By Richard Tromans, Founder, Artificial Lawyer.
Legal tech can sometimes feel like it’s the whole world. We get absorbed by the details of the technology and are sometimes blinded by big investment announcements, but without the rest of the legal innovation ecosystem around it then this sector-specific software is limited. What do I mean? Let me explain.
What Are We Trying To Achieve?
First, let’s consider what legal tech is actually for. While founders and investors may be excited by the commercial aspect of a software product, for the wider world legal tech only has value if it makes the delivery of legal services achieve the below:
- Cheaper – because legal services exist within the broader economy; higher legal and compliance costs act as a tax on business and on wider society as we try to go about our lives or run our companies.
- Faster and/or More Efficient – as there is only so much time in a day and if we can get to X outcome faster, then we are better for it as a society. Equally, if we can get to X outcome without expending as much effort or human resources as previously, then this is also a significant improvement. Human society is based upon the principle of limited resources and how to deal with that fact, getting to legal outcomes is as much a part of this as any other aspect of societal need.
- Less Risky – all actions carry a degree of risk, from crossing the road to drawing up a contract. If we can reduce the risks inherent in contracting and disputes then we are also doing the world a favour. Less risk can also lead directly to less costs in general, and also connect to forestalling the emergence of future risks.
- Greater Knowledge – as one can never know too much about a goal that one is trying to achieve, as that will then help with all of the above, i.e. reduce input costs, human resources required and hopefully reduce risk as well.
Now, it’s fair to say that when it comes to marketing pitches a lot of legal tech is sold as if a lawyer is wandering around the soft-furnishings department of some fancy store and the primary goal is to make the lawyer’s life more comfortable. And that is perhaps a good way to sell your software to the people who pay for it, but if legal tech’s main goal is just to make lawyers’ lives a little bit comfier then that places it on about the same level as selling cushions for your sofa.
There’s got to be more, right?
And if there is more…..
What Else Is There? A Lot! And It’s All Connected
If the goal of legal technology is to help improve the delivery of legal services for society as a whole – (which to me has to be the overriding goal, otherwise what’s the point?) – then is it performing this act of improvement, this process of legal innovation, on its own?
Clearly the answer is: no. Legal tech does not exist in a vacuum, even if sometimes it’s easier to point at because there are obvious products out there, with brand names, with identifiable founders, that perform very specific things. Yet, there is so much more going on.
Now, there’s clearly a book or two in here, but let’s keep it simple. In fact, let’s make a narrative out of it, starting with a company, and let’s make it a large, multinational company, the kind of business that an AmLaw 100 or UK 100 law firm might wish to serve.
- Company A just wants to conduct the business for which it was created and then funded for by investors. It just wants to get on with life and so do all of its staff and executive team. Anything that gets in the way of this is basically an impediment, an obstacle, even if sometimes those impediments are in the company’s interests, e.g. the law and the need to follow it to preserve itself, as well as support the greater good.
- Now, Company A is tootling around doing its thing when an opportunity arises to buy another business. An acquisition project commences with all manner of players getting involved. Naturally, the board and shareholders play a key part in this, but so too the company’s HR team – as they’ll be absorbing many new people, the marketing team, the IT team, the property team, and more. But, there’s also the external advisers; so there are investment banks providing additional finance for the deal, there are all manner of consultants giving tips on how to make the deal work and how it fits into a longer-term strategy (especially in order to sell the deal to the shareholders), there are accountants, maybe regulators want to take a sniff at the deal to check for competition issues as well….the list grows and grows.
- One part of the deal we haven’t mentioned yet is the legal side of things. If the companies involved could avoid having to pay for lawyers to help here they would, but they are not daft and know they’ll need legal input all over this deal and across a dozen different aspects. From deal negotiation, to due diligence, to handling regulators, to exploring what putting two property portfolios together will mean, to HR issues that arise out of redundancies, and more. It’s going to be vast, complex, and multi-faceted. It’s also all going to cost a lot. But, the deal is a good one, and the shareholders want to make it happen. And of course, the other company, the target, will also be going through something similar, albeit from the opposite direction.
