The top 5 trends of future legal practice

1. Firms will start thinking like start-ups

Forget robot lawyers – the “Uberisation” of legal services poses the biggest threat to  the legal industry. That’s according to US-based legal innovator and professor of law Daniel Martin Katz, who delivered the keynote speech at the 2018 FLIP Conference.

Katz, a professor of law at Illinois Institute of Technology and Michigan State University, said recent media reports had caused misdirected panic among lawyers by focusing on the so-called “rise of the robo-lawyer” in a shrinking jobs market. But, he said, the most significant threat to lawyers’ wages and firm profitability would come from smaller start-ups and fusion businesses such as consulting and accounting firms.

“The media loves the ‘robot lawyers’ thesis, but legal innovation is far broader than legal tech per se,” said Katz.

Katz explained that in recent years start-ups and consulting businesses had begun to compete with law firms by “Uberising” the sale of legal services. He said these businesses tended to compartmentalise individual documents or products and offer them cheaper than traditional firms – with their expensive office overheads and staff salary bills – could afford to.

He gave the example of an online start-up offering downloadable legal documents for a fixed fee, such as employment contracts or wills. These contracts often have artificial intelligence solutions built in, enabling users to adjust certain terms and produce a legal document suited to their individual practice. LegalVision, Zegal and LawPath are some Australian examples of firms working this way.

“The lines have become blurred and boundaries between industries are disappearing,” said Katz. “Law has historically been a service business, but it is becoming a product-service hybrid.”

Katz, who described himself as an academic-cum-scientist, technologist, teacher, consultant and advisor, is highly qualified to speak on the issue. He is known as a change leader in the legal profession internationally and was named in the “Fastcase 50”, an award that “recognises 50 of the smartest, most courageous innovators, techies, visionaries, and leaders in the law”. Katz was also named one of the American Bar Association Journal’s “Legal Rebels” in 2018.

Katz is the Chief Strategy Officer of his own legal-consulting hybrid called LexPredict, which works with Fortune 500 companies to solve technical and strategic problems.

In its mission statement, “#MakeLawBetter”, Katz notes that his company is just one of the more than 70 legal tech start-ups listed by Stanford University in the US. Most of these start-ups have been doing the “lion’s share” of research and development in the legal industry, said Katz.

He said traditional law firms would do well to take a leaf out of the books of start-ups, by exploring technology solutions to help lawyers do business more efficiently and for lower cost.

“Pick a problem with good monetisation value, and offer a product that solves that problem,” advised Katz.

“The race is on for firms to offer products and scalable tech solutions to continue to compete in the legal industry.”

2. Disruption will become a strategic priority

The challenge isn’t the pace of change of technology – the challenge is the pace of change of ourselves.

So said James Brett, digital strategist, leadership development coach, and author of Evolving Digital Leadership.

“When I am doing strategy work with organisations – both digital and non-digital – I hear clients say, ‘Everything is moving so quickly, we don’t really know how to cope with this. Should we use this platform, this technology? We just can’t keep up’,” Brett told the FLIP conference.

But if lawyers simply paid more attention to technology and disruption, said Brett, it’s actually not moving as fast as it seems.

“If you imagine boiling a pot of water, it takes six or seven minutes. Only in the last 30 seconds does it move from being non-boiling to boiling. Yet there have been five or six minutes of heat added to that water,” he explained.

“That is similar to what happens when new technology appears. Google drops a new AI chat bot that can make human-like telephone calls. It seems like a big step, a huge change in technology. But there have been five, 10 or sometimes 15 years of work behind that. The pace of change is fast, but it’s not as fast as we might think.”

Brett advocated a four-step process called the Evolution Helix, which he said gave lawyers a good chance of not only responding to disruption, but actually being disruptive. The four steps outlined were awareness, intention, attention, and reflection. Awareness, said Brett, simply meant recognising you had more to learn about disruption. Intention, he added, meant getting intentional about responding to that disruption.

