Loading...
Each week, the Law.com Barometer newsletter, powered by the ALM Global Newsroom and Legalweek(year) 2021, brings you the trends, disruptions and shifts our reporters and editors are tracking through coverage spanning every beat and region across the ALM Global Newsroom. The micro-topic coverage will not only help you navigate the changing legal landscape, but also prepare you to discuss these shifts with thousands of legal leaders at our next virtual Legalweek(year) conference, happening on July 13-14. The upcoming sessions will cover a host of topics, including contracts and document automation, legal business strategies, e-discovery, litigation and data science and more. Click here to learn more and register for the most important virtual legal event of the year!
The Shift: Law Firm Tech Budgets Scrap “Next Big Thing” in Favor of the Basics
Especially after the pandemic, it's not too much of a leap in logic to picture the "Law Office of the Future," as brought to you by The Jetsons: robot receptions scanning never-ending databases of legal precedent to find the perfect evidence to take before the virtual court. To hear some tell it, these futuristic law firms are only a matter of time, the natural end of technological progression. But a closer look at law firm tech budgets tells a very different story.
Far from the promise of artificial intelligence-laden solutions, today's law firm tech budgets in reality look very, well, practical. For instance, the American Association of Law Libraries (AALL) found in a recent report that more than half (52%) of 229 law librarians surveyed said they didn’t have an AI/machine learning initiative and had no plans to start one—up from 42% who said the same just last year. A separate report from technology provider Mitratech backs that up, finding that a relatively common technology—collaboration platforms—was legal professionals' top priority in 2021, followed by “general adoption” and use of software, as well as data privacy and security.
“For so many firms and corporate legal departments, we went from being in the office to being at home, we had to pivot and look for opportunities for outreach and training,” AALL president and Hogan Lovells senior research services manager Emily Florio told Legaltech News. “Non-budget items like AI and machine learning got put on hold because we were told there was no room in the budget unless it was for day-to-day [tasks]. While there’s interest, we didn’t have the bandwidth and support to do so during the pandemic.”
The result is an atmosphere where big tech spending is taking a back seat for more mundane, everyday sorts of fixes. And law firms—and their clients—are largely OK with that.
The Conversation
It's not that attorneys can't change; in fact, the past year has proven the exact opposite. “Oftentimes we say that attorneys are not flexible, they’re not adaptable, they don’t want to adopt new technology. But I think this shows that people can if they need to,” Judith Flournoy, chief information officer at Kelley Drye & Warren, told Law.com.
The cracks that the pandemic revealed, however, weren't necessarily client-facing, bet-the-company types of issues. Instead, law firms found that small processes were the ones that needed changing, particularly those small issues that become exacerbated by working remotely.
“A lot of those back-office operations … you don’t always challenge how those functions are working because they’re typically so close together. [But] when truly moving to remote, now you start to see where there can be [problems],” noted Chris Cartrett, executive vice president at software provider Aderant.
Aderant's own survey of law firm professionals found their top challenge coming out of 2020 was "operational efficiency," with the percentage of those focusing on efficiency up 8% from 2019.
With this in mind, there remains skepticism about whether those big-ticket items are the way to go, as compared to smaller-scale projects that can better patch the cracks. To use an analogy, why buy a whole new fence when you can patch a few holes?
In practice, Thompson Hine managing partner Deborah Read explained to The American Lawyer that innovation to her means "changing our service delivery model to align with our clients’ needs for efficiency, predictability and transparency." That resulted in changes to four distinct areas: legal project management, process efficiency, flexible staffing, and value-based pricing.
"Lawyers are taught to turn over every stone, go down every avenue, and build the best Rolls-Royce they can. Clients don’t think that way," Read said. "They enter into a cost-benefit analysis all the time: 'For this ride, it’s not that far, we need something tailored to our business needs. We don’t want you to build a Rolls-Royce today.' And lawyers are not great at that."
The Significance
Still, the allure of the latest and greatest understandably looms. Law firms aren't in the business of being left behind. So could not investing in AI and similar technologies represent a missed opportunity for law firms, particularly ones that pride themselves on being innovative?
Perhaps not, at least from the client standpoint. As we've explored in a previous Barometer, corporate clients don't necessarily think about innovation the same way firms do. “There’s plenty of opportunities to explore these AI and analytical platforms,” explained Zack Hutto, an advisory director at Gartner. “[But] the real burning need for most legal departments is much more foundational in nature.” As a result, meeting client needs and focusing on that "low-hanging fruit" could pay immediate dividends for firms.
Instead, where law firms may see the negative results of eschewing forward-looking investment, strangely enough, may be more internal than external. “Delayed implementation and investment means a backlog of information that isn’t mined, managed or organized, which creates additional issues downstream around accountability and regulatory compliance," noted Mark Yacano, managing director of the transform advisory services group at Major, Lindsey & Africa.
It could also lead to downstream effects like potential avenues for innovation narrowing in the future, added Aaron Crews, chief data analytics officer at Littler Mendelson. “I think like anything, if you’re starting from behind in a race, you’re at a competitive and strategic disadvantage because the number of choices you have kind of narrows. … Your options are more constrained when you’re trying to catch up.”
The Information
Want to know more? Here's what we've discovered in the ALM Global Newsroom: COVID-19 Slowed Law Libraries' AI Initiatives. But the Technology Isn’t Going Away. The Pandemic Tech Hangover: How Law Firms' Tech Bill Is Coming Due Can Law Firms Innovate Remotely? Thompson Hine's Deborah Read Is Ready to Find Out Law Firms' Post-Pandemic Future: More Process Improvements and Cloud Transitions Law Firms, Clients Want to Automate Their Relationship, But Differ on Specifics Legal Organizations Plan to Spend on Workflow Automation, But Not D&I Tech General Counsel Reveal What They Really Think of Firms' Legal Tech Products Clients Want Innovative Firms. So Why Aren’t They Hiring Them? Corporate Legal Is Hungry for Tech Transformation—And Wants Firms to Help Lead Them For more information on the Legalweek(year) virtual experience, visit legalweekshow.com or follow @Legalweekshow and engage with #Legalweek21 and #Legalweekyear for updates. The Forecast
Particularly after a strong economic year from top firms, there's going to continue to be investment in aspirational legal technologies. There's too much potential to hit on something great; the chance to truly have a differentiator from peers is too great. Plus, there's an element of "Keeping Up with the Joneses": If your rival firm has a shiny new AI tool, sometimes it's worth checking out just in case.
More practically, though, those investments are going to increasingly be backed by business reasoning, by demonstrable ROI. It's what corporate clients are demanding; it's what law firm managing partners are learning to demand in turn. Combined with the pandemic proving that technology adoption is indeed possible, the result could be increased technology sourcing—but with a more informed, firmwide strategy behind it.
As Ana-Maria Norbury, director of global service design at Baker McKenzie, put it, clients have started to realize over the past year that leveraging technology is perhaps easier than they originally thought. Law firms have followed suit, creating areas of strategic thinking.
“This idea that we don’t have to do things the way that we’ve always done them I think opens the door to some of the other things that aren’t necessarily triggered by the pandemic, but people have more confidence—both internally [in firms] and on the client side,” she said.
Zach Warren is the editor-in-chief of Legaltech News. Based out of Minneapolis, Minnesota, Zach has been with LTN since 2015. He can be reached at zwarren@alm.com.
|
Loading...
Loading...