So, that’s the context, and immediately we can see it’s super-complex with many moving pieces. (N.B. Plus, it’s worth saying this vast complexity is one reason why when people suggest generative AI is about to bring an end to lawyers, or professionals in general, it really does seem extremely unlikely.)
From Money to Efficiency The Connections Keep Coming
At this stage let’s drill into the narrative and focus on the buyer’s legal needs. And it’s here where shaping decisions and key economic factors come into play that will shape all that comes next.
- First, if there is no economic aspect at all here, and I mean really no spending limit in any way, then perhaps we are lucky as everyone in the innovation field can go home and not come back to work ever again – as it would be pointless. If the client is happy to spend limitless amounts of cash on a legal matter, regardless of how many people are involved, or how long it takes, then legal innovation has no role here, nor legal tech, nor anything else other than the expertise and elbow grease of the lawyers involved. (And you might argue that even if the buyer is spendthrift legal tech might help increase the odds of winning a case, for example, as you could use some legal AI tool to analyse past trials if it were a dispute matter. But…if money is no object, then why not hire an entire room of trial lawyers to do that for you?) So, if that’s the world you inhabit and the clients’ shareholders don’t give a fig either about efficiency or costs, then bravo for the external advisers, you’ve managed to find the goose that lays the golden eggs. If there is any legal tech, or legal innovation input in any way here then it’s just to make the lawyers’ work on this job just a little bit cosier, that’s all. It’s just an extra duck-feather pillow on the especially plumped up and super-soft deluxe mattress of endless, unchecked, un-evaluated hourly billing.
- But…..what if money and time and efficiency in general does matter? Well, then we are so back!
Everything Is Connected
OK, enough with the preamble, let’s get to the meat.
Here’s some aspects to consider that show how everything is connected. Think of each item as a node that links to the others.
- Billing model and matter scoping – before a client can really engage with an ‘innovated’ approach to legal work they need to consider how much something should cost. After all, if money matters, then we need some way to measure and compare things. This could lead to accessing past legal billing data to create a model. This may also need something like SALI’s billing code taxonomy to help the client compare like with like. The end result may be a fixed fee, or perhaps a rough guess at the total cost via hourly rates. Either way, there is some attempt at objectivity here before the great production process commences. I.e. before anything happens, before any tech is deployed on actual work, or any real legal labour begins, we start with this node and then build outwards.
- Division of legal labour – how will the ‘thing’, the outcome, be got to? Who will do this work? How will it be distributed? What goals will be achieved by approaching the division of legal labour in different ways? For example, will an ALSP be involved? Will it be part of the law firm, or standalone? Will an ALSP also be needed to provide some flexible talent for the inhouse team while this big deal happens and is then integrated? Which firms will do what? How is that decided? Will a firm’s ability to show it will use tech and better working methods to handle costs be a factor? Where does the line sit between ‘super complex – no questions asked’ work vs ‘this is really routine and the faster and more economically we do it the better (up to a certain limit)’? And this part, this chunky node, really matters as it will inform a lot of other decisions, such as:
- What technology should be used? – An ALSP helping with document review, for example, may win the work on the basis they are using legal AI tools. The top partners at the law firm’s M&A team may win the deal not just because they’re great at this kind of work, but also because they can show they’ll be shaving away as much low value and time-wasting work as possible, e.g. using signing platforms.
- What technology should be used that perhaps is not explicitly explained to the client? After the work is won, the law firm may then wield a lot of tech that helps them to keep their costs down. E.g. with great KM they’ll be able to pull up the precedents they need, and plenty besides, such as perhaps Operational KM data that shows which teams worked on a similar deal before, and how the matter evolved. That allows improved planning and cost management.
