What you need to do to get ready
Cultural change may be the single greatest challenge facing law firms as the impact of legal technology is increasingly felt.
This was the clear message at the recent ILTACON conference, where attendees focused on the need for law firms to consider the sustainability of their work.
Many of the sessions at ILTACON highlighted how artifical intelligence (AI) and machine learning can perform many facets of legal services faster and more cost effectively. This in turn enables firms who embrace technology to move up the value curve for their clients and remain relevent in this new world of lawtech.
Recalling the mood of the 2016 ILTACON conference, Macquarie Business Banking Division Director and Head of the Legal Segment, Ian Marshall, said it oscillated between hype and inflated expectations. Early enthusiasm about the potential for lawtech to enhance legal work was quickly followed by fear of the unfamiliar.
But conference sessions this year explored practical examples of how AI, data analytics technology and Blockchain will transform the daily operations of law firms.
Reflecting on Gartner’s Hype Cycle and Technology Adoption Lifecycle, the general consensus was that when it comes to AI, firms are now on the slope of enlightenment.
Marshall says there’s been a period of learning about the extent that technology will disrupt the practice of law and we’ll continue to learn while putting solutions in action.
“It's no longer hype,” he says. “Lawtech is here and there are practical applications in the market to make legal services more efficient, accurate, and cost-effective for their clients. It can also enable new revenue lines.”
Marshall also noted that ILTACON 2017 was all about dispelling the myths of lawtech. “In the past there’s been a lot of speculation in the media that robots will replace lawyers. But that’s not going to happen,” he says.
“Technology will change the way lawyers operate: they will have to move up the value curve for their clients, and this means a lot of challenges in the industry around human capital in a law firm.
“A lot of the work done today by paralegals and junior lawyers will be completely changed by AI. Firms need to consider what that means for the traditional training for lawyers as well as what new roles will appear in the industry.”
The AI equation
One practical application of AI platforms is how they can dramatically reduce time spent on due diligence and contract review. In a matter of hours, AI can compare thousands of pages of contracts and provide a dashboard analysis report – something that historically could have occupied weeks of paralegals’ and junior lawyers’ time.
“The larger law firms have the capital, and the time, to invest in AI,” Marshall says. “Clients are now starting to expect this and firms are having to adapt. It’s all about efficient delivery of services.
“And because it’s not practical to charge hourly rates for AI tools, the value equation is changing, forcing a move away from billable hours. For most firms this will represent a significant cultural change.”
Data and predictive analytics
The key to using AI and machine learning effectively is data analytics.
“When it comes to machine learning, AI’s ability to accurately analyse, predict and summarise efficiently is all a function of how clean and structured the data is,” Marshall says.
“Current tools in the market are coming up the Technology Adoption curve rapidly and delivering powerful solutions. But they still have a way to go, largely compounded by both the complexity of the English language and the challenges associated with sourcing, sorting and feeding the millions of legal data sets needed from publishers, court records and case law.”
The ILTACON sessions discussed several predictive analytics tools that can improve the likelihood of winning cases or moving to settlement. Data mining, supported by complex AI tools, can anticipate the behaviors and actions of all parties (attorneys, judges etc.) by court, area of law, jurisdiction and motions. These tools are also providing litigation firms with a competitive advantage in winning new clients.
Reviewing your fee structure
Matter fee forecasting for a client can be a hit and miss affair in the new world of fixed fee and value-based billing. Lawyers can struggle with this process, sometimes inflating costing and pricing. Getting this wrong can have a negative impact on client satisfaction and firm revenue.
The good news, according to Marshall, is how data analytics is being used to vastly improve this process. By getting granular – removing cognitive biases and learning from what was poorly forecasted last time – firms can improve their fee forecasting.
“AI identifies the key complexity factors in the matters that do cost more and then uses that data to better forecast the true costs next time,” says Marshall.
Overall, Marshall believes that this year’s conference was the challenge to the status quo the industry has been waiting for; and the firms that act with agility will benefit in the longer term.
What firms can do to confidently face the lawtech future
- The value equation:
Hourly billing purely for lawyers’ time will continue to lose validity as technology is imbedded into aspects of legal service delivery. Embrace these technologies and deliver more efficient, accurate and transparent solutions.
- Be lawtech ready:
Spend the time to research and understand what technology is out there. These new technologies are no longer just the domain of the large firms with deep pockets. Cloud-based and SAAS solutions are enabling these technologies to be accessed by firms of all sizes.
- The lawyer of the future possesses a new set of skills:
Many students are combining a law degree with computer science – a reflection of change in the 21st-century market for lawyers. This multi-layered skill set favours millennials and the next generation graduates, and it’s a call to arms for experienced lawyers to update their tech skills and remain on the knowledge curve.