20 February 2018

What did we learn in 2017 and what does it mean for 2018?

Published on 20 February 2018

What stood out for us in 2017? Without wanting to revisit that in detail, since it’s now history and we all lived it, it does inform where we find ourselves in 2018. To that end, here are the highlights of what stood out for us, what informed our work in 2017 and how we see that developing in 2018, now that we are almost through February:

  1. The terms “innovation” and “disruption” were used a lot – by everyone, every firm, every initiative in the legal industry. And yes, I know, we are the Centre for Legal Innovation and we used it too! But what we all meant by that, how we applied it, and used it was not the same. And while lawyers are criticised for getting hung up on words, defining these two, at the very least, and more particularly the process through which we all arrive at a definition, is important. So, we kicked off our Roundtable Series in Perth in February with that question in mind, “What does innovation mean and what are you doing about it?” - download our key takeaways from this Roundtable. 

     

    What we learnt from this for 2018, is we need to understand innovation and disruption, draw on the seminal work of Clayton Christensen, and draw from the plethora of blogs, LinkedIn posts and articles but ultimately define it for ourselves. So, it becomes for us and our firms/organisations more than a word on a website. True innovation only comes when it is part of a commitment and, better still, a passion for continuous improvement. In other words, as Michelle Mahoney explained in her CLI blog post, it needs to be part of our firm/organisation’s culture, deeply infused with curiosity, creativity, and the agility to adapt and move quickly that this supports. Jodie Baker’s blog for us provided a useful tool to encourage us to ask pertinent questions and a scorecard to use to measure your “innovation rating”.

    How we define “innovation”, and whether or not what you do is or needs to be “disruptive”, will continue to dominate discussion in 2018 but with the emphasis focused on implementation, results and differentiation. Those firms/organisations that get that will retain competitive advantage and, those that don’t, will continue to lose market share to those that do. Those firms/organisations that know the difference between these two approaches, embracing change versus defending the status quo, have changed or will change their business models, governance and staffing models. We will see much more emphasis and discussion of R and D in law firms and the appointment of more C-suite leaders of innovation in 2018. One thing we know for sure is that LegalTech does not equal innovation – so buying it will not in and of itself make any firm innovative – we will see more firms understand that in 2018!

    So what about Innovation Committees – we saw a number of firms establish and launch these in 2017. Innovation is not about appointing someone or appointing a committee or setting up a function/department with “innovation” somewhere in the title. It’s also about creating an environment and opportunities for ideas to flourish, an organisational structure and process that ensures great ideas are presented to decision makers, and understanding that an idea about one thing in one place can have a positive impact on many things and many places, something that the initiatives at DLA Piper recently illustrated very well. 2018 is going to be less about the talk and all about the walk for innovation in law firms!

     

  2. LegalTech was never out of the news in 2017…and it won’t be in 2018. This is a fascinating space, moving at a blistering pace and evolving. In a few short years we have moved from the focus and deliverables being mostly tech tools used in conjunction with or driving the development of processes and systems for enhanced efficient service delivery, to increasingly being more about a second generation, and perhaps even a third, of sophisticated AI. The sheer volume of information in this space can be overwhelming and, for the busy practitioner who is time poor, hard to get a handle on. So for many practitioners, trying to define AI or place it into some framework or categorise it so there is some reference point to start, is difficult. That’s what prompted us to hold a Roundtable in this area (download our key takeaways from this Roundtable) and develop our “AI in Legal Practice Summit” which we launched in Sydney last October. We wanted to create events that were inclusive, that brought together lawyers, legal professionals, techies, academics, consultants and anyone else who wanted to talk, network, and share experience. We’ll do that again with our AI in Legal Practice Summit in Sydney on 31 August 2018 because that discussion has just started and it’s going to be a game changer, the extent of which we believe we will see more of in 2018.

