Derek Southall: “A phenomenal opportunity for firms to reinvent themselves”

Derek Southall is founder and CEO of technology innovation advisory group Hyperscale Group and the chairman of LITIG – the Legal IT Innovators Group, comprised of individuals from over 90 legal organisations. We hear about the projects he has been involved in looking at how generative AI will shape and/or replace the need for other technologies.

Give us your overview of 2023 both from an industry and firm perspective
Just as we thought things couldn’t get any more volatile we have seen interest rate rises, wars, cost of living challenges and the acceleration of gen AI to boot. Gen AI has really got the attention of law firm partners and made them realise that digital is real. This is an area they are looking at carefully with a sense of urgency and has also given rise to the acceleration of other digital projects.

Interestingly, it has given rise to a reprioritisation of everything. When looking at tech, you always have to look at the value delivered, and it is fair to say the value equation/value proposition of some products has shifted dramatically. Also, Microsoft 365 has gone from strength to strength and to consolidate this further, Microsoft appear to have played a phenomenal game strategically in the gen AI space – as have the major publishers. In short, it is the year the rulebook was rewritten.

What are the major milestones?
The obvious answer is the speed of acceleration of gen AI. I suspect the real question however is what does this mean in practice and what will it cause to happen (i.e. what impact will it have on risk, work volumes, policies, structures of firms, client demand etc) and so we are spending a lot of time on this. Also, I have been involved in a few projects where we start to see how gen AI will shape and/or replace the need for other technologies depending on how a firm approaches this. Will you for example need a CRM in the future or will all this information and more be obtainable from gen AI? What role will aPMS and reporting have?  Once you understand agreed positions on work types how will this affect how much you negotiate? For law firms pricing and risk re gen AI will be key as no other players in the gen AI space seem to be taking on material levels of liability for outputs.

What were the biggest surprises?
On systems there is nothing radical bar the pace at which some products have adapted to gen AI (some products are developing impressive roadmaps) – plus the emergence of new cloud PMS/CMS solutions, which is good to see. We have been monitoring/testing gen AI for around two years and notwithstanding this, were completely shocked at the speed of adoption. I think one of the biggest surprises is how well the publishers have developed their strategies in this space in such a short time period, with Thomson Reuters even forming part of Microsoft CEO Satya Nadella’s announcement of Copilot. Some said that gen AI would lead to the death of content businesses, but they could not be further from the truth. Given the technology firepower and the corpus of corroborated content these businesses have, they are in a phenomenal position and every legal technology team need to track them carefully.

How do you think the firms have coped?
I think firms have coped remarkably well over the last year but some think there are tougher times ahead – technology advancement is largely marching on though. On resource most technology functions tend to be geared up for BAU. On top of this they have to deal with key projects which come along as well as having to embrace a whole new genre of technologies and start-ups in the gen AI space. Some of them have struggled but many have adapted well, and I can vouch for the fact there are some really interesting projects underway. One thing I really like is that gen AI is very much seen as a cross firm opportunity and challenge – i.e. thankfully there isn’t a view that the IT team will sort this on their own. With lawyers and IT professionals working side by side we are perhaps “living the dream”.

What other opportunities have arisen?
With the growth of Microsoft, gen AI and the strategies of the publishers, I think there is a phenomenal opportunity for firms to reinvent themselves and transform how they deliver, albeit there will be challenges from clients who are having similar thoughts. That being said we need to be cognisant of the fact that many markets around us will change too – ensure what we do is not in a vacuum. Our worlds will be very different. I admire law firm’s gen AI efforts but we constantly need to look at who we are competing with and make sure our efforts are not easily replicable by others/larger players.