LegalBusinessWorld Posts

Technological Disruption or Next Industrial Revolution?

August 20, 2019

Blockchain, quantum computing, artificial intelligence (AI), augmented analytics and immersive technologies are driving disruption and new business models. [1] AI-driven robots are just one example of “autonomous things,” which use AI to perform tasks traditionally done by humans, others include: vehicles, drones, appliances and service agents [2]. 

 

AI, automation and blockchain are already being used to undertake legal tasks and more digital disruption is around the corner, as the use of technology in law becomes mainstream worldwide.  Until recently, legal technology and technology services have been a localised response to local legal issues, but the 2018 Global Legal Hackathon, with more than 600 teams in 40 cities from 22 countries, has shown the same types of legal issues arise in all jurisdictions and can benefit from technology solutions.

 

2018 saw a massive global growth in investment in digital tools and services, with an increase of 713% in 2018 on 2017 investment.  $USD1,663 billion was invested globally in legal tech in 2018 compared with USD 213 million in 2017. [3]  The leading tools and technology services in 2018 are: 

 

  • DocuSign - providing e-signature technologies and electronic agreements, 188 countries 100 million+ users. 2018 IPO $USD 629 million.

  • LegalZoom - online legal documentation creation, four million users worth an estimated $USD 2 billion).

  • Exterro - e-Discovery software with impressive client list.

  • Atrium - aims to become "the largest multi-practice firm in the USA " through increased efficiencies delivered by new technologies”. $USD 65 million investment in 2018.

  • Kira Systems - AI-Enabled Contract Review Software, substantial 2018 revenue increases resulted in USD50 million investment. [4] 

 

Despite a population of just over 25 million, [5] Australia is a leader in the global legal tech expansion, in terms of sophistication and size, with more than 90 legal technology firms in 2019 providing new lawyers with new products and new ways of working. [6] 

 

Intermediary to Change for 35,000 Legal Professionals 

While digital disruption can present challenges for legal service providers and their clients, it can also present opportunities. Member associations have a focal role in mediating technology-related change through relationships with their profession, the public and government. [7] 

 

For more than 125 years, The Law Society of New South Wales has been the voice of the State’s legal profession - guiding, supporting and educating over 35,000 legal professionals.  While our strength and influence has been shaped by the past, we are constantly looking ahead to support the legal profession as they embrace innovation.

 

Perceiving the need to prepare the profession, in 2016 the Law Society commissioned the Inquiry into the Future of Law and Innovation in the Profession (FLIP), looking into the rapid transformation taking place in and around the profession. The Inquiry culminated in the Law Society of NSW’s ground-breaking FLIP Report, which draws on testimonies of the 120 expert witnesses who gave evidence at the Inquiry.  

 

Key findings include:

 

  • Consumers of legal services are confidently seeking value and client focused service from their legal service providers. Clients and competition are forcing legal providers to change and optimise legal service delivery. As a result, a range of innovative legal and non-legal service providers are emerging to service the legal market. A range of new skills and knowledge is necessary to remain competitive. 

  • Increased adoption of legal technology enables re-engineered work processes, new pricing models , new areas of work and new ways of working. Clients are expecting lawyers to be competent users of technology.

  • In-house practices are driving change, internally and externally seeking greater value from external firms through improved processes and reduced legal spend leveraged through legal technology. Inhouse  teams are streamlining their own work processes, delivering their own client-centred service with the assistance of legal technology. 

  • AI raises regulatory and ethical issues that require investigation and guidance. 
     

Humans & Machines Better Together 

Continual change may threaten the ability of professions and their associations to hold onto their ‘traditional’ roles and values. [8] 

 

This common notion of lawyers being replaced by machines, is often associated with AI. [9] Professor Richard Susskind notoriously believes that the profession will inevitably change, whether by force of circumstance or voluntarily, predicting “the end of lawyers”. AI programs led by 14 countries and international organisations with total spend of AU$ 86 billion have been announced. [10] 

 

While some parts of a legal professional’s role may be susceptible to automation, it is quite difficult if not impossible to automate a lawyer’s entire workflow and skillset.  Susskind’s view is not universally shared, it more commonly accepted that AI will automate routine work leaving lawyers to concentrate on higher value strategic tasks. One need only to look at how new business models and new AI tools in areas such as document drafting and review, legal research, contract review and management, investigations, due diligence, e-discovery and billing, analytics and prediction as well as technology assisted review are already enabling more efficiencies in lawyers’ work. 

 

Significantly, the quality of datasets used in machine learning determines the value of the outcome, in addition to the time spent “training” the algorithm and the degree of expertise and insight delivered by the human trainer.

 

New technologies will create new legal issues and novel questions, which lawyers will be involved in helping to address. 

