The bleeding edge – The legal tech debate

Cutting-edge legal tech is no longer an optional extra for law firms. In our latest round table with McCann FitzGerald, legal technologists debate the key barriers to success

The last five years have seen the emergence of early adopters in the legal technology sphere, firms that have embraced innovation and adopted artificial intelligence (AI), data analytics and predictive coding tools, not only to increase efficiency, but to reshape the way they work.

While firms such as Berwin Leighton Paisner and Allen & Overy (A&O) have led the way in innovative legal tech, last year saw a number of other firms join the fray. One of the most significant developments amid a string of AI moves in the summer of 2016 saw Slaughter and May, one of the more conservative of the elite firms, embarking on a high-profile venture with Cambridge-based Luminance.

Across the Irish Sea, McCann FitzGerald in 2016 broke ground with the launch of its data investigations group, becoming the first firm in Ireland to use technology-assisted review for the management of large-scale document handling across all key work areas.

With this in mind, we invited guests from a range of different firms – including those responsible for heading up separate business service arms that operate at the cutting edge of AI and automation – to share experiences and to debate how the modern law firm can properly exploit the use of tech and new business models in the future.

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Mark McAteer, Legal Business: Can I get some opening thoughts on why those around the table have chosen to pursue technology-driven initiatives?

Karyn Harty, McCann FitzGerald: We are the first in Ireland to take this approach. A law firm is like a big ship: it takes a little time to turn. Rather than seeing it as a litigation-specific thing, we wanted to take the analytics work, predictive coding and artificial intelligence work we were doing and apply it to all of our practice areas. Out of that sprang our data investigations group.

Isabel Parker, Freshfields Bruckhaus Deringer: The legal services innovation function I head up was established at the end of last year. We conducted a global client feedback survey, which told us that we were brilliant at the legal aspect of what we do but that we needed to be even more responsive to clients’ rapidly changing business models. From this we realised that we had to be very serious about innovation, which we define as finding creative solutions to our clients’ problems, using a combination of technology, process improvement and project management. We are at the moment experimenting with the best way to embed this within the firm. We want innovation to be associate-led.

That is not to say that partners have not bought into it. But some will take longer to adapt to the new technology. This cannot be a case of IT developing and rolling out solutions. Use cases must be generated, developed and championed by the business.

David Halliwell, Pinsent Masons: Our journey started in 2008/09, with a couple of practice areas that were under market pressure, primarily our property and employment groups, which started to look at the problem from the other end of the telescope. It was not: ‘How can we be more efficient?’, but: ‘How can we provide our clients with different types of value?’

This kicked off a big move around process automation and document automation, and from that we built a range of different client propositions. A big step change happened four years ago when we won a sole supplier mandate for Balfour Beatty’s core operational work and on the back of that won an equivalent deal for all of E.ON’s work. That gave us a platform to invest and virtually guaranteed work streams for three years for each.

Marc-Henri Chamay, aosphere, Allen & Overy: The A&O story is similar. It started in terms of responding to the need of cutting costs for clients during the last recession. The two drivers were the pressure from clients and progressive A&O management ready to challenge the existing business model. It started as a fragmented approach, with different capabilities emerging. The effort in the last couple of years has been to bring it together a lot more and rethink how we deliver our services.

Ultimately, it is great to have all of those capabilities, but if you cannot articulate to people how to use it, it is very hard. If we look back at the last five years, there has been a proactive element in saying to the partners: ‘These are the capabilities you can use.’

The big challenge now is to define best practice and say to the partners and clients: ‘Those are the case studies; this is where you can do something really great.’

Caroline Hunter-Yeats, Simmons & Simmons: One thing that absolutely drove me mad when I took over responsibility for our e-discovery function four years ago was that providers would come in and show me a wheel to illustrate the power of the technology, but they were never able to explain when I would use the wheel in a real matter. I got to the end of my ability to sit in any more of those meetings. I had to understand the technology myself.

We have a very talented person heading up our e-discovery team on the technical side. She and I spent hours making sure we both understood what the technology did, its limitations, what you could and could not throw at it and then designing the new workflows.

We had our own LPO [legal process outsourcing] team in India from 2009 to 2011, the theory being that if we had a dedicated team we were bound to make use of it and could work out what the Simmons need was. I trialled some work on our London trainees compared to the qualified Indian lawyer in our LPO and discovered it was much more efficient to use a London trainee because they were so much quicker. That was the moment I realised this was not the right route for us. Low-cost people is not the right solution for all matters.

‘Innovation has to be driven by the lawyers, even technology solutions.’ Isabel Parker, Freshfields Bruckhaus Deringer

Gráinne Bryan, McCann FitzGerald: I would rather have a strong core team of really good people who know what they are doing, have enough experience and know how to use the technology than 50 people sitting in a room churning through documents. It is driven by the associates and from their years of experience in this space – they get it.

