By Sophy Moffat, Head of GOS Research EMEA, and Jenny Hylton, Director
The legal sector continues to provide high-cost customized advice. In the most advanced legal markets, the UK and U.S. lawyers continue increasing their fees. The main reason is there isn’t much incentive to change the current system, in which partners at the top of the biggest law firms distribute profits between themselves, while teams of junior lawyers do most of the legwork.
In addition, corporate clients, continue relying on legal services, thanks to the global financial crisis and the onset of increased regulations. But the widening gap between legal fees, and what most clients are willing to pa,y is becoming a catalyst for change.
For example, corporate in-house legal departments are under increasing pressure to reduce in-house staff and cut external spending on legal services, which is resulting in a movement to control costs. Altman Weil’s 2015 Chief Legal Officer survey showed 40% of in-house legal departments plan to reduce spending on outside counsel in the next 12 months.
The movement to cut costs makes this very traditional industry ripe for disruption, and provides an incentive for investment in, and development of, cost-cutting and time-saving technologies.
One such technology lets lawyers and staff have a better understanding of how much time they are spending on projects. UK-based Riverview Law for example, is launching virtual assistants which can be used by corporate in-house lawyers to identify the risk profile of any case, the team working on it, and how long it is taking.
If a legal adviser believes historic cases exist to help his/her client win a case, that adviser can search through precedents. This can be helped through the IBM Watson artificial intelligence system. Watson can search through thousands of documents, allowing junior lawyers to take on higher-level tasks.
Lawyers are also responsible for providing advice to clients. But Axiom Law – a technology-based provider of legal services – is working toward industrializing much of that advice-creating process. One service uses technology to run clients’ contracts, which Axiom claims has led to a 30%-40% drop in contracting costs.
Axiom, along with legal process outsourcing companies DTI and Consilio, also offer cheaper legal services to companies by having lawyers work on a project-by-project basis at clients’ premises, from home, or from their own offices. As these companies improve and increase their use of technology, they could be viable competition to the larger, global law firms, with the potential to disrupt the legal profession.
Corporate clients are becoming more discerning and cost-conscious users of legal services, and they want change. Lawyers have long played an important role among corporations, and there will always be a need for advisers. But for those questioning the cost of legal advice, technology will offer some hope. Certainly, technology has a long way to go before it can handily take over legal tasks. But if new applications can be made to succeed, they will bring big rewards to the sector.
The other, more threatening view to the legal sector is that technology will go far beyond digitizing everyday routine processes, and taking on the kind of complex work only human lawyers can do. Artificial intelligence will move forward at such a pace in the coming years, that systems will be able to diagnose and respond to clients’ legal problems. Lawyers will no longer be face-to-face advisers, but people putting in-place systems and processes.
In both views, if the legal sector does not find a way to disrupt itself, it is possible another company will do it for them. Legal professionals can wait for the technology industry to innovate their sector in a way that increases efficiency, transparency and cuts cost, or become part of the technology industry itself.
Sophy Moffat is the head of the Global Occupier Services Research team for Cushman and Wakefield.
Jenny Hylton is the Director of the Global Occupier Services group for Cushman and Wakefield.