 

Delivering the keynote address at the Law Society of NSW’s 2018 FLIP Conference, Professor Daniel Martin Katz, legal futurist of the Chicago Kent School of Kaw declared that the proposition of “Humans AND Machines” is preferable to the proposition of “Humans OR Machines”. “We do not have to choose between one or other, they work well together,” he said.

 

At the same conference, Chrissie Lightfoot, 2019 UK Game changer of The Year (Legal Tech) and 2019 International Legal Coach of The Year, , also proposed that “emotionally intelligent humans and artificially machines” are “better together”. 

 

While legal roles will undoubtedly change, AI and other technologies will be able to assist lawyers to offer a more holistic legal service and be a force for social good.  So just as technology has made many dangerous occupations safer – technology can automate the less intellectually stimulating or fulfilling functions in legal practice, reduce the cost of legal services and increase access to justice for those we serve.

 

FLIP Stream of Research

This sentiment was also supported by new research on AI and the Legal Profession flowing from the Flip Stream, the Law Society of NSW’s five-year collaboration with the University of NSW. 

 

Launched in 2018, the FLIP Stream Research Project has been specifically created to generate a stream of research to consider and respond to the issues raised by the FLIP report, particularly technological change and its impact on lawyers, law and the legal system. 

 

This strategic alliance, forged between a world-class university, UNSW, and the Law Society, is a milestone of progress for both institutions and for the entire legal profession. 

 

Each year the FLIP Stream’s dedicated team, led by UNSW Law Professor Michael Legg, undertakes research into an annual topic, which is then disseminated through the academy, the profession and society. This research will create the blueprint for the 21st century practitioner’s engagement with the 21st century profession.

 

In 2018, Professor Legg and FLIP stream research fellow, Dr Felicity Bell looked at “Artificial Intelligence and the Legal Profession”. This year’s FLIP Stream Research topic “Change Management”, led by Dr Justine Rogers, will be presented at the July 2019 FLIP Conference and Innovation Dinner. 

 

Role of Professional Associations During Periods of Disruption 

During times of technological disruption, Associations can communicate information about new technologies to members in a way that is ‘more comprehensive and impartial’ than direct information from technology suppliers. [11]

 

Numerous Flip Report recommendations, addressed the need for the Law Society of NSW to provide guidance to members on legal technology and innovation by:

  • Facilitating information sharing in legal technology, work process improvement, client-focussed service and emerging technology across all sectors of the profession

  • Providing guidance for solicitors as to the legal technology market 

  • Raising awareness of justice-related innovation including online dispute resolution

  • Increase solicitors’ capabilities in cyber management and security

  • Helping to empower lawyers to make informed decisions about organisational strategies and managing change.
     

FLIP – Ongoing Process 

Fulfilling FLIP’s role in ongoing support of the legal profession, the FLIP Report made 19 recommendations for implementation by the Law Society, which are contained in an ongoing program of initiatives aimed at helping the legal profession leverage and embrace the opportunities that technology and innovation can provide, for them and their clients. 

 

Behind the Buzz Words 

The legal profession is full of new buzz-words which require continual de-coding. The analysis needs to consider various perspectives, including ethical, regulatory, risk management, privacy and legal practice. 

 

This is why, in 2018, the Law Society of NSW launched the very successful “The FLIP Inquiry Series – Behind the Buzz Words”, a bi-monthly panel discussion which unpacks a buzz word from a variety of perspectives including cyber-crime, metadata, blockchain, AI and RegTech. Five new sessions in 2019 will include globalisation, new-law, cloud and change leadership. Post- event, the panel discussion is converted into a podcast.

 

FLIP has now also advanced into Australia’s Largest Legal Innovation Event  

The Law Society of NSW’s annual FLIP Conference and Innovation Dinner was created to action more of the FLIP Report’s key recommendations, exposing legal professionals to the latest technology and innovation trends. The FLIP Conference and Innovation Dinner will take place in Sydney on Thursday 25 July 2019. 

 

More than 500 legal professionals will hear from over 50 eminent Australian and international legal practitioners, judiciary, academics, law-tech experts and regulators across 20 face-to-face sessions and 11 hours of demonstrations of the latest technological advances in the profession.  Eight hours of valuable networking opportunities is also featured.

 

This year’s keynote speaker is legal futurist Mitch Kowalski. Fastcase 50 Global Legal Innovator and author of two critically acclaimed books, Mitch Kowalski will provide strategic and practical advice on innovations that give law firms and in-house legal departments a competitive advantage.

 

A highlight of the 2019 FLIP Conference will be the Today and Tomorrow Alley which takes conference delegates on an immersive and interactive virtual journey into the legal world of 2050. Tailored to each “time traveller’s” personality profile, the virtual journey will help participants discover the skills, innovations and areas of work relevant to them in the future, and ultimately help them understand how they might change to embrace these opportunities.

