LOTF2011 | Ian McDougall

23 June 2011 | 12:30 - 13:30 | LunchFuture of the Legal ProfessionBy: Ian McDougallIt is fascinating to ponder how the law will develop over coming years. My own retrospective anthology wascalled “Cases That Changed Our Lives” and tried to examine the impact of legal changes on the lives ofpeople. But something that often gets overlooked, and therefore has to play “catch-up” as the law moveson, is how the legal profession changes? How will the profession of law change to meet the needs of achanging world? I believe it is a mistake to imagine the law developing without any impact either on, orfrom, the actual practice of law.So, I hope, in the time I have today, to take a brief look at a possible direction for the legal profession and,in particular, what will be expected of it.Many people say that to study the future we must look at the past. Indeed, the common law systemabsolutely relies on that premise. But let us see whether the past developments in the legal profession cangive us any clues to future development.Let me start with a very brief history to set the scene.Gradually, the modern law office has transformed into an amazing place. In the distant past, peopleemployed “scribes” to copy important documents, when the ability to write was a skill in itself. Of course,the introduction of printing machinery led to the commoditisation of the written word. For a long time, themost complicated piece of technology most law offices had was a typewriter. Research was (and still is inmany ways) a process of reviewing a mountain of paper; books, periodicals and statutes. An important partof the legal advisor’s skill was just being able to retrieve the relevant area of law.But, back to my story; As I say, printing took the place of the scribe and eventually technological wonderssuch as the telex machine and photocopier were introduced. They were quickly followed by the wordprocessor. As telex and word processors were introduced, the operators were able to capitalise on that skilland commanded salaries for that work. But the ability to use such technology, in turn, became widespread.This technology was also gradually superseded by the introduction of multi function computers with LANsystems and, then, the internet and, maybe soon, the Cloud.In my view, the legal profession has been extremely conservative in the area of professional change andespecially technological development. I rather suspect that, given the choice between doing nothing andchanging the way the legal profession works, much of the profession would choose to do nothing. 23 June 2011 | Lunch Presentation | Ian McDougall | 1

Yet, when the Information Technology world focused its gaze upon the “back-office” functions of law offices,it became clear that commoditisation was not only possible, but necessary.More recently, aided and dare I say provoked to an extent by In-House Counsel, law firm focus has been ondriving down costs, and/or providing some additional value added service. Increasingly, a fair proportion ofthe work can be done by the “client” with its in-house advisor. In fact, a LexisNexis survey conducted duringthe height of the recent economic downturn showed that 60% of corporations responded to the downturn by“insourcing” their legal work. That is, bringing the work inhouse and increasing the size of their inhouseteams. But the same commercial/budgetary, pressure to increase efficiencies, and show ever improvingvalue, is being focused on the private practice legal profession with an intensity never before experienced. Itwas heightened by the recent economic recession.Current Legal Service MethodologyEfficient legal services have, effectively, three components in delivering services to clients; Firstly - The frontline provision of advice. The most fundamental and value added service of all. But one which, for reasons I will explain later, is the latest to come under pressure to change; Secondly - Back office systems which enable an office to manage itself – billing, time recording and document management being obvious examples. Thirdly – the knowledge management systems - that is, providing the tools to support or enable the advice to be given – research and workflow solutions are the examples.As I said, the first impact that IT had on law firms was the back office system element. Computers areparticularly good at doing standard and repetitive tasks!But the developments of interest to all legal advisors is how the provision of the legal advice itself will bechanged in future by the introduction of technology. If you had asked our law office of the distant past, orindeed even of the 1970’s, what they thought of a computer actually giving advice to a client, they may wellhave thought the idea pure Star Trek. And you might still think this sounds strange now!! But we can seehow commoditisation is even affecting the provision of 1st level legal advice.Let’s take a contract. The construction of a contract is considered an area where drafting expertise is thevalue added service. But does it continue to be once a systematised version is created? It is now possible tocreate systems which can ask questions and then automatically deliver draft documents. No legal advisorneeds to be involved in the conversation!A process can now, to a large extent, be managed by a computer with an administrator under legalsupervision. It is clear to see how the commoditisation has led to the matter being managed by a lessqualified (and therefore, usually, cheaper) person than otherwise would be the case.But change does not stop there. Any legal advisory process which can be reduced to a series of fixed (albeitnumerous) considerations can be automated. The lay client can led by the hand through the proceduralsteps and the relevant core research material integrated into the system and accessed if necessary. 23 June 2011 | Lunch Presentation | Ian McDougall | 2

