In May LegalTrek organized the inaugural Legal Edge conference, with particular focus on the business of law and business innovations in the legal industry.
Rather than discussing vague and distant challenges that the legal profession may face in future, the conference explored topics relevant today. Speakers presented best practice methods to improve (in-house) legal teams’ effectiveness and law firm business – today.
Some of the topics were:
- Practical use of AI and Blockchain;
- Innovating in big systems;
- NewLaw and a non-traditional take on legal service business;
- Agile transformation;
- What can law firms learn from startups.
In addition to expert speakers, the conference convened two panels comprising some of the most prominent law firms and in-house legal experts.
One panel focused on clients’ perspectives. Leading General Counsels and Counsels shared their experience of working with law firms. They were happy to suggest how law firms can improve clients’ experience in service delivery.
The second panel discussed business innovation from a law firm’s point of view. Law firm partners shared insights on what clients expect from firms and what (new) best practices will be important in future.
Venue and audience of Legal Edge 2017
The Case for Innovation in Law
The day started with keynote speech by Dr. Hariolf Wenzler’s, Chief Strategy Officer D/A Baker&McKenzie. His presentation “The Case for Innovation in Law” started off by revisiting examples of innovation from the not so distant past. Electric car manufacturers, smartphone producers, companies like Youtube, Spotify, and Amazon were just some examples cited of how true innovation often seems counter-intuitive.
Dr. Hariolf Wenzler, Case for Innovation in Law
This makes innovation particularly difficult for lawyers to grasp, he thought, bearing in mind their traditionally conservative and risk-averse outlook.
Innovation is not easy, Hariolf pointed out, even without entrenched attitudes. For example, for innovation to take place within a legal department, in-house counsels should usually consider many different factors.
To start with, they must decide which technology they feel will be most useful. Next, they need to estimate how much to invest, and how to “sell” this necessity to the higher-ups in their structure. Furthermore, after in-house counsels overcome all these hurdles, they are met with the ultimate challenge – change management and adoption.
— Joanna Goodman (@JoannaMG22) May 18, 2017
Hariolf emphasized that many people often identify innovation with mere technology adoption – that is simply not the case. True innovation comes from having your people and organization think differently and work differently. In Hariolf’s words, we need lawyers to have more entrepreneurial spirit, and not be afraid of trying new approaches in legal service delivery.
Innovation in the legal business does not have to be robust, or scary. Sometimes small steps can be truly innovative. One example of a seemingly small, yet high impact innovation, is how lawyers and law firms now work with their clients.
Nowadays, boardroom meetings are the norm for Biglaw when meeting clients. However, we note that this is already changing, as fancy office suites are replaced by interactive co-working spaces. Additionally, client-attorney work will be more interactive using common project boards and creative spaces. This is already taking place.
Hariolf likened current Baker McKenzie’s current model to a Pyramid (left) and presented Baker McKenzie’s roadmap for transformation: a plan to move from the traditional Pyramid model to a modern Rocket delivery model.
However, he emphasized that there are already outsourcing initiatives and offshore centres that are breaking into the traditional structure. The future model – the Rocket – will have a much more narrow Pyramid base. However, it will be enhanced by technology and technically competent staff, with Project Management competency.
Finally, Hariolf pinpointed three major challenges that any innovator faces:- money; people; growth.
The money challenge stands for a fact – Biglaw earnings are still good enough for them not to be worried for their future too much. Good people are always difficult to come by and indispensable for organizations needing to maintain growth (especially if such growth needs to be fuelled by taking risks).
Dr. Wenzler (CSO Baker McKenzie) posits that future legal industry will be the sale of products with ancillary services. #legaledge
— Elizatech (@FreelanceLawIE) May 18, 2017
Alex Hamilton, How and Why Radient Law started
Radiant Law – the Origin Story
Everyone seems to be enjoying origin stories nowadays, and we were happy to have Alex Hamilton tell us why, and how, he got Radiant Law started. It was a touching story, with occasional “in hindsight” moments – every self-made entrepreneur is bound to have those.
When he was starting out, Alex said that he had a vision of a modern organization – not necessarily a law firm – that would provide legal services in a way that is very different from the traditional one. At the very start, he envisaged a combination of a law firm, an LPO and a tech company.
— Alex Hamilton (@AlexHamiltonRad) May 19, 2017
Alex went on to explain what is basically the single most important differentiator between Radiant Law and traditional law firms. Radiant Law is not afraid of experimenting, and making mistakes along the way. That does not, however, mean they would rush straight into a risky project without careful consideration.
Rather, they have created their unique “space”, where it is OK to try new things, without the fear of failure. In Alex’s view, this is crucial for any organization that aims to be innovative. It is OK to fail, as long as you do so within a controllable environment.