Isabel Parker: If I were an LPO provider in that space I would be feeling very uncomfortable.

Gráinne Bryan: Yes, absolutely.

Caroline Hunter-Yeats: I am not technical and that is actually one of the advantages of me being in charge of our function. There is no excuse for anyone else in the firm. Everyone looks at me and thinks: ‘If she can get it, I can get it.’ That has helped adoption, particularly at partner level. There is not that fear, because I am one of them.

‘The key to success is to innovate close to the coalface, directly with the lawyers.’
Nick West, Mishcon de Reya

Chris Dale, The eDisclosure Information Project: The most interesting discussions I have had recently have been with two young solicitors from Taylor Wessing and RPC, who were on opposite sides in a dispute. They had gone out and found out about technology. They had made it their business to find out. Their blessing was both being in firms with a very short path from them to the partner whose authorisation is needed, in this case the use of predictive coding. They had to argue their corner and explain why this was the best course for the clients.

Jonathan Maas, The Maas Consulting Group: What I find interesting, especially with what you are doing at Freshfields, Isabel, is the astonishing level of internal commitment needed from the fee-earners to invest their time in doing this, rather than having someone from IT, who does not understand what they do or how they want to do it, developing something that will never get used. How do you formally recognise this commitment from your fee-earners?

Isabel Parker: It is still to be tested. Our ask of the partnership has been that, if we are going to take this seriously and make it work, they have to give up the good associates. I have asked that the associate hours be billed as client hours, to have the same weighting.

Mark Higgs, Ashurst Advance: It’s exactly the same for us.

Isabel Parker: And has it worked?

Mark Higgs: It has worked in the sense that we have a defined budget of hours that we can spend and therefore associates are fully incentivised to participate in our work alongside client work.

Nick West, Mishcon de Reya: The key is to innovate close to the coalface, working directly with the lawyers. One of the associates in our real estate department spends one day a week working with me on how to apply some of these AI tools in practice and has 20% of their target hours reduced to compensate for it. Obviously, we had to get the buy-in of the partners to make the secondment work, but it wasn’t as hard as I thought it was going to be. We have a different configuration in other departments, but it’s a similar principle: working together with the lawyers to understand how to apply the technology to their day-to-day tasks. The big point here is that people are committing to this kind of action, rather than just talking about it.

Trevor Horwitz, EY: What is innovating and differentiating technology for us now will at some point become commoditised. What is it that clients actually value from us? It is our insight and our intelligence; it is the ability to problem solve, to come up with answers and really to hold hands.

It is an interesting journey, because you start off asking how you can use technology to accelerate your work and be your differentiator. However, that can become ubiquitous and the cost too exorbitant. The question around the table is how much this technology landscape is costing you? The bigger you build it, the more it becomes an IT infrastructure to manage. From a disruption perspective, new entrants to the market are no longer paying as much as we are paying to get the same kind of analytics. You build this fantastic capability and suddenly the carpet is taken right out from under you. We are finding ourselves in that position at the moment.

Nick West: You have to think carefully about what’s appropriate and weigh up the option to buy versus build. There is a certain amount of technology it will always make sense to buy. But even there, when we talk about AI technology, there’s a difference between what it can do out of the box and what it can be trained to do. The key is about how you, as a firm, choose to use that technology and whether you can work out how to use it in a potentially more interesting way than the next firm.

‘How do you get buy-in for tech? Attract clients and make money. That is the only way.’
Marc-Henri Chamay, aosphere

Karyn Harty: The analogy I would use is that we all know that aeroplanes largely fly themselves these days, but you would not get onto one if there was no pilot. We are the pilots of this technology. It is interesting what you say about technology choices. As a firm, we have adopted a platform-agnostic policy. We would rather go out to service providers and choose our weapon depending on the project because the technology is constantly evolving.

Isabel Parker: A big enterprise solution is the wrong approach. I am not a technical person, but even I can see that. We would only adopt technology to which we can add our knowledge; nothing out of the box is going to work.

Jonathan Maas: You have to adapt your processes and workflows to the out-of-the-box technology. You cannot make it work the way you want to unless you pay the developers an exorbitant amount of money to fast-track your change requests (which then become public) or wait until they put it in off their own bat – in version 17.

Gráinne Bryan: The way of getting the best out of any system is when you are given that freedom to work on that platform and figure it out for yourself in conjunction with your team. Ultimately, you have to have the experience to understand where the pitfalls are. You still need that and no system is going to be able to do that for you.

Mark Higgs: You want to start with the problem, not the solution. Coming round waving a solution at somebody is not helpful at all. The job of people around this table and others in respective teams is to go and help the lawyers articulate what the pain points are with a level of knowledge about what is available to make their lives easier. The faster you can do that, the better your outcomes will be.