 

Extensive research has been undertaken by the Law Society of NSW to create this virtual journey into the future, synthesising ideas and predictions from a large number of legal and non-legal experts into an interactive, fun and personalised learning experience.  If you want to know what the future of legal work will look like for you and where should you invest your energy today, for the opportunities of tomorrow, the Today and Tomorrow Alley can answer these questions in one personalised short FLIP journey.  

 

A 2019 Emerging Technology Lounge and LawTech Theatre will also provide conference delegates with the opportunity to explore technologies that are significantly altering the shape of the Australian legal landscape. Technology awareness and the ability to leverage technology is essential for large and small law firms, sole practitioners and in-house counsel. Impossible capital outlays are no longer required to access new and emerging technologies. Reductions in the cost of technologies have created a more level playing field. 

 

The thought-provoking program will give delegates the tools to survive and thrive in an ever-changing legal landscape including the opportunity to mix and match sessions from Thought Leadership, Leading with Innovation and Future Proofing your Career streams. 

 

The 2019 Flip Conference will conclude with an Innovation Dinner, where finalists of the #InnovateLaw2019 Hackathon will present their solutions to challenges set by the Supreme Court of NSW and The Law Society of NSW before the winners of this ground-breaking initiative are announced.

 

REGULATORY IMPACT

Technology and innovation in the profession is inseparable from regulation of the profession. In April 2018, Facebook CEO Mark Zuckerberg said: “[T]he real question, as the Internet becomes more important in people’s lives, is what is the right regulation, not whether or not there should be regulation.”

 

The regulatory framework in NSW allows innovation to flourish, apparent from the range of new law firm types that have emerged. At the 2018 FLIP Conference the NSW Law Society hosted an Emerging Technologies Lounge where more than 15 legal technology start-ups and the four finalists of #Innovatelaw2018 hackathon provided demonstrations innovative ways to utilise the latest technologies, including AI, in their service delivery. Examples included: 

 

  • Ailira - Acronym standing for: Artificially Intelligent Legal Information Research it automates legal advice for consumers and automates legal research for lawyers. 

  • Contract Probe - this app reviews a contract and generates a report with a quality “score” in 15 seconds. 

  • LawSwitch - can automate the entire legal client engagement process for legal service providers, taking it from initial enquiry through to a booked conference by using chatbots.

  • Legaler – who is using blockchain-based platform to match people who can’t afford traditional legal advice with those willing to provide it pro-bono. 

  • Xakia - software for in-house legal departments of 2 to 2,000, providing reporting and automated view of the team's workload.

 

Technological innovations are brushing up against several regulatory boundary lines and the Law Society of NSW is taking an active role in advising on the regulation of innovation in legal practice for the benefit of those we represent. 

 

Consequences arising from unregulated legal information and unqualified practitioners 

At present, NSW legal industry regulators − the Legal Services Commissioner and the Law Society of NSW − have no power to hold vendors accountable where a defective product or service is deemed not to be a legal service.  

 

Issues with the accuracy of legal advice provided by qualified NSW legal practitioners can be addressed by the regulators. However, if legal documents provided online do not constitute a "legal service" under the Uniform Law, buyers must seek redress under the general Australian Consumer Law, a regime that operates independently of the specialised regulatory framework governing the legal profession. It is challenging for regulators to provide redress where legal information was provided by a non-legal, professional operating outside our jurisdiction. 

 

The Nova Scotia Barristers' Society has sought to dealt with this issue by introducing a new model of legal services regulating "the delivery of legal services" defined to include work performed by “legal entities” including non-lawyers working under the supervision of lawyers. This model will not distinguish between the provision of legal information and legal advice. As legal services may be delivered by legal entities in combination with other services, all delivered services are subject to the same ethical and professional standards required for legal services. [12]

 

he Legal Professional Uniform Law 2014 (Uniform Law) (adopted by Victoria and NSW in 2014) ensures the highest standards of service and entrenches the independence of the profession from the State and from clients themselves in providing that legal service provision is indeed the sole province of licensed legal practitioners. 

 

The purchase of commoditised “legal documents” by consumers carries the risk that the document may not be fit for purpose and the consumer’s rights are adversely affected. The consequences can be serious as the provider may be outside the jurisdiction and may not have insurance to meet any claim against it; not being obliged to carry professional indemnity insurance. 

 

Competency Duty

NSW lawyers have a fundamental duty to deliver legal services competently. Supervising lawyers also have duties of reasonableness in the supervision of other solicitors and employees. Key questions about technology competency remain unanswered, for example: can a lawyer discharge this duty without a basic understanding of:
 

  • The technology including algorithms that 

  • underpin an AI application and data used in machine learning that enable the legal service provided

  • Technology used in technology-assisted review of documents in discovery

  • The workings of automated drafting tools used to draft wills and other legal documents

  • Cloud technology used to ensure security of hosted confidential client data. 

