Although technology can achieve a lot, if we drive cultural change then we can accelerate this sector’s evolution way faster than software can on its own, no matter how effective it may be.
That is to say, if we consider that ‘culture eats legal tech for breakfast’, to paraphrase Peter Drucker’s famous motto and to also build on an earlier Artificial Lawyer article, then we can see just how much our behavioural norms are holding us back from real change. Here are some examples.
Standard Contracts vs Infinite Variety
Let’s start with contract standardisation. As the work of a growing number of organisations shows, lawyers and their clients can indeed work with standard contracts in multiple areas. This cultural change, if we can call it this, drives up efficiency by a huge amount, but with very little tech involved.
If a standard NDA, perhaps with some additional flexibility allowed for, is used, then all parties in a deal can move forward much more quickly. The parties benefit and so does society as a whole, which has been saved the waste of time, money and effort on something that never really needed that much finessing after shared contractual goals had been established.
A cultural shift toward finding a shared solution in contracts, centred around a standard, would move deals forward more rapidly. Today we have all kinds of tools to help with drafting and reviewing contracts, as well as deal management tools – and all of that software is welcome and useful, but what it can do is limited if the initial engagement between the parties is hostile, overly complex, sometimes random in direction, and where the dominant goal is to defeat the other side on every possible point.
Point of Creation Data Extraction vs Unstructured Data Search
This site is a long-time supporter of NLP tools, because they can bring – with some human-in-the-loop support – huge efficiency gains when it comes to trying to understand what is in your contracts. And this matters because contracts are the commercial DNA of a company, i.e. who owes what to whom, when, and how.
But, if every contract had as much key data extracted from it at the point of creation as possible and then that was stored in ways that were easily accessible, then so much of this work could be circumvented.
None of this is technologically hard to achieve. It just needs a cultural shift, primarily among corporates, to capture all the key data whenever any document is created.
This can go far beyond just names, dates, and amounts. Why not strip out and store the main dispute clauses and any other important aspects, such as change of control clauses, as well? It doesn’t really cost a lot more to store those additional 1s and 0s. You need to invest in the information infrastructure, for sure, but this is not a technological challenge. It’s a matter of choice.
Likewise, law firms, and ALSPs and law companies, could be doing that when they provide contractual services to the clients.
The entire legal ecosystem could be geared up to be ‘data first’ in its approach. We do this already in so many other areas of life. E.g. the food in the supermarket has a mass of information that comes with it: ingredients, where it was made, use by date, calorie content, allergy warnings, and more. Why can’t every single contract be the same?
To make that happen needs a cultural shift, it’s not a tech problem, the software is already there to do that.
ADR vs eDiscovery
One of the things that struck this site during a recent visit to New York for a major conference was the focus on eDiscovery. So many companies, so many cases, so much effort and money, all to support an approach to disputes that really needs to evolve.
I.e. eDiscovery is fundamentally just part of an old way of doing things. It’s a fancy solution to a problem that is caused by an overly complex, overly costly, overly aggressive way of resolving disputes.
Of course, sometimes you need this approach, as the other party really can be a total XXX-XXXX, and there is no other choice but to go to town on this. But that is not always the case. Alternative Dispute Resolution (ADR) seeks to find solutions without ‘going nuclear’ every single time there is a spat between two parties.
And when you step back and look at it, the reality of how costly, slow, painful and unnecessarily inefficient the world of disputes has become really dawns on you.
Why is it like this? One response is simply that this is cultural. It is part of our legal culture – (with some distinct variations in intensity between the US vs UK vs EU) – to see litigation as always a marathon. As having to be a marathon. As if a dispute resolution that doesn’t cost millions, reach brutal levels of legal combat, and involve millions of documents, busloads of witnesses and more, isn’t really going to reach a proper resolution.
As noted, in plenty of cases this approach may well be needed, both to protect the innocent and to go after the guilty who will fight to the end to escape justice. But, not always. The problem is that the ‘total war’ approach is the default setting.
And, coming back to tech. We pat ourselves on the back for having developed great tools to sift and analyse documents, emails, and now even emojis, but what if the billions spent on eDiscovery (and eDisclosure) was instead spent on funding the growth of ADR?
Cost Benchmarking vs Information Asymmetry
Multiple reports keep telling us that inhouse legal teams are under pressure to cut costs, especially for more routine work. To which this site would say: well, you can’t really change what you don’t measure……….
