In December 2016, we looked back at the past year and asked leading chief information officers and IT directors to reflect on the challenges and highlights of the year. As 2017 gets underway, we’ve asked a far from exhaustive number of leading legal tech suppliers and high profile management consultants to do some future gazing on the opportunities, challenges and trends ahead, from both a supplier and law firm perspective. Here is what they had to say.
Practice, case and enterprise resource management
Chris Cartrett, executive vice president, Aderant
We are excited for 2017 mainly because firms are being more aggressive to roll out new technologies. They are embracing mobile apps, and the front office seems to have joined with the back office in the desire for greater efficiency through technology. One of the biggest challenges in 2017 is law firm resourcing and specifically project management. Firms seem ready to do more, but are struggling to get the resources aligned internally. Consultants are the natural place to turn for assistance, but too many of them are unaware of the creative solutions in modern firms. This is a time for creative and agile solutions, but talent limitations have the potential to hold everyone back.
Osman Ismail, founder and managing director, DPS Software
The main opportunity in 2017 is going to be the growth of the SaaS market. That’s how we are focussing on delivering our products. It’s about being able to provide software and information not only at the computer or laptop but on mobile devices such as iPhones and iPads. Office premises are increasingly expensive and users want increasing ability to work flexibly from anywhere and at any time.
Law firms need to reach out to clients on iPads and apps. The new clients for law firms are millennials who communicate using app messaging and social media. Practice management software needs to understand this and work their way. The new users of case software will be millennials, they expect to use their phones to record time and dictation, use their iPad to access their cases in court, they expect their case software to be as accessible as their Facebook.
As a supplier, our challenge is to make this happen.
Darren Gower, marketing director, Eclipse Legal Solutions
The opportunities are as they always were but we will see more firms coming to market looking for tech that radically improves what they do. There will be a shift away from incremental improvement to firms looking for bigger things to push them forward and help their clients and their bottom line. Law firms will be looking to the likes of us and other suppliers to facilitate that step change, putting pressure on suppliers to provide more innovative solutions.
Brexit is affecting the way that all firms buy tech, making firms more choosey about where they put their money and what they invest in, so the procurement process may get a little stiffer and people may need a little more assurance that what they’re putting their money in is the right thing.
One thing we’re seeing recently is that firms are looking to onboard business more easily and more quickly in a slicker fashion, both for their own benefit and to make customers feel more warm and cosy. The onboarding process can be quite clunky, expensive and admin heavy. I think that’s an area ripe for improvement. We’ve had a couple of forward thinking firms ask our view on how it can be done better. Firms are trying to spot areas of wastage and improve their processes.
Martin Telfer, SVP and EMEA chief, Fulcrum
Opportunities: The continued globalization of law firms, through a combination of mergers and market liberalization/growth, is a great opportunity for enterprise software, especially in an industry that really needs to adopt standards and processes under increasing margin pressures.
Challenges: The uncertainty caused by Brexit and the US presidency is affecting law firm investments in technology, unless there is a perceived innovation component to the investment. Law firms still need to focus on quality – in all its dimensions – and not get too distracted by new toys.
Trends: Law firms will continue to “grow up” from a business perspective – using technology to be competitive rather than being driven by clients or cost cutting, and (reluctantly) getting used to being a part of clients’ supply chains – but there’s a long way to go.
Steve Zangari, sales & marketing director, LexisNexis Enterprise Solutions
Opportunities: The use of big data, machine learning and AI to shape future decisions.
Challenges: The availability of real time data to decision makers, allowing them to react faster and to be ahead of the competition.
Trends: Mobility of working (cloud), people just expecting to be able to do all of their previously office bound activities from anywhere in the world using any device.
Tony Klejnow, managing director, Linetime
Opportunities: The growth in adoption of artificial intelligence will see a rise in the automation of business and administrative processes in addition to traditional legal work.
Challenges: The continuing battle with cyber-crime will present challenges to both law firms and system providers. Criminals by their very nature are persistent and often ingenious in finding new ways to take advantage of breaches in security.
Trends/anything clients must beware of: As per challenges, cyber-crime needs to be combatted by a combination of IT systems, good business practice and (most importantly) education.
Kaye Sycamore, chief sales & marketing officer, Peppermint Technologies
It’s two years to Brexit. I think law firm leaders need to use the time now to (really) address the internal change programme that most of them know they need to make in their business – increasing efficiency, delivering value, and critically providing the right client experience. Increasingly it will be the latter – the client experience – that will matter most in terms of differentiation & retaining clients. Modern legaltech is certainly very important to this, but this is bigger than technology; this change programme requires process change, and behavioural change, and a willingness to invest.
