Roundtable: legal IT

The past year or so has seen a change in the major technological drivers within the legal sector.

While last year’s focus was disruptive technology, this year’s buzzword is innovation. This is perhaps due to a combination of factors, including law firms investing in and deploying cutting-edge technology, facilitated by the mainstream adoption of cloud computing. The catalyst in the business environment has been the meteoric rise of law tech start-ups – which has been accelerated by the economic climate, and new facilitators and investors.

The latter include Dentons Nextlaw Labs in the US; Jeroen Zweers’ Dutch LegalTech meet ups in Amsterdam, supported by Kennedy van der Laan; and Jimmy Vestbirk’s Legal Geek meet ups in London, including the UK’s first law tech hackathon and the world’s first law tech start-up conference.

Mainstream firms and vendors are buying into the ideas economy and the start-up/hackathon dynamic, whereby collaboration can deliver something new. Doing things differently is seen to be bringing competitive advantage – to the extent that innovation is beginning to be included in request for proposals (RFPs).

It is apposite therefore that the Gazette held this year’s IT roundtable at DWF’s London offices. DWF’s strapline is ‘doing things differently’, and in that spirit we gathered at its stunning offices in London’s Fenchurch Street.

Technology as a catalyst for innovation presents legal IT leaders with strategic dilemmas: balancing client demands and regulatory requirements; and integrating exciting new tools and applications with existing systems and processes, while taking into account operational and budgetary implications, including security.

All this broadens the scope of legal IT, so our roundtable included technology roles beyond that of head of IT. Jan DeCerce is chief operating officer (COO) at Lewis Silkin; Jonathan Patterson is DWF’s development director, responsible for research and development, service design and innovation; and from BLP we welcomed Bruce Braude, head of strategic client technology, and David Boulds, head of development.

We balanced these slightly different perspectives with contributions from leading lights from law firm IT functions: Richard Hodkinson, COO at DWF; Stuart Walters, IT director at Olswang; Karen Jacks, IT director at Bird & Bird; Carol Skinner, head of IT at Lewis Silkin; Nathan Hayes, IT director at Osborne Clarke; and Abby Ewen, IT director at BLM. Our participants reflect the gender diversity that one hopes is part of the transformation of legal IT.

Client-facing technology is increasingly seen as a differentiator. DeCerce explains that, although Lewis Silkins’ IT function is doing an excellent job for its internal clients, the firm is dedicating more time and resources to client-facing services. ‘This year we have set aside budget to develop ways of differentiating ourselves from other firms across different areas of law,’ she says. This means incorporating input from clients, partners and fee-earners into the firm’s IT strategy.

At DWF, Richard Hodkinson works closely with Jonathan Patterson on targeting resources to clients’ requirements. ‘DWF has a wide range of customers whose needs vary widely, so one challenge is to make a judgement as to where we spend our development dollar,’ he explains.

Simply asking clients what they want is not always the answer: ‘You’ve got to give them a few ideas as to what the possibilities are. But you also need to develop a solution that is different, but realistic, deliverable and scalable.’

BLM’s Abby Ewen highlights the ‘customer relationship sandwich’, where the law firm IT function and the client are in agreement, but the partner is not on the same page.

Carol Skinner of Lewis Silkin has experienced the opposite – where the partner and client want to run with an idea before IT can consider the practical implications.

Partners are often concerned about getting out of their depth in a technology-based conversation with their client. Hodkinson agrees that this is exacerbated by the fact that partners can be protective of their client relationships.

But Bruce Braude of BLP is seeing partners bringing IT into the conversation: ‘It’s forcing partners to let go of their hold on the relationship, because they need IT support to deliver the client’s requirements.’

The pitch process increasingly includes requirements around technology; Braude observes that RFPs often include technology and innovation.

Karen Jacks of Bird & Bird believes that clients who use technology and innovation as differentiators are ideal partners for developing client-facing technology. However, Hodkinson observes that while law firm IT heads are regularly involved in panel pitches, it is rare that they meet their opposite numbers – that is, the CIO – in client organisations.

Hodkinson reiterates that as well as client pressure on innovation, law firms need to be commercially competitive. This means focusing on efficiency and managing risk, including cybercrime. All these elements feed into the overall strategy and put pressure on IT budgets.

Compliance issues are greater for firms that operate in regulated industries. Jacks at Bird & Bird has experienced several onsite IT audits conducted by financial services clients and found that many client requests made in the interests of data security and protection are unworkable in practice. For the IT function, this means learning how to say no and communicating exactly what is feasible.

An internal communication challenge involves dealing with lawyers’ fear of failure, as their need to get things right first time limits innovation, particularly when it relates to software and systems development. DeCerce addresses this by adopting a phased approach to IT projects: ‘If phase 1 doesn’t meet lawyers’ expectations, they know that we can revise our plans for phases 2 and 3. I explain to them that software and systems need to be developed. You have to play with them, test them and adjust them to fit.’

