A new breed of legal market professional could revolutionise the business of law. They have legal technology expertise, they are fee-generating and they are on track for partner status.
This is an excerpt from The Lawyer UK 200 Business Services 2017 report.
Mishcon de Reya has more technology-related business services professionals per fee-earner than almost any other firm in the UK 200. Surprised? The fact that the London firm is in the early stages of a potentially transformative 10-year plan that has technology at its core suggests you shouldn’t be.
Mishcon’s tech-to-fee-earner ratio, which is higher than most of its rivals in the data set for this year’s UK 200: Business Services report, suggests it really is putting its money where its strategy is.
Mishcon’s tech-to-fee-earner ratio – higher than most of its rivals – suggests it is putting its money where its strategy is
Indeed, in November Mishcon invested in two of the technology start-ups that featured in the first-ever MDR LAB incubator programme, run last year. Mishcon refuses to divulge the size of its investments in litigation case management software provider Everchron and automated timekeeping technology provider Ping (they are thought to be in the several tens of thousands of pounds and potentially six figures), but it underlines that when it comes to tech, Mishcon means business.
This would seem to be borne out by its headcount data. In the 2016/17 financial year, Mishcon had 53 staff in its technology team. In total the firm also had 494 fee-earners, giving it a ratio of 9.32:1.
Only Slaughter and May, with 84 technology specialists and 754 fee-earners, and the tech-driven, commoditised legal services boutiques Drydensfairfax and Bott & Co (respectively 27/119 and 14/35) have a higher proportion. Of the larger firms that provided data for this year’s report, DAC Beachcroft (98/1,530), Ashurst (172/1,644), Berwin Leighton Paisner (78/780) and Addleshaw Goddard (62/927) also feature prominently in terms of absolute numbers.
Elliot Moss, Mishcon’s director of business development (and one of the firm’s newest equity partners, having been made up last year) says the headcount data reflects an “inexorable change” taking place in the way legal services are delivered in the UK. This tech-led evolution, says Moss, will require a shift in the mindset of law firm leaders tasked with making long-term investments not just in technology, but also in the specialist professionals who can implement it.
“We’re seeing an increase in the use of technology and automation and process as an enabler, which means, as night follows day, that you need people who understand how to build and then interact with that technology,” says Moss.
This year’s UK 200: Business Services report analyses how technology is changing the traditional structure of a growing number of law firms and the services they offer. The twist is that these days, it’s as much about the people as the tech.
A new breed of legal tech expert
For law firm management, the implications of this developing trend vary. Certainly it would appear that firms will need to make bigger investments in the future, not just in technology, but also in the growing range of new technology-related business services roles and specialists.
Take Clifford Chance. The firm’s global head of innovation and business change, Bas Boris Visser, who is also a partner in the finance and capital markets practice, confirms that the magic circle firm is currently reorganising the way its IT team is set up. To that end, it has introduced a raft of new roles, many of which relate in some form to technology, including head of legal project management, transaction managers, resource managers, data science analysts, coding experts and others.
Visser adds that the firm is also building a standalone team focused on tech-based client solutions while also introducing numerous “tech-heavy” client solutions.
“You need a very strong team on the technology side to help the lawyers become comfortable in applying these tech-based tools” Bas Boris Visser, Clifford Chance
“You need a very strong team on the technology side to help the lawyers become comfortable in applying these tech-based tools in their day-to-day practice and across different time zones,” says Visser. “There is a large variety of new roles coming in, and not just tech-related. The law firm of the future will be focused on using the right resources for the right work.”
The future firm will also have a very different mix of products and services, adds Visser, which again is likely to require new skill sets to complement legal know-how. And inevitably, that will require some forward-thinking investment decisions.
“We’ve made a conscious decision to invest in these areas because we believe the future successful law firms will see a different composition of products than even three to five years ago,” explains Visser.
Law firm management will also need to keep one eye on the future remuneration and reward of these increasingly prominent, often client-facing and fee-generating professionals.
Martin Soulsby, a specialist in technology recruitment at consultant Jonson Beaumont, says a senior technology professional is likely to cost a £50m-plus law firm in the region of £120,000 to £150,000, minimum. “Technology is changing at such a fast pace in law firms, so they’re having to acquire people with new skills or train their people up,” he says. “But there’s a skills shortage. Some of this is being met by bringing in people from outside the sector, but that is driving up the price and putting more pressure on IT budgets.”
