ILTA: Innovation and the generation of legal services

International Legal Technology Association’s annual INSIGHT conference returned to London for its tenth year yesterday (12 November), drawing over three hundred IT professionals to its etc. venue in Bishopsgate.

One of the best-attended sessions of the morning looked at innovation and the new generation of legal services, led by a panel including Gadfa Management founder and former Allen & Overy chief information officer Gareth Ash; Berwin Leighton Paisner’s (BLP’s) head of strategic client technology Bruce Braude; BLP’s head of Asia and Hong Kong managing partner Bob Charlton; and Baker Donelson Bearman Caldwell & Berkowitz’ knowledge management officer Meredith Williams.

Baker Donelson each year sets aside over $1.5m to invest in legal ideas generated by its lawyers. The Am Law 100 firm encourages teams of lawyers to compete to come up with the best ideas, which will be invested in and turned into a live product or solution.

Williams said: “Competition takes over and they all want to be the winner.”

Baker Donelson has set up its own subsidiary as a vehicle to work on and invest in new ideas, partnering with technology companies such as Neota Logic on larger ventures. This year the firm had 200 ideas submitted and is working on 50 of them.

Lawyers are paid to work on innovation projects, which count towards their billable hours. If an idea is turned into a product that is sold on, 75% of their time is credited and they are paid a percentage of the sale price – regardless of whether they have a relationship with that client or not – after any outgoings are paid back to the venture fund, Williams said.

On top of its existing subsidiary, Baker Donelson has just launched a second subsidiary, called Legal Shift, which will focus on law department process streamlining and is in the process of appointing a chief executive officer. Legal Shift goes live in January.

The innovation culture at Baker Donelson started over a decade ago when one of its largest healthcare clients instructed it to do all of its work for a very competitive alternative pricing method, with Baker Donelson becoming the client’s national counsel.

Now lawyers at the firm have to be part of an innovation team to be considered for partnership and the top five innovative lawyers receive a bonus.

Elsewhere in the innovation session, Ash looked at how new and progressive technology is becoming more mainstream, while in the background organisations like CodeX – The Stanford Center for Legal Informatics is bringing together students, academics and lawyers working on tomorrow’s inventions that will be a game changer for the sector.

Becoming more mainstream is Brightleaf’s automated contract abstraction and analysis service – increasingly used in the due diligence process – while also gaining traction are litigation data mining company Lex Machina and RAVN, which recently signed BLP to its AI solution ACE. Ash said: “These are all bleeding into the mainstream and people are looking at what they can put together to differentiate themselves from the competition.”

Charlton, meanwhile, pinpointed a number of trends that are contributing to increased competition within the legal market, such as the shift in power to the client and a market that is over-lawyered, all leading to a downward pressure on fees. This is exacerbated by increased competition from the Big Four accountancy firms as well as legal process outsourcers.

Will ‘normal’ conditions return? The most likely answer is ‘no’, Charlton said. “We’re at a junction where we have an exciting choice to react positively and move forward or not react and slowly crash and burn. We have to be brave and face up to and overcome the changes posed by our new market environment,” he said, adding, “technology must be seen as a driver of differentiation.”

Braude identified a trend towards clients asking for increased management information and analytics and the fact that clients are demanding both lower costs and innovative, concrete solutions.

The legal process needs to be broken down and Braude observed: “Even high end work can be deconstructed and delivered differently.”

ILTA’s keynote speech was delivered on managing innovation in business by Peter Hiscocks, senior faculty in management practice at Cambridge Judge Business School, while other sessions looked at artificial intelligence, cybersecurity, e-disclosure, data analytics and cloud services for legal.