A new year always brings with it both hope and uncertainty, especially in the current climate. However, at least in the legal tech world there are many points of light that chart a potentially positive future. As 2021 slips into history here are some of the things this site hopes to see in 2022, and also those things it would be great to avoid.
Standards Aren’t Just For Christmas
Standardisation in the legal sector took several positive steps in 2021, e.g. the roll-out of oneNDA’s non-disclosure agreement, backed by some of the world’s leading firms, and we also saw SALI, the legal work taxonomy project, go from strength to strength.
The challenge now is maintaining momentum. For example, will law firms and inhouse legal teams that have onboarded the standard NDA say: ‘That’s it! We’ve done standardisation!’, or will they see this as the first step in a journey of a hundred more miles to come?
This goes to the heart of innovation, not just in the legal sector, but the world over. Changing stuff – to put it simply – can be done in isolation far from the way the core of an organisation works. That’s why you can have a tiny wind turbine fitted to the operations centre of a coal-fired power station.
If the goal is to eventually replace the coal-driven approach with renewable energy, then the little wind turbine is not just a bit of politically correct green-washing, it’s a statement of intent that will – (naturally over a suitably long transition time) – eventually see the system change considerably.
And this is the key issue: is standardisation going to be like buying a puppy for Christmas, but which will end up in Battersea Dogs Home once the family gets tired of the challenges involved?
We can only hope that what we are seeing now is the beginnings of something that will grow and grow. To that end, look out for a little project Changing Legal will be announcing in 2022.
‘There’s More to Life Than Billable Time, You Know’
To paraphrase The Smiths’ song ‘Handsome Devil’ – ‘There’s more to life than billable time, you know.’ But, the question is: how much more? As the song then counter-refrains: ‘Oh, but not much more, not much more.’
What will it be?
Law firms and their clients (and let’s be frank, some ALSPs), have got themselves into something of a dilemma. Demand for commercial legal services has been very strong the last couple of years and doesn’t look like it’s about to drop off anytime soon.
Despite all the great work already done in this sector, the vast majority of legal production remains manual, slow and laborious, (even if it’s now more digital in the delivery). We just haven’t come that far when compared to other sectors.
The problem is that in a time-based legal economy with pyramidal business models this leads to very, very long hours for junior lawyers. The firms then see people wanting to leave, and so throw bonus money and higher salaries at them.
But….little really changes. Because it cannot. Not if you keep using the same system for the vast majority of production. In fact, it would be amazing if you could get a different result when doing exactly the same thing, time after time.
Equally – and despite protestations from some – the time-based economy does reduce innovation in the legal sector. You can still innovate to some degree and live in a time-based world, for sure, just as you can clean your carpets by hand with a dustpan and brush rather than using a Dyson, and also own the latest computer.
However, if your overriding objective was to get those carpets cleaned as soon as you could, so you can then move onto more interesting work, then you’d invest in a Dyson by the end of the day.
Selling time doesn’t prevent all innovation, it just cuts the legs from under wide-scale change. If I pay you to do X and I’d like it done as fast as possible, and I’m certainly not going to reward you for time-based inputs alone, then one can bet you will very quickly find lots of ingenious and innovative ways to:
- Reduce the costs of production and delivery – because the risk is on you and you cannot nonchalantly (perhaps even decadently, one might say) let it hang over the head of the client.
- Standardise and benchmark the work you do to enable you to better understand your inputs and costs.
- Use as much tech as makes sense, and invest heavily in experimenting with any new tech that could help you to get the legal outputs delivered to the client.
Any road, the arguments for change are not going away. And the valiant efforts to defend the billable hour are welcome. Why? Because the more we all talk about the subject, the more the chance more clients will one day do something about it – (although this could be a long wait, for sure) – but we must live in hope, as they say.
Going back to the starting point, if there was eventually real change here, then law firms and ALSPs (some of which are not really that radical when it comes to time issues either), could confidently say there was more to legal life than billable time.
The Hope That Big Money Doesn’t Spoil Legal Tech
One of Steve Jobs’ well-argued points is that many tech companies eventually move from a leadership driven by innovation to one driven by the need to just keep selling stuff, thereby killing off what made that company great.