Mark McAteer: What is the feedback from partners on this? Although a lot of it is associate driven, partners are obviously going to be signing off the investment.

Caroline Hunter-Yeats: I would not agree that it is associate-led. All firms are different, but the one thing I have always thought is that if you want to achieve change in a legal partnership, it has to be partner-led.

Jane Bradbury, Slaughter and May: What has been so notable about our AI project is that having senior partners supporting the introduction of the technology has made an enormous difference. I have then loved seeing the enthusiasm of the associates and trainees as they start working with the technology.

Mark McAteer: Is the key to measuring the success of innovation not so much servicing the client through the use of AI and tech, but creating an asset for the firm that you can market? How does a partnership reconcile with that?

David Halliwell: We have two answers for that. One is using the technology to create an output, which is a new product. The second is asking if our internal capability and technology platforms are of themselves worth commercialising and selling directly to clients, non-competing law firms and competing law firms. It is much more like the aosphere idea of a separate business providing those solutions.

Mark McAteer: Marc-Henri, how did you go through that process of getting buy-in to create aosphere as a separate business?

Marc-Henri Chamay: By attracting clients and making money.

Mark McAteer: Is it that straightforward?

Marc-Henri Chamay: That is the only way. When I joined A&O, there was some innovation going on, but we hadn’t worked out how to convert that to profitable revenue growth. There were discussions about pulling the plug. I said that the money was spent and we were not going to get it back, so we should look forward, see if we could make money and structure it quite differently.

We have constructed an online business where all of our clients are basically run on a 12-month subscription contract with a standard service, fixed fees and no tie-ins. This takes away the risk for clients and if they do not like what we do, we know straight away. Our offering goes beyond the traditional A&O client base. We only get approximately 10% of our business through direct referrals from A&O. All the rest – we chase it direct.

Trevor Horwitz: We are all focused on talking about how we are using technology, data scientists and all sorts of machine learning in a legal context. The reality is that the hottest topic in the world today is supervision and monitoring compliance in the corporate environment, which involves cognitive analytics of text. What have we been doing for the last 15 years? Cognitive analytics of text. The e-discovery specialists have got far more experience and opportunity to develop in this area than all the start-ups that are now coming out of Google.

The reality is that the start-ups are all stealing a march, because we are too focused on a narrow market. You have large banks hiring 2,000 compliance people to carry out activities, talking about due diligence and contract review. That is the opportunity here. To be brave is to break out of the shackles that we see in the law field.

‘The start-ups are all stealing a march. To be brave is to break out of the shackles that we see in the law field.’
Trevor Horwitz, EY

Marc-Henri Chamay: When the financial crisis hit we had 40 institutional clients and we have 320 now. The driver was that before the financial crisis people would say: ‘We like what you are doing, but we are doing our own legal analysis in-house with our own resources.’ Certainly all that has gone, with pressure on cost and increasing regulatory complexities. Once you have passed a certain credibility point, if the service is good, clients will go for it and outsource some of the in-house work. That is also a big risk. Beyond the disruption of technology, good service providers will emerge and may challenge the way legal services are provided.

Nick West: You make an interesting point; law firms struggle to talk to anybody beyond the in-house legal team in large corporations. Big Four organisations don’t have that limitation – they have links to other parts of the organisation through their finance and consulting practices, and so are much better at having a wider conversation. And the tech businesses, the start-ups – well, they don’t really know the rules, so they just go and talk to whoever they want to.

Jane Bradbury: I am looking forward to seeing graduates coming out of university who have actually been looking to solve legal problems using technology as part of their studies and have then joined law firms. They are potentially another force for disruption.

‘If you want to achieve change in a legal partnership, it has to be partner-led.’
Caroline Hunter-Yeats, Simmons & Simmons

Nick West: I work a lot with the University of Law and BPP and spend time talking to LPC students, and I find that the majority of students are relatively uninterested in the application of technology to law. Yet, they are digital natives and keen adopters of technology in their personal lives, so I believe that there’s great potential to be unlocked here. Right now, however, the institutions do not invest sufficiently in teaching about technology and we’ve got to change that.

Jonathan Maas: As you said, law firms take years to change direction. Today’s people coming up through the LPC expect a quicker turnaround and reward from what they are doing. If it takes two to three years of persuading a partnership this is a jolly good idea, the boat has already gone.

Mark Higgs: It is not necessarily good for the business if everybody is worrying about how to bring technology into their practice. It is better to have a cleaner demarcation of roles. In the future there will be more legal technologists, project managers and potentially salespeople. Law firms have sold for centuries, but they have not traditionally used professional sales approaches. The highly-valued cadre of legal technologists in particular will help push a change agenda. LB

mark.mcateer@legalease.co.uk