Rather than make more predictions, here are some of the key things that Artificial Lawyer guarantees you will happen in the year ahead.
The billable hour will remain the dominant means for buying legal services, even though, like the fossil fuel industry, many agree its time to be replaced is now long overdue. This will continue to support higher than necessary costs for clients, inefficiency, and badly aligned incentives that affect everything from a culture of presenteeism, to driving out fee earner talent that perhaps might otherwise stay at the firm.
Many firms will also continue to increase their billable charge out rates in 2020. This will include for work that results in legal products that law firms have been making for decades. Yet, those products – which are heavily standardised now – will continue to see price rises.
The law will continue to be one of the few industries where having greater and greater knowledge of how to make something, and better processes to execute that work, does not result in price reductions. Instead, the end cost to the customer – at least from traditional law firms – will keep rising, for another year.
Spread of AI Review/Analysis Tools
‘First they ignore you, then they laugh at you, then they try to stop you, then you win’ goes the saying, and this is especially true of machine learning software designed for document analysis and review tasks.
As Noah Waisberg, Co-founder & CEO, Kira Systems pointed out recently, over 80% of the Global 100’s top 30 are using contract analysis software today. While the AL Product Review of Luminance showed that although this particular company’s software can sometimes see uneven uptake, overall there are a growing number of firms using it on a regular basis.
There appears to be no good reason why this trend will not continue to expand. Moreover, we can now see a widening range of companies seeking out other parts of the market, such as Evisort – which is targeting medium-to-large scale businesses, and companies such as Knowable – which is seeking to provide large corporates with ongoing insight into their contract stack using machine learning and NLP.
Meanwhile companies such as Seal Software, ThoughtRiver, LegalSifter, LawGeex, to name just a few, keep growing, keep winning new clients and steadily keep helping to enlarge the market. And, we have also seen ALSPs/law companies embrace the technology – something that will lead to greater normalisation of this approach and wider client acceptance.
Any recruiters out there worrying that technology will hurt their profit margins can be certain that in 2020, whatever happens, it won’t be technology that causes them any problems.
The number of lawyers in major markets such as the US and UK, and globally, will continue to rise this year. Short of the end of the world, in 12 months’ time there will be even more lawyers on this planet than there are right now.
Will we ever get to ‘peak lawyer’? Possibly. We could reach a point at some time where demand vs supply reaches equilibrium, and where tech really does start to reduce the need for so many manual legal labourers to produce all the work products the market wants to consume. But, we are not there yet.
And, it’s worth considering that although maybe the top 100 law firms or less in each major market have an active focus on ‘innovation’, the other 90% of the market rarely does. On a global scale legal needs keep rising, and the number of lawyers keeps rising to meet that demand.
Attempts at Consolidation
There will be more efforts to purchase standalone legal tech companies. That is guaranteed. There is money out there searching for assets. There are large companies seeking to build out their platforms. And there are canny investors hoping to roll-up a bunch of companies and then sell them on for a massive profit. So, yep, for sure, there will be more efforts.
Will they work? Can’t guarantee that. But it seems likely that if enough offers are made to enough companies a handful will take the money.
Will this consolidation change anything? It may not change very much. Does it really change the world that company A is now part of company B? If A’s tech was totally market-shattering and now as part of B it can be leveraged and marketed on a whole new scale, then perhaps yes. But, in most cases this is not what’s happening. The truth is that the really pioneering companies are still doing fine on their own. Very often (though not always) they are the ones that are really pushing the market forwards, and will keep doing so in 2020.
(And, there will be more investment in startups and scale-ups – that is also 100% guaranteed. While regular readers may have become used to seeing such news stories, the reality is that legal technology is seen as a growth market for a lot of big investors and VC funds, and from their perspective things have only just got going. While we may be amazed to see a small legal tech company bag $10m, for example, to the big investors this is peanuts, especially when you consider the kind of money that goes into other market segments.)
More and Larger Innovation Teams, More Legal Ops
What starts at the leading firms and companies always trickles through the rest of the market. Norms get set, expectations are created, momentum builds up. If there is need, then things keep growing.
And there is certainly a need for every large player in the legal sector to have staff who can manage the change process around technology. I.e. not just sourcing some new operational tech that makes no change to how work is produced and then managing it – but rather working with the lawyers and often also the clients, to build new and/or improved work processes and product delivery systems, i.e. innovating legal services delivery.
While some firms and in-house legal teams have been here for some years, a lot of the market has not really embraced this approach and are still stuck in a 1990s ‘IT’ approach to legal technology, i.e. seeing it as just nuts and bolts stuff, rather than a business line transformation issue. Fundamentally, innovation teams are not technicians, they’re change management experts – or at least should be.
Year of the Client
Is this the year of the client? Or perhaps even better: the year of the end client?
It looks certain that more companies will embrace an approach to legal services that questions how things are made, and that questions why legal is still so separate from the rest of the business.
These are the two fundamental qualities of change that we will see more of in 2020. How much is debatable. But, the fact that an increasing number of GCs are focused on this area, that there are more legal ops professionals, that law firms and ALSPs are trying more than ever to ‘work with’ clients, not just ‘work for’ clients, to create better legal manufacturing processes, is a sign of how things are changing.
The other factor is seeing legal as truly just another division of the company, not as a special facility that is attached to the company via a long corridor. For example, contracts are not ‘legal contracts’, they are just documents that contain business data and commercial arrangements. Inside them is information that the whole company can benefit from, if only it could be extracted easily and efficiently, and then made sense of via a suitable data framework.
So, plenty is guaranteed. Some good, some not so good. However, from Artificial Lawyer’s perspective 2020 is one step closer to getting to where we need to be, and that has to be welcomed. Looking forward to watching the good stuff unfold!