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Lawyers talk a lot about technology – but how many are walking the talk?

26 Apr 2024

| Author: Reweti Kohere

Lawyers are talking-up the benefits technology and innovation but is much actual disruption happening within the profession?

The answer is a resounding ‘no’, according to the experts and there’s a raft of reasons: an entrenched business model centred on billable hours that doesn’t incentivise lawyers to innovate in order to offer a more responsive service; risk-averse lawyers reluctant to be first-movers on new technologies and work practices or too gun-shy to try again; and poorly tailored products and solutions sold by tech companies that fail to understand the legal profession’s regulatory environment.

But the sluggish uptake of innovation might have grave consequences for the very existence of some law firms which will be left behind or outplayed by outsiders. “Law firms that don’t innovate will not be part of the conversation in 10 years,” says Steven Moe, a partner at Christchurch-based firm Parry Field Lawyers.

Innovation – in technology, culture and work practices – is helping to reduce the time and cost of providing legal services and to maintain or improve its quality. A glance at this year’s LawFest, a legal innovation and technology conference, shows at least 40 companies and organisations selling law firms and in-house legal teams the “latest and greatest” innovative solutions. In a recent move that hit headlines, the only fully New Zealand-owned mid-tier legal practice-management software company, OneLaw, announced a major investment by technology firm Stratos Technology Partners to position the business at the forefront of innovation in the legal industry.

But for all the progress being made, innovation in the legal profession is still “nice marketing-speak”, says Moe, who questions how much of a foothold it has gained. “There’s a lot of companies and talk about it, but I’m not sure there are many where it’s actually changing hugely the way things have always been done.”

LawFest organiser Andrew King describes the extent of innovation as mixed. Some firms are making considerable change, he says, while others haven’t moved too far away from the traditional partnership model as there’s not much incentive to do so “because, in a lot of ways, they’re still getting paid”.

Antonia Modkova, director of IP and innovation at AI company Soul Machines, is frank: the extent of technological innovation is “pretty low”, she says, the result of New Zealand’s poor productivity across industries – one of the worst among OECD countries – and the legal profession’s inherent conservatism.

Not much has changed in the more than 10 years since her first job as a junior at a law firm, where she was “absolutely horrified” at the number of routine tasks she was paid to do. “Ten years later, my sense is that in a lot of law firms in New Zealand, a lot of routine work remains done by humans and hasn’t been automated.”

 

Burden of proof

Innovation is “stuck”, says Lloyd Gallagher, managing partner of Gallagher & Co Consultants. While many large tech businesses are trying to pick up legal industry work because it’s lucrative, their products aren’t changing the way that lawyers practise or do business or improving upon the solutions they already have, he says.

Part of this is the prescriptive regulatory environment of lawyers, he says. Innovation takes time to understand and a regulator is bringing itself up to speed at the same time as users, meaning the burden of proving a tech solution doesn’t contravene the rules is much greater. The burden may be on lawyers, but the solution’s provider “should be providing that proof to take that weight off the law firms”, says Gallagher, who is also the convenor of The Law Association’s Technology & Law committee.

“People have stuck with the status quo and [tech] firms have marketed purely to that status quo…But that, in itself, helps to stagnate innovation because you’ve got people rushing to a product or solution not fully understanding what the actual requirements of that are.”

 

Roadblocks

The regulations, themselves, aren’t the problem though. “It’s the organisations trying to provide a service to people who are under the regulation, that is the problem,” Gallagher says. In his experience, tech companies should start with the regulations covering the industry they are selling to and with which their product must comply, create a compliance process and then package it for that particular industry.

The stumbling block, in his view, is that the tech company often hasn’t done its homework on the industry. The result is an incomplete service from suppliers who are trying to make a solution, designed for all industries, fit a single industry, he says, “instead of trying to create a solution that’s dedicated to the jurisdiction they’re going into”.

The risk is amplified for lawyers, a profession that trades on its inherent trustworthiness and is necessarily held to a higher standard of scrutiny. “The level of trust for what we do means we have to take that extraordinary step to make sure that whoever’s supplying us the systems [has followed] a standard process,” Gallagher says, adding that innovation in some of these areas is harder because the risk increases. “If it’s a brand-new technology, such as AI, then the risk of cybersecurity attacks or information being mishandled is massive because you don’t know yet. It’s untested technology.”

Moe, a member of The Law Association’s Technology & Law committee, says the legal profession’s mentality of “if it ain’t broke, don’t fix it” accompanies its law school training in identifying and mitigating risk. “Our framework of being educated is naturally directed toward a conservative bent.” The practice of billable units is enduring. “There’s inherent conflict in that: the longer it takes us to do things, the more we can charge,” he says. “So there’s a lack of desire, in some ways, to necessarily be more efficient. For some lawyers, it would be ‘Let’s keep the system as it is because it’s working well for us’.”

 

Succession

Older generations of partners might not choose to invest in innovation where it won’t benefit them, Moe says. “If you’re 60 years old and you’re going to be retiring in the next five years, why would you be leading innovation unless you had a bigger vision of what your law firm was there for? It’s a different mindset.”

