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Survival of law firms depends on innovation

Pioneering lawyers find that far from posing an existential threat to their profession, technology provides new ways to do things better

There is disruption, because that is what innovation is

There is disruption, because that is what innovation is

 

Law firms aren’t known for innovative thinking. At least, they weren’t. But in an era of technological disruption, being open to new ways of doing things has become a source of competitive advantage. For lawyers themselves, it also helps put paid to fear.

“One of the things that worries us all is that the robots are going to take everybody’s jobs, and that the legal profession will be dumbed down to a point where you’ll just throw a bunch of algorithms at it. Not so. The future will require smart systems and smart lawyers,” says Karyn Harty, partner at McCann FitzGerald, a legal firm, and head of its Data Investigations Group.

Just as investment managers have got to grips with what the rise of roboadvisors, pioneering lawyers are realising that far from posing an existential threat to their profession, technology provides new ways to do things better.

“The technology is really important but it’s not a question of taking jobs, it’s about transforming roles. From our own experience we can see that technology, if used correctly, can enhance people’s roles.”

McCann FitzGerald has been to the forefront in this respect, successfully introducing Technology Assisted Review (TAR) into court cases, speeding up processes in a way that results in significant savings for clients.

The law firm was the first in Ireland to invest in artificial intelligence software, from software provider Kira Systems, to aid with due diligence work for corporate finance and capital markets transactions too. Again the result is increased efficiency, greater accuracy and lower costs for clients.

Such activities are the result of the formation within the firm of its innovative Data Investigations Group, which combines data review software with specialist legal project management.

“In terms of the impact of machine learning on due diligence, in one case we had a review of 600 documents that would have taken a month of a professional’s time, including evenings and weekends. Using Kira we were able to do it in a week, saving our client between 60 and 70 per cent , with the same excellence in quality. That’s a big game-changer from a client’s perspective,” says Harty.

The establishment of the Data Investigations Group earned the firm plaudits within the profession too, with legal IT expert Jonathan Maas citing it as a stand-out example of the way in which some law firms are embracing technology as a differentiator, either by using it to add value or to reduce the cost of their services. Harty has been referred to as one of three leading authorities worldwide on TAR – by Chris Dale, an authoritative writer on the subject of eDisclosure and eDiscovery.

To those outside the profession, the pace of innovation at the firm may surprise. “By their nature, lawyers are cautious but we have had an innovation strategy for a number of years. It’s good for any business and our clients want their lawyers to be tech savvy and innovative too,” she says.

Much emphasis is put on the concept of “design thinking”, a way of revisiting accepting thinking about the systems, processes and even assumptions that grow up in every workplace. It arose out of McCann FitzGerald’s research and development activities, and is used to consider a range of ways in which technologies, such as artificial intelligence, can be used to improve performance.

Even embracing concepts such as “design thinking” required a change in mindset at the firm, away from the traditional focus on billable hours into new concepts such as legal software as a service, which could see firms develop programmes in-house with their clients’ needs in mind. Instead of the traditional pattern where clients seek out legal advice reactively, artificial intelligence could provide law firms with a way to predict client needs.

“AI is represented as a significant threat to our business but it is also an opportunity,” says Tom Connor, an associate executive at the firm who was shortlisted for the FT Young Legal Innovator of the Year 2017. One of the first projects to emerge from the design thinking process is an app designed to help businesses cope with the requirements of new EU rules on data protection.

“The focus we have on R&D here, and the investment we make in it, is unusual for a law firm, but we think it will pay dividends,” says Connor. “The challenge for us is to replicate the excellence of McCann FitzGerald, in algorithms. But in thinking that way we have been allowed to grow creatively, allowed to embrace failure, and to bring projects such as the new app through an iterative process.”

It’s the language of the tech start-up, and it’s reiterated by Gráinne Bryan, director of Data Investigations & Project Services at the firm. She spent time recently talking to law students at third level to find out their views on the future of the legal profession. “I was interested to hear their concerns about disruption, and they are right, there is disruption, because that is what innovation is,” says Bryan.

“It’s about not being afraid of it but embracing it, and McCann’s has embraced this change. We are growing and expanding, becoming leaner and more agile. It is something we have now built up expertise in, which is important, because it is the way the legal services of the future are going to be.”

Risk is inherent in any change. “Lawyers by their nature are risk averse and design thinking requires a change in mindset for us. But you can’t innovate if you are too focused on risk,” says Harty.

“For me as a partner it’s very exciting to be involved in this and it’s an interesting time for the profession generally. In Ireland we are typically around 10 years behind what is happening in the US and there we can see that already a divergence has emerged. The top third law firms are innovating and really doing it well. The bottom third are refusing to innovate and tanking. The middle tier is trying to figure out what to do and hoping it’s all just a phase. But the truth is that in the future, those law firms that don’t innovate aren’t going to be here.”