Law firm technology report: To the cloud

panelQ: What are your predictions for how firms will be using technology in 2016?

Tim Roche, head of IT, Boyes Turner: The feeling at IT director/CIO level is that more firms this year will take on both a private cloud for their own services – IAAS, VDI for the desktop/managed desktop, DR – and legal IT vendors’ cloud offerings for legal services. These will become very attractive as they gain customers and their offerings are cost effective and robust.

However, concerns about where data is stored and recent events regarding Safe Harbour have helped. Expect to see more vendors opening UK and European data centres this year.

Richard Kemp, founder, Kemp IT Law: Front-of-house applications like digital engagement (social media, mobile and analytics) and middle-office-ware applications (like pricing, resource planning and knowledge management) are investment priorities in 2016.

The cloud continues to vex, with what management sees as the risk of a potentially terminal client data breach sitting uncomfortably alongside demonstrable cost and efficiency benefits.

Sara Morgan, general manager, Axiom, London: We heard a lot about AI last year but I think the advances this year will be far closer to home and more likely to have an immediately positive effect on lawyers and the businesses in which they work. This will be the year in which companies seriously consider how they manage their risk and will embrace technology with that aim in mind.

Leading the charge will be the application of technology specific to the negotiation and execution of contracts.

Contracts are a goldmine of information; they define almost every detail of every relationship held by every company in the world. We spend a huge amount of time negotiating contracts and making sure they’re right, but the disturbing reality is that once executed, very few remember, record or consider the data locked away in those contracts. What could be more valuable in both controlling risk exposure and unlocking a treasure trove of valuable commercial information?

Sara Morgan, London general manager, Axiom

“2016 will be the year companies consider how they manage their risk and embrace technology”

The data in contracts can enable companies to assess risk in individual contracts and across contract portfolios; assess the limitations across the current contracting portfolio relative to divestiture, movement to new geographies, and other strategic moves; and assess key customer relationships when they expire and how that relates to previous years.

To realise these benefits presents a real operational challenge. Most multi-nationals have tens of thousands of agreements that also include associated schedules, attachments and versions. So the starting point of most multinationals is millions of pages of information that you can’t use.

Roy Russell, CEO, Ascertus: An emphasis on ‘digital’ is going to be the foundation of technology adoption this year. A vast number of technologies exist today, but they can’t be fully utilised without firms making a commitment to creating fully digital files. This includes providing an intuitive, integrated email management system and a clear and simple strategy for the transition from a paper to a digital environment. Firms will have to consider methods of collaboration that will work with their clients’ IT environments and business processes and not try to force them to use tools that are not fit for their purposes.

This is likely to drive firms to enter into more cost-effective commercial arrangements with their software suppliers such as software as a service, managed services and subscription-based licensing. In fact, software providers will be urged to offer ‘app store’-like functionality to firms to allow them to use new applications for free until they can establish the long-term benefits of the solutions to the business.

Q: Will this be the year that we see AI take centre stage in terms of the delivery
of services?

Russell: AI is certainly being touted as a game changer in the legal sector. The largest firms are exploring the technology and have the resources to invest in emerging technologies. This situation is not reflective of the overall market, however. A large majority of today’s firms are either yet to introduce or are still implementing core systems such as case and practice management.

Also, AI technology is still in its infancy and presently isn’t much more than an extension of enterprise search engines and knowledge management systems. Furthermore, without a firm-wide electronic-matter file strategy, any attempts to harness/apply intelligence are likely to be unsuccessful. As it stands, AI is unlikely to take centre stage just yet, and certainly not in the short-to-medium term.

Morgan: AI is certainly exciting, but I’m not sure that it will take centre stage this year in terms of the delivery of legal services. We’ll hear more about it, there’s no doubt of that, and its applicability to the legal sector will continue to develop.

Tim Roche, head of IT, Boyes Turner

“It’s still early days for AI, despite headlines about IBM’s Watson and game-beating computers”

Roche: It’s still early days for AI, and despite headlines about IBM’s Watson and game-beating computers of late, firms will wait and see what happens. While the low-end legal work will be targeted by AI vendors it will take some time before the more detailed legal will be an AI option.

Plus, a great deal of legal work is of course face-to-face and is either emotionally charged – think family issues – or involves convincing people, such as in a complex M&A activity or a debate in court.

Kemp: 2016 will see more function-specific AI and BI (business intelligence) software deals like 2015’s tie-ups between BLP and RAVN (light obstruction notice automation) and Pinsent Masons and Cerico (compliance check cloud platform).

But the real killer app for lawyers – and you’ve still got to go a long way to top email and file attachment – is going to be something much more universal, probably voice activated, like contract assembly or legal research. Here, the ROSS legal assistant application developed on the IBM Watson platform (which Dentons invested in in 2015) perhaps points the way ahead, with its natural language front-end and its cognitive ability to learn from feedback.