 

In 2012, the American Bar Association approved a change to the Model Rules of Professional Conduct to include an understanding of technology within a lawyer’s duty of competence. In NSW this duty is implied. In Europe, several legal professional bodies have issued guidance for the profession on the importance of keeping up to date with changes in technology, particularly in the areas of data security and client confidentiality.    

 

AI Ethics Framework

This year, the Law Society of NSW’s Privacy and Data Law Committee contributed to a submission on the Australian Human Rights Commission and World Economic Forum white paper: “Artificial Intelligence: Governance and Leadership” which asked whether Australia needs an organisation to take a central role in promoting responsible innovation in AI and related technology. 

 

“Such an organisation could combine capacity building, expert advice, governance, leading practices and innovative interventions that foster the benefits of AI while mitigating risks.”

 

The Law Society of NSW is also responding to a Discussion Paper issued by Data61 and CSIRO “Artificial Intelligence Australia’s Ethics Framework issued in response to an announcement by Australia’s Federal Government of funding for the development of a national AI ethics framework through the Department of Industry.

 

Over 100 pages of the FLIP report could have easily been left to languish on the shelves of the Law Society of NSW or become quickly outdated. Instead, the FLIP project has emerged as a change agent for the Law Society’s members and within the broader legal community to actively and innovatively provide the legal profession with unbiased information on the state of technological disruption and innovation. 

 

Notes  

[1] Gartner Top 10 Strategic Technology Trends for 2019, October 15, 2018

Contributor: Kasey Panetta https://www.gartner.com/smarterwithgartner/gartner-top-10-strategic-technology-trends-for-2019/

[2] ibid

[3] Pivovarov, Valentin, 713% Growth: Legal Tech Set An Investment Record In 2018 https://www.forbes.com/sites/valentinpivovarov/2019/01/15/legaltechinvestment2018/#683ad0c7c2ba 15 January 2019

[4] Ibid

[5] Australian Bureau of Statistics, http://www.abs.gov.au/ausstats/abs%40.nsf/94713ad445ff1425ca25682000192af2/1647509ef7e25faaca2568a900154b63?OpenDocument

[6] Baker, Jodie, Australia is leading the legaltech revolution, but what does this mean for lawyers, firms and clients?  www.smartcompany.com.au 17 January 2019

[7] The Value of Contemporary Professional Associations, Report researched and written by Dr Justine Rogers and Deborah Hartstein UNSW Law, 2018

[8] Ibid

[9] According to Deloitte, 100,000 legal roles will be automated by 2036. They report that by 2020 law firms will be faced with a “tipping point” for a new talent strategy. Deloitte aren’t alone in making predictions about the automation of legal jobs, and there are other estimates out there – Michael Mills of Neota Logic estimates 10 per cent, McKinsey Global estimates 25 per cent.

[10] Artificial Intelligence: Australia’s Ethics Framework (A Discussion Paper) https://consult.industry.gov.au/strategic-policy/artificial-intelligence-ethics-framework/supporting_documents/ArtificialIntelligenceethicsframeworkdiscussionpaper.pdf
[11] Jacky Swan, Sue Newell and Maxine Robertson, ‘National Differences in the Diffusion and Design of Technological Innovation: The Role of Inter-organizational Networks’ (1999) 10(S1) British Journal of Management S45, S48. 175 Ibid S51 in The Value of Contemporary Professional Associations, Report researched and written by Dr Justine Rogers and Deborah Hartstein UNSW Law, 2018 

[12] Tahlia Gordon, Co-Director of Creative Consequences, Nova Scotia Barristers’ Society, address to Flip Inquiry 

 

About the Author 

Martina Ludvigova is a lawyer and Head of Innovation and Strategic Engagement at the Law Society of New South Wales, the peak regulatory and membership body for the state’s 34,000 solicitors and legal professionals. 

 

She identifies and develop member centric solutions, drive external commercial partnerships and am also responsible for design and implementation of the Law Society of NSW’s Future of Law and Innovation in the Profession (FLIP) Project, supporting its members through the technological and innovative disruption facing the profession.

 

Martina has extensive experience in legal process improvement and legal service delivery and is passionate about technology and innovation and how it can enhance legal service delivery.

 

She has been developing, managing and implementing business development and marketing strategies, campaigns and communication programs to generate new business opportunities as well as acquiring and retaining clients for more than 15 years.

 

Martina holds a Master of International Business and Law from The University of Sydney, Graduate Diploma of Legal Practice from The Australian National University, Diploma in Law from Legal Profession Admission Board and Bachelor of Business Studies from Charles Sturt University. She is eDiscovery certified.

 

 

 

 

 

 

 

 

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