25 Outstanding Legal Tech and Business of Law Predictions for 2019aderantuser
by Craig Dekshenieks, Director, Content & Marketing Operations, Aderant
Predictions are a blend of facts, analysis, and aspiration. It’s a chance to pause and think – in a time where perhaps we don’t do this enough amid the pace of the business of law today.
As we did last year, we asked several big legal thinkers for their take on the forecast for legal tech and the business of law in 2019. Some predictions are long, some of them are short, but all of them offer a thoughtful analysis that looks at current legal trends from many sides.
We’ve listed those predictions below, and it’s important to note there is no intended order of precedence. We’ve listed them in the order in which they were received. We appreciate every contribution and hope you do as well.
Here we go!
1) Smaller firms are quicker to implement AI
“Artificial intelligence tools are discovered by lawyers in medium-sized to small firms and they implement these tools more quickly than the larger firms have done. (‘Scan my brief and give me some tips? Yes, please.’)”
2) Data analytics grows and drives AFAs.
“The use of expert systems and data analytics in practice environments will grow measurably in use. These will be tied to larger AFA engagements.”
3) Learning how to use AI
“We will all go back to the beginning. AI is through the front door, but now lawyers need to really learn how to use it.”
4) Best-of-Breed and BYOD
“Law firms will start abandoning Remote Desktop solutions in favor of best-of-breed cloud software. Those firms will also start embracing bring-your-own-device (BYOD). Small- and mid-sized firms are allowing employees to provide their own computers, which will make them even more profitable.”
5) Big law incubates alternative service models
“We will see the emergence of more ‘alternative’ service models (or ALSPs) incubated and launched within big law firms. We will see an entire practice group ‘exit’ its current, traditional firm to join another firm (or service provider), re-engineered as a scalable high-growth ALSP. This will be evidence of a new trend wherein certain practice groups are able to depart their current firms not as a typical lateral transaction, but more as a business unit divestiture or acquisition.”
6) Both dark and light spots
“’Some things change. Some stay the same.’ (Hymn to Her, The Pretenders, 1986).
‘There are some things in this world…that will never change. Some things do change.’ (Morpheus, Matrix Reloaded, 2003).
The legal industry is struggling – will it change, or will it stay the same? For all the talk about change during the 40 years I have been in the industry, the degree of change has been remarkably small. Bill Henderson would say this is to be expected, the E.M. Roger’s Diffusion of Innovation Theory tells us so.
In the meantime, CLOs tell us the tide of complex legal work is rising, so they are reaching out more often to outside counsel for help. The economy is doing well, so CEOs and CFOs focus less on legal costs and more on pressing issues. Politicians in the US are revving up for the 2020 election, driving more uncertainty. And of course, technological changes, be they good or be they bad, roll forward.
So, what is in store for 2019? There will be dark spots. The urge to merge will continue to infect law firms (better safety in numbers than security in profits). CLOs will continue to stress the need for greater efficiency but will settle for greater complexity (expensive, challenging to implement, short-term tech will win out over inexpensive, easy to implement, continuous process improvement). The cost of legal services will continue to rise (inequality under the law rather than equal access to justice for all).
But, hopefully, there will be bright spots. Law companies will continue to grow and provide a cost-effective, high quality, supplement or alternative to law firms. Free access to the law itself – the cases, regulations, statues, and other materials that are the laws of our states and country – will continue to expand. And students will continue to feel the tug of the bar and apply to law school as they see the turmoil roiling the United States and want to do something about it.”
Editor’s note: Bill Henderson is a Professor of Law at Indiana University Maurer School of Law and publishes the online publication Legal Evolution. He wrote a piece titled – What is the Rogers Diffusion Curve? – which is a useful reference to go along with Mr. Grady’s prediction.
7) Ebb and flow of generations, clients and technology
“The business of law will see more attorneys of the Baby Boomer generation departing the active practice of law, whether due to retirement, health issues, or an untimely death.
For the first time in many years, new law grads are finding work as attorneys in greater numbers. The good news is that the decision to hang your own shingle is now being made without the financial pressure of needing to start your own firm because you didn’t get any interviews and those student loan payments are now due.
Clients are more savvy consumers of legal services. They are turning to ratings and reviews and checking the legal experience of their attorneys before signing the engagement letter.
Technology can enable attorneys to streamline their practices so that they can deliver the high-touch competent service that clients are demanding and that they have always deserved. It can be a win-win situation for every attorney-client relationship. Practicing law can be rewarding and enjoyable in 2019!”