By taking the legal information, integrating it into a workflow process, the basics of legal advice, at lowlevel, are pre-analysed and commoditised. Technologically, all of the elements are in place to commoditisemuch more of the provision of legal services. Maybe even the actual provision of first line legal advice?It is now possible to have research products integrated with matter management products integrated withDocument Profiling (i.e. categorising and systematic filing of documents) integrated with an electronicdisclosure tool with voice recognition software and audio responses from the computer.The efficiency gains may be obvious to see. But here is the amazing point – all these systems exist NOW.So, let us add some further recent developments to the legal industry into the mix;Multi-Disciplinary ServicesIn many parts of the world, these are becoming an increasing focus. People mention phrases like “one stopshop” It is the idea that a single company can provide a client with a multitude of different skills andservices including legal advice. Many accounting firms have had in-house legal departments helping withprojects for some time already. It is not too much of stretch to take this further. What about an architect’sfirm also providing the legal advice to enable planning permission for buildings to be obtained?In the UK, we have recently had this issue dealt with by the Legal Services Act which, for the first time, isgoing to permit commercial organisations to own law firms. The governance and code of conduct issues arestill being worked through but that is a matter of time.The electronic way of doing business is transforming the law as well as the profession; from jurisdicitionalissues tweeter’s breaching national court injunctions. The legal profession cannot ignore the impacttechnology is having upon it.Bulk/”Factory” LawAs a counterpoint to what seems to be the prevailing wisdom, I want to briefly mention “outsourcing oroffshoring.” This became appealing in the UK first among banks and call centres, and then to a much lesserextent, by law firms themselves. Why have they outsourced legal work? Because it is a low costenvironment that allows lower level legal work to be done more cheaply.The “outsourcing” industry quickly caught on to the fact that much legal work is relatively repetitive and,therefore, can be done in low wage environments. The so called “legal process outsourcing” companies havetaken this on and there was a spurt of growth. I shall be, deliberately, a little controversial now and saythat, in my view, LPO is a fad! It distracts us from the real debate about the development of the legalprofession. Why do I say that? For a couple of reasons; Firstly, anything which is simple, repetitive or fairlylow skilled (as I hope I am explaining) is in fact work for which a computer is ideally suited. No matterwhere you are in the world, or how little your wage is, a computer requires no salary. It can workcontinuously on repetitive tasks without getting tired, demanding a wage rise or better working conditions.Which, secondly, means that areas where LPO’s have grown (like India, for example) can only experiencegrowth in skilled areas on the basis of low costs for a limited time. Wage inflation in India is running wellinto double digits, especially in the skilled sectors. Having a billion people as a potential work force does notdrive down costs when a massive proportion of them are still totally illiterate. That is not how you sustain alow cost environment for skilled tasks. 23 June 2011 | Lunch Presentation | Ian McDougall | 3

