Technology and the Law - New Opportunities for Lawyers and Their Clients
5 Pages Posted: 22 Aug 2015
Date Written: March 27, 2015
The pace of change in the legal industry is accelerating. Greater price competition, the difficulty to hold and promote new equity partners, lower profits...are only some of the key changes that big law currently is facing. More than 7 years after the financial crisis these changes undermining the current state of the legal profession appear to be permanent. In fact traditional law firms are losing business to larger in-house lawyer teams, specialized contract law boutiques or contract management firms, accounting firms but also new legal tech companies, which were able to find innovative and more cost efficient ways to provide legal services to clients. Further, it is interesting to note that the legal services industry is growing while law firms are not - at least on average - anymore. At the same time the number of companies providing legal services, so called ABS, has grown dramatically. Finally, law firm salaries have been dropping since 2008 and do not seem to come back to pre-crisis levels.
Companies like Airbnb and Uber and the disruption they brought to their respective industries are examples that show what could happen to the legal industry if new technologies take over and design thinking is applied to legal services. These companies completely changed the perspective that traditional actors in the taxi and hotel industry had with regard to pricing, service, quality, user friendliness...For too long, taxis and hotels went unchallenged in the way they structured their market - so they had no incentive to redesign their products or services. Law firms need to be careful not to fall into the same lethargy if they want not to be submerged by the wave of change that the industry is facing and will be facing at an accelerating pace. It is only a question of time that current market leaders in the legal industry will be challenged by smaller firms that will be able to leverage their potential via technology or alternative approaches to pricing, service delivery and product quality.
This paper suggests that lawyers can avoid to be overrun by the wave of change if they grasp the potential of new technologies, design thinking and user centered attitudes. Lawyers could develop new products by transposing the underlying functionalities of the various technologies their clients (but also they themselves) use in their everyday or professional lives to the legal services they provide. Why not develop new tools of client lawyer or lawyer-lawyer interaction by using google docs, the idea of spam filters, google maps or machine translation. Legal tech start ups in the US and UK show the way: LexMachina, Ravel law, shake law, legal zoom, rocket lawyer...are only some of the many examples that illustrate how legal technology and design thinking can change the way lawyers operate.
We suggest in this paper that the experience and insights that lawyers have of the relatively closed legal profession makes them uniquely positioned candidates to develop new business opportunities in the law. They just need to be motivated and incentivized to grasp the opportunities of change. Technology and the law is an opportunity that no lawyer should miss if he wants to be a driver of change and not a person that is driven by change beyond its control.
Keywords: Innovation, law, ABS, pace of change, machine learning, data analytics, big data, open innovation, LexMachina, Ravel law, legal informatics, natural language processing, contract management, automation, exponential linear growth, Richard Susskind, end of lawyers
JEL Classification: K00, L1, L2, L8, L84, M11, M14, O3, O31, O32
Suggested Citation: Suggested Citation