Essentially, Alex suggested that each organization needs to have their own “lab”, with well-defined principles, procedures, and a means to capture all the know-how (including lessons drawn from failures).
— Tech&Law Israel (@legaltechIL) May 18, 2017
Once you have your own “lab” – your own unique process that helps you build-up your own know-how, you will have no reason to be afraid if someone copies what you do. Anyone can copy most new things. What can’t be copied is the experience, the trial-and-error, and the whole process that encourages fresh know-how.
Finally, an almost subliminal message that Alex wanted to imprint on the audience was the principle of diminishing value, and how this affects how clients create their budgets.
This should certainly also be a part of how law firms do their service pricing, since it will:-
- Provide a clear understanding of clients’ business goals in any given case; and
- Create opportunities for lawyers to earn larger margins in certain situations.
Robot Lawyers in action
Joanna Goodman, author of Robots in Law: How Artificial Intelligence is Transforming Legal Services, followed with a talk on practical application of AI. She immediately pointed that Artificial Intelligence is frequently pictured inaccurately, which may be contributing to all the noise around it.
AI has its place with legal teams even today, but it is important to pinpoint use cases and possible scope of application. In that sense, Joanna drew a line between General AI and Narrow AI.
General AI is a system that “thinks like a human” and is able to build self-executive systems in response to inquiries from human users. On the other hand, Narrow AI is much more specific, and focused on niche-areas and narrow problems.
Joanna Goodman, Practical AI for Lawyers
Most AI systems are narrow, by their nature. Some of the product categories where AI is present in the legal industry are Expertise Automation; Legal Research; Prediction; Contract Analytics; and Electronic Discovery.
AI has certainly had a big impact in the industry, since, in Joanna’s words, AI is consistent (as opposed to humans) and is not prone to error. Additionally, AI is scalable and able to take on a high volume of standardized work.
— Joanna Goodman (@JoannaMG22) May 18, 2017
AI’s impact can perhaps be best shown by the fact that AI has already helped introduce new roles within companies. For example:- Chief Data Officer; Legal Engineer; Head of Innovation; etc.
However, the question that lawyers seem to find most interesting is – will AI disrupt, or will it help the legal industry evolve? There are different views on that, but one thing is certain – many law firms are using modern technology to assist in legal service delivery.
Whilst AI may disrupt certain pieces of the business model, it will likely end up assisting law firms. This view is also shared by other pundits in the legal industry.
Joanna’s final remarks were about law firms’ strategic choices, when faced with AI and other new technology. She likened this choice to the infamous “blue pill vs red pill” choice.
In Joanna’s words, the red pill would mean – to truly take an innovator’s path and experiment with technology, before most people. The red pill will likely mean you are a true legal innovator, ahead of the curve. However, this brings some risk and an uncertain ROI, until the cycle is complete.
The Blue pill, however, means a not so radical approach, but rather one of continuous improvement. Instead of being the first mover, the Blue pill will mean you are a fast follower, while taking care that all your choices have a good risk / ROI ratio.
Blockchain and its application in Law
Florian Glatz, lawyer and Blockchain-versed coder, presented his insights on Blockchain, and what we can expect next from that technology, within the legal space.
Probably one of the biggest implications of Blockchain is that it will remove the need of any intermediary in transactions. In lieu of central clearing organizations, Blockchain will enable peer-to-peer clearing, which will affect many industry sectors today, including legal.
Florian Glatz, Blockchain: A New Foundational Technology in Law?
At the very least, it will certainly affect how clients conduct their business, and, by extension, what services lawyers provide to clients. After all, Blockchain has the potential to become a backbone for trading commodities – whether physical goods, virtual goods, or trading rights.
But perhaps the most direct relation between Blockchain technology and law are so-called “smart contracts”.
— Alex Hamilton (@AlexHamiltonRad) May 18, 2017
Smart contracts are Blockchain-based constructs that can self-execute certain transactions based on a pre-defined set of rules. A good example of a smart contract is a script that is able to procure, and pay for, fuel on behalf of a self-driving car unit, without human intervention (still a concept, however, one that is being carefully considered).
The advantage of smart contracts is that they can automatically execute contract terms, are autonomous, and provide a good framework for high volume standardized transactions.
However, there are limitations to smart contracts in their current state. Namely, they can still only operate within the Blockchain framework. Likewise, the code still cannot capture dynamics of real world transactions, yet.
Florian ended his presentation by touching on regulatory issues related to Blockchain. Civil Procedure codes must recognize Blockchain-based timestamps. Additionally, accepting digital signatures, as used within the Blockchain infrastructure, would further facilitate its adoption.