8) Laterals, mergers and diluted profitability
“We will see more announcements of global clients selecting alternative legal services providers and technology tools to displace what was once significant legal spend directed toward large law firms. Some law firms will heed the wakeup call and begin process re-engineering. Most will accelerate their pursuit of laterals and mergers to replace lost revenue, and in so doing will dilute profits.”
9) Non-lawyer law firm ownership
“An ALSP (or what we refer to as New Law) will buy a law firm (likely in the UK); one state in the US will allow non-lawyer ownership of a law firm.”
10) Tamping down legal tech hype with purpose
“I believe (hope?) that in 2019 we will return to some level of sanity regarding the overhyping of ‘blockchain’ technology. It is overused at every technology conference I’ve attended; the fact is that blockchain technology has always been a backend technology that is most effectively used without the front-end user even knowing it. If a new application solves an actual problem, that’s good. If ‘blockchain’ is the best technology to use, that’s good, too. But the application will be good because it solves a problem needing to be solved, not because blockchain was used. We can only hope the same will come true for the hyping of ‘AI.’
In the legal practice management system (LPMS) and time, billing, and accounting (TBA) arenas, we will continue to see premise-based applications run a large percentage of small (meaning larger than solo/duo) and medium law firms, the many reports of their death notwithstanding. The cost of migrating LPMS and TBA to cloud-based systems for firms of this size is quite high both in terms of actual costs and office or practice upheaval, and the benefits are still being determined. Because most of the current cloud-based LPMS and TBA still lack the more advanced features that these firms aren’t willing to give up just to ‘go to the cloud,’ they will maintain their status quo in 2019.
That said, the cloud is clearly the future, and in 2019 there will be more cloud-based LPMS and TBA that begin to mature, add more powerful features, and compete for the substantial market that currently uses and wants the more advanced features available in the ‘old school,’ premise-based LPMS and TBA.”
11) Data changes the game
“In 2019, the importance of data for small law can be a game changer. The more lawyers understand what facts and figures are important to their practice, the more successful they can be. There are big challenges for lawyers to solve: access to justice, DIY clients, and competition, just to name a few. Lawyers are going to survive and thrive. And getting better at math will ease their way.”
12) Alternative pricing for a competitive edge
“Demand seems to be coming back slowly, hence productivity is improving. I do believe firms are going to continue to explore pricing alternatives in order to maintain that competitive edge. Also, enhancements in legal technology should facilitate the practice of law considerably and will lend itself to more alternative fee arrangements.”
13) Modernizing legal pricing
The profession will wake up to the fact that despite the effort and investment that has been made by some firms when compared to many other sectors of the economy, we remain very unsophisticated in our approach to pricing.
This failure will until properly addressed, continue to generate perceived value disconnect, hamper profit optimisation and prolong the angst that exists around this aspect of the law firm and client relationship.
However, in 2019-2020, two things will happen:
- a) New terminology will enter the legal pricing lexicon at the sophisticated end of the continuum – price segmentation, price discrimination, surge pricing, versioning, asymmetric dominance effect, ‘Goldilocks’ pricing, loss aversion theory, amongst others;
- b) AI and machine learning together with the science and academics of professional services pricing will for the first time be ‘baked’ into new software that will be exponentially more powerful and ‘clever’ than the current family of budgeting and pricing offerings, which, by comparison, are little more than glorified spreadsheets.
Editor’s note: Mr. Burcher managed the Profitable Pricing for Lawyers group on LinkedIn.
14) “Trust is the New Algorithm”
“Outsell’s meta-theme for 2019 is ‘Trust is the New Algorithm’. From Cambridge Analytica to Equifax, major data breaches have repeatedly hit the headlines in recent times. Now power is being restored to consumers to make it easier for them to seek compensation after a data breach, and for regulators to clamp down on companies playing fast and loose with our personal data. New privacy laws have, or are due to, come into power across the world, with Europe leading the charge with the GDPR.
Data protection is particularly important in the legal services sector given the extremely sensitive personal information clients share with their lawyers. Regulators, particularly in Europe, will come down hard on any business that fails to protect their clients’ data.
In 2019 the media will be on the hunt for instances of data breaches, and damage to reputation could be irreparable. Data protection compliance is a given, but beyond this clients and consumers need to trust their service providers, and this takes a shift in culture from box ticking to data protection by design and complete transparency. Lawyers are used to thinking in terms of attributing and shifting liability, but to succeed in this new climate, they will need to get back to the basics of being honest, reliable and competent.”