Q: There are indications that much more sophisticated panel RFPs are likely this year, with clients likely to look for providers to increase the level of collaboration with other firms/legal services providers. How can technology help with this?

Roche: It’s all down to the continued client demands for quality work but at the right price, plus completion for work is high. From an IT perspective we must ensure that the firm has the right base systems in place, PMS, DMS, case and matter management, KM, client portals/extranets so that the firm’s efficiency and effectiveness are as good as they possibly can be.

Kemp: Big clients like their law firms to play nice and don’t like seeing them strut. Technology can help with this. The banking legal technology (BLT) portal – set up by a number of magic circle firms as a collaborative legal know-how platform for their investment banking clients and now run by High Q – is still probably the best example of this combination of procurement, collaboration and technology.

Morgan: As service providers, we’re accountable for thinking ahead for clients, challenging the status quo and helping clients achieve the greatest value possible for their businesses. I don’t believe you can effectively do that unless you’ve made a meaningful investment in technology that allows you to re-engineer the way clients are approaching all but the most artisanal of matters.

Richard Kemp, founder, Kemp IT
Richard Kemp, founder,
Kemp IT

“2016 will see more function-specific AI and business intelligence software deals”

Russell: Until now, RFPs have mainly centred on fee rates, billing, scope of matters, case approach and so on. Today, technology is a fundamental component of the law firm/client relationship, and so forms part of the ‘key law firm selection criterion’ of corporates. For instance, firms need to illustrate their info-security credentials to allay any potential security breach fears clients and prospects may have.

In the same vein, the collaboration tools that firms provide are growing in importance for corporates. Increasingly, firms will need to offer collaboration tools that fit clients’ requirements from a functionality/usability standpoint and potential ease of integration with customers’ IT infrastructure. Firms need to be able to offer clients a suite of collaboration tools to pick from.

Q: How likely is it that we will see better use of CRM technology to manage and build true business/sales pipelines as firms move to a more sales-oriented culture?

Morgan: I know how powerful a well-operating CRM system can be and the benefits it can bring to both your own business and your clients. I would counsel all firms to invest in a high-quality CRM system from the outset – don’t try and cut corners. But don’t be fooled, a top-class CRM system is nothing without the people who operate within it. Without a true shift towards a sales-orientated culture and an acceptance that sales is a skill in itself and on par with being a fantastic lawyer, a shiny new system will not drive your business forward.

Kemp: The IT investments currently under way or planned in the areas of client digital engagement and partner decision support systems based around pricing, resourcing and project management are all propelling law firms towards more granular control of top and bottom lines at the client and matter levels.

Roche: I think this is a real opportunity for legal firms to get this right. Other professional services such as accountants seem to be able to grasp the concept better and there is no doubt that the software and services are out there. I think sales is still a bit of a dirty word for lawyers, but it makes sense that a better understanding of where the best work comes from; what our relationship is with the client; whether we are cross-selling enough where we can; and how to plan and properly resource work is a smarter way of working and should be more profitable in the longer run.

Q: Do you anticipate further costs reduction this year via the use of technology? If so, where will we see the biggest changes?

Morgan: I fundamentally believe that cost reduction is the wrong measure. Yes, cost is a factor and technology can improve the cost-efficiency of contracting, but a successful solution should also reduce risk (through improved consistency and policy adherence); reduce cycle times (resulting in improved client satisfaction and faster ‘time to trade’); and reduce the burden of regulatory compliance (by improving reporting capabilities and automatically capturing structured data during the negotiation process). Technology and data analytics can increase visibility, mitigate risk exposure and help drive commercial revenue.

Roche: Yes, as more firms move to the cloud for what is now seen as services delivered internally by IT, the cost of these will fall as they become less specialised and more commoditised. We have talked about AI being perhaps a little way off yet but firms that make the best use of the data they have both in terms of ‘mining’ it and understanding it will do well. I also think firms need to look at their existing IT systems and services and consider what can be done with what is there, and what will have the most significant benefit to the firm’s profitability. Too often we seek the next best piece of software to bolt on when a review of best practice and what we already have with just a few tweaks might suffice.

Roy Russell, CEO, Ascertus
Roy Russell, CEO, Ascertus

“Firms will have to consider methods of collaboration that will work with their clients’ IT environments”

Russell: Cloud technology itself and the service offering of cloud providers have made huge leaps forward already. A shift towards a private hosted model for business applications will gain momentum this year: this  model delivers cost reductions holistically across the spectrum – from servers and expensive room spaces through to IT personnel and support services.

Additionally, the much-debated security and data privacy constraints no longer hold. The model offers in-built disaster recovery and the organisation has complete control over its data and documents.

Also, firms are finally realising that cloud technology adoption does not have to be an ‘all or nothing’ approach. Instead, they can privately host their current, on-premises business applications in the cloud entirely or as a hybrid without making any modifications to the existing system or requiring any new software.

Kemp: One word: cloud.