However, the true next big step, and transformation of how our society works, will happen once important institutions and civil activities are powered by Blockchain. In that sense, think of, for example, the European Central Bank operating on Blockchain. Or, equally as impactful, voting for public officials via Blockchain, as opposed to contemporary, dated methods.
Dr. Sascha Theissen, answering questions after his great presentation of Agile and Kanban for Legal Teams
Agile Project Management and Transformation
Dr. Sascha Theissen emphasised right from the start that we live in times of unprecedented change. He reflected on JP Morgan’s software that can complete in mere seconds, a task that once took lawyers around 360,000 hours.
So, the recurring question is how to remain relevant and indispensable in times like this? By constantly increasing your capacity to deliver excellent solutions, and a great client experience, of course. And Sascha has a tested method just for that.
Prior to moving forward with any project management methods, Sascha pointed out, it is crucial that lawyers get rid of the “silo” mentality, and start communicating more with one another. This will also help them understand client demands better, and reduce back-and-forths.
Sascha presented Kanban as a framework for ongoing evolution of legal teams. He described his experience of joining a big publisher as their General Counsel. He was faced with a “you can do whatever you want, as long you do not change things” kind of a mentality.
Kanban enabled him to do exactly that – to introduce a seamless transition, without making huge upside-down changes, that would disrupt ongoing work and agitate their team.
In Sascha’s words, Kanban is all about making work transparent. Doing so breaks any “silos” and focuses the discussion on how the team can make results better. Kanban has helped Sascha’s team deliver more results, with the same capacity as before. Sascha even mentioned that after a while, his team discovered that their clients actually became bottlenecks in their legal service process.
Sascha and his team used the extra time, that came as a result of better organization, to reflect and do some design thinking. Consequently, they have started creating better legal products. Those, in turn, empowered his team to perform even better, and removed friction in the negotiation process with external parties.
Ivan Rasic, Art that must be managed as a Business
Legal Project Management Will Be Increasingly Important
After Sascha’s great and practical presentation on how Kanban helps legal teams self-organize, it was my turn to take the stage, and to give a broader perspective on why legal project management is important.
Innovations are truly great and all, but without understanding why law firms and/or in-house legal teams need them, we will not progress.
I opened my presentation by showing datasets from recent Thomson Reuters research. I focused on two questions – 1) why clients (in-house legal departments) are working less with law firms; and 2) those legal departments that still work with firms, how do they manage their legal costs?
A back-of-the-napkin conclusion here is that generally legal departments internalize lots of work. However, even when they decide to engage a law firm, they take good care to deal with those firms that demonstrate good budget and project management capacities.
With that out of the way, I presented some of the benefits of Kanban for lawyers as knowledge workers, namely:
What Can Law Firms and Lawyers Learn From Startups?
Ido Goldberg, legal tech consultant at Robus, had some thought-provoking tips for law firms. Coming from Israel – the “Startup Nation”, Ido feels technology startups actually have lots of useful suggestions that law firms can apply in their daily practice and for strategic thinking.
For starters, as Ido suggests, fast growing startups often consider how to self disrupt. That is, they constantly think about potential risks that can disrupt their business model, and put them out of business. Then, instead of waiting for someone else to come and think of that, they do it themselves. That way, Ido continues, successful startups are in a constant mode of evolution – by disrupting everything they do, and leaving very little to their competitors.
Ido Goldberg, What Law Firms Can Learn from Startups
A good example from Ido’s presentation is the Netflix vs Blockbuster case. Namely, once it became clear that Netflix’s growth was sustainable, Blockbuster was faced with the choice to maintain the status quo, or to disrupt their brick-and-mortar business model. Netflix accelerated their growth, Blockbuster went out of business.
And talking about Netflix – they did certain things which put much more pressure on their business – merely in order to grow faster. Namely, they switched their customers to lower pricing plans, and, at the same time, invested much more in high quality content, which increased their running costs. At the time, it hit their bottom line heavily, but they started winning more business as a result.
The only constant is change, Ido pointed out, so we might be as well be the ones who enact it.
However, as Ido further notes, disrupting your own business model might be too costly, and not many are ready to do it. So what is the next best thing, then? Be change-ready. There are certain things you can do,to be ready for changes.
— Sascha Theißen (@1digitalnative) May 18, 2017
For starters, make sure you hire professionals that enable your team to learn fast. Secondly – do not confine yourself to an echo-chamber. You may already network within legal professional chambers and memberships, but make sure you also connect with people from other industries, to keep new ideas coming along. Thirdly, make technological adjustments where needed.
Finally, the last point that lawyers can pick from startups? This may sound like a redundant piece of advice (it may even feel controversial). The one thing good startups always do right is to remain laser-focused on their clients and their needs.
