Neota Logic Featured in Law21: The intangible law firm

Posted: 12 July 2016
By: Neota Logic

by Jordan Furlong via Law21

Remember all those ludicrous predictions you kept hearing about how law firms were someday going to invest heavily in intelligent technology that could do legal work? Funny thing about that: someday is today.

Here’s what’s actually happening, right now, with advanced technology in law firms:

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This is only a recent sample of law firms’ technological commitments: consider Ron Friedmann’s Online Legal Services list for a more complete picture. And it’s not just happening in the US, either.

  • – Berwin Leighton Paisner is using“AI-type solutions to carry out standard legal processes hundreds of times faster than traditional methods that use painstaking human labor.”
  • – Mishcon de Reya’s new ten-year strategy includes a plan to “drive the automation of everything that can be automated, whether it’s legal or process,” including the establishment of  “an internal laboratory to vet artificial intelligence initiatives in a bid to make the firm an ‘early adopter for new technologies.’”
  • – Australia’s Gilbert & Tobin has filed several patent applications to cover new computer applications it has built: “Rather than take 20 hours, some tasks can now be done in two hours,” said a G+T partner.

“But she tripled the firm’s productivity.”
“Burn her anyway!”

Talking openly and on the record about eliminating billable hours in a law firm has traditionally been regarded either as heresy or a sign of mental instability. “Burn the witch” would also have been a standard response to a lawyer who advocated spending real money on anything that could be described as artificial intelligence. But the facts are what they are: major law firms are actually building systems to do some tasks that previously only lawyers could do, at the expense of some of the firm’s hourly-billed inventory.

But that’s not all. Law firms are also adapting to the emerging imperative of process improvement, finding ways to introduce efficiency and enhance the quality of outcomes through better procedures and workflow systems.

  • – At Seyfarth Shaw, the process improvement gospel of Seyfarth Lean has become part of the firm’s core culture.
  • – Process is just as important as technology for Littler Mendelson programs such as CaseSmart and Compliance HR.
  • – Clifford Chance launched its Continuous Improvement program back in 2014 in a search for “the best approach to carrying out a piece of work.”
  • – Gowling WLG talks about its acquisition of expertise in “non-legal support components of service delivery” such as project management and pricing.

You can expect to hear more of this from law firms in future. “Something like 90 percent of the RFPs we receive ask us about our [legal project management] capabilities,” said one respondent to a Jomati Consulting survey. “We get RFPs that not only ask us if we do project management, but also our specific methodology, and how many matters we have under administration,” said another. This is not a temporal anomaly: law departments take process improvement seriously, and they expect outside counsel to do the same. Some law firms are outpacing their own clients in response.

These are all signs, to my way of thinking, of a fundamental shift in the nature of law firms. Specifically, law firms are changing from entities composed almost entirely of tangible assets to entities composed increasingly of intangible ones.

The conventional wisdom on law firms has always been that “all their assets walk out the door every night” — and that the firms could only hope those assets walked back in the next morning. Suppose they didn’t come back? Take the lawyers out of a law firm; what have you got left? Reams of documents, files, and transactions — but no one to read, write, or process them. Capable and professional support staff — but with no one to support. Libraries full of case law and regulation, shelves lined with texts and CLE binders, filing cabinets crammed with precedents — but nobody to apply legal skills and expertise to convert them into actionable outcomes of value to clients. The law firm machine would stand idle, because its engines had disappeared.

Just as importantly, all these non-lawyer assets differed hardly at all from firm to firm. Law libraries were mostly indistinguishable in their collections; precedents varied so little as to be virtually copies of one another; workflow and operational procedures were standard across almost every type of firm. The only features of a firm that could legitimately be said to be exceptional, standing out from other firms, were its individual lawyers. Many of them were pretty general-issue as well, to be sure, but most brought at least some unique value to the table, and a few brought an enormous amount. So in the absence of lawyers, law firms would be true commodities: offering basically the same thing to everyone in the market, bereft of any valuable distinction.

It seems to me that it’s precisely this state of affairs that all these foregoing efforts will change. What these law firms are building, through their investment in technology and processes and non-lawyer sources of value, are intangible assets. These assets can provide legal answers or deliver legal outcomes of value to clients in some circumstances, thereby giving firms a second type of option for serving those clients. But unlike lawyers, these assets won’t leave the office at the end of the day, and they don’t ask for raises or demand larger offices or threaten to join the firm down the street — they serve the firm, not themselves. By building these assets, firms give themselves leverage over their lawyers, and they’re going to use it. These are the new engines of the law firm machine. And they’re going to multiply with astonishing speed.

Take a quick inventory of your own firm’s assets. How many are tangible and how many are intangible? How many walk out the door and how many stay overnight? And how prepared are you to compete for talent and business in a market where you can’t afford to let your lawyers walk, but your rivals can? Because that’s the market that’s unfolding in front of us right now.

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