The new disrupted normal

Automation is poised to shake up the legal industry. How can students prepare for a shifting career landscape?

The new disrupted normal
Automation is poised to shake up the legal industry. How can students prepare for a shifting career landscape?

No industries seem safe from technology disruption these days. Music, movies and newspapers have all fallen under its spell, and the financial industry is following suit. Law is next as new technologies shake up processes that haven’t changed for decades.

This disruption is still in the early stages, but today’s legal students will feel its first real effects. What will it mean for their careers and what skills must they nurture to prepare themselves for this change? How can law schools and law firms help them to adjust and make the transition?

Some legal experts predict a decline in job opportunities. Bryan Friedman, general manager for Canada at Axiom, which provides technology-enabled legal and contracting services, warns that “one area particularly impacted by technology is anything that involves high-volume, repetitive work.”

Technology promises to disrupt several areas of law, one being compliance. Examples include ComplyAdvantage, which uses machine learning to identify compliance risk, while LawGeex uses similar artificial intelligence technology to make contract review more efficient.

Further up the value chain, Ross Intelligence is selling AI based on IBM’s Watson to read the entire body of law and generate responses to natural language questions, along with citations. It is already working long hours at law firm Baker & Hostetler LLP’s bankruptcy practice.

Friedman says that technologies such as these are encroaching on junior tasks. Traditionally, first-year associates and beyond could expect to compile due diligence memorandums for corporate transactions, he says. Moreover, they can do it more effectively and deliver more presentable results.

Technology can not only automate the hours of review but also make the output more digestible, delivering a hierarchical, interactive reporting dashboard rather than a Word document.

The human judgment of lawyers is still there, but it’s being applied at the upper levels of that analysis, says Friedman. Younger lawyers, robbed of their role, will be at a loose end.

“Can you justify putting more expensive and more error-prone resources in front of that?” he asks. “If not, how do you give young lawyers the training and exposure that they need to develop a skillset and gain familiarity with the inner workings of the deal?”

Friedman anticipates a thinning out of junior legal jobs as this automation works its way through the industry. It will affect those at earlier stages in their careers. “It’s really the hire-backs, and how many junior lawyers firms [we] will be looking to keep,” he says.

This is going to change the shape of the legal workforce, according to some. Traditionally, law firms have adopted a “pyramid” model for hiring, with a small number of partners at the top followed by a larger number of senior associates and a still larger proportion of juniors at the bottom.

Expect that to change, says Paul Paton, dean of law and Wilbur Fee Bowker professor of law at the University of Alberta Faculty of Law in Edmonton. “You have a few associates, a fair number at the senior associate junior partner level, and then a few senior partners, so you can envision a diamond.”

This thinning will have a knock-on effect for law schools, anticipates Warren Smith. He is managing partner at The Counsel Network, a company focusing on legal recruitment.

“You’ll end up with this gap,” he says, arguing that a scarcity of jobs for new legal graduates could affect law schools’ student intake, on which they rely for tuition fees.

“If the law firms don’t take them, then the law schools will be faced with a more challenging question,” he says. If the probability of a well-paying job and a secure career path after law school decreases, then students may be less willing to invest large amounts in a shifting career.

Smart students may instead decamp to other sectors with more certain futures, he says. Engineering, medicine and technology all spring to mind.

If law schools don’t address this issue, then Smith anticipates a gradual erosion of well-trained feedstock for the legal sector. “You can’t run the legal profession on no new hires. At some point, the law industry falls in on itself,” he warns.

He would like to see the legal industry must move to stop that brain drain before it becomes a problem.

This change in opportunities for legal students might become a problem more quickly than we think, warns Krista Jones, managing director of the work and learning cluster at Toronto-based technology innovation hub MaRS. She predicts that these technologies will change junior jobs in the legal industry within a three- to five-year time frame.

Technology disruption follows a common pattern, she warns, and disruption in legal practice will be no exception. “We have seen these new business models spinning up overnight and requiring skills that are not [traditionally] in demand, and then we see this race to commoditize the skills,” she says.

The technology industry moves at bullet speed, and where it sees an opportunity, the commercial world leaps on new developments in tech and automation to gain competitive advantage. Jones worries that the academic site may not keep up. “Our education system is not structured for real-time skills development,” she says.

Law firms may have no choice but to adopt these technologies if they want to stay competitive, says Smith. Where one firm leads and wins competitive advantage, others will be forced to follow.

Client demand may also exacerbate this race to automate. Clients want more for less from legal firms. Deloitte’s recently released its “Canadian Legal Landscape 2017” report, interviewing 100 in-house counsel lawyers and representatives from law firms across Canada. The research found that almost half of chief legal officers are currently using alternative fee arrangements and expect to increase their use in the next year. Almost two thirds of law firms said these new arrangements are not as profitable as hourly billing.