David Thorpe, business development director, slicedbread
We’ve talked about it for several years now, but at last there seems to be an acknowledgement by a good number of law firms (I’m not sure whether we have reached majority level yet) that the business of law needs to change to reflect modern buying requirements. The jury is still out on what that means but you regularly see expressions like AI, Industrialisation, CRM and other terms that hitherto would have been anathema.
As a supplier who has looked at legal work from a ‘process first’ perspective and applied the very latest technology to that, we see a real opportunity to help firms provide clients with better and more predictable outcomes whilst using their own internal resources more efficiently. The challenges remain very much the same as they’ve always been. Even accepting the need to change doesn’t mean that law firms necessarily see IT as a major part of the answer. We need to shift perception from IT being a “necessary evil” to that of “competitive enabler”.
On top of that, there needs to be a willingness for the firms to change behaviour. All of us know change is hard and law firm mentality is still very much status quo, or “change for the firm is good as long as my part of it doesn’t have to”.
However, there are now market examples of IT-led change producing positive outcomes and this will encourage less change-embracing firms to at least put the topic on their agendas.
Patrick Hurley, vice president customer advocacy, Thomson Reuters Elite
Both the challenge and opportunity of 2017 for us is the cloud. It’s been around forever but we see it as a huge opportunity this year. There are a lot of people out there who need to get off old technology, ours included. What is the cheapest, fastest and most risk-free way to do it? By moving into the cloud. Both Elite 3E and Business Development Premier will be in the cloud by the end of the year. The challenge with it is that there’s still too much speculation about the cloud.
Our opportunity as a business – and we’re taking this on in 2017 – is to bring clarity to the cloud. People really don’t understand what their needs are and what the risks are around data encryption, encryption at rest, data residency, user authentication and all the unique features of running your practice management system in the cloud. And depending on whether you go with Azure, or Amazon hosted, or private cloud, it’s all still very much an area of speculation.
We’re under no illusion that all of our clients are going to go to the cloud tomorrow, but in the next five to 20 years, cloud will be the norm and we as a technology organization will lead the legal market in providing cloud solutions.
In terms of trends, I don’t think KWM will be the last firm to go under in 2017. The pressures of competition and price pressures are reaching an apex.
Geoff Hornsby, general manager, iManage
If you look at the really successful tech cloud companies out there, they don’t have down time for maintenance or unexpected outages. Their modern cloud is built for massive scalability and to work in a very different way to the legacy cloud built 10 years ago. A second wave of cloud, which is being used by the likes of Amazon, Google, Airbnb and eBay, is about to happen and is very different to anything available now in legal. When did you last see eBay collapse under a huge volume of transactions? Tech is being built in a very different way and 2017 will be the start of apps for the legal profession being built in this way.
While AI has been overhyped, machine learning and legal tech is going to get much smarter. If you put something in the cloud at the moment, it’s a dumb store. The first generation of DMS just stored documents. The second generation stored documents and email. Then we’ve had ‘oh by the way you can put in the cloud.’ But the next generation of DMS will be an intelligent system where you can automatically derive value from the data through built in analytics.
The challenge to the IT community is to deliver the solutions using the very latest technology to realise the benefits that the eBays of this world are delivering.
Matt Duncan, CEO, NetDocuments
I would combine challenge with opportunity. Clients are placing their law firms under increasingly stringent security and compliance requirements and law firms’ ability to keep up with these requirements is really going to be tested. Law firms can either build sophisticated security and compliance solutions or consume them from platforms addressed for that need. This year law firms will increasingly look to consume purpose-built security and compliance solutions as opposed to trying to build them. Why reinvent the wheel when you can spend your resources on valueadd such as analytics, AI and delivering value on top of your core systems?
The challenge will be for suppliers like us to deliver and keep up with the varying requirements of large global corporations: we need to move quickly and be agile and provide a level of security and compliance that others may not be able to achieve.
Teams are becoming global but data sovereignty requirements are becoming more stringent and those are at odds. The need for solutions that can store data where it needs to be stored (“geo-awareness”) and also facilitate seamless global team collaboration is a big trend.
We are also going to see more examples of how cloud-to-cloud integration can provide a more ubiquitous working experience.