…..so why don’t you start measuring what things cost, and also define those legal things, so you have a workable taxonomy that allows you to really understand what your legal costs are. From that position of objectivity you can then do something about it.
Moreover, why not work with others, including taxonomy and standards organisations to make this journey easier? Every other company on this planet has exactly the same problems around dealing with the information asymmetry of the legal world. Why not work together?
Again, why do we tolerate this massive lacuna in our knowledge? Other sectors would not allow it. They would demand transparency and some genuine shared benchmarks.
If legal tech is there to help drive efficiency – and save the end clients time and money – then think how much better things would be if they could overcome information asymmetry AND use legal tech.
Once more we have tech working on top of a scenario where the culture prevents significant change from happening. To use an analogy, it’s like we want to prevent global warming, but we’re burning coal and then sticking some kind of half-efficient anti-pollution filter on top of the chimney stacks, when the better solution would be to stop burning coal in the first place and find a better power source.
If companies want their legal functions to work better then they have to do something meaningful about it. Just moaning to the GC to cut costs if they can isn’t really that helpful. The companies need to fund real data analysis projects that allow the GC to get on top of what everything it is that they do and how much it costs, and then figure out the best way to make it.
The companies should also get their heads together to share data on costs, share – or better co-build – taxonomies to describe all these things – and then finally get a handle on the problem. But most don’t.
Why? Again, it’s cultural. Law unfortunately remains a sector that you ‘shouldn’t try to understand’ and still has ‘noli me tangere’ writ large in glowing letters above it, scaring away executives who then put their effort into improving other parts of the business.
And this goes back to legal ops. We have a whole new field of professionals doing great work inhouse, but they are ultimately doing their jobs with one hand tied behind their backs. Without a full grasp of the ‘legal products’ that the company consumes, how they are made, what they cost, and how those production methods can be improved – and how they compare to the cost of products across the market – then legal ops will remain a function limited in potential. Again, this is cultural.
There are more examples, but let’s stop here for now. The key point is that legal tech is incredible stuff and in some use cases can increase efficiency by huge amounts. But…….we also need to ask ourselves: how does our legal culture help or hinder these efforts?
What use is a tool that can sift through a million documents to find data, if that process could have been avoided in the first place by a different approach?
And that is fundamentally a question of culture. Because how we work is very much a cultural issue. Which leads to the last point: if culture eats legal tech for breakfast, then can we change it? Or are we stuck with it?
On the basis of historical evidence, it’s fair to say that cultural change is hard, but it can and does happen. In fact we already see signs of change in the legal field.
From the standardisation movement, to the growth of legal ops, to the continued rise of new business models, to the growing interest of the clients (i.e. CEO, CFO and owners of the business) in how their legal needs are met, there is hope for change.
By Richard Tromans, Founder, Artificial Lawyer, March 2022.
Drucker was right and you are right. Culture – or mindset – is a huge factor. Change and the search for new opportunities are the life blood of business. There is no evidence that the legal industry should be the way it is. [I would love to hear from anybody who has any research or science-backed view on why they think the legal industry is in a fully fit-for-purpose state.] To not think about, and not look for, new ways of working and to invest time solely in the ‘as-is’ and continue adding ‘more lipstick to the pig’, as the saying goes, is like investing in your own obsolescence.
Thanks Richard for this article. It is bang on the money! The focus on the importance of data and finding constructive ways to harness and use it particularly resonates. Historically, there has been so much “reinventing the wheel” in the legal sphere that the inefficiencies and cost implications must be stratospheric. There is plenty of good legal tech out there to help and it is getting better daily but, as you point out, the mind and cultural shift must happen first to really capitalise on it.
Wonderful piece, thank you Richard. A data-first approach is essential for real progress, and I wish the industry could get there more quickly. My start-up Lexata’s name comes from “law = data” and I’m building a research tool in the securities regulatory space. Contrast the U.S. SEC which publishes everything immediately in machine-ready format, versus Canadian securities regulators who just publish PDFs. So this article really resonated.
“The entire legal ecosystem could be geared up to be ‘data first’ in its approach. We do this already in so many other areas of life. E.g. the food in the supermarket has a mass of information that comes with it: ingredients, where it was made, use by date, calorie content, allergy warnings, and more.”
Goes back to understanding the atomic unit in a law firm: time. It is the widget we sell and until we understand it, we won’t be able to forecast pieces upstream.