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Will the COVID-19 crisis be the catalyst to transformation within the legal sector? 

With three billion of the world's population under some level of lock-down, many businesses around the world have had to acclimatize to remote working practices quickly. The legal industry is no exception to this, but law firms have a reputation of being reluctant to change. 

For centuries the legal sector has been opaque and mysterious, protected by proprietary jargon and complex regulation, and many view the industry as vulnerable to the risk of substantial disruption. There has been a slow response to technological developments, and few incentives for law firms to adapt and embrace innovation. Indeed, there are powerful incentives to resist change, such as billable hours, a practice that does not lend itself to operational efficiencies – completing an inquiry, document, case review faster means less money for the law firm. 

We are only at the beginning of the journey sparked by the COVID-19 crisis; there are many unforeseen consequences that will unfold along the way. The response so far shows that the legal sector can adapt to a new way of operating. Could the health crisis be the catalyst to transformation within the industry and an acceleration of the uptake of innovative technology such as artificial intelligence and automation, as well as the insights provided by big data to drive decision making?

Change is coming   
Is the legal industry the most obstinate to change of all the global professions? There is no way of knowing that, of course, but there is a strong perception that the legal industry is reluctant to change. The balance of power between law firms and clients has for so long been on the side of the firm. Until recently, there have been few reasons to change. Today, however, there is little doubt that change is coming, and has been coming for a long time. A new generation of tech-savvy professionals are growing into their corporate roles, executives accustomed to having information at their disposal, to the ability to 'hail' services for immediate gratification, to solve urgent challenges. There is little alignment between the current practice of law and this modern working practice.

Now, however, there is an awkward pause as the COVID-19 health crisis has forced every industry to examine working practices and interrogate effectiveness and efficiency in this time of remote working, physical distancing and stringent hygiene. Even the most resistant to change lawyers will have to accept that there is no escaping the use of innovative technology, if only in the short term. The question is, once the technology genie is out of the bottle, will it ever go back? We have seen, for example, the number of users of Zoom, an app which facilitates team meetings spike from 10 million to over 200 within a matter of weeks as lock downs around the world restricted personal interaction with work colleagues. The number of Zoom users will be interesting to track as restrictions ease, as will the vocal critics who immediately pointed to the security risks and legal implications of moving client confidential interactions to online platforms.

No longer survival of the fattest but of the fittest
Often seen as the last bastion, law if the last sector to resist the fast-paced technological change that has swept through so many other industries. Could the COVID-19 crisis could be the seismic transformation that is required to move the industry into a new age? The crisis has revealed that the industry is capable of adapting when it's necessary. When societies begin to emerge from their various lock downs, only then will we begin to understand the new normal. Law firms will have to adapt to this new normal quickly. This process will be financially driven – cash-strapped clients will ask for more value from their legal solutions, they will search for a broader, more holistic response to their pain points, and law firms will be bound to provide solutions that may sometimes go beyond their legal expertise to survive. Innovative technology facilitates collaboration and will make it easier, and cheaper, to plug in expertise from other sources when it is required.
Will firms adapt?
Often seen as the last bastion, law is the last sector to resist the fast-paced technological change that has swept through so many other industries. Could the COVID-19 crisis could be the seismic transformation that is required to move the industry into a new age? The crisis has revealed that the industry is capable of adapting when it's necessary. When societies begin to emerge from their various lock-downs, only then will we begin to understand the new normal. Law firms will have to adapt to this new normal quickly. This process will be financially driven – cash-strapped clients will ask for more value from their legal solutions, they will search for a broader, more holistic response to their pain points, and law firms will be bound to provide solutions that may sometimes go beyond their legal expertise to survive. Innovative technology facilitates collaboration and will make it easier, and cheaper, to plug in expertise from other sources when it is required.

The future is already here
Collaborative tools and the use of smart contracts will be a feature in the future of legal work. While this may seem abstract to some, there are places where this future has already arrived. China, for example, is heavily invested in its belt and road initiative, and this represents a USD 6 trillion supply chain which will span many jurisdictions over its life time. There has been significant investment into a de-risking solution which entails the use of a block-chain-based smart contract. Should there be a dispute, the contract can solve the issue by itself. It will appear on an agreed platform, the dispute is examined and resolved either through AI or human intervention, and the contract continues. We are also seeing AI solutions that translate smart contracts into legalese and legalese into smart contracts, an interface between code and language that reduces the need for lawyers to explain contracts to clients. This smart contracting will rise in prominence, and industry insiders predict that within ten years, 50% of all international contracts will be smart, self fulfilling contracts. What does that say about the future of legal firms? 

Adapt or die
The use of this kind of legal technology will raise efficiency by a substantial rate, thus freeing the in-house legal team and external counsel to add value where it's needed. In this way, data centricity and AI may revolutionize the way that inhouse counsel operates. However, we know that traditionally lawyers are, by training, risk averse and tend to rely on tried and tested methods. Innovation is, of course, for the vast majority the complete opposite of that. The existing business model of a law firm has enormous costs built in, partnership structures encourage people to enhance their knowledge in silos, and this does not promote innovation. Indeed, it is necessary to go back to the beginning and examine the premise of legal training. The future of work will require emerging lawyers to be not only students of law but also students of technology and entrepreneurship. It will require the provision of incubators and accelerators, as seen in other industries, to encourage the level of innovation that is needed. The entire initiative requires a new skill set and mindset. 

Law Tech that will endure
It is a daunting task to choose the best fit of technology solution in a fast-evolving situation, and there are many options currently in the market, such as Thomson Reuters HighQ, a piece of clever law tech that provides a secure collaborative platform for both law firms and in-house legal teams alike. However, it is better to make a calculated and informed decision and invest than to stand still and remain with the status quo. While the situation is dynamic and challenging to forecast, there are notable trends that will likely endure.  Legal teams working remotely will probably be a feature for some time, so there is an urgent need for tools that will support remote work for those teams. In this case, a solution that offers robust cloud storage and security, as well as easy mobility, will be valuable. 

There will also be a need for increased knowledge sharing and efficient collaboration: between law firms, between in-house counsel and external specialists, between legal experts on different teams. The use of smart contracts will quickly increase, so a solution with smart contract management will greatly facilitate workflow and analyze data metrics, boost efficiencies and freeing resources. 

A new dawn
The industry is on the cusp of significant change, and the firms that adapt the quickest will emerge stronger than the competition. A new business model will undoubtedly arise. Innovation within law will begin to align with innovation within the business that they operate, or aligned with the technological developments within the businesses that they advise as outside counsel. Governments are beginning to spearhead this drive towards legal tech, and we see tech hubs emerge. Technology should not be feared but embraced for the potential strengths that it brings to the business of law. Law firms, corporate legal departments and governments that fail to recognize the signs of change are at risk of being left behind.

This article was co-edited by Nicholas Cronjaeger,
Head of Legal Software Solutions MAR.

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