standard tools as basic matter or document management systems do not do enough to accommodate the day-to-day tasks of in-house counsel or law firm.

 

The benefits of adopting new technologies can be wide and varied, including greater, faster and more accurate access to knowledge, information, and documents at greater speeds, improved work efficiency and better task management. 

 

“For example, if you look at information management, the old way was the filing cabinet and ...now it is the cloud” says Luna. “This not only centralises information, but it also helps to create a practice of law that is more flexible, smart, simple and immediate”. Many mobile devices can now handle complex tasks, while also allowing lawyers to access and use material securely at any point in time.  In addition, systems to measure metrics or KPIs can also prove especially useful for implementing strategies and in identifying areas for development which can lead to substantial improvements in efficiency and profitability. 
 

While some in-house counsel and law firm lawyers may fear that new technology will become just another risk to manage, Luna, suggests otherwise, “Technology has levelled the playing field, years ago it was very difficult to find a solution that could offer strong, practical and focused solutions dealing with the management of your contracts, litigation and other legal activities and services, but today you can buy the app, or the software as a service licence very easily, meaning that technology has in a sense democratised the capability of legal service providers and facilitating the access to users”. 

 

Law firms and corporations harnessing these technologies stand to gain a significant competitive advantage. The peril of the technology revolution comes in two forms. First, it will apply new pressures on traditional pricing models for legal services. Second, it poses new obstacles for junior associates and paralegals, whose role in a firm may be jeopardized, but promises opportunity for lawyers and legal professionals incorporating technology into their skill portfolios.

 

The transformational opportunities provided by new technology and innovative approaches to the legal profession go far beyond the benefits of cost savings, and their proper use can enable in-house counsel and Law Firms to faster react to business trends and needs, while focusing on core business activities and working to the best of their abilities in a more efficient manner.

 

“There is a different DNA to legal services today and we can no longer provide the same responses to issues that we did in the past. So unless we bring a new element, something that focuses on evolving client needs, which in this case everyone is calling innovation, more cost effective and comprehensive legal coverage will not be possible”, says Luna. 

 

Technology is clearly revolutionizing the work we do and how we do it. AI and machine learning are already part of our daily lives. And these technologies are now progressing into more complex tasks. New applications are appearing in all industries. For example, the medical profession has unveiled an AI “doctor” that can diagnose patients.  Why should legal be the only exception? It is not. 

 

Just as an example, in a recent study, LawGeex, a legal tech start up, challenged a group of 20 experienced lawyers to test their skills and knowledge against its AI-powered algorithm. 

 

The group included associates and in-house lawyers from global firms, as well as general counsel and sole practitioners.The task was to review risks contained in five non-disclosure agreements (NDAs). The AI matched the top-performing lawyer for accuracy – both achieved 94%. Collectively, the lawyers managed an average of 85%, with the worst performer recording 67%.

 

When it came to speed, the AI far surpassed the legal minds, taking just 26 seconds to review all five documents compared to the lawyers’ average speed of 92 minutes. The speediest lawyer completed the review in 51 minutes – over 100 times slower than the AI – while the slowest took 156 minutes.

 

In summary, the Legal Industry need to understand that contrary to its long tradition of exclusive ownership and control, now legal Innovation centres, academic institutions, legal tech Hubs, entrepreneurs, influencer’s blogs, legal innovation experts, legal management consultants, investors, inventors, different professional minds, and clients... are all taking a stance, guiding the process and helping to transform the legal profession.

 

The message is clear: a revolution in legal services is underway, and Lawyers not reacting to this new reality are taking the biggest risk. 

About the Author

Juan Carlos Luna is managing director of Lawgistic, an international legal consulting firm. And co-founder of LAWIT, a legal innovation and technology consulting firm, focusing on the transformation of the Business of law, supporting both legal departments and lawfirms to enhance their value added through legal operations efficiencies.

 

Drawing from 20+ years’ experience as an accomplished attorney at Fortune-class, global corporations and international law firms. He served as director of legal projects – Europe and Global Regions for Hewlett Packard Corporation, where he transformed HP’s legal infrastructure to establish a more efficient, business-driven organization.

 

Mr. Luna began his career at Barrera, Siqueiros & Torres Landa in Mexico City and Bracewell & Patterson in Washington, D.C.  He earned a Juris Doctor from Universidad Panamericana in Mexico City,  a Master of Law (LL.M) from Georgetown University Law Center in Washington, D.C. and a Legal Management certification from Instituto de Empresa in Madrid

 

He teaches the course of legal Innovation at the Business Law Master Degree at Universidad Panamericana.

 

 

 

 

 

 

 

 

 

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