How technology is affecting the legal community

CXO THOUGHTS
czegers How technology is affecting the legal community
Christopher Zegers, Chief Information Officer, Lowenstein Sandler

As CIO of law firms since the late 20th Century, I have spent more time objecting, motioning, and pleading than you can imagine. I work for people trained specifically to find holes in your beliefs, positions, and strategies. They are also trained to make rules and have successfully kept themselves free of most. They are governed by ethical obligations, not regulated like other industries. Complement this with their lack of business management training and you have a $160-billion dollar industry run by autonomous-leaning serial skeptics. Super fun times!

All joking aside, I work for law firms because I appreciate autonomy and healthy skepticism. CIO’s need a devil’s advocate and lawyers’ autonomous nature translates to less committees and more agility. They have to turn on a dime at a client’s request and technology is playing an ever-increasing role in these requests. Clients are asking for two distinct service guarantees – 1) efficient and predictable use of billable time, resources, and previous work product; the right work for the right price, and 2) data isolation and security. Clients are getting more savvy with their expectations and comparing notes on cost and service through e-billing companies and associations like the Corporate Legal Operations Consortium (CLOC.)

These pressures on law firms brought on by the abundance of available data has been referred to as the Uberization of legal services. Legal work is being better documented and commoditized, much to the shagrin of law firms, which still primarily bill by the hour. The challenge to the billable hour is more cultural than technical. Other professional services companies, particularly the big 5, built process improvement into their culture. They paved the way for project management, process routinization and automation. Other than the largest, law firms have typically not brought in MBA’s and “non-lawyers” to manage business operations; they select internal attorneys with the will to take a leadership role. Nor have many developed project management offices.

Many law firms are addressing these challenges by tackling pricing first. Up to now it takes people to curate information useful to efficient pricing (and project management.) There is a hope that AI will solve the resource problem that has kept many innovative efforts from coming to fruition.

A “matter” constitutes specific work done for a client, ie. an IPO. AI matter tracking is currently based on time entry narratives and document metadata analysis. Vendors have developed machine-learning and natural language processing algorithms to analyze time records and documents, and develop taxonomies of what work constitutes a matter. Coupling a normalized set of activity categories of a matter with details about the client and the attorneys working on the matter yields a better understanding of the type of work performed, by whom, and for whom. This in turn provides baselines for pricing future work, and identifies outlier matters that may not be properly staffed for maximum efficiency and client value.

Vendors are developing pricing modules which use the experience data generated above to predict costs of future matters, and model changes to cost based on changing variables. Once firms benefit from consistent matter phases and tasks realized by their analysis, matter tasks can be integrated into workflow that efficiently guides attorneys and staff through a matter, and alerts designees of when matter activities deviate from the norm, thereby reducing the risk of poorly-managed matters and ensuring the right people are working on the right components of the matter.

Clients also expect law firms to increase the use of data analytics to know their clients and their clients’ business better. Many law firms rely on email alerts to stay informed of their clients’ activities and industries. These alerts include court filings which their client may not be aware of yet, giving them the opportunity to deliver the typically bad news and offer of assistance.

In addition to meeting client expectations with respect to pricing and service, law firm are looking to AI to support strategic and operational endeavours, including attorney hiring and business development. Firms are pursuing opportunities to be more efficient with their internal operations, as well as ways in which they can better serve their clients. Specialized practice groups are utilizing case analytics for developing case and settlement strategies, and predicting future outcomes based on past results. Other groups are pursuing contract analyses aimed at quickly surfacing issues in contracts and offering strategies for improving negotiation points in contracts.

To garner interest in improving attorney productivity (aka herding cats), many firms are developing “Hackathons” and “Innovation Labs” to introduce attorneys to emerging technologies and processes that leverage technology to improve client service. There is undoubtedly a seismic shift taking place in the legal sector and it is being driven by client demand and emerging technologies. The opportunities are great and CIO’s have a critical role in effecting this change.