Law firms and lawyers often claim to be client-centric (it is mentioned on so many law firm websites). However, startups must always make an effort to “go the extra mile”.
The success of a business model at a startup company depends on how well they understand their clients’ needs. It is a simple matter of survival – know your clients well, and you stand a chance of meeting those needs. Otherwise, it may lead to client frustration.
Legal Department’s Elevator Pitch
Karel Everaet, Creating In-house team for Ingram Micro
Sometimes, a legal department is viewed as a cost center within a company. However, Karel feels all in-house legal teams must answer – “What is it that you DO for the company?”.
Karel Everaet VP legal Ingram Micro (far from micro supply chain co) #legaledge legal: help co grow faster, sustainably, with fewer risks
— Elizatech (@FreelanceLawIE) May 18, 2017
Legal Departments are deeply rooted in a company’s business. By actively participating and helping with commercial contracts, mergers, joint ventures, etc. legal department professionals are facilitating growth of the company.
Further, and equally as important, legal departments keep the company, and its employees, out of trouble. It does so, not only by reacting when necessary, but also by enacting preventative policies.
Finally, there are traditional roles like litigation management, compliance and regulatory tasks, as well as helping other departments out when they are enacting their internal policies (e.g. Human Resources; Finance, etc.).
Karel then explained why Ingram Micro decided to consolidate their in-house legal operations, by forming regional centres, as well as why he feels so-called “shared legal services” have lots of potential to optimize operations.
Shared legal services, in Karel’s words, allow for greater specialization. Namely, it enables more experienced lawyers to move up the value pyramid and focus on high-value work. Low value work, on the other hand, may be outsourced or automated, to a certain extent (which should be a perpetual goal for every organization).
One innovation that Karel presented was their case for e-signing services., Karel’s legal department is using digital signing for many internal and external documents. In his words, that practice speeds up collecting necessary approvals, which, in turn, makes taking action much faster.
Clients panel: What do they expect from service providers?
Clients as Drivers of Change
Following the presentations, the first panel came on stage to discuss clients’ expectations of their legal service suppliers.
— Tech&Law Israel (@legaltechIL) May 18, 2017
The panellists confirmed from the very start that they in-source more of their work, and work less with law firms. Their reasons for doing so mostly revolved around:
- high-value work (i.e. not being willing to look for, or find, reliable expertise outside);
- high costs of certain outside services (or, rather the low perceived value of such work and high billable rates offered by law firms).
Panelists also agreed that, currently, the legal market is a buyers’ market, and had the overall impression that law firms could work on their attitude towards their clients.
As one of the panelists pointed out, their company was never even asked for feedback on legal services they received.
“We are always happy to provide feedback, and we make sure we do so – especially when we are unhappy with the service. But we have never been asked to do so, which is a huge opportunity (lost) to learn something new about their own client.” Other panelists also confirmed this was the case with their legal service providers.
When it came to innovation – the panelists shared some of their own internal practices that make their operations more efficient. However, they all agreed it is not always lawyers that slow down innovation (whether it in-house, or within law firms). Often, it is a regulatory problem that can prevent adopting certain solutions, technologies, or best practices.
The overall conclusion was that law firms as service providers could improve their relationship with clients – especially if they aim at winning more business back from in-house legal teams. And, if that means law firms should do something to innovate – so be it.
— Tech&Law Israel (@legaltechIL) May 18, 2017
What can Law Firms do to stay ahead in CEE & SEE Region?
Our final panel for the day gathered leaders of law firms that serve some of the most sophisticated clients in the region. We asked them to reflect on the subjects covered at the event, especially the comments of the previous (clients’) panel.
The panel confirmed that they feel the market has changed, and that there will be no way around certain technologies within the daily practice of lawyers and law firms. Blockchain will have a huge impact, however, it remains to be seen in what way that will affect legal services.
One of the panellists reflected on Legal Project Management and its rising role. “Lawyers today may get by without the structured approach, however this will no longer be the case. Technology, and increasingly relevant AI, are making lawyers rethink their practices.”
However, the panel also noted that AI is frequently overrated in the media. “Everyone is replaceable, but there are certain things good lawyers do which makes them indispensable to their clients. Every law firm and lawyer must understand what makes them genuinely valuable – and then double down on that.”
Speakers and organizers at Legal Edge conference
Impressions and what comes next
With those final thoughts we closed the first Legal Edge conference. The energy among attendees was high, and discussions during breaks were lively. Speakers were very happy to chat with all participants who were curious to learn more.
We were very excited to see such a high turnout and excitement, and are preparing follow-ups and surprises for all the legal geeks and those curious about the future of the legal profession.
See you next time at #LegalEdge!
— Alex Hamilton (@AlexHamiltonRad) May 18, 2017