The snow has melted, my ‘delay repay’ claims against BA, Virgin and SouthEastern are in progress, and I’ve finally found the time to write about the excellent GlenLegal event organised by the Legal IT Insider/ Orange Rag team at Gleneagles from 25-27 February 2018.
Here are some of the highlights of the conference from where I was sitting.
Introduction by Mark Whitley, Founder Trinity House Advisory
We’d be talking about change. It’s not just what tech you buy but how you implement it. That’s what delivers the change. The market has changed, and this will continue. Different law firms are competing. New providers are entering. How do we reengineer businesses to deliver what clients want? What is the role of IT in delivering that? Who will drive forward this innovation in law firms and in-house?
AI Panel: Chair Jo Sherman, EDT
What was interesting about this was that the panel chair asked the audience – primarily IT Directors – to raise their hand if they thought AI was simply a distraction. Would the cynics please raise their hands? Hardly any did. This is not surprising. Here are some of the main points of this session (Chatham House rules, so I’m not quoting people/firms throughout this article):
– Tools and systems enable faster working, and with enhanced quality.
– Commoditised legal services lend themselves to AI.
– Systems can do certain tasks more quickly and more accurately than humans.
– Questions: What is the problem? Can AI help?
– Insurance industry example: low value cases, 90% of work automated with a decision tree, providing end to end solution to client – necessary to maintain profitability.
– Tenders and pitches: clients are asking what firms are doing in the AI space.
– Clients are being disrupted themselves.
– Firms realise they need to be fast and agile to get products like AI in.
– An innovation division, away from the main firm management, can help – reporting directly into the Board to get things done.
– Top management will get involved when large clients award contracts on the back of innovation in tenders.
– I am currently advising a law firm on a tender where innovation/use of legal tech is a primary criterion of the process. The client will appoint firms on the basis on innovation … and we will see more of this.
– AI successes: one firm was using Luminance to cut through massive document sets quickly.
– The “churn” work was being moved away from the lawyers, leaving them the documents they need to analyse.
– ROI – yes, of course, AI provides ROI – and sooner than most people think.
The ideal ROI is a combination of (a) the firm reducing the price for the client whilst (b) making the job more efficient internally, resulting in (c) law firm saving money too.
– When will firms spend more money on technology investment than they do on expensive lawyers? When large clients demand it.
– Proactive firms are investing in this area to disrupt it.
– This should stand them in good stead with clients and when responding to RFPs.
AI Keynote: Jie Zhang, Research Director, Gartner
– By 2020 Gartner predicts that 15% of currently low tier billable legal work will be replaced by AI.
– There will be more automation across all industries. By 2020, AI will be very pervasive.
– Law firms should ask: Who is my competition? What are they doing? Where do I want to be in the market place? What profit margin do I want to achieve? How can I do that?
– Most firms are risk averse – not the best at ground-breaking innovation.
– Things to watch: primary deep neural networks/DNN – Google, Facebook.
– After that, natural language processing/NLP: document review, contract analytics, court decision predictions.
– The message: humans and machines complement each other. Machines need humans to make the final decision.
– Avoid the hype. AI will not save humanity. Robots will not win the race. Algorithms will not do what humans do.
– The future world = people + machines – not either.
– Lawyers today must speak 3 languages: law, finance and technology.
Pricing Panel: Chair Mo Ajaz, National Grid
Panellists from Accenture, Herbert Smith Freehills, De Brauw Blackstone Westbrook, Pinsent Masons
– Grown up conversations are required about budget setting, managing the budget and fees.
– Pricing is connected to profitability and technology.
– In-house clients believe law firms have the systems and the data – so why can’t they give clients a good estimate?
– Law firms say that many clients talk about innovative pricing, yet then ask for hourly rate style narratives supporting that pricing. How can that be?
– Both sides want to move to talking about the value of the work.
– From that, move to a more collaborative way of working with different fee constructs.
– The problem? This requires behaviour changes on both sides.
– Lawyers need to understand the finance behind the deal – how to make the right profit margin for the firm.
– Moving away from a time and materials model requires greater thought. It’s not easy.
– In-house teams have masses of information available due to the rise of ebilling solutions.
– Firms should brace themselves for difficult questions about how they resource the work.
– Firms admitted that partners can still cause problems with “finger in the air” pricing.
– They need the tools to scope matters, break the work down and then fix the fee.
– Poor instructions are a problem from the client side. A fixed fee for what?
– Up front scoping of work requires effort and can’t be done in isolation by one party. Discussion is required.
– Firms ask, if clients are allowing budgets to overrun, why is that? Are they not project managing it correctly from their end? It takes two …
– The more data a firm has on what matters cost, the better it will become at pricing.
– Many firms have this information but haven’t turned it into predictive information that will enable them to make decisions.
– Fee income: There is often no guarantee of work. Where is the incentive for the firm?
– Will we see a rise in the sole provider model, or at least a much smaller number of firms being appointed to a panel?
– Will we see more ‘solution-pricing’? A flat fee/retainer idea – possible with sole provider agreements over a longer term. TUPE time – in-house staff moving into the law firm.
– These deals work best where both parties can see a clear pipeline of work.
– They also require trusted relationships. Easier said than done? These deals must be truly win win to work.
