CRESCO Legal_ FZC – What consequences will new technologies have on the practice of law?

“ Innovation distinguishes between a leader and a follower”.

Those words, pronounced by Steve Jobs, one of the most admirable geniuses of the 21st century, could not be more accurate than today. The new technologies, and digital ones in particular, are invading every house and field of profession, bringing with them important and necessary changes. One of the concerned sectors is the market for legal advice delivered to corporations.

Indeed, computers and digitalisation of data are quickly becoming indispensable tools for law firms, due to the incredible efficiency. Books and libraries are slowly being replaced by websites and databases. Some big cases (like, Volkswagen, Clinton, or Lehman Brothers) required from lawyers, to review and analyse huge volumes of e-mails to establish the facts and find evidence. The Boston Consulting Group (BCG), in cooperation with the Bucerius Law School, stated that “in the future, the ability to screen, analyse, and interpret unprecedented volumes of data will become just as critical to law firms’ success as the “art” of delivering legal advice is now”.

The BCG’s conclusion is very close to Steve Job’s idea of innovation: “Law firms can no longer afford to ignore legal tech. In the changing legal-advice landscape, there will be winners and losers”. Currently, a large majority of lawyers are reticent to use such tools. They prefer the traditional approach; screening documents manually, one by one (usually the junior lawyers’ work). What are the reasons? The billable hours and the profit-sharing agreements put in place in partnerships do not spur lawyers to invest in new technologies. Moreover, these instruments represent significant investments in time, human resources and money.

Still, law firms will have to adapt. The whole world is moving forward towards a more efficient and completely innovative way to work. Lawyers will have to join the movement by trading hard copies against softwares. In this century where quickness is essential, their lack of rapidity, due to the necessary long hours of research, will not be tolerated much longer. If accepting legal technology-solutions may be a way to help law firms to succeed in this new era, refusing them will at best make them loose corporate clients to more forward-thinking competitors. At worst, they might go completely out of business. However, the digital age should not be a danger in lawyers’ minds. Actually, it may even be a great opportunity to exploit.

The digital tools, created to assist lawyers, can be divided in three different categories of technology solutions; the enabler technologies focused on facilitating digitisation (such as cloud storage tools and cybersecurity solutions); the support-process solutions (customers relationship management to accounting, billing and finances); and finally legal technologies providing substantive law solutions, such as execution of low-skilled legal tasks, drafting of standard letters and deadline controls. This last category should be highly improved in the near future by the emergence of artificial intelligences. Yet, experts consider that A.I. uses will not be commercially relevant before at least five years.

What will be the impact of these new technologies on the practice of law? First of all, law firms will use legal tech to differentiate themselves from their rivals, which will change law firms’ requirements and clients expectations. The most innovative law practices may even develop their own tech solutions, or invest in legal-tech start-ups. Since they will be able to use technology to capture more valuable insights from large data sets, clients will expect the legal firms to offer better services for less money.

The traditional hierarchy inside important law firms, usually represented as a pyramid, will be completely altered. Until now, it was composed of a few partner lawyers at the top, and many junior lawyers and associates at the bottom. The use of digital tools will definitely change this system. The new configuration will be characterised by fewer junior lawyers and associates per partner (they could reduce their ratio by up to three quarters). Instead, law practices will have to hire people who did not study law, but who are specialised in the use of IT tools, such as project managers, legal technicians and tech managers.

To survive, the smaller law firms will have to revisit the services they offer, and consider offering more specialised services (by selecting a small set of cases), instead of taking a generalist approach. If they succeed to combine specialisation with competitive fixed-price offerings, they may even benefit from new technologies by finding a “niche” (for instance, by crafting legal products and selling them for a fixed price).

To conclude, it is possible to say with certainty that, thanks to legal tech, law as a profession will look impressively different five to ten years from now. Lawyers better be prepared, or they will suffer from the consequences. Alexander Graham Bell, the inventor of the first practical phone, once said:

”Before anything else, preparation is the key to success”.