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Jim Middlemiss

Here come the algorithms

Law firms looking to secure their future need to hire more technology experts, not lawyers. It’s one of the key takeaways from the “Legal Technology Future Horizons” report from the International Legal Technology Association.

That’s because the legal business is on the cusp of a technology revolution, but still behind most industries. One need only look at the newspaper business to see how technology has upended a long-established business. Alan Mutter, a former newspaper executive and now Silicon Valley CEO who works with new media ventures involving journalism and technology, tracks the “newspaper crisis” on his Newsosaur blog. The statistics, are sobering. Revenues at U.S. newspapers tumbled 55 per cent, dropping to $20.7 billion in 2013, from $46.2 billion in 2003. Despite attempts to garner a share of the growing digital ad market, newspapers’ share has actually declined by 52 per cent in the past decade to 7.9 per cent from 16.4 per cent, despite the total digital ad pie growing by 494 per cent. Newsroom staffing has suffered, dropping 31 per cent to 38,000 in 2012 from 54,700 in 2002, the lowest number since tracking started in 1978.

If the legal business thinks it’s immune to such technology disruption, think again. The 141-page ILTA report is a fascinating look at the technology storm enveloping the legal ecosystem. The year-long study, undertaken by Fast Future Research, explores how advances in information technology will impact the profession over the next decade. Forty law firms were interviewed and input was obtained from outside sources, such as vendors and experts in legal technology and innovation.

The report identifies six dominant forces in business that will impact the future of law firms, including:

•     The new client agenda: Clients are pushing law firms to change;

•     Globalization and mobility: Business will be done in more countries;

•     Economic shift and uncertainty: This includes the rise of emerging markets and concerns over the fragility of the global economic system;

•     Political instability: There will be greater economic and political conflict within and among countries;

•     Environmental responsibility: It’s a growing concern both inside and outside boardrooms; and,

•     Socio-demographic changes: An aging society working longer and generational differences in attitudes and understanding of technologies will drive greater change at law firms.

The study found compared to other industries, legal has been slow to adopt technology that re-engineers fundamental work processes or helps firms analyze data to enhance operations and provide value-added services. That’s where the next wave of developments are headed: predictive analysis, indicative analysis, collaboration tools, dashboard-driven tools, the “appification” of law, and greater mobility and personalization. The end game, still years out, is using artificial intelligence and eventually “iCyborg” lawyering.

However, for law firms to survive legal IT departments must play a greater role in the strategy and development of firms’ business models. If they don’t, rule changes allowing alternative business structures mean firms will be surpassed by other organizations.

In fact, more than 62 per cent of study participants say commoditization of legal services will have the biggest impact on the future of legal service, followed by new players entering the sector (58 per cent), and alternative fee arrangements (58 per cent), which all drive the need for technological change. The report states: “law firms must automate; they must prepare for commoditization and free online delivery; and they must experiment with new organizations and structures, funding sources, business models and alternative fee arrangement. . . .” That will likely require “major increases in technology budgets over a long period of time.”

One firm, Fish & Richardson PC in Boston, employs more than 40 technology specialists to support 350 lawyers and has developed specialized tools. Most law firms are well behind them.

If you think about it, much of what lawyers do can either be aided or replaced by smart technologies. The ability for law firms to comb through legal precedents and historical billing practices to produce effective pricing and budgeting is essential to meeting demands in the new marketplace. Computers do it more efficiently than armies of lawyers. Same for managing contractual clauses, combing case databanks, and more.

Where the report gets really interesting is the discussion about artificial intelligence and the potential future. It cites futurist Marcel Bullinga, who argues we will move away from a model of written laws enforced by individuals to a future where laws and rules are incorporated into chips and enforced by technology systems. Laws will become open-standard software with algorithms that contain the regulatory information and protocol, so intelligent devices will “know” what the law is and how to act. The result is that lawyers, courts, and judges will be reduced to algorithms.

Ouch!

So when you’re recruiting this fall for new talent, think about visiting technology campuses and not only law schools.

Jim Middlemiss is a principal at WebNewsManagement.com. You can follow him on Twitter @JimMiddlemiss.


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