15) Our AI is Better than your AI
“As we go into 2019, I predict that artificial intelligence will filter down from the larger law firms to the mid-sized and smaller firms. AI will start to lose some of its luster as a marketing and hype term, as people come to terms with the definitions, the uses and the limitations – which is always a plus.
Mid-sized and smaller firms are going to influence the AI market and vendors as they are forced to define, in more exacting terms, the returns and value statements for its use then some of the bigger firms are.
We’ll see the larger firms, which are ahead of the smaller ones with their KM and AI efforts, start to actually make structural changes as they shift their AI projects from tests to full-blown production.
What will be interesting will be to see if the marketing shifts from ‘our attorneys are better than your attorneys’ to ‘our AI is better than your AI.’ Will large firms, who have larger data sets be able to have a better AI? I’m afraid we won’t know the answers to these questions in 2019.”
Editor’s note: The PinHawk Law Technology Daily Digest is one of three free newsletters PinHawk produces that we are prone to peruse including the PinHawk Legal Administrator Digest and the PinHawk Librarian News Digest.
16) The nimble and agile law firm
“If your firm is not nimble, it will fall behind in 2019.
Your software developers may be agile. Your entire IT department may be agile. But is your project management office? And what about your legal services delivery teams?
As firms bob and weave to respond to (or even get ahead of) competitive pressures, only the nimble firms will succeed. Adding agile capabilities to every part of your firm that runs projects will help your firm become more nimble.
2019 would be a good year to master this.”
Editor’s note: Ms. Abraham is a long-time prolific blogger at Above and Beyond KM.
17) Transparency in legal analytics
“The legal market will demand transparency from vendors of analytics products. As legal information vendors have rushed analytics products into the market – many have taken the ‘black box’ approach and fail to provide documentation to help lawyers and law firms understand the strengths and limitations of the product they are selling.
There will be a customer revolt if vendors don’t start providing specific documentation on their websites and promotional materials specifying product features. Full transparency requires disclosure of data sources, jurisdictions and courts included, case types included or excluded, dates covered for each court, filtering and reports features, case outcome transparency (based on keyword or linguistic analysis).
There a rising tide of revolt among knowledge managers, librarians and information professionals who will demand documentation, reliability scores, embedded explanations within analytics products. This market is in its infancy, but it could be badly damaged by products which fail to disclose key data features and limits which are key to understanding how to use analytics in any legal or business context.”
18) Legal tech, law schools, legal access and law firm overhead
Legal Tech Companies, Services, and Products: There will be an increase in proven commercial uses for artificial intelligence and blockchain in the legal profession. In addition, other types of existing and competitive companies (already serving the space) will continue tweaking ease-of-use for their products or services further enhancing their competitive advantage. Said another way… young but maturing companies will now compete by making their products and services easier to use.
Law Schools, Innovation Discipline, and Bar Admissions: Law Schools will grow their educational programs which integrate with other disciplines like science, software, marketing, business, etc. Tuition rates won’t come down in 2019 but there will be greater pressure on bar score performance and there will be more graduates working as non-practicing attorneys. In addition, state bars will feel more pressure to offer uniform bar exams and reciprocity…with future ideas and plans of making legal practice more portable. There could be more “divorces” between state bars and their related sections and division like we saw with the State Bar of California and the California Lawyers Association.
Access to Justice, Innovation and the Business of Law: The Access to Justice gap won’t close a lot in 2019…but there will be continued pressure to liberate limited scope representation, limited license legal technician programs, alternative legal business models, and funding for the Legal Services Corporation and related pro-bono organizations at the state level. There will be limited or no pressure to make laws easier to read for the general public or simplify civil court procedures for pro-se litigants. It is very possible that small claims courts around the country will be increasing their claim ceiling or at least debating it. Technological breakthroughs will still be looked at with great interest to whittle down legal costs for those who can’t or are struggling to afford them.
Hourly Rates and Overhead: There will be continued downward pressure on the billable hour rate or model and increasing client demand for flat rates. Lavish office space will continue to be out of vogue as increasingly savvy consumers will see those trappings as a cost driver on their bill. The competitive attorney will know how to look smart, successful, and competent… without appearing needlessly expensive.
19) Focusing AI to solve real legal problems
“With one exception, legal software companies will continue to ship products touting artificial intelligence (AI) that don’t sufficiently solve real-world problems, especially for small law firms. The one exception is litigation analytics. Previously, a litigator’s only option for learning about a judge consisted of anonymous message boards. Thanks to litigation analytics, litigators can better understand judges than the judges understand themselves. Over the next decade, as software companies in the AI space receive feedback from lawyers about what they really need, AI-centric products will begin their golden age.”
