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Technology at law firms: the revolution is yet to come

  • Poland
  • Technology

24-04-2018

There has been a lot of talk recently about the use of IT in delivering legal services. The topic has drawn attention mainly due to the growth of AI tools, fueling media speculations about the possibility of eliminating lawyers and replacing them with robots. But the application of technology in legal services is much broader than just implementing solutions based on artificial intelligence.

What is LegalTech?

The notion of LegalTech came into existence along with the spread of information technologies—computers and software. LegalTech means any tools (mainly IT) used by lawyers. This covers such common tools as word processors and email, as well as specialized instruments, e.g. for firm management and knowledge management.

The International Legal Technology Association devoted to these issues was founded back in 1980 in the US. ILTA now includes 1,440 member organizations (mainly law firms) and over 20,000 individuals.

The LegalTech market is very highly developed in the US and the UK. On other markets, including Poland, the offerings are much more modest.

Classic examples of LegalTech products and services include:

  • Law firm management software
  • Timekeeping software for fee-earners
  • Legal information systems
  • Software for generation of contracts and litigation pleadings
  • Support for due diligence in transactions, such as virtual data rooms
  • Tools for managing intellectual property rights
  • Software supporting debt-collection processes.

In Poland, just a few years ago there were very few IT tools designed especially for lawyers, but a more expansive range began to appear in 2012–2013. Nonetheless, the clear majority of the tools now offered are programs for firm management or debt collection, all quite similar to one another.

The role of LegalTech

Classic LegalTech tools are technologies supporting the practice of the legal profession. These solutions assist lawyers in their day-to-ay work and in attorney/client dealings. They have no ambition of changing how legal advice is generated, but only streamlining the way legal services are delivered. Tools of this type were eagerly adopted by lawyers, as witnessed for example by the rapid spread of devices like BlackBerry and later smartphones.

A clear majority of lawyers use IT in a traditional way. For them email is simply a more convenient and faster way to send correspondence, and word processing is a convenient method for drafting documents. Regardless of the tech solutions employed or how cutting-edge they may seem, the legal advice provided using them is essentially created the same as it ever was: hand-crafted, with an emphasis on the work of the individual lawyer, his or her legal skills, and the time devoted to developing the advice.

Around the turn of the century it began to be pointed out, however, that technology can change the way legal advice is produced. The breakthrough in thinking about technology in the context of legal services can be attributed to Richard Susskind and the publication of his book in 2008 entitled The End of Lawyers? Rethinking the Nature of Legal Services.

Susskind predicted that the legal profession would change in the near future under the influence of two factors: commoditization of legal services, and growth of information technologies.

Among the technologies expected to have the most impact on the legal profession, Susskind mentioned:

  • Automatic generation of documents
  • 24/7 communications with lawyers
  • Electronic platforms linking lawyers and clients
  • Interactive, self-service systems for obtaining legal advice
  • Design systems for managing the work of lawyers
  • Online dispute resolution systems (i.e. dispute resolution as a service).

Remember that these predictions were issued ten years ago, and at that time Susskind did not factor in the rapid growth of AI tools.

LegalTech and changes on the legal services market

Currently, from the perspective of 2018, it is plain to see that some of the technologies mentioned above are already present on the market and are beginning to shape not only how legal services are provided but also the market for legal services. Other changes have appeared on the market naturally fostering the broader use of technology.

More and more companies are creating their own legal departments, which are evaluated for efficiency and speed. Technology is also opening up the consumer market for legal services. For example, platforms matching up lawyers and clients online are already shaping the market of legal advice for consumers, enabling many law firms to look beyond their local territory of operations. Consumers are also beginning to get used to accessing knowledge about the law, as well as solutions based on automation and online access.

The question is, when will these changes be truly reflected in the legal services sector?

Until recently there were no tools or technologies that could realistically change the way law firms work. As I already mentioned, the introduction of computers, word processors and electronic communications did not represent that kind of change. These tools only streamlined and expedited services still performed in a traditional way.

Now tools are entering the market that can truly change how lawyers do their work. These tools include, for example, software for automating legal services or certain elements (e.g. for generating contracts, reports and pleadings), or software analyzing natural language to perform a quick analysis of numerous documents and draw relevant conclusions. Concepts and tools aimed at automation of the phase of contract performance have also appeared on the horizon in the form of “smart contracts.”

There are numerous examples of such tools. Many of them are still at an early stage of development, but sooner or later they will begin to be employed on a broader scale. Moreover, while a fairly narrow set of IT firms were involved in the past in the development of technology designed for lawyers, there are now more and more such firms. This can also be seen in the number of startups addressing these issues. AngelList, a well-known directory of tech startups, listed 412 startups in 2014 identifying themselves as involved in LegalTech. By 2016 the number had grown to 1,094, and as of April 2018 there are 1,851 of them.

Investors’ interest in LegalTech ventures is also growing. More and more such investments are being made, and on a larger scale. As a consequence of devoting greater and greater resources to the development of technologies for legal services, it is no surprise that concrete results are anticipated in the near future.

But any fundamental change usually requires some external stimulus. For lawyers, such a stimulus could be either new expectations of clients, or the appearance of competition. And broader application of IT to the provision of legal services and the possibility of at least partial automation of such services has quickly been noted on the market. It’s enough to look at the offerings currently available on the market of services preparing businesses for the requirements of the EU’s General Data Protection Regulation. Many of the providers offering such services are not law firms, but consulting firms and IT firms.