“If we don’t respond to disruption, we are likely to get disrupted at some point,” he said. “Make sure you’ve not got a victim mindset. Doom and gloom is not going to work. It’s going to create all sorts of negative patterns and be a really stressful experience.

“Make incremental changes constantly. That is how water boils. It’s an incremental addition of heat and all of a sudden we have a breakthrough.”

Attention translated to making time and prioritising your strategy on disruption, he added.

“If you don’t make disruption a strategic priority, you just don’t do it,” said Brett. “[Many companies] have a roadmap and they’re following that roadmap. They’re not looking at the disruptive elements and innovation elements because they’ve got a delivery chain and shareholders and milestones to meet. If you are not making disruption a strategic priority and measuring it, you are never going to do it.”

The final step in the four-step process was reflection. “How often do people do this on a regular basis? How often do you look back on a week, a month, a quarter and ask, ‘What did I do? Did it really align with what I wanted to achieve?’” asked Brett.

“It is important to look at your local ecosystem – your city, your state, Australia, depending on your target demographic. Then look at the innovators in your industry and outside the industry and see what they’re doing. Constantly look forward, because that pot has been boiling for a while. It hasn’t just been boiling for 30 seconds – it’s been boiling for five or six minutes. If you pay time and attention you can actually figure out what is going on.”

3. AI will require human judgment to succeed

Professor Michael Legg and Dr Felicity Bell from the Law Society of NSW FLIP Stream at UNSW Law are convinced the core characteristics of good lawyering will remain in the future.

Good judgment and practical wisdom are human qualities which cannot be replicated by machines. At least for now, Legg and Bell told the FLIP conference.

“One of the key things that unites lawyers as a professional group is the concept of good judgment or sound judgment,” Bell said. “Sometimes that’s referred to as ‘practical wisdom’.

“Good judgment can’t be captured by a formula or a mechanical rule. It’s something that has to respond in a particularised way to a particular situation.

“As far as we can tell, that’s something that is still unique to humans.”

Mark Cohen Esquire, the CEO of Legal Mosaic, agreed, saying, “I don’t think tech is going to replace lawyers. It is ushering a new age.

“There are going to be a lot of new legal positions that are going to open up and we don’t even know what these jobs are going to be, but we know that they are going to be variations and combinations of different themes that translate to work.”

Cohen said modern lawyers have had to adapt to the “doing more with less” mentality – a way of thinking that clients in the post-2007 global financial crisis era have embraced.

He pointed to this new business mantra and the ways globalisation and the use of smart-phones have changed how people interact with the world as evidence of changes to the “traditional legal buy-sell dynamic”.

“Law has morphed from a very lawyer-centric, labour intensive, homogeneous law firm-dominated guild to something very different,” Cohen said.

“It has become a digitised industry that relies on technology to deliver legal services.”

Cohen pointed to Uber’s upending of the taxi industry as an example of how regulated and established sectors could be quickly robbed of their market share if they did not embrace change.

He said alternative legal service providers and the Big 4 accounting firms had been able to do the same thing to traditional law firms by giving clients control over who did the legal work and how much of it.

He added that Uber was part of new generation of service providers that had changed client expectations in terms of both cost and service transparency.

Economics could also help our understanding about the nature of AI’s impact on lawyers, Legg suggested.

Referencing research undertaken by a group of economic experts from the University of Toronto in Canada, he said reliance on human judgment would increase as AI took over tasks that required predictions.

“Judgment will be part of making the AI work, but it will also be that you need that human judgment in terms of the strategy, the advice that is an important part of what lawyers do,” Legg said. “The AI [should be viewed] as an input into the human decision-making process.”

4. Legal education will evolve

Erika Ly, NSW President of the Legal Forecast, a not-for-profit for early-career professionals passionate about disruptive thinking and access to justice, and Lyria Bennett Moses, Director of Allens Hub for Innovation and Technology, sat down for a student-professor Q&A during the FLIP Small Talks session.