There are also issues of corruption, data loss, data protection, and various other matters that the, currentlyfavoured, outsourcing nations have to deal with.Fees & RiskWe have heard much about “Innovative Billing arrangements”. Actually, I almost sick of hearing the phrase– it gets mentioned so often. But what does it really mean? I suggest it means that both parties, customerand provider, will take a costs risk in the project. This is not something the legal profession has been usedto doing. We are a profession raised on hourly fees. That means that no matter what happens to the client,the law firm gets full fees for what it has done. No risk. The client may lose, but the firm still charges forwhat it does. Innovative billing, quite common in other industries, can mean the firm accepts a risk it willnot be able to charge for all the time it has spent or it shares the full risk with the client on an outcomebasis – most commonly no win-no fee or, slightly less common, no completion - no fee. In my view, its timewill come, only not as quickly as has been predicted.A speculation into the future of legal servicesSo far we have looked at the past and the present. Let’s consider the future. Sometimes we have to makegreat leaps of imagination (and risk ridicule) to try to plot a path into the future. • Who would have predicted, even as recently as the 1970’s, that an legal entire case could be created, managed, documents sourced and arranged for disclosure, lodged with the court and served, completed and billed without a single piece of paper being used? Yet the majority of evidence in litigation matters now comes to us in emails or other electronic file formats. • Who would have thought, that it was anything other than science fiction that a computer would be able to ask you questions and, from those questions, generate a contract? • Who would have thought that you could talk to a computer and get it to follow instructions? Or that the computer could actually talk back! Yet, that technology is available now. Voice recognition software is widely available and synthesised computer voices sound more human than ever. It’s not the norm yet, but it is becoming increasingly widespreadBut this is the important point; these things will continue to become widespread if efficiency gains are to bemade.So, I think, on the basis of what I have said, let’s make a number of further predictions. • It seems clear that if technological development, I also mean commoditisation, continues then more and more legal advice functions will be carried out by computers. No, let me rephrase that, MUST be carried out by computers if real efficiencies are to be wrung out of ever tightening budgets. • The importance to the profession of its relationship to the legal solutions providers, for example LexisNexis, will become even more important than it was when we were pure publishers. Instead of a supplier/customer relationship, there will have to be a much closer relationship involving systems management & research development and, dare I say it, “cloud” computing. • This leads to the notion that more legal work will be done by lay administrators who can simply follow the process laid out for them by the automated system. The cost and efficiency savings becomes obvious. • The legal advisor will become specialised in interpreting the law in the light of the facts of each individual case. To do this most efficiently, the advisor will require the sophisticated support tools that I have referred to. The real value of the legal advisor will become, increasingly, judgement and 23 June 2011 | Lunch Presentation | Ian McDougall | 4

experience. They will be the premium skills - as they are in many other professions; all designers can draw, but some are great designers! As a result, we may even see the re-emergence of old fashioned, and very much longer, apprenticeships. This is because experience and judgement can only come by having that skill handed down from wise(r) senior colleagues who have been there, seen it and done it. There will NOT be a requirement for an ability to remember which book the law is in, or what a piece of statutory text actually says (a computer can tell you facts and will be able to do so in milliseconds). Instead, an ability to correctly interpret and judge those facts is what will be required. • Using technological efficiencies enables continuation of the trend in keeping costs under control and focusing on the actual delivery of value added legal advisory and management services. Law firms may abandon their own IT infrastructure and have their information and support software provided by “cloud” integrators who can manage both the information and practice management requirements. The extent to which we will see the abandonment of the traditional “office” is something I have more of a doubt about within a short time scale. Yes, many people live a great deal of their lives virtually, but I think the more virtual your life, the younger you tend to be. That means it will take a generational shift before we see many truly virtual law firms.So, I will conclude with some final points. It is clear that economic/budgetary pressures require a never-ending hunt for further efficiencies. The future will see a drive for professionals to move higher up the valuechain; those things that can be commoditised will be commoditised.That means, eventually, workflow tools and other electronic legal support measures will become a necessity,not a choice. Will there continue to be the great single or multiple volumes of works on legal subjects? Orwill there be a mass database of information, sucked out and into workflows as needed? If that becomes thenorm, how will Judges, in referring to text precedents, be satisfied that they are referring to an expertopinion upon which they can place weight?The automated workflow and content solutions will allow lawyers to focus the real added value that theyprovide; that is interpreting facts in a legal context to provide advice on an individual case by case basis.That skill cannot be replaced by a computer. That skill requires technology which remains the prevue of StarTrek. I can also make a statement that may stand out as going against the current trend; Insourcing, usingtechnology and lower skill administrators will be the way that efficiencies are eventually wrung out incompanies large enough to invest in them.As I say, all of these issues have an impact, sometimes profound, on the development of the legalprofession itself. So I hope I have stimulated some thinking that will start now. 23 June 2011 | Lunch Presentation | Ian McDougall | 5

LOTF2011 | Ian McDougall

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LOTF2011 | Ian McDougall — Document Transcript