     

    The discussion that also gained some momentum in 2017 was around regulating AI. Michael Guihot led that discussion for us in his blog post. Similarly, the ethics of AI, and whether or not AI can now be classified as a new area of law, will start to gain greater momentum in 2018. As will a greater understanding of the depth and breadth of change AI will bring to the practising legal profession. In 2018, AI tools will continue to impact litigation (data analytics) and advisory work (due diligence) but, as Tim Pullman from ThoughtRiver has opined in a recent interview with Artificial Lawyer, the use of these tools will likely become the norm and be an integral part of compliance and corporate governance. This also means that they will become standard tools for risk management.  And, we should also not forget that one of the first significant uses of AI, in legal research, is not standing still. ROSS Intelligence will continue to be a market protagonist here and has already launched a new product in 2018, EVA, which promises to move that area along a notch or two. While we will undoubtedly continue to be amazed by stories of what AI can and will do, it’s going to be the application of AI in every day legal practice that we believe will be most relevant and important for legal practitioners in 2018.

     

  3. It’s not possible to have a discussion about LegalTech or AI without quickly moving to the subject of legal data analytics. We can cut and dice it as “big” or “small” or any way we want to but the reality is, no legal practice should be making any decisions, business or otherwise, without reference to it. Conrad Karageorge’s blog prompted us to think about data and its impact on the practice of law. It’s something we believe will continue to be on the top of managing partners’ agendas in 2018.

     

    It will be important, in these discussions, not to get lost in the maze of data – it’s easy to do. The discussion has to start with “what do you need” and then “what do you have” before it moves to any discussion of the use of external products, no matter how shiny they might look. This requires law firm leaders to have a clear business strategy designed around their client needs, and delivered by people who understand and exceed client expectations. It’s not possible to determine what data you need or develop key performance indicators that support agile and lean decision making, if you don’t know these things first. And that’s not all. It’s also important to present that data, linked to performance indicators, in a way that makes sense. In 2017 we saw a number of aggregator platforms that did just that e.g. a more sophisticated use of dashboards that provided “at a glance” overview of performance.  In 2018, we will witness not only a further increase in sophistication of these decision making tools, but their extension from the financial health of the firm (including the health of client relationships), to the mental health and well-being of the people who deliver that work product. We saw a little of it emerging in 2017 in the form of apps focused on mental health and performance, and we are going to see a lot more.

    Finally, before leaving this point, it is important to note the ongoing and important discussions in 2017 about the quality and security of data. Data is not neutral. It is a product of where it came from and so, as research is now highlighting, it can be biased. We will see more on this discussion in 2018, especially as we start to rely on and work more extensively with data. One of the expanding areas for lawyers in this space will be the ability to engage in or with those who work in forensic data analytics – lawyers will need to know when and where to question the accuracy of data and understand the consequences if they do not. Just how vulnerable we all are to a cyber-attack and the need to focus on cybersecurity hit home for lawyers and law firms in 2017. We held a Roundtable on that topic (download our key takeaways from this Roundtable) and we expect that discussion to continue, and dominate, in 2018.

     

  4. Firms that celebrate innovation and use LegalTech, AI and data to assist, augment or even automate how they work look different from a traditional law firm. In 2017, we saw two key areas evolve and change the way law firms were designed and operated.

     

    Design thinking: 2017 witnessed the coming of age for design thinking in law. Whether a devotee of the D-School at Stanford or another, courses, programs and events were alive and well in 2017 for lawyers with a hankering to learn more about design thinking. We jumped in too with our Innovation Through Design Thinking breakfast series led by Lisa Leong and Tristan Forrester. Lisa and Tristan captured highlights for us in a blog post. For many law firms, design thinking has supported their restructuring, reinvention or rebuilding, from a client perspective. Hive Legal, one of the leaders in the new law space, was a guiding light for the profession again with its innovative thinking and initiatives in this area. 2018 is going to see these principles and others from other disciplines, like agile and lean management, taking a hold in law firms and demanding different and new skill sets of their leaders and managers. It’s going to be move over project management (that’s a given), to move into collaborative working styles that celebrate differences, encourage and facilitate contribution and talent wherever that is found, and ensure clients and employees alike thrive in the experience. The legal profession has been working on these ideas and concepts in law firms during and long before 2017, so it is again going to be about implementation in 2018.

