#GlenLegal: How to stay relevant as CIO PLUS Clients’ five worries and how we respond

We’ve saved some of the best for last when it comes to covering the content from #GlenLegal19. Here our two co-chairs gave their thoughts on the latest trends, and warn: scrutinise, don’t just get sucked in by technology. Includes our favourite graphic: the correlation in data measuring cheese consumption and death by strangulation from bedsheets.
How to stay relevant as a CIO
Rick Howell, CIO, Perkins Coie
The challenge for CIOs is how to serve clients’ needs today, while also making the right choices to remain competitive tomorrow, Rick Howell told assembled delegates.  CIOs are being asked not only to solve more problems than ever before with technology but also to drive new ways of working through innovation.
These are two related, but distinct, challenges.  “Solving problems typically comes down to a tech solution.  You might not be the first person to do it and change management may be relatively simple.  It’s a productivity play.  It’s about using a piece of technology to do existing work faster and cheaper.”
In order to do this effectively, it is important to start by focusing on the benefits of technology, Howell said.  “Why?  Because IT has no inherent value.  The benefits of IT are only realised by enabling people to do things differently.  Just as a carpenter’s tools have no value until his customer has a need that allows him to create something that the customer will pay for, only business managers and users can create value from technology.  Not the IT team.”
But while solving problems with technology is about doing existing tasks more effectively, innovation can be about opening new markets, new skills, new roles and potentially even new service lines, Howell explained.
“When you are talking about smart contracts or blockchain, for example, you are talking about a new way of doing business.  There is a lot less certainty of outcome.  There will be a lot of people telling you they have the unicorn you are seeking, and you have to get good at filtering the information you are presented with.”
Howell explained that it is vital that CIOs are able to cut through the deluge of available data to make decisions – and investments – that work for their firm.  “If we can’t apply that lens, then technology could kill us,” he said.  He went on to reference a number of statistical correlations that highlight how important it is that data presented as fact is thoroughly scrutinised.
Could technology actually be killing us?  Check out these stats…

Or even more improbably…

“That we even have a stat that shows people are dying in their bed sheets is strange, while the fact it is correlated to cheese consumption is frankly disturbing,” Howell joked.  “But it does show that while data is a great way to tell a story, if you are not checking the veracity of that data it might not be the best basis for making decisions.”
Indeed, when making decisions about innovation, Howell believes the challenge becomes less about the objectives that play such an important role in solving problems with technology, and instead more about how that change can be managed.  “The most important piece of innovation transformation is ensuring that this new way of working is sustainable.  That is why, as CIOs, we need to be deeply engaged in these conversations.  If people, processes and culture are not changing to support the technology we are trying to initiate, it won’t be sustainable and the business won’t realise the benefits.”
“For me, that is what the role of the CIO is,” Howell continued.  “Our role is to sustain and extend the strategic capabilities of our firms and to do that you have got to be at the table.  You don’t have to be driving the innovation but you need to be part of the conversation to make sure the organisation is not just doing the right thing, but that it is doing it the right way.”
Clients’ five worries, and how we respond
Mike Rebeiro, senior adviser and head of digital innovation at Macfarlanes
There are five things worrying today’s general counsel, Mike Rebeiro, senior adviser and head of digital and innovation at Macfarlanes told delegates at the 2019 Legal Leaders IT Forum.  Those worries are globalisation, liberalisation, cost pressures, digitalisation and business model disruption.
“In terms of globalisation, all of our clients are being affected by increased regulation on a national and international level,” Rebeiro said.  “In the UK, of course, the situation is particularly challenging because of all the uncertainty surrounding Brexit.  Our clients are having to look at new markets.  That creates a different regulatory landscape and new and worrying risk for general counsel.”
GCs are also acutely aware of the wave of liberalisation that is happening in law, Rebeiro added.  “It is no longer just about the traditional law firm relationships, which many GCs have been defending to their management teams for a long time.  Liberalisation is leading to an unbundling of legal services which means the GC is having to develop project management skills and there is a complete supply chain of legal vendors for any one piece of work.”
At the same time, GCs are facing immense cost pressures.  “CFOs are demanding they reduce spend on external legal services.  That’s bad news for them and it is certainly bad news for us,” said Rebeiro.  “Furthermore, many of the tasks that used to be regarded as high value, are now seen through the lens of the fourth industrial revolution and there is pressure on GCs to commoditise.”
Rebeiro pointed, in particular, to the role that technologies such as blockchain, smart contracts and AI will play in the industry.  “The result is GCs’ positions are becoming worryingly disrupted because the business – their internal client – can, in many cases, go to a platform for legal advice.  In the past, the GC was considered to be the font of all knowledge.  The business would ask them a question and they, in turn, would come to our partners.  In the future, the business will increasingly go direct to independent platforms to get that advice, without the requirement for either the GC or us.”
Businesses themselves are also being disrupted.  New technology from AI, to big data, predictive analytics, smart city infrastructure, wearable devices and virtual reality, are all shaking up traditional industries.  That creates challenges for GCs who need to navigate the legal and ethical implications.  Finally, there is business model disruption.  Clients tend to fall into one of three groups, according to Rebeiro.  There are those who feel immune to change.  “Those businesses will not be around too much longer, I suspect,” Rebeiro commented.  Then there are those businesses which see disruption as an opportunity, and which have a clear strategy for disrupting their own market.  “Finally, there are the vast majority of businesses, which see this tsunami of disruption coming but just don’t know what to do about it.”
Rebeiro pointed to Clayton Christensen’s innovator’s dilemma to highlight the challenge that businesses face.  Christensen argues that disruptive technology is generally developed within big companies.  Those companies seek the reaction of their clients, who often tell them that while the technology has potential, it is of no immediate use.  However, someone else then sees the value in the technology and continues to invest and build new markets.  The clients that originally turned that technology down come running, and the company that walked away from the opportunity is left with nothing.
“There is no doubt that there were people within Blockbuster that were thinking about streaming technology, but they decided to stick with what they know,” Rebeiro said.  “Our clients don’t want to join the ranks of C&A, MFI, Woolworths and Toys ‘R’ Us.  They don’t want to be disrupted.”
The challenge for the GC, therefore, is one of relevance, Rebeiro claimed.  “They have to be able to add value to the business and move into the digital delivery of services which are real time and interactive.  As CIOs, your challenge is to help them with their challenge.  If the GC is no longer relevant, they will no longer be there.  If they are no longer there, they will no longer be paying our fees.”
So, how has the legal profession responded to this dilemma?  With business as usual, according to Rebeiro.  “Ownership models are still defined by equity in the hands of a few white, middle-aged men.  Billing is by the hour, infrastructure involves multiple offices around the relevant geographies and delivery of service is still word and paper-based, albeit delivered digitally.  Frankly, it isn’t good enough.”
Rebeiro believes that over the next 15 years the competitive threat facing law firms will soar.  “We will still see one or two niche advisory firms.  In-house teams will be more tech-enabled as CFOs invest in order to save costs.  There will be global law firm platforms and full-service consultancies, but full-service law firms will struggle.  At the top end there is the possibility of investment and listening to clients, if they get it right.  But at the bottom end, where margins are tighter, it will become a lot more difficult.”
This article first appeared in the July/August Orange Rag. For your free monthly copy, which is sent out by email, click here: http://legaltechnology.com//latest-newsletter/
For those of you quite fairly wondering about gender diversity, GlenLegal was also chaired by LITI editor Caroline Hill, who opened the conference with a session talking about topics including, you guessed it, our efforts to improve diversity.
Keep your eyes open for our #GlenLegal19 e-book of all the main sessions, which will be published shortly.