Technology is transforming legal business models

We are all familiar with the industrial revolution, which led to the implementation of process efficiencies, automation, and a reduction of human resource spent on what is now seen as routine tasks and far greater leveraging of data. This has all contributed to a far lower cost of production. Knowledge work, including law, has also started to evolve, driven by increased business complexity and pressure to do more with less. Technology has been used in legal services, for decades, in the form of document management systems, law firm practice management systems, and various forms of electronic communications. More advanced technology, such as document automation, has also been used by law firms for over two decades.

Several factors in the last few years have caused the emergence of legal technology as a distinct and rapidly growing market category. Law firms, and more recently corporate legal departments, are focussing on its application, and investors—whether venture capital, private equity, or trade buyers—are taking this segment very seriously.

Technology has become a significant area of focus for legal service providers and corporate legal departments alike. Everyone has high expectations of the benefits that it will bring. So why has this heightened recently? I believe this increased focus is a result of:

1. Cost: Increased cost pressures to do more with less
2. Capabilities: Technology is advancing at a pace, capable of doing even more
3. Expectations: Raised user expectations due to the pervasiveness of technology across all areas of our lives
4. Data: The need for better insights
5. New business models: The ability of technologies such as platforms and AI to enable new business models.

In leveraging technology, organisations, whether legal service providers or corporate legal departments can:

Delivery models made possible with technology

Technology has to date predominantly focussed on driving efficiencies in service provision and enabling the capture of the most basic management information. The overall proposition from service providers has largely remained unchanged. Technology is now being applied in the creation of very different delivery models and data is starting to be used for more sophisticated analytics and prediction.

New delivery models made possible by technology include:

1. Industrialisation: The industrial revolution led to a change in production methods (more process-oriented delivery, disaggregation of labour, the use of machinery/automation and, in more recent times, increased use of data and metrics). It also resulted in lower costs and higher quality products for consumers. At the same time, markets came to be dominated by a lower number of successful manufacturers, each with significant market share, and this brought about the demise of most artisanal manufacturers. A similar theme is now playing out for more repeatable knowledge work. As with most innovation, this trend has started with low-level legal work, but over the last few years, the approach has been applied to increasingly complex areas of legal services. The trend will continue with more complex areas of law being industrialised. When work is disaggregated, certain tasks in the process can still be complex and undertaken by expert lawyers, while the broader, more generic processes are industrialised.
2. Collaboration: Digital technologies are enabling work to be done far more collaboratively. We now all operate in a highly networked online world and technologies cross organisational and geographic boundaries. If deployed and used properly, this connectivity can enable multiple parties to collaborate very effectively on knowledge work. This can be described as a “platform” approach. Using workflow platforms collaboratively, multiple participants across different geographies and organisations can “plug in” to the platform to carry out their respective pieces of work. This will further drive efficiency and information sharing. This move towards a platform approach is also affecting resourcing models. Resources no longer need to be constrained to specific organisations, locations, or team structures. Different teams or individuals can be brought together on the platform in an agile manner to deliver legal work. The industrialisation of legal service delivery and the use of platforms across organisations is also driving standardisation in legal work, particularly the standardisation of various contract types.
3. Self-service: Another rapidly growing area for the application of technology in legal is that of self-service. Self-service offerings range from consumer-focussed solutions offering people the ability to create wills automatically, powers of attorney, and other relatively straightforward contracts online, to self-service offerings that are made available to businesspeople in large global organisations, either by external legal service providers or by the company itself. The self-service propositions can manifest in the form of contract automation, expert systems, and knowledge bases.
4. Data insights: Data has not traditionally been leveraged in legal services, other than in time recording and billing, because legal work has been a manual and an intellectual activity performed by individuals in an artisanal manner. As legal services become more industrialised as described above, and as various technologies emerge to digitise contracts, data will become a lot more accessible.

There are two broad categories of data in the legal world:

• Process data: Information about the status of legal work and the processes used to deliver it.
• Legal data: Data that is of legal substance, typically relating to advice, contracts, and litigation cases.

There are also three perspectives from which we can look at data:

• Information: Current data about the state of processes or legal matters
• Analytics: Backward-looking perspectives on data trends over time
• Prediction: Forward-looking models to predict or forecast the future.

Organisations typically start with the first perspective—having current information about their processes and matters. As the organisation continues to capture information, it builds a history and can then mature into undertaking more trend-based analysis. Finally, once enough history has been captured and trends identified, more mature models can be developed to predict trends.

Making the transformation happen

Deloitte Legal is engaging with industrialisation, collaboration, self-service, and data in multiple ways. Our Legal Management Consulting team advises the world’s largest organisations on their legal operating models and digital transformation. We also apply these models to our own service delivery. By using both market leading and our own bespoke technologies, we industrialise our legal service delivery to clients, we provide clients with sophisticated collaboration and self-service solutions and by using such technologies can provide clients with advanced dashboards and analytics into the work we do for them.  We look forward to continuing to collaborate with technology providers and our clients to further digitise the legal ecosystem.

Author: Bruce Braude, Deloitte Global Chief Technology Officer – Deloitte Legal