The hidden stakes of technology adoption in the legal sector

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A few days ago, we shared on our LinkedIn Page, the blog “The Economics of Legal Tech”, written by Richard Tromans and published on www.artificiallawyer.com.

We found this article particularly interesting because it brought up the question of lawyers’ technological adoption under the angle of its economical/financial opportunity.

As mentioned by Richard Tromans “Why should any business, in the legal sector or otherwise, actively seek to make less money, to reduce profits, albeit in the name of greater efficiency?”. And Richard Tromans to note that “change is often dependent on clients who may push providers to cut costs and reduce inefficiency, which in turn drives two responses: the opportunistic response (…) and the defensive response” and that “The majority, as in all markets, take the defensive route and change to adhere to the evolving norm. This also undermines the economic discussion, as once you get to the point where you have to do something, it becomes a hygiene issue and the economic debate is now moot.”

“A race is engaged and law firms having already started their technological transformation will pick the low hanging fruits.”

We certainly can concur with this observation. And this is already illustrated in several domains (e.g. compliance, contract drafting, etc.), where the increased client pressure contributes to the shift from the traditional “hourly rates” model to upfront fees model. These domains – where it is more opportune to speak of realization (i.e. the number of hours having been effectively charged) – have already been heavily impacted by innovation.

However, the discussion must go beyond client pressure.

Indeed, in our view, there are other factors – equally important – justifying to favor an “opportunistic response”.

As stated in Wolters Kluwer 2019 Report The Future Ready Lawyer, “as we enter the next generation legal industry, some players have already a head start on the future, while other will need to catch up quickly to ensure continued relevance and resilience” and “The firms and the legal departments that are still in the planning phases of leveraging technology to a greater extent (…) will need to accelerate their transformation to keep pace”.

This is so true: a race is engaged and law firms having already started their technological transformation will pick the low hanging fruits.

This explains the massive – and constantly growing – investments in AI technological solutions made by international law firms: of course, not only they are convinced by the return on their investments but they are also consolidating if not growing their market shares…

Technological adoption is therefore a question of survival and ignoring this – or being too late – could have major impacts in terms of competitiveness.

“Without speaking of Gen-Z, talented young lawyers will spontaneously favor law firms allowing them to manage more efficiently ungrateful tasks (being supported by technology) and optimize their time on knowledgeable tasks or files.”

Why is it so? Because the new generation of technological solutions – built on artificial intelligence – is directly linked to the fundamentals of law firms dynamic. The equation is obvious: in the long-term, relevant AI technological investments will directly impact key elements (note: all of them being of course interrelated, impacting each other):

  1. The quality and creativity of law firms – Even if it certainly does not replace human brains, technology allows to ensure a deeper review of massive datasets, a deeper understanding of (hidden) links between documentation, a more complete perspective on (counter-)arguments and therefore efficiently assists in added-value functions. In the long term, this implies substantial gains of notoriety.
  2. The quality of deal/case flow – technology allows efficiency gains which not only reinforce the positive perception of the clients but also free up time to acquire new files at the detriment of under equipped law firms.
  3. The sustainability of know-how and expertise – technology allows to efficiently store and mine through the accumulated files, advises, documentation and hence transmits smoothly the know-how.
  4. The attraction of young talents – Without speaking of Gen-Z, talented young lawyers will spontaneously favor law firms allowing them to manage more efficiently ungrateful tasks (being supported by technology) and optimize their time on knowledgeable tasks or files.
  5. The retention of current talents – technology facilitates the management of cases, frees up time and energy, etc. important factors keeping teams’ motivation high for the long term.

Therefore, it seems crystal-clear that a too “defensive approach” could be disastrous as leading to a certain (but hidden in a first phase) erosion of these aspects and, hence, profitability.

That being said, at first view, the situation may appear challenging for some law firms (especially local and regional ones): beyond pricing issues, AI-solutions are constantly increasing in the market and with limited IT internalized-expertise, selection of the adequate ones is far to be evident.

“An immediate technological leap”

The excellent news is that a new generation of AI-solutions emerges on the market which,

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  1. Offer an immediate technological leap, with more powerful algorithmic approach (AI having deeply evolved over the last two years, some anterior solutions already appear as outdated),
  2. Are deployed super-rapidly (in a few hours) on any textual datasets without any configuration efforts (It not longer requires to proceed resources intensive and time consuming pre-training or to provide extensive lists of keywords),
  3. Are fully agile being generally deployed in a SAAS model (cloud-based) and being easily plugged-in with law firms’ systems without any disturbance.
  4. Are commercialized at much more affordable prices and following more flexible pricing cards (subscription or usage based model),
  5. Are testable in (free) pilot cases which provide great insights about their flexibility, force and pertinence.

This new wave significantly minimizes the financial risk taken by law firms and allows them to “catch up quickly to ensure continued relevance and resilience”.