Are law firms taking advantage of emerging technologies?

21 October 2018

I’m always interested in the results of the annual PwC Law Firms’ survey, particularly when it comes to looking at how the sector embraces technology.

Similar to last year, the top three priorities for law firms’ business support functions are ‘use of technology’, ‘improvements in legal service offering’ and ‘standardising and centralising of processes’. This, combined with changes in investment priorities, shows that the legal sector is starting to recognise that technology is key to its survival. But it needs to do more.

Technology keeps developing

Technology development continues at exponential pace. Think of it this way: whereas we’ve probably seen more change this past year than ever, it will be the least amount of change we will ever see: going forward, every year will have more change. The legal sector is rarely at the forefront of changes, rather, this year’s survey found that the more mature and established the technology, the more firms have embedded it. For example, most firms have now  established client collaboration tools (e.g., external portals, eData rooms) and mobile applications. It is also good to see that more firms this year have reported the use of data analytics to support decision making as a significantly higher focus area than in 2017.

This is necessary but not sufficient. Firms need to be on the front foot and constantly seeking to disrupt their traditional business and operating models, looking for opportunities to implement newer technologies that best fit their needs. The results show that some firms are doing so, increasing their use of digital and emerging technology (mostly artificial intelligence, smart contracts and blockchain) .

There are opportunities to truly harness disruptive technology

At a recent legal conference, where I had the honour of chairing a panel on legaltech, one of the speakers said, “law firms must adapt to the tech-enabled future, or, as I call it, the future”. It’s true and embracing technology is just the first step: firms must also turn innovation into business as usual. Another speaker cautioned against innovating the wrong thing; great innovation won’t prevent someone from being disrupted out of existence if they’re innovating an obsolete business model. For examples of bolder innovations, we see challenger law firms trying subscription-based services and using technology to provide greater transparency.

I notice a stark difference in attitude between incumbents and challengers; I see this not just with law firms, but in many sectors. Law firms need to understand that existing business models won’t continue just because of momentum. Firms that understand how the world is changing and reinvent themselves accordingly will have first mover advantage. I’ve come across numerous examples; here are two:

Example 1 - AI has the upper hand at reviewing non-disclosure agreements

A recent competition “pitted twenty experienced lawyers against an AI trained to evaluate legal contracts.” Both the lawyers and the computers were given four hours to review 5 non-disclosure agreements for 30 legal issues. The machine won handily, with a 95% average accuracy (vs 85% for humans), and a strikingly low average time of 26 seconds (vs 92 minutes for humans).

Example 2 - The world’s first robot lawyer

In a great example of what I call technological asymmetry, British entrepreneur Joshua Browder has invented “the world’s first robot lawyer”, a chatbot that provides free legal counsel using AI. He claims the invention has saved its clients over $9m, and he has expanded from parking tickets to landlord-tenant disputes, maternity leave coverage and data breach claims. At the moment this technology probably creates the biggest threat to sole practitioners and very small law firms. His most recent announcement states that “you can now sue anyone (in all 50 U.S states and 3,000 counties), fight corporations and beat bureaucracy” for free.

What’s a firm to do?

These are just two examples of emerging technologies being used and disrupting the sector, but it is important to note that there is and always will be, a need for human lawyers. Firms need to be clear about when each, humans and technology, add value.

The good news is that we can imagine the disruptive potential of technology. We can imagine different business models. And we can test both. We can work with our clients to understand their frustrations and changing needs, then match those requirements with innovative business models enabled by technology. We can look disruption in the eye.

Disruption is here. Innovation is required. What’s your move?


David Moloney

David Moloney | Director, Technology & Investments, PwC United Kingdom
Profile | Email |  +44 (0)7799 134617



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