Founder of AI-enabled predictive analytics legaltech company LSG
The legal tech revolution is still a long way behind comparable sectors such as banking and insurance. But COVID-19 is undoubtedly having an impact on tech adoption across the industry.
In 2018, for example, the UK’s top 10 law firms all agreed that technology was the key challenge when it came to growth. In 2019, however, there was a remarkable increase in interest in the legal tech sector from investors, with a record total investment value of $1.2 billion by the end of the third quarter.
With momentum already flowing, 2020 has accelerated the need for even the most tech-averse attorneys to rethink how they use technology in order to continue going about their lives. And now, 76% of lawyers surveyed by legal tech company My Case agree that COVID-19 will have a lasting impact on the way their firm uses technology.
“There seems to be a real appetite for technology,” said Rudy DeFelice, co-founder of KPLabs, a consultancy that connects lawyers with available legal tech options. “You just can’t keep throwing more and more people at problems...so technology is recognized as part of the answer,” he added.
So, as the rate of tech usage gathers pace within both law firms and in-house legal departments, the legal industry is on the cusp of an important transformation. The problem, however, is that there are still some significant barriers holding back wholescale adoption. Whether this comes from a lack of knowledge or understanding, general resistance to change, risk aversion, security concerns, or lack of trust, the industry still has some work to do to overcome these and support growth.
The slow advance of tech into legal firms is quietly chipping away at the foundation of the billable hour.
Technology is “just doing the things that people do every day, better, and fast-forwarding the time lawyers spend completing tasks.” points out Daniel Farris, founder of legal workforce management provider NMBL Technologies. So what does a firm do when calculating the bill, if half of their person-hours are replaced by software that takes a fraction of the time to manage?
What this creates is a paradigm shift in pricing. New entrants are leveraging this to differentiate themselves in the market. The two prominent pricing models to emerge are monthly subscription fees charged by “law-as-a-service” firms, and a la carte set-pricing for specific services.
When it comes to legacy firms, adapting to this new paradigm is not so easy. As Gillian Fishman, Founder and CEO at legal tech customer success platform Jade points out “legal tech companies will say lawyers are too focused on billable hours to take the time to learn new technologies. Lawyers will say they don't have time to go from 0 to 100 in one fell swoop”.
Therefore, it’s unlikely we’ll see the reinvention of legacy firm pricing models en masse in the near future. Instead, the most likely path forward for firms is to continuously adjust hourly rates as technology automates more-and-more processes.
Given that lawyers are trained to always expect worst-case scenarios, data security and privacy concerns in legal technology are also paramount, which is slowing down adoption. This comes amid the backdrop of countless global enterprises suffering well-publicized data hacks over the last few years.
“Law firms are facing more scrutiny over their security measures from clients than ever before, and they tend not to have large established information security departments,” said Farris.
So while an enterprise-level legal tech vendor will have similar information security standards to comparable vendors in other industries, such as finance, some are less equipped to deal with the auditing and testing demands of larger customers. This can especially be the case for vendors that have recently scaled. But, regardless of size or maturity, security auditing capacity and capabilities should be a focus area for all vendors.
Trust between a lawyer and the paralegals they delegate work to is slowly built up over time, the more they work together. This enables more sensitive and complex work to be delegated and with less oversight required as time goes by. But with technology, building this trust isn’t as straightforward.
“Lawyers are unlikely to use artificial intelligence software unless they trust the results it provides,” said Nicole Black, a legal tech evangelist at MyCase, who cited a 2019 American Bar Association Legal Technology Survey Report, which revealed that 51% of lawyers were concerned about the accuracy of AI legal software, and 48% concerned about its reliability.
This is known as the black box challenge - not knowing how a piece of software, such as AI, functions and arrives at its outcome. All industries are grappling with this problem, but the legal industry poses significant issues given the stakes at play with legal tech decision making.
Legislation and regulation will no doubt play catch up at some point and provide a governance framework for software falling into this category. Meanwhile, tech giants are putting huge amounts of research into commercial solutions to this problem.
Similar to the black box challenge is the potential risk of unintentional bias in software. When it comes to AI or machine learning, truly objective decision making should not be taken as a given. The algorithms that govern AI or ML are written by developers, and if development teams are unrepresentative of wider society, then intentional biases can make their way into code.
In criminal law, for example, there’s the example of COMPASS, an algorithm that predicts the probability of offender recidivism. Due to how the AI model was written, the technology came under fire for predicting twice as many false-positive results for black offenders than white offenders.
Algorithmic bias can also be the result of incomplete inputs, or data sets that are too small and therefore compound statistical anomalies.
However, we could be moving towards legislation that would ensure all software providers check their algorithms for bias. The Algorithmic Accountability Act that’s making its way through the Senate would mandate this, which would not only help to eliminate bias as much as possible, but also provide far greater confidence to end-users.
CLE training requirements are behind the curve of legal tech developments and usage. To date, only the Florida and North Carolina Bar Associations have mandated technology credits as part of their members’ CLE requirements.
As DeFelice points out, “many lawyers have been asked to adopt it without a real understanding or general knowledge of how it works, where it fits into their organization and the areas where it could have a potential impact”.
The lack of bar associations mandating CLE hours for technology credits is all the more jarring when you consider that 38 states have adopted the ABA’s duty of competence definition with regards to technology, defined as the following:
“To maintain the requisite knowledge and skill, a lawyer shall keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.”
Therefore, many bar associations are expecting their members to assess and determine the best technology to use, without the prerequisite support framework being in place. The recent proposal by the New York Bar Association to mandate cybersecurity CLE credit is a step in the right direction. Hopefully, many more states will follow suit in the near future.
Legal tech marketers have a duty to ensure they are providing accurate and useful information to their target customers. The tech industry as a whole can sometimes be guilty of overhyping a product or the next big thing, which can result in solutions being ill-suited to the tasks they’ve been applied to.
As Ferris points out “AI has become a buzzword…and it is overused and misused,” An example he provided is how it’s misleading to sell basic automation or predictive algorithms as AI technology. With AI especially, there’s a need to be thoughtful and careful about which exact aspects of business it is being used in, he stressed.
Legal firms should carefully consider where the application of technology will provide the greatest benefit to their clients. Low-risk, high-frequency tasks -- such as records checks and invoice processing -- could be some of the first places to look.
“We need to think of machines, not as a replacement for people, but as a supplement for people,” echoed DeFelice.
Despite these barriers, however, the next few years will probably be looked back on as the time period where the tech-tipping point in the legal industry finally broke. With more and more new entrants disrupting the traditional way of doing things, an ever-increasing number of legacy firms will have plenty of incentives to embrace novel technology.
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