Beyond the Pandemic
Great irregularities in life always bring forth droves of people wondering ‘what next’. I will join their ranks and outline my views on what is going to happen next in legal technology and how the ongoing crisis will reshape the legal industry.
I will start with the obvious. We consider the legal professions to be recession-resistant, at least to a certain extent. Instead of large M&A deals, the industry will turn to litigation, insolvency, bankruptcy and debt management. That being said, during the financial crisis in 2008, we saw a simultaneous downturn in both transactional work and litigation, and for a period, there was not much available in terms of compensation for lost billable hours. The way the ongoing crisis is going to unfold in the coming months will show us whether it will be a sharp but short shock in terms of postponed demand, or whether it will more resemble the 2008 financial crisis. It is essential to understand that lawyers serve as a support industry – and if the primary activities dwindle from a stream to a trickle due to lockdown and furloughs, the same will follow in support industries.
It is important to note that there is nothing monolithic about the legal profession, and different firms will be affected differently. The first distinction I would like to make is between ‘long-term’ and ‘short-term’ lawyering. Long-term work relies on litigation spanning several years or M&A deals where due diligence takes months to complete. Short-term work relies on immediate problem solving, decision-making support and compliance. Big law firms may be able to withstand the short-shock better compared to small law firms that depend heavily on SMEs hard-hit by the lockdown. Long-term work is not going to stop, and the life cycle of some legal work is long enough to span beyond the immediate crisis.
Long-term work is also important in terms of deployment of legal tech – the life cycle of legal tech product development or the selection of the next step on the innovation ladder are lengthy processes, and may span for well over a year. Decision-makers during a crisis will be inclined to cut everything deemed non-essential, which may inhibit innovation. This would be a mistake because there is a discrepancy between the lockdowns measured in weeks and the deployment/development life cycle measured in years. Innovation projects should survive, but only if they serve the greater good of maintaining cash flow.
The immediate crisis associated with lockdown may be relatively short, but will lead to a prolonged period of ‘new normal’. Therefore, there is a second distinction between ‘flexible’ and ‘conservative’ lawyering. The key point here is how we can get ready for the ‘new normal’ that contains periods of required social distancing. This will affect the way lawyers meet with clients and work together in offices. High street offices may quickly become a burden if clients are unwilling or unable to attend meetings in person. Heightened hygienic standards will drive building-maintenance costs upwards. As a result, overheads are likely to rise while the benefits of office-space decrease.
Driving down overheads is going to be crucial. Cutting costs of office-working may well relate to cutting costs in personnel and restructuring the way certain tasks are performed. On-demand contractors instead of on-site employees may conduct some tasks, such as legal research or discrete projects. Issues associated with remote working, such as a functional procedure for authentication of documents and creation of a paper trail, ensuring the security of communication, and adapting to the challenges of virtual meetings, are going to be part of the ‘new normal’. Flexible lawyers may be able to respond to these developments easily, while more conservative lawyers may struggle to adapt.
The third distinction I would like to make is between the ‘lawyer-based’ and ‘law-based’ lawyering. Technological innovation often meets resistance, as lawyers are a rather conservative bunch (and I am well aware this is a gross generalisation). One of the main arguments against automation is that legal work requires a finesse that any automation is unable to achieve. I believe this conviction is misplaced, and it will be stress tested during the ‘new normal’. Clients expect legal advice, which does not necessarily mean that it has to be provided by law firms or that every single step needs to be conducted by a lawyer. We will see a surge in alternative legal providers and the automation of repetitive tasks. Breaking down processes in law firms, eliminating lawyers where their presence is not essential, and supporting them with automation when appropriate (including in document review, document analysis, document production, legal research, and eDiscovery) is going to help to drive costs down. There will be no place for protecting the sanctity of legal ‘guild’ as there will be remarkable pressure to just ‘get things done’.
Richard Susskind noted in Online Courts and the Future of Justice that it is difficult to change a tyre on a moving car. The car has slowed down significantly, and this presents us with an opportunity to change the tyre a bit more easily. Lawyers and law firms focusing on ‘long-term’ lawyering may be willing to sit this one out and bet their future on the fact that this will be a short-term shock. This may be correct, but I believe that this period of ‘shock’ will be followed by ‘new normal’. In that period ‘flexible’ and ‘law-based’ lawyers will benefit from intellectual openness and tech-savviness. Make no mistake – legaltech will not be the driving force in our journey through this challenging year to 2021. Maintaining cash flow in a cutthroat world of economic struggle will instead be sitting behind the wheel. Nevertheless, legaltech will be in the back seat, and we will see years or decades of incremental development compressed into mere months.
Masaryk University, Faculty of Law