Good succession plans would produce future generations of partners who will be more attuned to the fast pace of technological development. “Even the next generation coming through now has probably used AI during their legal studies and will be much more familiar with the tools and what’s available, how it works,” Moe says. “If you’re willing to listen to them, they could actually help you to naturally transition to, [and] integrate in, the tools.”

The partnership model doesn’t help. King says that older generations of partners who are looking to “sell up, move on, cash in” need firms that someone wants to take forward. A “worldpasses-by” type of law firm that hasn’t invested in innovation won’t appeal to the next generation because it knows it will be responsible for making the change needed to stay in business, he says. “It’s a bit like doing a house up – you want to make it attractive for sale.”

Some comfort can be taken in the “Facebook-age or Google” generations of partners who see where the future is headed. “I’m not saying every single one of those is going to throw all the bathwater out, but they do see where the opportunities lie,” King says. “The traditional way of working – having a lot of support and admin staff doing a lot of routine type of work – is no longer going to be the way forward.”

King adds that the profession’s inherent conservatism often means it resists change and is slow to adopt. As the organiser of LawFest, King says there weren’t many New Zealand success stories, even a few years ago. While that’s changed as people have started to share their experiences with technology, perfectionist lawyers will also have to accept that imperfection is typical of transformational change.

But in Amy Kingston-Turner’s view, the slowness with which lawyers embrace change is “because, inherently, the law changes slowly”. The commercial director of Source Legal says the law must move inch-by-inch as “it shouldn’t change with every fad”. A balance must be struck with innovation, though. “It’s too slow right now and there should be more change than there is. But I can also see why there’s perhaps a reluctance,” says Kingston-Turner, a member of The Law Association’s Technology & Law committee. “Lawyers almost act as the handbrake in a lot of industries and they are slow to change their own industry.”

 

The four Ps

Modkova names the roadblocks as the “four Ps”: pretentiousness, pessimism, protectionism and passiveness.

Lawyers can be pretentious by thinking automation isn’t possible for their “far too important and complicated” job, she says. But this belief is misleading. While some “extreme” aspects of their role can’t be done by technology, “it doesn’t mean many of the day-to-day challenges that lawyers face couldn’t be automated”.

Lawyers accept that technology will automate aspects of their role but their bottom lines will take a hit. “This appears to be lawyers who still hold strongly to the billable hour,” she says. “If technology can make their jobs happen a lot faster, they’ll make less money by charging fewer billable hours.”

Protectionism often surfaces out of concern for the profession’s reputation and the quality of legal services. Modkova explains it’s the belief that “you always need that human oversight because it will always be superior to a machine”. And passiveness is where a lack of time, money, confidence or knowledge obstructs innovation, despite lawyers recognising the good that technology can bring to their services.

 

Many to one

Modkova has ready counterarguments for all four roadblocks. On pretentiousness, she agrees that, in outperforming humans on time, accuracy or any other measure, technology can be effective at humbling humans. “The majority of car drivers consider their driving skills to be above average. There’s a similar kind of superiority bias in lawyers,” she says. In one survey, two-thirds of Americans thought robots would replace more than half of human jobs within the next 50 years. However, in the same survey, only 80% of them thought their job was incapable of automation. “Applied to lawyers, it would be even higher, I’m sure.”

Instead of selling their time, pessimistic lawyers could shift to selling, for example, their intellectual property. Unlike the billable hour, Modkova says, intellectual property scales and can empower lawyers to service clients in a “many-to-one” fashion instead of one-to-one. Moreover, the potential market for legal services is far from saturated. “There is an untapped goldmine of people who simply can’t afford legal advice under the current offerings. But if there were cheaper alternatives, they would be willing to pay – and they do have a need for those legal services,” she says, adding that technology “will 100 per cent” improve the longstanding access-to-justice issues plaguing the administration of justice.

Modkova warns that “if the legal profession isn’t the one to adopt that technology, it’s going to happen without lawyers. It’s going to bypass lawyers”. Overseas, “robot lawyer” chatbot DoNotPay – founded in 2015 to challenge parking tickets, and which has moved on to automating other legal matters such as job discrimination complaints and bankruptcy filings – has started offering direct-to-consumer legal services. While it’s facing pushback and a spate of legal challenges, including on whether the bot constitutes an illegal practice of law, DoNotPay earlier this year became one of the first private, venture-backed companies to pay a dividend to its shareholders. Other outsiders could appear closer to home.

On passiveness, Modkova says the latest breakthroughs in generative AI, such as ChatGPT, will become more ingrained within word processing software that law firms use. The challenge for firms will then be setting clear expectations on how lawyers can and should make use of the technology in a safe, effective way while complying with privacy, confidentiality, privilege and other professional obligations.

Lawyers’ protectionism could be shifted by pitting the technology against a lawyer to prove its efficiency and skill. “There’s a reason why it’s called ‘human error’ because human brains are not evolved to necessarily excel at those repetitive tasks. It’s a no-brainer then to use technology for the aspects where humans are inferior to technology,” Modkova says, warning that lawyers could face a future where not using it could invoke professional liability.

“That’s already beginning to be a trend in the US where attorneys who lack the competence to use eDiscovery might be subject to professional liability for not using the latest technology that is now standard in the US.” ■

 

Next week: how AI could kill the billable hour

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