After banking, retail, transport and hospitality, legal profession could be the next area of disruption, which law firms will have to embrace to survive it.
WINTER IS COMING
In her keynote address at the recently held Future Lawyering Conference 2017, Senior Minister of State for Law and Finance Indranee Rajah quoted from the movie Terminator, likening the advent of artificial intelligence (AI) to the “rise of the machines”. She joked that the millennials might not understand the 1980s reference.
Perhaps a more apt comparison, when assessing the threat that technology poses to the legal industry, is from the more current Game of Thrones. “Winter is coming” and the rise of AI is like the inexorable advance of the terrifying humanoid White Walkers.
The tech tsunami that has disrupted the banking, retail, transport and hospitality sectors will not spare lawyers. Technology is already able to replace much of the repetitive legal work such as due diligence and standard contract drafting. Search engines will replicate the work of junior litigators who compile research and analyse likely dispute outcomes based on past cases.
JPMorgan, for example, has developed a programme called Coin for commercial loan contracts. Ross, an AI system built on IBM’s cognitive computer system Watson, will be able to conduct simple legal analysis. DoNotPay is a chatbot service that has achieved a 64 per cent success rate in helping its customers appeal against traffic fines. These are all legal functions at the lower end of the services spectrum.
How has the industry responded to the digital disruption?
The government has shifted into high gear, launching programmes to help lawyers be future-ready. Chief Justice Sundaresh Menon last month announced Flip (the Future Law Innovation Programme), an industry-wide initiative to help legal professionals navigate the still largely alien terrain where law and technology intersect. Flip promotes sharing co-working spaces and provides support for startups in the legal sector.
Ms Indranee in her speech exhorted lawyers to develop market knowledge and deeper expertise in specific practice areas, highlighting secondments for which funding is available.
These are all laudable initiatives aimed at helping lawyers to continue to do just better what they are doing. But it makes a fundamental, and possibly mistaken, assumption: That the legal universe of tomorrow will look largely the same as it does today. Digitalisation, I would contend, is not like global warming that melts ice caps over decades; it is a colliding asteroid that changes the landscape forever. To be future-ready requires us to anticipate what that landscape will look like.
AND NOW MY WATCH BEGINS
Let me make three predictions about the state of the legal industry a decade from now:
Computers Will Replace Lawyers at the Bottom Rungs of the Legal Food Chain
Any work that is repetitive requiring minimal professional intervention or based on template will become the sole province of software. This includes routine conveyancing, commercial loans, employment contracts, simple agreements and the less contentious criminal law cases (look at what DoNotPay is already achieving).
In addition, any legal work that depends on collating and analysing historical data such as past judicial decisions, including legal opinions or evaluating likely litigation outcomes, will become the dominion of AI. No human lawyer stands a chance against the formidable processing power of a mainframe when it comes to sifting through voluminous data.
International law firms are already riding the wave – Baker & McKenzie announced this month that it will be deploying AI as part of a global rollout plan. Latham & Watkins is already working with IBM’s Ross, and Slaughter and May is helping to design an AI system that will be “trained to think like a lawyer”.
Law Firms Will Become Providers of Specialised Legal Skills, Not Legal Product
As Ms Indranee predicts, “the future of lawyering is legal practice augmented by technology”.
With technology taking over more routine legal functions, law firms will go in one of two different directions: Some will seek safety in numbers. Herd mentality will lead to the development of multi-disciplinary practices – mega platforms offering legal, accounting, compliance, crisis management, government relations and corporate finance services, for example.
Others will shrink in size, focusing mainly on work that robots cannot replicate: advocacy, negotiation, structuring of strategic or complex legal solutions. While a computer can spit out comprehensive legal research that will help in a court case, the art of persuasion remains a wholly human province. Computers crunch past data; they cannot yet calibrate emotion or intuit hidden agendas. Top litigators need not hang up their court robes yet. For the same reason, corporate negotiators will retain dominance in the board room. And because AI shines brightest when predicting future outcomes based on the consistency of past precedent, legal structuring that has to take into account the often irrational desires of human beings will continue to be a human skill.
Companies Will Become the True Legal Domain Specialists
Corporate giants, from Big Pharma to Big Blue, will be the future bastions of legal domain expertise.
The increasing rate of innovation coupled with the speed of dissemination of information means that the world is changing at a much faster rate than law firms can keep up with. Yes, lawyers can and should learn more about their clients’ business by immersing themselves in the clients’ industry, including through secondments, as Ms Indranee has suggested. But that would be like holding up an umbrella against the tidal wave of legal disruption.
Companies in areas of cutting-edge development will need counsel who not only have legal skills, but potentially also in-depth knowledge of the relevant technology (think Tesla), and specialised expertise such as government relations and lobbying (for companies, such as Airbnb and Uber, which are disrupting existing business models). Lawyers will no longer be professionals armed principally with a law degree and a sprinkling of industry knowledge; in fact, their law degree may be just one skill set, and possibly not even the most important one.
The best crucible in which to forge such expertise must surely be in the companies themselves, which may mean that the legal departments of companies, especially those engaged in complex or innovative areas, will become the strongholds of domain expertise. Lawyers from Alipay and PayPal will be the future specialists in online payments and fintech (financial technology); Google and Facebook will control much of the emerging expertise in cyber law and data. We might even see Amazon launching specialised legal services they successfully develop inhouse. After all, is there anything the online sales giant does not offer on its platform?
“WHEN YOU PLAY A GAME OF THRONES YOU WIN OR YOU DIE”
And so, lawyers begin our Night Watch as our industry awaits the onslaught of intelligent technology. It will shake the architecture of our profession but if AI and digitalisation make us more productive, then that is what disruption is meant to achieve.
Lawyers have no more right to an iron rice bowl than a Lannister has to the Iron Throne. Law firms will have to embrace the disruption in order to survive it.