Ray Burch, director of product strategy & innovation, Phoenix Business Solutions
Governance including what content is stored and how that content is managed from encryption through to destruction are going to be key areas for firms to address risks due to the General Data Protection Regulation coming into force in 2018. Firms can’t afford to wait until it’s in place to plan on how they will deliver data subject access requests, or mitigate the risks of data leakage. This leads on to cyber security which, following a set of high profile cases, is at the top of every firms list. Data held by law firms is attractive to a lot of outsiders, so keeping them out of the system while also ensuring that content held inside is secure, encrypted and monitored is crucial.
The potential fallout from Brexit is another area to watch. We all know that a lot is going to change, but nobody seems clear on exactly what.
We see Artificial Intelligence, Machine Learning, Contract Automation, Smart Contacts & Security as key areas for future growth. Everything is focused on reducing costs in areas that are repeatable while maintaining a high level of precision. Using contract automation to draft high quality contracts quickly and without the need for a partner, while having AI / Machine Learning processes running contract analysis to improve obligation management and compliance are going to be used more and more across firms.
Artificial intelligence & machine learning along with data analytics will dominate throughout 2017.
Katherine Ainley, CEO, Tikit
In 2017, we’ll see full engagement of the conversation on agile working and how technology enables this. Technology such as Office 365 will enable a real change in the way people work, but also bring a more consumerised view of technology. Fee-earners will expect to do whatever they can do in the office wherever they are in a way that works for them, be it editing and sharing documents on their phone, or submitting time from their tablet and being able to switch seamlessly between devices. Ultimately the reaction from partners, fee earners and support staff should be ‘I could use that right now’.
This year will see a change in the conversation on cloud – for many it will be moving from a top-level strategy to a real in depth understanding of the pros and cons of different forms of cloud technology, and in many cases turning many traditional objections to cloud on their head. For the vast majority of firms, there will be a growing appreciation that cloud based solutions can offer a far higher level of security to their firm and clients with less overhead. One of the most commonly used hashtags at ILTA 2016 was #cloud2020, which gives a clear indication of where CIO’s from global firms are heading.
Security and data will continue to be increasing in profile and pressure: security will become an integral part the BAU architecture, processes and technology rather than considered a standalone, separate responsibility. This will be an opportunity for firms to reconsider their overall solutions and will go hand-in-hand with the increase in agile working.
Document production application
Ben Mitchell, vice president EMEA, DocsCorp
Opportunities: Helping law firms to achieve GDPR compliance. Achieving GDPR compliance will require most firms to implement new processes and systems. This presents a sizeable opportunity for legal IT vendors including DocsCorp.
Challenges: To attract a sufficient number of suitable staff, especially salespeople. Salespeople who are good at selling, technically competent and understand the legal market are very few and far between. A key challenge for DocsCorp in 2017 will be to find and train a sufficient number of such people.
Trends: The consumerisation of technology diminishing the value of best-of-breed systems or making them obsolete. Some long standing legal IT technologies could start to disappear in 2017.
Liam Flanagan, founder & chief executive, Enable Business Solutions
Opportunities: Cyber security – everyone’s talking about it. That’s probably the biggest opportunity. Security is about robust systems, defences. Most firms still won’t have robust systems in place. AI is all about efficiency – how do we make it easy for our clients to work with us, quickly. They’re emerging technologies. Both are buzzwords so will be big this year. Document automation is going to improve the way law firms create first draft documents. Clients will be able to generate legal documents from the websites of large law firms.
Challenges: The biggest challenge is also cyber security. People can get inside your network, spam you, bring your network down, send out bad information, including information about your accounts. The weakest link is the law firms who look after government information. Law firm security is nowhere near as secure as government security, which is why they are at the greatest risk of getting attacked.
Trends: The cloud. Everyone said in the UK, large law firms won’t use Microsoft because of international security issues. With the introduction of UK cloud centres, Microsoft has put a structure in place to protect UK and European law firms from US security issues. This will see a large uptake of Microsoft cloud systems among law firms this year.
Nick Thomson, chief revenue officer, Workshare
Opportunities: Growing security needs as a result of client demand and changing regulations (GDPR) will help the selection process.
Challenges: Increasing vendor overlap and confusion will make it more difficult for end users to understand the value/purpose of their systems.
Trends: Increasing need for our clients to differentiate their own client experience/service through the systems they offer. Legal IT needs to respond to the rampant change in how files are shared and worked on as staff demand enterprise systems to match those used in their personal lives.