    People: And so that brings us squarely to the second key area, people. Much of the discussion in 2017, as it has been in the past, centred on deliverables and the metrics to manage and measure performance – but people are much more than their billable hours. As discussed above, in the 21st century law firm, people need to be able to unleash their creativity, use and develop different skills, that’s what will continue to differentiate firms and other legal service/product providers in the legal marketplace and create competitive advantage. I highlighted key aspects of this discussion in a blog early on in 2017. For some time we have seen pockets of discussion about how new law firms operate differently like encouraging remote working, flexible work arrangements, focusing on coaching and mentoring versus providing feedback mostly in an historic annual performance review. We have also seen how their recruitment practices differ, recruiting for the skills that are needed in a multi-disciplinary business (read here every law firm whether they acknowledge it or not), commercially focused and tech/AI fuelled. Whether or not this new skill set for lawyers will include things like the ability to code was a discussion Jane Hogan led for us in her breakfast presentations and blog. And there will be many more topics like this that we will continue to see debated in 2018, like the need to understand or even set up a new practice area dealing with blockchain and cryptocurrencies.

    What we know for sure is that people innovate and law firms do not. We also know that change doesn’t just happen, it requires the firm’s leaders to actively recruit and include different voices in their decision making – diversity and inclusion has always been THE key to innovation! In 2017 a broader and deeper understanding of this point was evident in the legal industry and was coupled with an urgent need for a lot more to be done on implementation. What I have yet to see and hope for in 2018, is a robust discussion about the importance of placing a firm’s talent management strategy at the same level or even more important than its digital strategy so that people management skills are recognised as being at least as important as digital literacy – the two are inextricably linked in the new legal talent economy.

     

  5. I should have counted how many times I read, heard or saw a reference to how difficult it is for lawyers to change – I am going to conservatively guess in the hundreds. And, in almost equal measure, I read, heard or saw law firms indicating that they were doing just fine thank you very much, so why change? The problem is, as Ken Grady recently pointed out, that if we measure our success by the company we keep (our peers), which law firms almost always do, then, confident in our own complacency, we will continue a downhill spiral not knowing we are all being pulled into a black hole. The legal industry has changed and the pendulum will never swing back to zero. So while we think about it, while we defend the status quo, our competitors could not be happier – they will gratefully take the work from us and work with our clients (now former clients). We won’t and should not be able to continue to defend our patch if the ONLY reason we have it is because we belong to a protected monopoly. The world our clients live in has changed. They are changing to adapt to it. It stands to reason they will work with legal advisors who adapt alongside of them.

 

Illustrative of these sentiments was a series of blog posts and articles at the end of 2017/beginning of 2018 from respected institutions and legal commentators like Ron Friedmann, Jordon Furlong, Ken Grady and Mark Cohen, and reports from Australia: State of the Legal Market 2017 and 2018 Report on the State of the Legal Market in the US. I expect this discussion to become more frequent and more vocal in 2018, with clients continuing to exercise choice and move increasingly to the growing number of new law firms and legal start-ups.

 

And, last but certainly not least, before 2018 is done, expect higher education and particularly law schools, to move more squarely into focus in the change or lose out to alternative higher education providers discussion. This discussion started with a little more gusto than in the past in 2017, came up a lot more in industry events, academic conferences, etc. and, it is going to become more vocal in 2018!

 

We have put together a compendium of our blog posts from 2017 so you can read a little more about the topics discussed here. Please click the image or link to download the compendium. 

 

- Terri Mottershead, Director, Centre for Legal Innovation

 

Download our 2017 in Review Blog Compendium