20) Forecasting an “unremarkable” year
“2019 will be an unremarkable year in the business of law. ‘More of the same’ will be the rule:
- Corporate clients will continue to complain about law firms but won’t really change their buying habits.
- BigLaw firms will noisily roll out innovative projects but won’t change their profit and compensation models.
- Amazing new legal technologies will be announced but won’t be incorporated into lawyers’ work habits.
- Growing demand from clients will inflate law firm coffers and cool off most talk of impending upheaval.
- A few law firms will grow stupendously rich; more young lawyers will take low-paying leveraged jobs.
- Lawyers and judges will keep talking about access to justice while resisting new models that could address it.
Not much of a vision for the future, I know. But for once, I’d like to make a prediction about the legal market that I feel confident will come true.”
21) The balancing act continues
“Lawyers will continue to juggle focusing on bringing in new business with the improved economy and answering the call to Access to Justice initiatives. Practice management professionals will love the attention process and procedures will continue to get from this as lawyers realize they are forced to reckon with technology, innovation, disruption, ethics rules, client billing arrangements and other pressures. And, all while facing the stark reality of knowing they have to take care of themselves in the process with mindfulness and wellness. Ultimately, balancing will continue to be the thing for 2019!”
Editor’s note: As Aderant is headquartered in Georgia, we are thrilled to include the practice management advisor from State Bar from our home state. Please visit the Georgia Practice Advisor Blog for more information.
22) A case for DMS and experience management
“I predict that 2019 will see legal tech hype diminish. In 2018, we’ve already seen the discussion about legal AI hype become more realistic. For example, gone are most of the robot lawyer headlines. I expect that legal innovation talk will experience something similar in 2019. Of course, lawyers will continue to talk about innovation. But it’s hard to imagine that continuing because if it does, we risk innovation as the endpoint. The real endpoint must shift to how innovation will change how lawyers work. I hope this is a prediction and not a proscription!
So, you might ask, what could possibly be new and interesting if not AI and innovation? In legal technology, I have two predictions. First, we will see more emphasis on upgrading, improving, and gaining adoption of document management systems (DMS). DMS adoption at many firms remains too low.
Three factors will push firms to push for widespread DMS use:
(a) Client pressure to adopt the least-privileged security model. That means only fee earners on a team and staff who have a need to work with documents will have access.
(b) Recognition that AI and data analytics require access to documents. If half of the documents are outside the DMS (as is true in some firms), the value of AI and analytics is questionable.
(c) GDPR and other regulations force firms to manage documents more strictly.
My second prediction is that we will continue to see larger firms buy, populate, and use enterprise experience management systems. Despite recent reports of growth in law firm revenue, the market remains extremely competitive. Smart firms know that to win pitches, they must present prospects with experience most relevant to client needs. And lawyers who have worked on similar matters. And that requires managing experience in purpose-built systems. Beyond business development, pricing, profitability analysis, and knowledge management also drive the need for enterprise experience management.
Beyond legal tech, I have less confidence in predictions. But I do have one caution: keep an eye out for a recession. We are overdue for one. Is your firm or company ready? Large firms made a series of one-time cuts and changes (e.g., cut secretaries and de-equitize partners) after the 2008 economic crisis. I don’t see many obvious targets now. And if a recession does hit, I may have to take back my predictions above!”
23) Create, copy and acquire alternative service providers
“While alternative service providers have been taking work away from law firms, 2019 will see law firms create, copy, and purchase successful service and tech innovations and players. Many law firms are currently more worried about losing business than about cannibalizing their core service offering. And since clients prefer one-stop shopping, we count out law firms at our peril.”
24) Intense competition points to AFAs and smarter legal marketing
“In 2019, law firms will begin to react to the intense competition in the market by doing two things: 1st, law firms will begin to implement alternative fee structures, focused on capping cost for clients – even if they retain traditional hourly rate structures in most cases. 2nd, law firms will begin to implement marketing automation tactics, to make it easier for them to communicate with leads and clients at every level of interaction.”
25) Using the good times as leverage
“2019 will show us the legal market can again string together several years of growth. Savvy law firms will use these times of renewed fortune to make fundamental business changes that leave them better positioned to capitalize on emerging opportunities. It’s a hard decision – because it’s easy to keep doing what you’re doing when times are good – but it’s not hard to do. It merely requires a focus on the fundamental way law firms earn income and then finding ways to bring to bear better process, automation and analytics to drive unmatched efficiency.”
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