Nathan Hayes of Osborne Clarke sees the answer as engaging clients in developing new ways of working. ‘If you can show clients added value, you can then work together in a collaborative way,’ he says. ‘There is a big opportunity for law firms because the part of the business we deal with – the legal function – is a relatively small part of many organisations and they are more likely to get traction from their law firm’s IT function than they are from their own CIO.’

However, this creates an internal tension between providing value-added services and offsetting development costs – that is, if you develop a value-add for one client, can you ‘productise’ it and therefore monetise it elsewhere? Patterson adds that it is often a matter of working with the client to determine whether a specific legal IT tool would be accounted for under the organisation’s legal services budget or under its technology budget.

David Boulds, head of development at BLP, agrees that it is about presenting some clients with a hybrid package that includes legal advice as well as IT tools, as many in-house legal department budgets cover headcount and legal services but not technology.

The legal IT conversation has moved on from looking at the latest shiny new tech to focusing on particular issues and finding the best solution, whether or not that involves cutting-edge technology. Client organisations have also moved on from demanding ‘more for less’.

‘The agenda has changed on whether we can charge for client-facing technology,’ says Olswang’s Stuart Walters. ‘If you have the right conversation with the client, they may be willing to pay.’

The regulatory environment has obvious implications for data protection and security. This often means undertaking an IT security review, particularly for firms who work with financial services clients. But again, not all client demands are feasible; it is also about interpreting the regulation. ‘Globalisation means dealing with multiple regulators with conflicting requirements, so we have to pour energy, time and money into dealing with the exponential complexity of the regulatory landscape,’ Hayes says. ‘And Brexit means that the regulations in the UK and Europe will change too. So there will be more regulatory complexity. The problem is that it detracts from focusing on innovation.’  

Boulds adds that balancing security with what is feasible means that firms cannot react to every review with specific arrangements for that particular client. ‘It’s important to develop a system that everyone can work with,’ he says.

How does the requirement for panel firms to collaborate impact on firms’ IT functions? ‘While the client decides how to allocate/disaggregate legal work, there are discussions about which firm should lead various aspects of panel collaboration, such as systems, storage and data protection,’ Walters says.

This is where legal project management enters the mix. ‘Legal project management is a hybrid skill, just like legal IT, and it comes into play where clients want firms to work together,’ Patterson observes.

Ewen explains how BLM co-developed an integration template with DAC Beachcroft and how the entire panel is working together to deliver real-time systems integration in the claims department of a large insurer: ‘As this project is client-driven and offers no competitive advantage to panel firms, we took a collaborative approach. Although the panel firms approach integration in slightly different ways, depending on their internal systems, we share a HighQ Collaborate site where we can post questions and answers. The client project manager is very active in that environment. When you’ve got multiple panel firms and multiple insurers, you can end up with a spider’s web of systems. We added integration and collaboration layers.’

Hodkinson suggests that there could be a gap in the market – a third-party service to manage panel collaboration and systems integration.

Hayes agrees that panel management is the missing piece of technology for corporate legal departments: ‘Because they are not budgeted in a way that enables them to buy the technology directly, they have to go through their panel firms. And then there’s the issue of who takes the lead – because it doesn’t seem to be the client.’

Braude at BLP highlights Apperio, a third-party product that handles the financial element of panel management. Walters comments: ‘When you talk about panel management, it depends on whether you’re talking about case management, document management, financial management or the lot. Apperio is very good at financial management and project management, but it does not include case management or document management. HighQ covers document management but case management tends to be more bespoke. There is no solution that covers all the competencies.’

As Boulds observes, client-specific integrations involve a significant overhead for the panel firms. Ewen agrees: ‘Although we have built a template, you can more or less guarantee that the next client will want a slightly different solution. And partners are terrified of explaining to that client that they may not be able to have exactly what they want.’

The strategy therefore needs to include pricing. ‘If you charge significantly for a customised system, clients quickly go back to the free standardised version,’ Patterson says. However, he acknowledges that clients are still expecting firms to go the extra mile and provide value-added services as part of the overall package. As DeCerce observes, these services are not actually ‘free’ because they are covered by firms’ fees. There is also a difference between volume legal services – like insurance – and more bespoke work which is harder to standardise.

IT consumerisation in the form of apps has helped lawyers understand that they do not always need comprehensive solutions. This is helping to shift legal IT away from the belief that every solution needs to be integrated into central or legacy systems. DeCerce refers to ObjectiveManager, an online performance management tool that is used by several major firms.

‘Like any software as a service (SaaS) you cannot change it or easily integrate it with other systems, and although it can be accessed via the intranet, it is simply a link,’ she explains. ‘We need to integrate our document management and practice management systems because we need to attach a matter number to each document. But too much integration makes upgrading and so on overly complicated.’