“One way in which firms are understanding that is they are writing off the hours of junior lawyers, because clients don’t want to pay to the same degree to train junior lawyers,” says Cristie Ford, associate professor and director of the Centre for Business Law at UBC’s Peter A. Allard School of Law.

These shifts in client demand threaten a long-standing unspoken arrangement between in-house departments and law firms, says Smith.

“In-house departments are very reliant on the law firms to do the bulk of the training and have relied on the law firms to port some of the talent at the associate level to in-house roles,” he says.

Smith believes that this could create competition for talented lawyers between law firms and in-house departments. The former may be less willing to give up senior associate talent for in-house clients because a scarcer training process has left it thinner on the ground.

Deloitte’s figures bear this out. Seventy-two per cent of firms noted staff retention and succession planning as key priorities, and half of all legal firms pointed to staff retention as an issue.
All signs point to a lack of direction on this issue, as half of the firms surveyed said that they are not tackling it, often because they don’t know how to.

Axiom’s Friedman expects in-house departments to pick up the slack by hiring associate-level staff earlier on for lower rates. That would effectively see in-house departments taking on more of the training burden.

Is there a way for the stakeholders — the law firms, the law schools and the students themselves — to turn these challenges into opportunities from a skills and careers perspective?

Many commenters are optimistic. Shelby Austin, who leads the strategic analytics and modelling practice at Deloitte, describes herself as an “aggressive optimist.” She acknowledges the role that automation will have in shifting legal employment models — the diamond model features in Deloitte’s report — but she adds that there are upsides for all stakeholders in a technology disruption scenario.

Ultimately, the onus will fall on students to take ownership of their careers as the landscape shifts for legal talent, and Austin says that there is no shortage of opportunity.

“The thought that the pie is shrinking rapidly is a little overstated,” she says. “With a law degree, they’re going to have access to spaces that no other degree would give them and that the qualifications that they have in law school prepare them for a number of opportunities.”

These opportunities may lead them down alternative career avenues, says Peter A. Allard’s Ford, who also considers herself optimistic about the current changes. “It may be that there are other career paths, whether it’s in legal project management or thinking about the intersections between social issues and a broader conception of justice and the law or thinking about the intersection of technology and law that are really promising,” she says.

Axiom’s Friedman advises law students to become more business-minded. “As in-house departments rise in sophistication, there’s a lot of management components to what these lawyers are doing, so understanding different trends and thinking around management is really important.”

Shifting skills requirements for legal students will entail new approaches to study, suggest several experts. Friedman highlights project management, operations and technology as key focal areas.

Understanding the intersection between business and technology will be a vital part of a future legal professional’s skillset, agree experts who spoke to Canadian Lawyer. Friedman talks about learning to code and becoming intimately acquainted with Excel pivot tables.

Jones talks more broadly about analytics as a key component in legal practice. Future lawyers will need to be adept in managing data, she says.

Ford says students often bring a wealth of pre-law school experience that will help them present a more rounded, multi-faceted skillset to potential employers. The average age of the school’s intake students is 27, she points out.

“People come in with life experience, and often with graduate degrees, and with the advantage of being much more plugged into emerging trends and communications than some of their elders,” Jones says.

Existing technology expertise could stand new legal recruits in good stead, making them agents of change in legal firms that are grappling with new technologies and ways of working, says Roxanne Israel. She leads the Calgary business immigration practice for EY Law LLP and is also a member of the People Advisory Services practice of Ernst & Young LLP.

“A lot of the ideas and processes that we implement are driven by junior lawyers and paralegal teams who are digitally savvy and are first adopters of some of the new technologies and new ways of doing things,” she says. “We’re taking our lessons from them at this point.”

If legal students are expected to bring new skills to their practice, then law schools also have a role to play, argues Deloitte’s Austin.

“I think there’s an opportunity for law schools to take a leadership role in teaching some of this, but many are not quite on the leading edge at this time,” she warns. “So, I think there’s an opportunity there for those who want to get into that game.”

TCN’s Smith says this starts with an existential discussion: What is the law school’s role in relation to the law firm? If it’s focused on the bedrock of higher education such as teaching critical thinking, then questions around technology disruption will be less relevant.

Conversely, if it is expected to start picking up some of the training burden, then it will indeed need to change, he suggests — and it will have to figure out ways to do it more quickly to avoid a talent gap as law firms accelerate their transition into new working models.

Ford says the basics of a JD degree won’t change. A law school isn’t just about training students for a vocational profession, she asserts. Ethics, analytic rigour and scholarly inquiry will still form the foundation of a student’s education.