The key people missing from the sector, he adds, are those who understand what a law firm does in terms of its business processes. “Generally, if you say a ‘tech person’, that’s an industry term for someone with a screwdriver,” says Soulsby. “A business analyst is someone who understands how the business works, someone who fundamentally understands who and what you are.”
In that context, then, it makes sense for experts to say that when it comes to enhancing client service, the ultimate law firm technology professional is someone who understands both tech and legal – in other words, who bridges the often yawning knowledge gulf between lawyers and tech specialists. “The ‘gold dust’ is finding lawyers who really get tech,” says Eversheds Sutherland’s international managing partner, Keith Froud.
“The ‘gold dust’ is finding lawyers who really get tech” Keith Froud, Eversheds Sutherland
Stuart Barr, chief product and strategy officer at legal market technology business HighQ, recently wrote about these emerging legal market tech specialists. As he put it, their presence or absence could “make or break a firm” in the near future.
“To stay competitive, firms need to optimise existing processes … and create new legal products and services that make full use of the latest technology … specific to the needs of clients,” argues Barr. “It has led to a growing need for a facilitator who can identify new opportunities to improve existing ways of working and deliver innovative new client solutions, marrying legal knowledge with technological expertise. That role is the legal engineer. This role is the interface between legal experts and technology experts, they get both sides of the equation.”
Invest in tech people, not just the techware
In terms of the make-up of business services teams and the hiring decisions that will make them fit for purpose, this is one of the biggest issues facing law firms’ senior management. To be part of the leading group of firms in the future, the investments needed are not just in new technology, but in people who understand how to make it work. In addition, these people’s rewards need to reflect their importance to a firm’s business model. That might mean not only money but status, a trend that has implications for future career structures and for the long-held hierarchies in law firms.
Thanks to regulatory changes that paved the way for non-lawyer equity partners, the UK legal market is already seeing a shift. Indeed, Mishcon’s Moss appeared at The Lawyer’s annual Business Leadership Summit last September as part of a panel discussing this topic.
What is also apparent is the extent to which many more of this growing cadre of senior business services professionals (by no means solely limited to those working in technology, by the way) have direct access to clients. Crucially, this is not down to some quasi-royal decree on the part of law firm bosses. It is because clients are demanding it.
Pinsent Masons’ David Halliwell, says the role of many tech-related business services staff has shifted from supporting lawyers to dealing with clients
Pinsent Masons’ director of knowledge and innovation delivery, David Halliwell, says the trend is already in evidence by the number of tech-related business services staff whose role has shifted from supporting lawyers to dealing with clients. The continuing use of the term “non-lawyer” remains a source of irritation, he observes.
“It really gets my goat,” says Halliwell, a non-practising lawyer who used to work at Slaughter and May. “People don’t know what to call me. It’s the same in the medical profession with doctors and non-doctors. We just haven’t got a collective noun other than by defining people by what they’re not.”
Legal tech experts are revenue earners
Can these two traditionally separate worlds ever really meld in the context of an old-fashioned, hierarchical law firm? The signs are that it is happening already.
Most law firm partners, whatever the politically correct party line might be, still look at operations people and see an overhead. They are unlikely to view as irreplaceable someone who isn’t a lawyer. Or, more critically, a fee-earner. But they should.
Along with the rapid increase in new and emerging roles, a new legal landscape is coming in which a firm’s senior revenue generators aren’t necessarily lawyers. This is the nub of the issue.
Traditional firms’ structures are based around the fee-earner engine room. This drives the business. It’s a combination of people, processes and technology delivering legal solutions with law at the apex and lawyers at the heart. But as an increasing number of legal project managers, analysts and engineers drive the value proposition by working with clients right at the operational heart of the business, logically things should change.
“Our belief is that the more you have of this kind of thing, the more relevant it is to clients,” says Pinsents’ executive board member and head of client strategy, Alastair Morrison. “That takes you down the track of moving from ‘back to front’ – meaning that we have a number of professionals in our business who in traditional law firms would be regarded as part of a ‘back office’, whereas we see the range of their skills as very much part of a client value proposition. This logically evolves into pricing propositions which expressly celebrate or advocate skills like coding, data analytics and project management, which contribute to the speed, consistency and quality of delivery, creating value-adds for clients that may be equal or even bigger than legal skills.”