His argument was that tech companies are founded by creative, ingenious people, who take risks, experiment and try to build the future. If they succeed, people are delighted by what they have built and a sustainable business is created. Then, as more money flows in and the startup becomes a large corporate, it risks becoming ‘just another business’, and where product development becomes secondary to sales.
Is there a risk that will happen with legal tech? For sure. As companies head for IPOs and the big money starts to arrive, so too is a real chance that the appetite for risk also evaporates.
‘My duty is to the shareholders,’ says the new CEO of the listed legal tech company, who has just replaced the key founder who built the business. ‘We need better quarterly sales! We don’t need a new product, we just need to sell more of the products we already have!’
And from a sales perspective that makes a lot of sense. Why invest in risky undertakings? Why pour money into creating a new future when you already have something to sell that people like (or at least used to like when it was launched ten years ago)?
The problem is when more money is the main priority, rather than seeing it as the hoped for side-effect of innovation that wins customer loyalty, then companies fossilise in terms of creativity. And to be fair, sometimes this is forced upon them. Sometimes their cool new invention just becomes a piece of standard kit and then loads of imitators arrive, with the result that there isn’t much more they can do with it.
Although, one could argue it’s precisely at that ‘fossilisation point’ that the company needs to redouble its creative efforts and get back to its roots to drive things forwards again. But, it’s also at this point when some companies sidestep their founders because the goal now is to keep flogging the old products, not to make totally new ones.
Any road, we will see. But, 2022 will no doubt see more IPOs, more big money, more M&A. Will it all lead to better products for the clients in the long-term? Let’s hope so.
That CLM Grows Into Something More
The growth of interest in CLM is great to see, but it would be even better if this move to improve workflows and harness data for the benefit of not just the legal team, but the business as a whole, becomes not just a narrow activity, but widens and widens into a new approach for all legal teams.
What would be this new way? It would be an approach that sees the inhouse legal team as really batting for the company, not just in terms of defending their interests against adverse legal issues – which they do well already – but really batting for the company economically, and also not squandering data-gathering opportunities.
As seen in recent weeks, CLM is no magic bullet. But, it can act as a catalyst. If the legal team engages with a major project to improve contracting workflows, to capture data on what resources go into that work, and to extract contract data that can help the business as a whole, then they’re not just onboarding some legal tech, they’re moving to a whole new level of operations. They’re getting a handle on what they do. And with objective measurements comes the opportunity for change.
Once you’ve got on top of your contracting and have connected workflows and data across the business, then you can focus on other systemic issues. You can work on benchmarking pricing and resource needs for certain legal outputs. And you can rethink the entire contracting process – and other processes – which may lead to far more creative solutions.
The reason why the legal market changes relatively slowly compared to other sectors is that the people with all the buying power, and hence who could drive things along more quickly, are often operating in a world without management data.
Even if GCs feel inspired to drive change, without any data about what their legal team does, or a clear picture of how much money is spent on what and why, then it’s hard to change anything in a lasting way.
We cannot expect the sellers (e.g. law firms and ALSPs) to drive radical change alone, as why should they? It’s the buyers who need to state what they want, if what they want is something quite different to what they already get.
And so things move slowly. Sellers who have no reason to change, and buyers who even if they want to change (which cannot be taken as read) don’t have the data needed to make real change a reality.
But, let’s hope the surge of interest in CLM is the beginning of something much larger and more systemic for the inhouse world, and thereby for the legal sector as a whole.
Thank You and See You Next Year!
There are a range of other things this site wishes for in 2022 and beyond, but it makes sense to focus on these next year.
So, reiterating the thanks from yesterday’s Top 20 article, Artificial Lawyer would just like to thank again everyone who reads this site, who contributes their excellent views to think pieces and in interviews, who sends in news, who provides sponsorship, who attends events, and generally is part of what is now a global community of several thousand people all across the world. This site is truly grateful.
It’s been a super-busy year for all of us and Artificial Lawyer is now going on a short holiday. Normal publication will resume on Monday, January 10, 2022.
But, of course there will be plenty to read still, including the collected thoughts of a huge number of experts in the legal tech and innovation field. See here: Predictions Part 1 and Predictions Part 2.
Wishing you all a very Merry Christmas and a Happy New Year!
And thanks as ever for reading!
Richard Tromans, Founder, Artificial Lawyer – December 2021.