Everyone’s a player

In 1997, Beth Patterson witnessed the future. Working on the landmark Estate Mortgage case, she saw more than two million hardcopy documents scanned onto more about 100 CDs to create a searchable database.

“At the time, we thought that was extraordinary,” says Patterson, who is now Chief Legal and Technology Services Officer at Allens. “It was one of the first electronic courts in Australia. But it’s nothing compared to what we deal with today. Now, in document-heavy litigation, we can start with well over a million documents and it’s no big deal.”

The past 20 years have seen technology reach into every aspect of legal practice management, transforming the way lawyers do business and run their firms. From email and electronic record keeping to the emerging technologies of artificial intelligence (AI), machine learning and blockchain, new digital solutions are making the legal profession more efficient and cost-effective while also raising in-transition risks and challenges that are affecting firms large and small.  

According to Professor George Williams, this shift in legal practice is a once-in-a-century change. Before he became Dean of the UNSW Law faculty, Williams spoke to more than 60 law firms, banks, consultancies and community bodies in Australia and overseas and found every organisation wanted to talk about the impact of technology. “But often they had very different opinions as to its impact,” he noted in the June 2017 Legal Review Magazine. “One industry thinker at KPMG in Hong Kong even suggested that the work of 2,000 people in a major law firm could be done by as few as 30 once the full processes of automation are applied. This may seem alarmist, but the potential for disruption cannot be ignored.” 

Once-in-a-century change

Much of the disruption to legal practice has centred on the movement to a new digital reality. This is not only in the “legal tech” solutions themselves, but in the way those solutions are integrated into a firm. According to Steve Tyndall, Managing Director and Founder of NextLegal, technology is no longer just a back-of-house function for firms. 

“A firm’s technology capability is fast becoming a visible part of how they service their clients,” he says. “A firm’s lack of technology capability can no longer be hidden, making technology decisions and investment a significant point of difference for clients in an increasingly competitive market.”

Tyndall believes that in the next two to five years no modern firm can consider technology as a side function, much less an afterthought. 

“I think law firms – as with all professional services firms – will need to infuse technology into their business models to discover new opportunities and remain relevant,” he says. “In the same way the IT industry itself has changed to become almost completely ‘as a service’, law firms will need to develop cost-effective and proactive legal service offerings, which can be delivered on scale and through the use of technology.”

Many legal tech solutions already are being incorporated into legal practices. But while a tech arms race might appear to favour the big players, Sam Sofianos, the national board director at the Australasian Legal Practice Management Association and chief information officer at national firm Colin Biggers & Paisley, is seeing the impact across the spectrum of legal businesses. 

“Machine learning systems such as Luminance, RAVN and Kira Technology in due diligence and contract review processes are becoming more widespread,” Sofianos says. “Many of these solutions are attractive to firms of any size because they’re scalable, in the cloud and the infrastructure can be adjusted on each matter. It allows all firms and sole practitioners access to these services.”

Patterson thinks cloud-computing solutions have levelled the playing field. 

“In the old days, you had to have deep pockets to buy the hardware and have the facilities and the right resources to drive the machines,” she says. “That’s now all outsourced to the cloud, so you can buy unlimited processing power by the hour, by the day, by the week, by the month, by the year. It’s changing the paradigm and I actually see smaller and medium firms competing more easily if they choose to.”

Choosing the future

One key investment question for legal practice managers is deciding which suite of technologies to invest in. Inherent in that choice is the future risk of the technology being superseded or becoming obsolete.

Tyndall says once a firm is clear on what they are looking to achieve, they should begin by considering off-the-shelf products without customising them unnecessarily and accept that not all things will work the first time.

Tied in with making such a choice is what Tyndall believes is a broader cultural barrier in the legal sector – the fear of getting it wrong.

“Firms need to allow for failure in trying new things, quarantine the risks, and be prepared to try more than once,” he says. “A practical approach in the example of artificial intelligence, can be to apply new technology to existing or archived matters in the first instance. This can allow a firm to understand the technology’s accuracy, compare against ‘human results’, and allow staff to become comfortable before working with or risking a live matter or client.”

This is something Caryn Sandler, Chief Knowledge and Innovation Officer at Gilbert + Tobin, also understands.

“We need to be willing to experiment with new ideas and sometimes fail, but fail fast,” she says. “We need to have more of an agile mindset in that we know technology will move quickly and therefore we need to move quickly with implementation and adoption internally.

