Today, a computer one million times more powerful than the one that first brought us to the moon is in the pocket of nearly half of the humans that currently populate the earth. Artificial intelligence (AI) and other technological innovations are improving how we make inconsequential decisions (like which TV show to binge watch on Netflix) to the life-changing (like empowering doctors to make more accurate identification of malignant tumors). In nearly every industry and every aspect of our personal lives, advanced technology and in particular AI is providing people with better information to make more informed decisions.
Since the start of the new millennium, the pace of innovation and integration of novel technology in all aspects of personal and professional life has verged on (or in some cases surpassed) exponential. This poses some challenges for humans in understanding the scale of change — and just how much further along technology is today than 50 years or even five ago. The futurist and author Ray Kurzweil summed up the exponential innovation conundrum well:
Our intuition about the future is linear. But the reality of information technology is exponential, and that makes a profound difference. If I take 30 steps linearly, I get to 30. If I take 30 steps exponentially, I get to a billion.
The gap between the pace of innovation and adoption is especially apparent in the practice of law, which is even further behind than many industries. Even at Fortune 500 organizations, where AI is deeply integrated into myriad aspects of the business, the top lawyers that support these organizations as in-house and outside counsel still rely largely on the same technology (or lack thereof) that legal professionals relied on decades or in some cases centuries ago.
But, tech-forward clients are beginning to demand more from their legal counsel and refusing to pay the price when legal professionals don’t use more accurate or efficient technology to provide less expensive solutions to their legal problems. In the past, clients engaging with legal professionals relied exclusively on the reputation of the firm or individual rainmaker to determine who to hire or engage as outside counsel. But, increasingly those decisions are also being informed by better, smarter technology. Clients want to have demonstrable innovation and efficiency from their legal partners and are no longer satisfied with the status quo.
Chink in law firm armor
The first cracks in the perception of law as an invulnerable career began in the 2008 market collapse. The great recession resulted in tens of thousands of the brightest legal minds at even the top white-shoe law firms being laid off. Students at the top of their class at the most well-respected schools found themselves unemployable. Even some of the top firms and legal professionals did not survive this economic catastrophe. In one particularly brutal day, Bloody Thursday, over 1,000 elite legal professionals were fired from what were previously believed to be recession-proof jobs. The tides were turning on the invulnerability of legal careers.
In the midst of the high-profile meltdowns across financial services and the laser focus on subprime mortgages and shady dealings, the legal industry also faced an existential crisis. For the first time, the foundational model of law firms with a vast ocean of support staff and expensive junior attorneys supporting powerful rainmakers came into question. Clients began taking a hard look at legal spend, demanding cost justification, and refusing to pay top dollar for baby lawyers to learn how to lawyer.
To bridge this gap, an increased focus on alternative fee agreements (AFA) flooded the market as well as increased demand for services rendered by alternative legal service providers (ALSP). AFAs came in several flavors, but generally consisted of flat per-matter or even per-client pricing structures that shifted the incentives of law firm profitability away from billing as many hours as possible to performing tasks as efficiently as possible to drive up the profitability of flat pricing. The AFA push was also a driving factor in adopting ALSP providers for low-value tasks (like document review, word processing, and low level contract drafting) as well as a renewed interest in the use of technology to automate the legal profession.
Shaken not shifted
The foundation of the law firm model was indeed shaken, but in keeping with Newton’s first law of motion, the large objects reverted back to the status quo as soon as the external market pressures began to alleviate. The vast restructure of the business of law that many a pundit discussed never materialized in a lasting way, and firms big and small seemed to go back to business as usual in short order.
Despite the reversion to many of the old ways of doing business, it was not possible to fully unring the bell in terms of reliance on ALSPs for low-value tasks because clients had become accustomed to paying less for these tasks. What resulted was a variety of hybrid approaches to the practice of law that varied from captive law firm-controlled discovery or contract business units operating as profit centers within the firm, to hybrid approaches that married external on- and offshore ALSPs and traditional firm models. These captive and external programs operated under a different set of rules and had access oftentimes to newer technology to support more efficient approaches to repetitive or lower value tasks.
Savvy clients start to expect more
In the decade following the Great Recession, corporate clients began to exert increasing pressure on their outside counsel to demonstrate efficiency and their in-house teams to cut costs. New roles called legal operations were added at many Fortune 500 companies. These roles focused on driving pricing consistency and cost savings for legal services. Then in 2017, a global organization called the Corporate Legal Operations Consortium (CLOC) was formed to connect legal operations professionals and further codify the business expectations for legal services. This shift in many ways elevated the legal services from in-house and outside counsel to the same table as the business, but with this elevation came heightened expectations and scrutiny of billing, performance, and innovation.
I experienced this shift firsthand during my tenure as the global director of practice technology for Gibson Dunn & Crutcher from 2016-2019. In my last year at the firm, every single RFP I assisted with had some variation of the question “How are you using technology/AI/innovation to drive efficiency.” Some clients even went so far as to apply AI-powered tools to years of historical billing to evaluate our effectiveness as outside counsel and find areas for cost mitigation.
For the first time, clients wanted to know why a partner billed 10 hours to analyze a contract in one instance vs. five in another, or why three associates were billed on a matter instead of lower cost support staff. The technology and ALSPs we engaged with were frequently prescribed by clients who had large multiyear agreements with favorable pricing or who understood the cost efficiency of leveraging technology.
In parallel, a new trend began to emerge. Tech-savvy associates and even legal technologists began to have increased influence in terms of case strategy, technology used, and partners. People identified as tech-savvy were able to in some cases go up the partner ladder (up to and including the executive committee) more quickly than tech Luddites. Even non-lawyers were able to secure key roles within law firms, corporations, and ALSPs.
The rise of the tech whisperer
As clients have increased their adoption of technology and knowledge of innovation and cost efficiency in the legal space, the demand for tech-savvy practitioners in-house and in outside counsel has surged. Whether you are a litigation associate with your sights on partner track, a law student looking to find the path to job security and growth, or a partner looking to keep your clients, the impact of tech know-how and fluency cannot be understated.
While there has been an ever-present drumbeat of “learn to code” in pop culture and even some legal periodicals, I would argue that is not the only path to technology fluency. For some professionals, coding may be a great way to develop a deep understanding of underlying nuances of technology, but it is far from the only way.
In my career, as a recovering existential philosophy major turned Chief Innovation Officer of a next-gen cloud discovery company, being able to understand how technology works and the issues it posed, and translate between my techies and legal teams was the most critical skill. More than being able to write the code or craft the algorithm, finding a way to facilitate communication between technophiles and technophobes accelerated my career dramatically. It was less important for me to make or even in some cases be the end user to technology than it was to understand and be able to clearly communicate what the tech was doing and how it worked to professionals of all levels. And I am not alone: An entire new ecosystem of alternative legal paths have arisen sitting at the nexus of law and technology across the entire legal horizontal.
From roles squarely in the technology side of the equation to more traditional legal careers, advanced and more mundane applications of legal technology are impacting the business of law. Professionals who are able to integrate, evaluate, and understand the benefits and pitfalls of the various applications of technology are in high demand. Lawyers that refuse to adapt and adopt technology to become more efficient are falling behind and losing out.