Peter Groucutt, managing director, Databarracks
Five years ago, all we did was help law firms deal with disasters arising from fire, flood, and human error, as well as things like hardware failure, but that has changed dramatically. Last year, over 80% of significant recoveries and events we helped clients with revolved around cyberattacks such as malware or a crypto virus, and so we normally have one or two big recoveries going on for clients that have been subject to an attack.
In 2017, we’re expecting that to get worse – it’s certainly not going to get better.
I’m a glass half full person but the challenges are around the mass adoption of cloud services. Law firms are absolutely prime targets for adoption of cloud services and it makes no sense for firms to be delivering their own services that can be delivered in the cloud. What a lot of lawyers aren’t really looking at is what that means for continuity. If they are going to stick everything in Office 365, what are they doing in terms of resilience and continuity, other than leaving it to Microsoft? That’s not good enough. If everyone is using Office 365 or Azure, where will all the online criminals focus their activities? Also, if you’re sharing your infrastructure, you have no idea who you are sharing it with or what their risk profile is. Unless you’re ExxonMobil, if there’s an outage, you’re probably not going to be at the front of the queue when Microsoft bring their services back.
Automation and process improvement
Ryan McClead, VP client engagement & strategy, Neota Logic
The big trend I see in 2017 is in automation for efficiency and increased profitability. Firms that have never done anything in this area are beginning with document creation. Those that have already tackled documents are looking to automate processes and procedures. The most advanced firms are starting to automate and productize their legal services. Once firms understand the value of automation they naturally look to automate increasingly complex and important functions.
Ron Friedmann, partner, Fireman & Co
Large law firms face a key 2017 opportunity and challenge, flip sides of the same coin: change how lawyers work.
Most large law firms face profit pressure and an uncertain future market position. To succeed – that is, to grow and maintain profits by keeping and winning clients – they must improve service delivery and value to clients.
Change to do this is in the air but not enough on the ground. Recent lawyer and firm interest in legal tech is unmatched in legal market history. Discussion of tech and innovation occurs daily. And it’s true many firms now use machine learning to accelerate due diligence. That is a good example of how tech incrementally changes how lawyers practice.
But firms and lawyers must go further. They must adopt other practice specific technologies that improve efficiency (output per hour). They must improve client service, for example, with faster turnaround and more informative communication about matter status.
Making such changes requires process improvement and delegating work to lower cost resources. That is hard. No one likes change. But lawyers do not like losing clients and shrinking profits. The key to avoiding that and to motivating change is clear. Firms must measure matter profitably accurately and tie partner compensation to profits. That is slowly happening.
How heady it is to talk about the wonders of legal tech, especially AI. And much easier than changing compensation and then working in new ways. But to recognize the wonders of tech, compensation must reward efficiency and drive change in how lawyers work. That will be very good for legal tech indeed. And for clients.
Justin North, founder & director, Janders Dean
We see 2017 as a reset year after the “idea exhaustion” of 2016. Those firms who will succeed in the new year are those that focus on introducing new skills as a priority over new technologies.
Looking back, 2016 seemed to be a Lolita-like hedonistic love affair for some firms where the old fell in love with the young – many firms also found themselves stalled, making little progress while they gazed in awe from the bandwagon at the Emperor’s new clothes.
We will see many firms continue to grapple with the development of data strategies, with a small selection of grown-up firms bringing data services and scientists into the mix.
Surprising some perhaps, we’ll see a return to focus on the future of the enterprise document management and a recognition that it is a data hive that is full of mystery, and one that still contains undiscovered riches that will allow for the true productisation of a firm’s knowledge.
Cyber-security will be huge, mobile will continue to frustrate, some well-known vendors will change hands, a viable cloud PMS will emerge, and more non-legal leaders will enter the industry to replace what remains of the old school.
There will also be some exciting experiments – would love to tell you more, but that would spoil the fun 😉
Peter Owen, founder & managing director, Lights-On Consulting
“For the first time in my career in legal, I think the hype about technology driving major change in legal might actually becoming a reality! AI, machine learning, big data handling, process and document automation are all slowly coming together to possibly make a perfect technology storm. What will stop it being that perfect storm is under investment, poor people, poor management, lack of lawyer investment time and, in particular, failing to pay attention to the basic foundations and management of IT. Those that get all of this right however, might actually have a chance of real differentiation. I feel the market is at risk of larger, more powerful firms, being able to use automation to drive throughput up and costs down to a point they start to eat the dinner of the smaller firms. Why wouldn’t you dine at a higher-class restaurant if the price differential was not that great?!