“Part of the education piece for lawyers is that we are historically used to using or developing technology that doesn’t need much refinement. But increasingly we see solutions and tools that are designed and launched in the market with a roadmap for updating that technology built in. This requires a shift in mindset because technology is advancing very quickly and, as a result, you need to be willing to adapt to change.”

Beyond the technology

As much as legal tech solutions are starting to reshape a lawyer’s work day, the impact of technology goes beyond the latest practice management system or document review process tool or app. A firm now needs to have a strong understanding of the implications of a digital future on resourcing, training and leadership decisions.

“We focus a lot on the ‘technology’ aspect of the changes,” says Terri Mottershead, Director of the Centre for Legal Innovation at the College of Law. “We focus less on what sits behind it or as a consequence of it, and that is the huge changes to the way we work, to the work that lawyers will actually do versus other legal business professionals and the changes in how we practise.”

One of the most visible consequences of the changing approach is in the makeup of a firm.

“It’s now a multi-disciplinary team, with a combination of legal, technical, project management and commercial skills,” says Mottershead.

One major onsequence of a multifaceted approach is that firms will need to start broadening their education and ongoing training regimes, just as universities have. In June last year, for example, the University of Technology, Sydney (UTS) announced an Australian-first Legal Futures and Technology major for its law degree program which, according to the law faculty, aims to “equip students with the requisite knowledge and skills as future legal practitioners and professionals among rapid developments in technology, innovation and work”.

“The starting point is to make ongoing changes to the curriculum to integrate law and technology perspectives,” noted Williams in the Legal Review article. “For example, contracts might deal with platforms such as blockchain, and administrative law with reviewing decisions made by artificial intelligence systems. Students need greater familiarity with such systems so they can adapt to whatever technology is in place when they begin work.

“Students should be exposed to coding in the context of legal practice,” continued Williams. “Few graduates may code as part of their employment, but many will work alongside coded systems. This might be as a litigator working with an automated discovery process or as a solicitor in a community legal centre where advice is provided online.”

It’s a shift Patterson is already seeing play out in today’s lecture theatres. “I’ve been doing a guest lecture at UTS Law School in their Civil Practice course for about four years,” she says. “When I started it was, ‘How do I make tech interesting because usually lawyers are bored by it?’ Now, the students are asking me, ‘What jobs can I get?’ It’s been amazing to see the transition in visibility and attitude.”

Upskilling also goes beyond new ways of training lawyers. Sandler says one of the major themes at the recent conference about operationalising innovation in legal organisations in Silicon Valley was having an innovation career path within firms.

“Given the importance of innovation within legal organisations, it was very apparent from the conference that if you are going to attract good talent, it is critical firms have innovation career pathways in the same way there is progression for more traditional fee-earning partners,” Sandler says.

Sandler is perhaps emblematic of this change, having recently been made an equity partner at Gilbert + Tobin, and one of the first in the country to be made an innovation partner “from the ground up, rather than being an established partner who then moves into innovation”.

“I straddle legal as well as technology and the reason this role has evolved certainly in the past two years is that previously, technology just wasn’t as disruptive as what it currently is,” Sandler says. “Now it’s critical to have someone who understands the legal side so that when we look to embed technology, it will help enhance internal efficiency and client legal service delivery.”

Charting an uncertain future

The shift to a digital future brings transition risks for all firms. For Mottershead, however, one of the biggest risks doesn’t come from the printed circuits or from the programmatic cloud. It is a much more human-centred risk.

“Law firms can’t pretend that the transition is not taking place and to me, our biggest transition risk is that we will be comfortable in our own complacency,” she says. “The legal sector has tended to compare itself with other law firms, measuring ourselves against our peers. But we may not be the industry that is demonstrating the most forward-thinking or best practices so, if we are not looking outside, we’re in danger.”

Tyndall also sees challenges coming from less traditional rivals with more forward-thinking management practices.

“I am nervous for the legal profession in that I believe the true competitors in time are not going to come from an established or heritage law firm background,” he says.

“The competition will come from operations such as Virgin Legal or Amazon Legal Services. Many firms are still fighting over the same work that is being delivered in the same way, whereas the firms – or legal service providers – that will in my mind dominate the next decade or so will solve business’s and people’s legal challenges in a very different and potentially proactive manner. These legal service providers will use technology and expert systems to scale their offerings to both outperform and out-price what is on offer today.” Sandler, however, thinks that with the right approach, lawyers should be seeing technological shifts positively, especially if they’re willing to embrace new practices. “As roles that combine legal and analytical skills, process, knowledge management, project management, technology and data evolve – roles such as legal project manager and knowledge engineer – even more diverse and fulfilling avenues for a legal career will emerge.”