Nevertheless, it must move with the times and embrace new requirements. “It may be that different law schools across Canada will take different approaches in trying to train their graduates,” she says.

One such approach sees law schools embracing experiential learning. Hands-on practice beyond the traditional summer internship can help ground law students in real-world scenarios where technology and automation are already coming into play.

The University of Alberta has already embarked on a two-year program to explore how it must adapt to cope with technology change, says Paton. It created committees to explore potential curriculum changes and hands-on learning opportunities for students.

The Faculty of Law there is already launching experiential partnerships with organizations such as the Alberta Utilities Commission and Alberta Human Rights Commission. In September, it will launch an experiential opportunity with the Canadian Armed Forces.

“These sorts of targeted opportunities support and supplement what for the longest time has happened independently through student legal services,” Paton says. “Our student clinic is not an integrated part of our curricular activities. We don’t give credit for it, and we need to take a look at how we’re doing that.”

Beyond hands-on practicums, law schools also have an opportunity to bring technology and design to the foreground. This is already happening in some areas. Georgetown University Law Center’s Technology, Innovation and Law Practice practicum runs an Iron Tech Lawyer competition where student teams show off apps built to enhance legal practice.

Stanford University operates a legal design laboratory, which trains law students in human-centred design, giving them the skills to design new, more accessible legal solutions. That program uses an interdisciplinary model that Ford says will become more popular.

“I can imagine greater interest in interdisciplinary and linking them more actively with other faculties and departments on campus,” she says. This will prompt law schools to think about creating graduates who have those core legal capacities but who also bring some other legal skills to the table.

This collaboration could include not just internal faculties but other institutions including technology innovators, incubators and hubs, Ford suggests.

As someone working closely with technology companies, MaRS’ Jones sees value in bringing technology entrepreneurs to the table with legal educators.

“Entrepreneurs are talking to the legal schools as part of this ecosystem,” she says, adding that she has seen technology companies that offer legal and technology solutions working with faculty to find traction.

Law firms large and small can also become a bigger part of a conversation with law schools to help join the dots and give law students the preparation they need for a shifting industry, say experts. Deloitte’s Austin says that this is also an opportunity for legal firms and general counsel to address the development of new skills when training junior employees themselves.

“If we are right that this is truly the fourth industrial revolution and we’re going into a tech age, then perhaps the skills they need to learn in those first years are more around communication and responsiveness and less around research,” she says.

The onus here will be on mentorship, says EY’s Israel. She identifies a need to have strong mentors and coaches to help those junior lawyers who may not have the chance to be involved at the ground level.

There will be other upsides from a career perspective as law firms, in-house counsel, law schools and students themselves adjust to legal automation. One outcome will be an expansion of the client base, believes UBC’s Ford. Technology will drive new efficiencies into legal practice including “one too many” services, where a single list serves many different clients with the help of automated technology.

“We can serve people who may otherwise find it expensive to retain a lawyer,” she says.

Naysayers may bemoan the commoditization of legal practice, but developments like this open up new career opportunities for millennials entering legal practice, say experts. Look for changing working practices, driven in part by automation and the use of new technology.

“Flexibility might be something that we see more of, so you might see more part-time lawyers and more remote work arrangements, which we wouldn’t necessarily have seen in the past,” says Israel.

She also anticipates a rise in contract lawyers to handle project-based solutions such as research and proposal writing. This presents yet another opportunity for junior lawyers as they seek out new career paths within the legal world.

“A lot of this transformation and disruption that we’re seeing will impact not just how we practise law but what we practise,” she adds.

Technology ushers in new legal and ethical dilemmas that will challenge law firms and their clients. Those companies that are prepared for them can add value in an industry facing an unprecedented commoditization of skills. We’re likely to see a demand for experts who can grasp the nuances of everything from blockchain technology through to cybersecurity and biotech.

“With this change, there are new areas of law that will be opening up. That’s where law schools also will have to be proactive and stay on top of where these new areas are.”

One trend permeating Canadian Lawyer’s interviews about this topic revolves around choice. Stakeholders, including students, can view the emerging disruption of the industry as a hurdle to overcome or as an opportunity presenting new career choices.

Those who choose the latter get to be at the forefront for the new industry working patterns and have the chance to shape their own careers as they emerge from the legal education. The hand wringers can at least console themselves with the knowledge that law isn’t the only profession undergoing this transformation. Other careers such as accounting face similar transitions.

One thing is clear: A reactive approach to technology disruption will put legal firms, law schools and students on the back foot. Understanding how this will affect law careers and adjusting for the future will ease the transition to practice and set new lawyers up for success as they begin on this exciting journey.

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