Ly said Law school failed students in two ways – context and hyper-competitiveness.

“When you enter law school, you are not necessarily given the big-picture context of how to place your law degree or legal education within society,” she said.

“You only learn about that when you get to fourth or fifth year and you learn about the legal profession and ethics. That is not enough to give you a sense of how your legal education fits into a broader societal context.

“Law students tend to be a self-selecting group of Type A personalities. There is intense competition and not enough collaboration. There’s a cannibalistic environment in law schools.”

Asked what law students needed as far as technology goes, Bennett Moses said “basic literacy”.

“Clients are affected by automated systems, and that’s from the bottom of the food chain, from people getting robo letters to companies using AI to make business decisions,” Bennett Moses explained.

“Legal practice is increasingly involving various types of technologies and tools, so you need to understand what it means and what exactly it is.

“The more we use words like ‘artificial intelligence’, the more we hide, ‘What does this tool actually do? What is the piece of the puzzle it does? How is it getting to its conclusions?’ We need to understand that, because different tools have different risks and limitations.”

Bennett Moses said law students should recognise the diversity of career options available, adding “it’s not all about the clerkship at the end of the tunnel”.

“I don’t think most law students are aware of the legal tech sector, although that knowledge is growing,” she said.

“They should think about diversifying their skill set and gaining other skills. Everyone whom law firms or anyone else is hiring is going to have a law degree. What else do you bring? Everyone is asking where the profession is going. I would encourage law students to think about how they can be the change. What are the changes they would make?”

Ly said law students should be “okay with ambiguity and uncertainty because the future of legal practice is very uncertain”.

“The jobs that are going to be out there are not necessarily the same as the jobs we have always seen,” she said.

“It’s intense engagement with the water in which they swim – that is crucially important. Communicate well and communicate on a very human basis. I think the fact law students would rather email you than visit your office is an indication that we need to learn how to communicate better.”

Ly added that people of all ages should remind themselves that Generation Y “grew up with the internet … came of age at the same time the internet came of age”.

“We have had access to knowledge at our fingertips,” Ly said. “As a result, we come with duplicity of interests.”

5. There will be more fixed pricing

Fundamental changes to how law is practised are a fait accompli, according to attendees at a sold-out a session chaired by David Bushby, managing director of Lexoo Australia.

One key change, according to panellists George Beaton, executive chairman of Beaton Research and Consulting, Ian Marshall, National Head of Macquarie Business Banking, and Jodie Baker, founder of Xakia Technologies, will be a continuing growth in the use of fixed pricing.

Beaton, a senior fellow at the University of Melbourne law school who has also taught business at a tertiary level for years, said lawyers in firms big and small should see this as an opportunity.

“What we are seeing now for the first time – to my knowledge, ever – is that buyers, whether they are consumers, retail, or businesses small or very large, have more and more choice,” Beaton said. “They are beginning to understand they have that choice and are exercising that choice. Like us with medical practitioners, we Google everything before we go to the doctor … much to the absolute terror of the local GP.

“Clients, whether they are in-house clients or the external clients served by outside law firms, can Google choice, and we also have platforms where we can rate lawyers.”

Beaton said this choice was “driving enormous power for clients and … driving a reason to innovate”.

“That brings big opportunities the profession has never seen before,” he said. “When we get our cars serviced, we have certainty about the cost. People expect this of their legal services.”

He pointed to a survey of 6,000 clients of small and mid-tier firms which found “the more fixed pricing, the happier clients are”.

Marshall said change was being driven by consumers demanding legal technology to make things “more accessible and cheaper”.

“The ability to charge by the hour will be limited in the future,” he said, adding that the use of new technologies such as some apps would help lawyers make the change.

Baker added that doing things “faster, cheaper and better” was now a necessity for all firms. She said the use of chatbots (a computer program that conducts a conversation via auditory or textual methods) and automated contracts would increase “so lawyers aren’t doing glorified administration work”.

“Law firms are driving the appetite for tech-savvy law students,” Baker said.