– There will be tolerances, percentage allowances for ‘overages’ and ‘underages’ against fixed fees.
– The firm will apply technology to make such an arrangement profitable – e.g. triage.
– Law firm write offs – still an issue.
– Doubtless fault on both sides. Scoping discussions anyone? Did the fee match the scope? Was there scope creep? Both sides should carry out a post-matter review to learn what went wrong and then do things better next time.
Global law firm DLA Piper was among several organisations across the world affected by a major cyber attack in June 2017. Daniel Pollick described the effect this had on his world, his team and the firm. You could have heard a pin drop. (No notes taken).
Process Improvement Panel: Chair – Sarah Barrett-Vane, SBV Consulting
Panellists from Ashurst Advance and Eversheds Sutherland Ignite
– Don’t forget what you can achieve my making internal process improvements. Constantly.
– These can help your firm and clients if you share knowledge and collaborate.
– Make process improvements before you look to buy a tech solution.
– Many tech solutions will fail if the necessary internal work hasn’t been done in advance.
– Clients and law firms can work together to effect change, e.g. a firm providing training on contract automation to in-house paralegals to improve an in-house team’s productivity.
People and Performance Panel: Chair Haig Tyler, Herbert Smith Freehills
Panellists from White & Case and BCLP
– How to engage people?
– Easy surveys, where people can click on a happy/sad emoji face or like, share, comment.
– Corporate videos sharing information via the Intranet.
– Using the Intranet as an engagement tool rather than a business tool.
– Make your people feel part of a team.
– Run proof of concept projects or pilots before business case to bring solution in.
– Engaging lawyers with IT? Get them on side. How could you make their lives easier? Ask them.
– Innovation: many lawyers and law firm staff don’t like innovation much. Or failure.
– Create a safe place where people can truly innovate, try wacky ideas, and perhaps fail.
– Failure is fine, as long as you do it quickly and knowingly.
The Big 4 Panel: Chair Caroline Hill
– What is their strategy?
– To deliver services as a MDP: legal, tax, audit, consulting. Address the client’s needs.
– They take a global approach.
– Legal is a priority part of the business in terms of growth.
– They are planning to win an increasing share of work from their existing client base – adjacent services to the key areas they operate in.
– They aim to be appointed to legal panels.
– Most of them don’t aspire to be full service providers – e.g. no real estate, they don’t really litigate.
– But they can do the tech work it wouldn’t make economic sense for law firms to do.
– They are looking to take on work from in-house teams – outsourcing.
– Money: They have access to investment funds.
– They’ve invested, and will continue to invest, in platforms and technology.
– They also develop their own technology and work with other tech providers.
– Working for the Big 4 feels like working for a bank – i.e. corporate. There’s no cult of the partner (although there are partners).
– What should law firms do in response?
– Identify your particular differentiation. What is your niche?
– Hush descended …
Change Management Panel
Panellists from Fieldfisher, Blake Morgan and Norton Rose Fulbright
– What lessons can people learn from large IT implementations?
– You need buy in right from the top.
– From the outset, know what the product/tool’s benefit will be. Get clarity.
– Tell people the benefits.
– There has to be something in it for everyone, if possible.
– Choice of IT partner is absolutely key.
– Ensure people know what it will won’t cure.
– It’s not ideal if it’s characterised as an IT project (said an IT Director).
– If your data is in a shocking state, that will hinder you.
– An ERP project is more about change management than tech.
– Spend lots of time identifying key players you need on the project/on side.
– Get the ‘A players’ on your project.
– Get people on board and educate them as much as you can.
– You want people who will be constructive, not overtly critical and dogmatic.
– You want a mixture of leadership styles: autocrats and democrats.
– Autocrats will move the project forward.
– Democrats will bring people with you.
– Get positive people on side. They will help you push the project through.
– Make those positive people ‘super users’. Involve them start to finish.
– Encourage teams to work together cross functionally.
– Continue the change management programme all the way through go live.
– Maybe involve the marketing team and do a short video explaining what’s happening.
– Keep messages short and pithy. Why you are making the change, what it means, the before and after.
– Ideally create user groups and have user acceptance testing.
– People will realise they’ll likely need to change processes to leverage the technology.
– History is not on your side! If people have bad history they’ll remember that and criticise the new product.
– People are only really bothered about how the change will impact on them individually.
– You can’t change the system to suit everyone. They have to change – and eventually they will.
– Tips re C-suite (C-suite please stop reading now): you’ve got to keep the picture big because they will go into all the detail if you let them.
– Bid for more than you need so you can be sure it comes in under budget.
Summary of GlenLegal
– Excellent conference
– Good people
– Relevant content
– Words cannot do justice to Jeremy Hill’s auction night shoes
– Journey home not the best
– But … to quote Michael Kinnear towards the end of a fun-filled 5 hours at Edinburgh Airport: “The cheese is back!” (You had to be there)
Sarah was the Director of Legal Operations at Royal Mail plc until 31/12/17. She was responsible for managing the budget for Group Legal; running all legal panel reviews and other legal appointments alongside the GC; and managing Royal Mail’s law firms. She is now a legal operations consultant and founder of SBV Consulting Ltd, where this article first appeared.