In English-speaking countries, “alternative providers” of legal services have already become firmly entrenched on the market. They usually offer services in the form of products with fixed prices, which are sold separately from the work of creating such products. A typical product is due diligence for transactions, performed with great reliance on IT support. Technology is the key to the growth of offerings of this type. Among other things, technology enables a precise calculation of the actual costs of legal services, as well as creation of legal “products,” partially self-serve, which can be marketed by specialized sellers.

How to seek out LegalTech solutions?

When thinking about LegalTech and how to adapt to the processes of change discussed above, we must be skeptical of the hype. Many AI-based solutions are still at an early stage of development. Often their use requires a great amount of work input to train the software to correctly recognize the content it is analyzing.

To make good use of technologies as part of the delivery of legal services, the particular phases of delivery of legal services should first be identified, and then the available tools can be applied to better perform the particular phase. For example, the first stage in providing legal services is always to identify the client’s legal problem. This is usually done by clients themselves when deciding what type of lawyer they need or attempting to determine on their own what regulations might apply. This is also done by the lawyer once the client comes in with a problem. This diagnosis typically requires the lawyer to skillfully pose certain questions, but can this process be standardized and to some degree automated? Such a tool could help people needing legal advice to select the right lawyer or send them down the right path toward further analysis. Certainly no universal tool could be created, as some specific field of law must first be chosen.

Along with identifying the actions that might be automated, knowledge is also required about the available technologies. This usually presents the biggest problem, because there are still not very many people combining knowledge of available technological tools with knowledge of the law and practice applying it.

Is LegalTech only for lawyers?

LegalTech solutions can support both lawyers and their clients, but also individuals seeking to pursue their rights themselves. A lawyer needs first and foremost tools for expediting routine activities so he or she can focus on solving the client’s legal issues. The client may need a tool facilitating the selection of a lawyer or payment for the lawyer’s services. But technology can also equip persons seeking a solution to their own legal problems or enforcing their own rights with tools allowing them to act effectively in such situations. More and more solutions are appearing enabling for example semi-automated pursuit of claims against air carriers for flight delays, generating appeals from parking tickets, or joining class actions.

LegalTech has huge potential to realistically activate citizens and consumers, making it easier for them to pursue their rights against the state and businesses.

When will change come?

The American futurist Roy Amara coined the adage known as Amara’s Law: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”

Most current publications on LegalTech contain overblown descriptions of technological attainments and their influence on the legal services market here and now, but it is early days for these phenomena and it is not clear at all how they will ultimately impact the legal services sector. We must not ignore this trend, however, because there does not appear to be any turning back from technology as an aspect of legal services.

For now, we should look realistically at the development of technology for lawyers. When we attempt to implement LegalTech solutions, we may encounter a disconnect between inflated expectations and the real effects. For example, the tools currently offered involving natural-language analysis (e.g. for due diligence) require a great input of effort to “teach” the software, and they generate valuable output only when applied to large sets of repetitive documents of the same type (e.g. only leases or only license agreements).

Clients’ expectations

Before launching LegalTech projects, we should also ask ourselves what expectations our clients have. Lawyers’ clients do not necessarily expect to be offered tech solutions. What they really want is effective methods for solving their legal problems.

Technology is still only a tool for use as part of the delivery of services, even if it is a tool driving changes on the market. In October 2016 Eversheds Sutherland (then known as Eversheds) conducted its Looking Glass study among the heads of legal departments and lawyers from the 200 biggest international firms. The study found that for in-house lawyers, technology is not the most important thing. What was crucial for them was increasing efficiency and generating added value—not necessarily using tech solutions. The lawyers surveyed unanimously indicated that technology should free them from routine, repetitive activities and allow them to focus on strategic advice. Thus when analyzing any offer of tech tools, we should ask ourselves what purpose they are intended to serve and whether they will help achieve the aims indicated above. Besides, every tech implementation requires time and money.

Using what we already have

When seeking new tech solutions, we must also remember that most lawyers don’t fully exploit the tools that are already available. We should ask ourselves whether we can make better use of programs from the typical office suites for quicker drafting of documents or better communications with our clients.

A few years ago, Casey Flaherty from the legal department at KIA Motors in the US decided to check this using a specially created tool for testing the tech competencies of the law firms working with the company. The test covered basic skills in word processing, spreadsheets and .pdf files. The results differed dramatically. The task was designed to take about an hour, but it took some firms 25 minutes and some as long as 10 hours.

So is it worth investing in new tech solutions, for example to expedite communications with clients, when the same effect could be achieved if lawyers honed their skills at using the tools already at their disposal? And often the existing tools offer many unexploited capabilities.

Lawyers as a breed tend to take a conservative approach to their work. This presents a challenge for managing the change from implementing new tech tools among lawyers, particularly when habits engrained over the years must be retooled.

The revolution is yet to come

In the long run, the impact of LegalTech on the legal services market cannot be ignored. IT has begun to truly alter how legal services are delivered in many areas. But a major breakthrough has not yet occurred. New solutions are increasingly being tried, and thoroughly assimilated in certain niche areas, but not yet employed so broadly that we can say there is a real change in how the entire market operates. We should make good use of the time remaining until such a breakthrough comes, to rethink how we deliver legal services and how technology can help. Fortunately for human lawyers, clients don’t seem eager to hire robots as legal advisers—at least not for now. But we certainly need to keep our finger on the pulse to ensure that the way we deliver legal services continues to meet clients’ expectations and keeps pace with reality as it evolves under the huge influence of technological development.

 

Tomasz Zalewski is the Founder of LegalTech Polska Foundation

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