Walters emphasises that integration is the biggest problem with legacy apps and the fact that law firms expect everything to be amalgamated into a single system means untangling a complex web of systems if you want to upgrade or add a new tool. Jacks also finds it challenging that lawyers tend to ask for everything in one system. Bird & Bird recently introduced a Salesforce standalone client relationship management (CRM) tool, and Jacks was continually asked whether it could be adapted to do business intelligence (BI) too. It could not.

Patterson believes that lawyers are not necessarily looking for systems integration. ‘They just want a single log-in for everything. So we simply need a wrapper for all the applications we use,’ he says. ‘One that’s activity-based,’ DeCerce interjects. ‘We know we need a whole raft of applications to run our businesses,’ Ewen adds. ‘But that confuses lawyers, who need a straightforward user interface like an iPhone, so that they can go straight to the activity they want.’

Part of the problem is that legal IT vendors are offering catch-all solutions – everyone is trying to do everything. However, mobile working means people are accustomed to using intuitive apps, which do not require multiple log-ins. Lewis Silkin’s Carol Skinner observes: ‘When users have so many intuitive applications, why should they choose the one that is difficult for them?’

‘We use booking flights online as our benchmark,’ Patterson adds. ‘If something is more difficult than booking a flight online, we don’t deploy it.’

However, most legal IT systems require at least a degree of user training, DeCerce observes: ‘Users want our document management system to be as easy to use as Dropbox, but then they want all sorts of additional capability, which requires training.’

Braude flags up generational differences in the workplace and there is general agreement that millennials who are used to Instagram and Snapchat are often less familiar with office applications. Walters uses printing as an example: ‘If you give a millennial a document, they will probably photograph it, whereas some lawyers will print out every piece of digital correspondence. The challenge is that we have both generations in the office at the same time!’

Legal IT needs to become more intuitive. Patterson emphasises that whereas the large mainstream legal IT vendors are catering for a global marketplace, the legal tech start-up community can quickly develop solutions to fit particular requirements: ‘When we see what start-ups can produce in a short timeframe, we wonder how long the legal IT model of LexisNexis, Thomson Reuters and HighQ will remain dominant as firms increasingly buy into the start-up dynamic – sometimes offering legal advice in exchange for equity? The technology is more agile and user friendly – and you can programme it yourself.’

Hayes agrees: ‘Mobile working means that everyone engages with apps, but why are vendors so poor at responding in the app space?’

‘We are poorly served by vendors in the app space,’ Hodkinson adds. ‘There is an opportunity to make things simple, but when products are brought to market too early, they have problems and this reflects badly on IT.’

‘We’ve got great systems, but we need to leverage particular solutions and deliver them in a different way. It is ridiculous that we don’t have a practice management system app interface,’ Hayes says.

A recent Thomson Reuters debate decided that artificial intelligence would not have a significant impact on law. Perhaps this was because it has not yet hit the mainstream.

DeCerce and Skinner at Lewis Silkin are looking at applying AI to matter allocation. Hodkinson, who has been working with IBM, emphasises that AI is beyond applying an algorithm to a process, but using machine learning to modify output. Walters refers to IPSoft’s Amelia, a virtual service desk assistant. ‘If it cannot answer a question, it passes the query on to a third-line engineer. What makes it AI is that it stays on the line and listens to the answer so that it can deal with a similar question in future. That is what defines AI – its ability to learn both from being taught and from experience.’

The challenge is that AI is not straightforward to implement, says Hodkinson. ‘It is never an out-of-the-box solution as it requires a lot of investment from the fee-earner community, because you have to train the system.’

Jacks believes that for most firms it is about finding where AI can be applied to a particular problem or issue, rather than buying it and then deciding where to apply it.

Blockchain, meanwhile, is considered a potential disrupter of transactional work. Patterson believes that initially it will be a source of advisory work for law firms, particularly in terms of regulatory considerations.

‘However, once companies have got it right, it will replace a lot of the work lawyers do because it automates the parts of transactions that require an intermediary,’ he adds.

Hayes is not so sure: ‘We are more likely to see hybrid contracts, where some elements sit outside the transactional platform.’ Patterson sees potential opportunities around creating and managing transactional platforms. However, this raises the issues of risk as well as practical and regulatory matters.

The discussion turns to the risk and reward of investing in innovation as a key strategic focus. As Hayes observes, very few law firms would bet the business on technology – in that regard, ABSs are leading the way. Law firms and the big legal IT vendors are looking to harness the start-up dynamic as innovation increasingly becomes a law firm KPI (key performance indicator). Yet many are more willing to invest in products than actually use them.

Hodkinson and Patterson highlight the dilemma of partner involvement: while it is critical to have senior buy-in, it is important to present projects to partners at the right time as they are more likely to invest in a workable prototype than an idea that might work.

When asked to predict topics for a similar meeting next year, there is general agreement that collaborative systems would be used more strategically, with both law firms and clients collaborating on solutions that do not involve competitive advantage. The panel envisages no diminution in regulatory, security and pricing pressures – and law firm IT strategy will still be focused on balancing client demands with the unrelenting pace of change in the tech space.  

Joanna Goodman is a freelance journalist