Logically, this should then over time blur the distinction between lawyers and the widely hated term, non-lawyers. According to Allen & Overy’s Scott Robson, this was the “huge shift” that the accountancy market went through a few years ago, after the penny dropped that you don’t have to be an accountant in order to earn money for an accountancy firm.
Robson, who in October joined A&O from EY as the magic circle firm’s first-ever global head of e-discovery, says that the major consultants haven’t talked of “accountants and non-accountants” for years. Indeed, the accountants don’t even refer to themselves as “accountants” any more. “I’ve worked in e-discovery for 25 years, before people knew what it was called, and I’ve always been a fee-earner,” he says.
Attracting the cross-platform legal professional
The number one firm in this year’s report ranked by the total of technology staff based in London is Slaughters. Jane Bradbury, head of knowledge and information, says it is “very evident” that her firm, which famously became the first to adopt the Luminance AI platform (and subsequently invested in it), is interested in technology expertise.
“I’m most interested in the sweet spot where that gets blended with being a lawyer,” she adds. “We’ve always had KM lawyers in the central team working with fee-earners but we’re now recruiting young lawyers who’ve seen the way technology can drive changes in the way we can deliver our services to clients. There are lots of lawyers that are very excited about tech now. It’s not just being seen as a platform.”
Adam Curphey, BPP Law School’s head of innovation technology, led a workshop on ‘The Law Department of the Future’ at The Lawyer’s In-house Counsel as Business Partner conference in November. He highlighted the emergence of two related trends: legal know-how isn’t the principal way law firms are competing these days (“it’s more about the business of law”) and students and junior lawyers need to have a far greater understanding of technology, and in particular legal market-specific technology.
“We need to start really embedding tech in the law,” says Curphey. “Just as we simulate our clients as we teach, so when we talk about drafting, we highlight tech-related ways of drafting e.g. auto drafting. At the moment, we get students to run track changes and so on and we have the module ‘Law Firm as a Business’. And millennials do have tech knowledge, it’s just not focused on the type of tech that any of the firms use. As we move towards creating new courses for the solicitors’ qualification exam, this is definitely something that has to be embedded.”
Legal tech and the law firm
Curphey’s point highlights the coming together of two trends – the increased need to educate new lawyers about tech and the growing importance of tech in law firms, the latter necessitating a greater role for specialists who are recognised as such.
Both speak to dynamic changes coursing through the legal market that have the capability to redraw the traditional model entirely. Needless to say, this is hardly unique to law firms.
More than 50 years ago in 1956, American entrepreneur Malcolm McLean invented the shipping container. It was the simplest of ideas, but it radically increased the speed and quantity at which cargo is transported, changing the industry forever.
“A container port of today bears no resemblance to the Thames docks of the 1950s. The impact of legal tech on law firms will be as fundamental” Axel Koelsch, Addleshaw Goddard
Addleshaw Goddard COO Axel Koelsch believes the legal market is going through a similar, technology-fuelled change.
“Legal tech is creating new ways to deliver better business outcomes,” confirms Koelsch. “Slow and bespoke ways of working are being replaced with more efficient and technologically enhanced ways of working. It resembles the impact of containerisation on international trade: irregular-sized crates replaced by a standardised, fast and more efficient simple solution, that makes the transportation of goods around the world almost frictionless. A container port of today bears no resemblance to the Thames docks of the 1950s. The impact of legal tech on law firms will be as fundamental.”
Undeniably, the rise of automation and market consolidation has caused tension among business services staff, with a number of roles already beginning to disappear. Pinsents, for example, confirmed this year that it was looking to axe up to 100 PAs, since new technology resulted in better workflow and document production capability.
This stark development potentially applies to lawyers themselves, clearly. Law firm managers will, or should, be discussing not only the skill sets needed by those in the future, but also the staffing levels required.
“We hired 28 NQs into litigation last year. Next year, should it be 22, and six tech grads? These are the debates we’re having” Paul Worth, Eversheds Sutherland
“We hired 28 NQs into our litigation group in the UK last year,” says Eversheds Sutherland’s head of litigation, Paul Worth. “Next year, should it be 28? Or 22, and hire six tech grads as developers or analysts who might have a bigger impact on the bottom line, if not on day one then in the future? These are the debates we’re having.”
Watch Matt Byrne talking about the dismantling of the status quo in law firms in this short video.