- What tech is used in the deal that helps the firm in the future? Again, this is about KM. Can the firm extract and preserve value from this deal to use in the future? Or is it lost? What on the Operational KM side do they learn about costs, unpredicted changes, how the ALSP worked with them? How is all of this captured and turned into value?
- What tech is used to communicate and share information with all the parties involved? This is not an automatic thing. Certain legal tech tools can be wielded better when the culture of the firm is suited to this approach. So, culture is a factor here.
- What tech is used to perhaps avoid pieces of work that may not need to be done, or can make that work a lot shorter? Is there an approach at the firm – and again this is cultural – that focuses perhaps on using tech to detect possible future issues in the data it receives and enables perhaps new offerings to be made to the client that grow out of this deal?
- How does all of this tech fit together? No matter what tech you may want to use, does it all fit together? Have you put in place the IT structure and data flows to make your ‘battle plan’ feasible?
- What does all of this tech cost? Not just legal work has a cost, the tech does too. Plans to use X or Y tool may depend on cost factors as well. Are those understood?
- Relationships after the deal – what happens to the relationship between the law firm, the ALSP(s) and the client? Do they make an effort to work together, or at least grow the relationship around shared innovation goals? Do they share notes on efficiency and legal tech tools that work well? Or do they all go their separate ways and not talk again until there is another great need and another beauty contest?
- What about feedback? – do all those involved give feedback to each other, especially the legal tech companies and ALSPs?
- Longer term effects – does a certain combination of law firms, ALSPs and legal tech tools lead to new approaches to conducting legal work, i.e. in the execution of the deal in an economic and efficiency environment? Does this perhaps even move law schools to pay attention to these developments and ensure that law students are taught about them so they are prepared for the future of work?
- Even longer systemic effects – Does all of this, especially if carried out multiple times, lead to changes in the law firm, (or even the legal sector as a whole)? Do they hire more experts in certain areas of legal innovation? Do they build their own ALSP? Do they decide to invest more in legal tech or certain types of product, e.g. generative AI or do more with KM? Do they sit down more often with clients to explore new ways of working? Do they analyse their own performance and get into the numbers and how new approaches changed things? Do they then use these outcomes to improve and adapt their marketing and business development approaches to clients? Does this in turn change the position of the firm in the market? Does it help the firm to compete for/or retain clients? Does it change the way the senior management thinks about the wider market and what resources are going to be needed to embed and further legal innovation for the long-term? And finally, do the views, expectations and behaviours of the clients change as well? Most likely they will….because everything is connected.
And there is no doubt more to add here (e.g. perhaps considerations around work/life balance), but hopefully this gives a sense of just how wide the field is and how connected things are in legal innovation. Legal tech does not, and realistically cannot, exist in isolation.
Let’s end with a paraphrased line from John Donne’s most famous work: ‘No legal tech product is an island, entire of itself, every legal tech product is a piece of the innovation ecosystem whole.’
Hopefully that was of interest and thought-provoking, if it is, then you may want to come along to the Legal Innovators conference in London, Nov 8 + 9, as the above is exactly what the event is all about and will bring together the many different parties that form key aspects of the legal innovation ecosystem. I look forward to seeing you there.
Legal Innovators Conference – November 8 + 9 – London
The Legal Innovators conference will be a landmark event exploring a range of key issues with high-level speakers from across the legal innovation ecosystem. The event will take place on 8 + 9 November in London. Day One: law firms and ALSPs, Day Two: inhouse and legal ops.
For tickets, please see here.
Here is a list of our great speakers so far: please see here.
While for general information: please see here.
The two-day event comes at a time of significant change for the legal market and we will be bringing you engaging panels and presentations where leading experts really dig into the issues of the day, from generative AI, to the evolution of ALSPs, to law firm innovation teams in this new era for legal tech, to how empowered legal ops groups and pioneering GCs are making a real impact. And as always, I’ll be there and chairing the event.
See you there!
Richard Tromans, Founder of Artificial Lawyer and Conference Chair.