The Death of Legal Tech May Be Lawyers

The first time I spoke to my mentor about legal tech, he made a funny face and went quiet. He seemed to think about the topic, which he usually did not.

“We are not really there yet.”

That was his conclusion. I remember it clearly because his words never seemed to disappear; they were just left hanging between us. They are a big reason why I decided to write my thesis about the taxation of data and why I always found legal tech exciting: there is always room for improvement.

He never answered what legal tech is supposed to be. The discussion trailed off into something else; we discussed world politics and how to make the perfect breakfast, something that he and I are both very passionate about.

Looking back, I realise that he is very, very right.

The biggest issue with legal tech today is that programmers and the tech-savvy rarely find themselves familiar with the law, whereas legal professionals can hardly imagine how programming works and what technology can do. Artificial intelligence this, smart contracts that. Outside of the usual buzzwords, many legal technology solutions do not even leave the Word or PDF format.

This is also a primary reason why lawyers may become the death of legal tech: slow adoption rates and when finally attempting to, the solution is never really “there”.

If only a minority of legal practitioners understands the tech, very few meaningful legal tech solutions will be created.

However, to figure out what meaningful legal tech could be, it is necessary to take a look at the existing solutions and the future role of legal advisers.

Your Tech Is Actually Not Very Smart

You don’t have to look to many other fields to become saddened by the lack of innovation in the legal industry. While many smart and innovative solutions do exist, actual transformation has largely been stifled by the profit per partner business models in law firms.

I wonder how many young lawyers have been met with an unwillingness to develop new ideas and processes because “that’s how we have always done it and it’s the best way”. It is understandable because the decision-makers are making money based on the status quo.

The model works for what it is intended for, but digital transformation suffers because the focus is short term benefits. A big latent pain is building, but very few are seeing it.

Lacking long term strategies or expertise, technology solutions developed by law firms will be limited in functionality. The impact of these limitations is already showing:

When you imagine legal tech, do you think of either (1) AI-powered document/case review; (2) document automation; or (3) contract management or compliance tools (KYC or GDPR)?

Arguably, only one of the above can be considered an intelligent solution that provides value that can’t be replicated by a Word document or Excel sheet with macros. When legal tech is not prioritised, we can’t expect truly disruptive services to appear.

And in the lack hereof, no actual digital transformation will happen.

This may also explain why even tech-interested law firms are hesitant to make an actual move and implement more digital services. Many legal tech solutions are merely creating operational value by minimising repeating tasks on an operational level. Not a lot of legal tech services have drastically changed the way we provide advice with a high degree of client value. This waters down the value proposition.

You may be able to draft company documents in 3 minutes, but it still requires the lawyer to provide the full input — and it adds a minimum production threshold to warrant extra costs. This makes simple solutions difficult to sell.

It’s a vicious circle: the lack of interest leads to unambitious products, which in turn leads to a lack of interest.

But why have we not seen any complex legal problem-solvers — even from those who are willing to invest?

We all have an immensely strong bias when it comes to our own industries. Many lawyers would argue that their job is so complex that an algorithm could not replace them. As such, there is no incentive to develop. The should-be minds behind the solutions do not even believe them to be feasible.

You may object: “But… there are so many nuances in my field, and I really don’t see how software could ever analyse or solve that.”

I would dare to say that this statement is wrong.

The Market Is Changing

At the same time, the market is still moving forward. It does not care if the lawyers are moving with it. Legal fees are being fixed/capped and forced into a steep downwards trend, while the clients are already used to getting 40-page slide decks from their accountant or management consultant with beautiful, minimalist graphics — and for 30% less and with full risk coverage.

Further, we are currently seeing associates on all levels fleeing the corporate ship to work small, smart, and flexibly. It has truly been a long year. As a consequence, there has been a substantial rise of alternative legal service providers (“ALSP”) and gig economy platforms for legal services.

For any onlooker, it should be clear that the “old” business model is challenged, despite making its partners millions every year. To argue against this would be incredibly short-sighted. Any law firm partner who fails to see this will lead his law firm to its demise.

It should go without saying that investment in future tech solutions is key to ensure growth. But such a focus will — in the short term — damage the key performance metric of the business model: partner profit.

This emphasises a very difficult question. Which of the following is the most important way forward for the legal industry: profit ratio optimisation or value creation? Could we not have both?

There is without a doubt (still) an immense and cashable value in optimising the amount of time spent per matter. Obviously, any stressed lawyer, behind on billable hours, would mostly focus on legal tech tools that can optimise their existing and very specific workflows. But that is a mere quick-fix in a changing marketplace that is becoming digital and global.

I am not arguing for a black/white focus on either. The real value proposition of legal tech is a combination. If we want legal tech to become a disruptive and meaningful change, we have to start actively looking for it.

And the best place to look should be ourselves.

The future role

The goal of legal tech is not to make lawyers obsolete. However, being a lawyer is no longer just being a legal robot behind a desk. Lawyers are increasingly managing human emotions and connections rather than sections and subsections.

In the future, legal tech should — and will — provide smaller firms with the means to compete with bigger firms and meet the same speed and level of advisory quality. In a time where smaller boutique law firms are succeeding, no law firm is “too large to fail”.

While many larger law firms have woken up and started legal tech departments or digital consultancy entities, many have still forgotten to focus on what I would argue is the most important aspect of modern legal tech: it should be for the client, not the adviser.

The role of the great lawyer is no longer just providing correct advice, but to be a client-centric legal process and project manager. Legal tech should facilitate this.

“There”

To be honest, I do not think that my mentor knew where technology is supposed to take the legal industry. His statement should be understood in this context.

But what is the next step?

It is often mentioned that legal professionals should learn how to code; at least to understand the building blocks of the modern world.

However, while it would undoubtedly be beneficial to any adviser to learn how to code, the best way to drive meaningful technological changes in the legal and financial industries may instead be a focus on the much broader issue that such advisers lack a general understanding of technology.

Technology will determine the success of legal advisers in the future.

My point is that we as legal professionals need to dare to take the next step. Create solutions for the new role of the legal adviser. Look beyond your Word document, your smart contracts, your fancy buzzwords.

What if you could solve legal issues instantly while your client described them to you? Or with collective intelligence, tapping into an unlimited and scalable source of legal knowledge that alerts you of future risks in advice or strategy?

Maybe it’s time to rethink the business model.

About

My name is Christian, I am a Master of Laws (LL.M.) from the University of Copenhagen and Co-Founder of Juristic. I am specialised in legal tech solutions and corporate tax — what a mix. When I am not boring (my partner’s words), I love tennis, running, and playing music.