Legal Tech and the Changing Legal Services Industry – Weekly Update – January 30, 2018

Quote of the Week

“All law firms talk about ‘delivering value’ to their clients … It’s one of those phrases that’s all over every website. The problem is, the law firms are defining value on their terms.” – Donna Kent

Three Articles Worth Reading

Artificial Lawyer Discusses Law Firms Working Together With Legal Tech Companies – The Allen & Overy Example

• Key excerpt: “We are trying to create a culture where every lawyer within A&O feels that it is his or her responsibility to identify ways in which we can work better. The key challenge is creating the space, time and resource for lawyers to take their ideas forward, and that is partly what we are trying to achieve with Fuse – we are very fortunate to have a dedicated physical space in the A&O building itself, which means that from a practical perspective, it is as easy as it can be for our lawyers to engage with the programme and cohort.”
• Why it matters: A&O has taken the impressive step of launching its own legal tech incubator at its London offices. Legal tech companies have a chance to work at the firm’s offices. The result is 2-way dialogue between legal tech companies and lawyers. Lawyers develop a better understanding of how they can leverage technology to augment their legal practices, while the legal tech companies are able to get real-time feedback from lawyers to help refine their products. When it comes to building a culture of innovation at a law firm, it doesn’t get much better than having entrepreneurs collaborating with you on a daily basis.

The Legal Industry's Scoping Problem

• Key excerpt: “Scope is the bedrock of client relationships. Clients want certainty; this is the client theory of “no surprises:” yes, clients are demanding budgets to control cost — but it’s not solely cost at issue. It’s the need for certainty, the desire for no surprises in their legal spend. Without scope, when partners price matters, they are giving educated guesses. Guessing is not a long-term strategy, it doesn’t scale well, and when the guess goes wrong, it’s rather difficult to justify the error — so we save face and the relationship by writing off the error. That is why we, the legal industry, are in a scoping crisis. Learning to scope is a better strategy than guessing — in fact, it delivers the missing ingredient on clients’ theory of no surprises, which is important for firms endeavoring to develop strong, long-term relationships.”
• Why it matters: People have been saying for decades that the billable hour is dead (or at least dying). Yet somehow, the billable hour remains the dominant way that large-firm lawyers bill their clients for legal work. That being said, demographic changes, technological advances and increasing pressures on in-house counsel are starting to accelerate the shift from the billable hour to fixed fee/AFA arrangements. Last year, Microsoft announced that it would be shifting 90% of its work to AFA arrangements within two years. General counsel at Fortune 500 companies are coming together to apply pressure on large law firms. And there is no shortage of articles bemoaning the failure of law firms to provide value to their largest clients. But to win on fixed fees/AFAs, lawyers will need to learn to scope effectively and will need reliable data on which they can base their quotes. And this will be no easy feat for most firms.

Artificial Lawyer Discusses the Industrialization of the Legal Industry - An increased Focus on Standardization

• Key excerpt: “Leading Swiss law firm Meyerlustenberger Lachenal (MLL) has joined global professional services giant PwC in selling automated contract templates via PartnerVine in a move that shows the ‘industrialisation’ of the legal sector is now truly speeding up … In short, this is a quality ‘manufacturing’ style approach that seeks to tap technology to crystallise legal knowledge and then sell this to the market. It also may help drive standardisation, something the legal market has been sorely missing. Overall, this is an important step forward in the much-needed industrialisation of the legal sector.”
• Why it matters: Picture an employee who is fired from a job and who is told they have 24 hours to accept the employer’s severance offer. At present, the employee needs to find a lawyer (hopefully they know one), sign a retainer and obtain sound legal advice in that limited window. Imagine a future where the employee simply pays $100 and uploads that contract to a contract review website. The employee receives – within a matter of minutes – an understanding of whether their employer’s offer is fair given the terms of the employment agreement and the common law. No lawyers involved. While this scenario may scare a lot of lawyers, this is where we’re heading. And enterprising lawyers will recognize opportunities for new revenue sources from this currently untapped pool of consumers who would not engage a lawyer in the current environment.

Legal Tech to Check Out – Blue J Legal

Blue J Legal co-founder Benjamin Alarie was at Aird & Berlis this past Thursday to talk about artificial intelligence. Toronto is a world-leader in the artificial intelligence space, and the event was a great opportunity to hear Benjamin’s insight (amongst others) during a panel discussion.

Aird & Berlis is a subscriber to Blue J Legal’s Tax Foresight and Employment Foresight products. Tax Foresight enables tax professionals to determine the strength of their tax position by applying AI to prior judicial decisions. Employment Foresight is an AI-enabled software that helps employment lawyers get rapid clarity on how the courts would resolve certain employment law issues.