Here, our projects and research associate Ben Rosie explores how tech is changing the traditional law firm and calling time on the billable hour
Parts of the legal sector are famously conservative and slow to embrace new methods and technologies. However, the pace of change is accelerating, emerging technologies, new service providers and a new generation of tech savvy lawyers looking to make their mark on firms are creating the conditions for what could be the most radical rethink of the legal market we’ve ever seen. The fear for firms is that those who are lagging behind, could be left there.
The biggest new development is the implementation of AI within firms as an efficiency tool. The use of tech in law firms can be broadly categorised into technology that supports the internal production of legal services, and technology that is client facing. These are sometimes described respectively as “legaltech” and “lawtech” and should be distinguished from the more general use of tech tools to improve back office functions in law firms, such as accounting software and case management systems.
Tech is altering how firms operate internally, how external suppliers view the market and their role in it, and what is possible for new legal service providers to do. This all has significant implications for the structure of law firms, how they create revenue and ultimately how they serve the client.
Tech in firms
Allen & Overy is one of the law firms that have embraced legaltech AI in the form of Harvey AI. Harvey AI is a leading example of an AI application using natural language processing, machine learning and data analytics to automate and enhance various aspects of legal work. It is an application building on OpenAI’s GPT Software, now spun off as a separate legaltech start-up. Unlike ChatGPT, Harvey AI has been specifically developed to be used by law firms with high volumes of documents. The technology has been ‘trained’ specifically on legal data such as case law. Once implemented by a law firm, the technology is ‘onboarded’, like a new employee and given training on specific models and projects. Designed for large firms, Harvey has made quite a splash at all levels of the legal industry, with over 15,000 firms of all sizes on the waiting list.
It is not just large firms using technology to innovate. Family Law Partners, a 27 partner practice in the UK, was developed with the central focus to use technology to improve service delivery. Through a government backed scheme, the firm engaged in a ‘knowledge transfer partnership’ with the University of Brighton to develop a customer facing ‘virtual lawyer’. This acts as an onboarding system, collecting key case information and removing the initial meeting between client and lawyer. This tool has been seen favourably by clients and allows the first face to face meeting to be immediately productive, rather than an information gathering exercise. Financially, this is more cost effective for clients and it has also had the added benefit of allowing clients more information and control of their matter from the outset.
Technology at both large and small firms is altering how services are dispensed and therefore how firms create revenue. What was previously billable is becoming automated, meaning clients cannot be charged for it and will increasingly become unwilling to pay for services being automated elsewhere, driving change. This requires a radical rethink of revenue models for firms and potentially a move away from the billable hour.
Tech outside of firms
Technology is changing the way suppliers of law firms are able to operate. Companies such as Thompson Reuters, Westlaw and Lexis Nexis are beginning to compete with firms for customer market share, as well as providing services to firms to improve their customer service and operational efficiency.
Thompson Reuters recent takeover of Casetext suggests this trend will continue with more and more services available that automate unregulated tasks previously conducted by lawyers or paralegals. Casetext has developed a tool called CoCounsel, an AI powered legal assistant that can conduct document review, develop deposition outlines, conduct legal research, summarise complex legal documents, assist with compliance and extract contract data. This can be used as a litigation assistant to develop complex arguments through high level research.
Similarly, Solomonic is another supplier making waves. They are an AI powered litigation analytics platform that assists litigation funders manage risk and resources more effectively. Solomonic hosts thousands of data points and provides in depth insights of previous judgements, outcomes, relationships, and past behaviour in the High Court that can be used to assess the likelihood of an outcome for litigators. Solomonic changes the equation and litigation goes from being a legal to a risk based issue that can be effectively managed through this service.
Pattern Data offers another example where technology is accelerating the review process for litigators and improving the risk judgement going into litigation. Pattern Data reviews thousands of medical records to determine the quality of a case before it begins and provide insight in real time. Pattern Data also allows litigators to search their entire case inventory and access the details of any case, streamlining the process of internal case and document review.
At first glance technology like Casetext, Solomonic and Pattern Data assist the work of lawyers, speeding up case prep and automating the more mundane parts of a lawyer’s job, however, we may increasingly see them replacing much of this work in the future. This poses a risk to the structure particularly of large law firms as they will become increasingly resistant to hiring large numbers of trainees and paralegals to do work that can be carried out by AI. This will have serious implications for the training of new lawyers as well as constricting the pyramid structure of most law firms who will no longer have the flow of paralegals and associates they are used to.
This represents a problem for firms who will need to develop new methods for training young lawyers. This is an opportunity to be innovative in legal education and focus on the value-add lawyers can bring.
This will also reduce the pool of lawyers available to be welcomed into the partnership potentially causing leadership issues.
New legal service providers
It is not just tech in law firms which is impacting how firms operate, competition from new legal service providers is causing firms to rethink their current model of service provision. Tech is enabling (mostly unregulated) legal service providers to offer many of the services traditionally the sole preserve of solicitors directly to clients.
Amicable and HelloDivorce in the UK both offer full-service divorces without the need to engage a solicitor. Amicable shows how technology is allowing providers to be far more responsive to clients’ needs by offers an online service that covers all aspects of divorce, including agreeing on how to separate finances, agreements on custody, the preparation of legal documents and managing the court process. On top of this they offer tools to manage the complex personal aspects of separation such as a divorce timeline, parenting planning and a diagnostic tool to find the right service for the consumers specific circumstances. Amicable is able to be far more responsive and flexible to the consumers specific circumstance than a traditional law firm. These services are far more affordable, offer better value for money and give the client more control. This is important in all legal matters but particularly something as personal and emotionally fraught as divorce.
Over the years many different new technologies, regulations and events have supposedly rung the death knell for the billable hour and the traditional law firm. However, none of these have come to pass, and the billable hour remains, with the vast majority of the biggest law firms steadfastly sticking to their model with great financial success. However, the tech we are currently seeing is moving faster than anyone could have predicted and to remain competitive, law firms will have to innovate and alter their model or risk being left behind.
