2016: Legal tech grows up
2016 has been something of a coming of age story for legal technology. The slightly irritating teenager that hung around waiting for an invite to the party has got rid of their spots and is starting to feel pretty damn cool. And hey, guess what, not only are they being invited to parties, but they are having to turn some down.
The past year has been a great number of things – frothy, over-excited, and a period when everything, but everything was labelled AI – but beneath the hyperbole, leading law firms have been making meaningful and in some cases systemic changes that are here to stay.
Driven by a perfect storm of the consumerisation of technology that has seen previously tech-incapable lawyers now seemingly never without a screen; great leaps by clients into technologies that are disrupting their own businesses and the wider market; and a huge downward pressure on law firm fees, technology has begun to take centre stage.
Andrew Brammer, IT and shared services director at Allen & Overy, which in its last strategy review 18 months ago, decided to increase its investment in IT by 5% says: “In 2016, legal technology investment has pushed its way up the strategic agenda. That’s happened because legal technology has developed so it’s increasingly well adapted to suit the needs of the legal market. Our clients have woken to the potential changes in the way law firms are developing and can provide legal services to them.”
He adds: “I was in our Frankfurt office recently and a partner spoke with me about how he sees technology enabling his practice. What we are seeing now is a pull from the business rather than a push.”
This is a story replicated and retold with varying degrees of surprise and delight across every major legal IT department. Mike Nolan, IT director at Berwin Leighton Paisner says: “For the last few years we’ve been working with professionals across the firm and making sure technology is on their agenda; that they understand our role and what we can deliver. This year we have found there’s a real appetite to talk to us and they really want to hear what we’ve got to say.
“We’re not the most innovative of sectors so it’s been interesting to see the amount of interest from our lawyers, clients and other firms – technology is now right at the top end of strategic consideration by many firms and it’s good to see because its driving the wider sector and there is a lot more coming into the market in terms of wider innovation.”
For CIOs and their senior team, this has increasingly meant they have, in many cases for the first time, genuine buy-in from senior management. Matt Peers, who in February 2015 joined Linklaters as director of information systems and strategy from Deloitte, says: “One of the key attractions for me of moving into law at the time I came into the industry was that we were entering a new era, when technology was taken more seriously in the legal world and we would have a bigger influence in the role it plays and the way it’s delivered – so far that has completely lived up to my expectation.”
While the legal sector undoubtedly does trail others, such as FinTech (EdTech, MedTech….) among CIOs and their teams, Peers has been impressed by the energy and job satisfaction within IT. He says: “People in the external market regard legal as being sleepy and behind the times but we just did a global engagement survey and 93% of the IT team said that the work they do is really challenging and interesting and that they are working with new technology that is advancing their career. I’m thrilled they feel that way.”
While this sense of excitement and engagement among both the tech team and the wider partnership is infinitely preferable to banging a drum no-one wants to listen to, it is not without its challenges. Where CIOs until only very recently tried to find innovative ways to slip legal tech into the agenda, they are now having to dampen unrealistic expectations as to what can be achieved in a legal context.
Furthermore, now that front end technologies are being adopted in a meaningful way, firms are having to give serious consideration to what that means for the traditional law firm model. Brammer says: “The challenge is how the legal industry responds to the pace of change. We all work in firms that are incredibly successful in certain ways and its now possible to work in different ways. What does that mean to the firm and how do we adapt? What does it mean in terms of how we train and develop our staff to maximise the opportunities of some of these technologies? This will be a bigger challenge for Allen & Overy and our entire industry for years to come and the firm that works out how to do it well will be successful and the firms that don’t will be less successful.”
These existential challenges come on top of one of the most turbulent political years in living memory, with Brexit and the U.S. presidential vote causing market turmoil. Richard Hodkinson, chief technology officer at DWF says: “It’s been a tough year as we watched the before and after impact of Brexit. Some firms are likely to do well in the short term and others will trade precariously looking for some signs of certainty around the Brexit process. Who knows what will happen longer term. If you factor in a couple of notable cyber events in the public eye this year and it has made 2016 a bit of a challenge with disturbances guaranteed to have lasting effects. It’s going to be an interesting platform to work from in the next few years.”
In fact, Brexit could prove to be a further boost for legal tech, and Hodkinson adds: “If firms weren’t already looking at ways of preserving margin, Brexit is going to be the catalyst for new emerging technology to make a significant play in every firm looking to build a sustainable business.”
Andrew McManus, IT director at Eversheds adds: “2016 has been full of uncertainty and across the legal sector this year’s events have questioned many planned activities. However, that high level of uncertainty went from a considerable level in the summer to people realising that there continues to be a fantastic opportunity to develop new and exciting digital capabilities with our clients. Most people I speak to now think 2017 may still have uncertainty but more and more of our lawyers and clients are talking about technology and digital innovation and improvement which leaves open an exciting prospect for the year ahead.”
Digital innovation agenda or no, one of the big challenges and realisations of 2016 and beyond is that exciting tech may be out there but it needs to fit the budget and strategy of the firm. Nathan Hayes, IT director at Osborne Clarke says: “It’s fascinating to realise there’s a slew of tech you can take advantage of in a perfect world but it’s not a perfect world and you have to identify the technology that’s right for your business.”
The cyber events referred to by Hodkinson mean that significant resource has been diverted by firms towards improving information security. At Ashurst, global IT director Bruna Pellicci says: “It’s a fast moving and demanding market and cybercrime is becoming ever more prevalent. Tech is developing at a faster pace than ever and it’s imperative to invest in the right technology at the right time to keep ahead of the game. Having the right people in place is fundamental to successful delivery.”
However, 2017 looks likely to see the fruition of a number of more innovative projects that have been running behind the scenes, including in, yes, we said it, AI. Brammer says: “AI means different things in different sectors but there is no doubt that machine-based learning and rules-based learning are being applied to extract information within the legal sector and that is only going to increase, which will create efficiencies.”
In his write up of ILTA 2016 for Legal IT Insider, IT consultant Neil Cameron said: “AI appears to be very much like teenage sex at the moment – everybody is talking about it, but few people are doing it, and even fewer know where to start.”
If, as we suspect, the teenager really has come of age, 2017 could be the year all that changes.
Caroline Hill, editor Legal IT Insider