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Beyond pot plants

06 October 2016 - By Thomas Bloy and Kieran Boyle

This article follows up an irreverent piece we wrote for the 29 July 2016 issue of LawTalk entitled Innovation requires more than new pot plants, in which we suggested that large law firms would serve clients and budding lawyers better by investing in technology rather than ‘state-of-the-art’ office space.

While our tongues were being held firmly in cheek to some extent, we had a serious message. The soundbite: fancy office trappings are deadweight – the Cloud and remote service provision are the way to go. Cheaper, faster, and more convenient.

While that is all well and good, the point of this article is that there is nothing actually innovative about the virtual law firm model. It is only a small step in the right direction. We still have a long way to go.

We know the internet is cool

Apologies in advance to our online law firm colleagues. We know from experience that touting your firm’s virtual office and use of the Cloud is a good way to differentiate yourself from the competition. It says “look how modern we are compared with the rest of the tired old profession”. But we are deluding ourselves if we believe that is innovation.

To any professional other than a lawyer, boasting that you run a virtual law firm using the Cloud is like bragging that you use the Internet. It should be the default. It is only because the profession is so far behind that using the Cloud is seen as innovative at all.

Accountants are ahead of us

New Zealand’s accountants are far more innovative than its lawyers, thanks in no small measure to Xero. At the recent and, judging by Rod Drury’s Twitter feed, hugely popular ‘Xerocon’ conferences, Xero marketed new services making use of artificial intelligence and machine learning to assist accountants.

This isn’t some American law firm talking about using IBM’s AI Ross to create bankruptcy documents one day. This is advanced technology designed to improve everyday practice for accountants by mechanising a steadily increasing number of processes. It is available right now (or will be shortly).

Lawyers, in contrast, are still debating whether or not the Cloud is appropriate for legal documents while happily using their fax machines. We continue to store or outsource the storage of original documents when digital copies usually suffice. There is no reason, for example – neither legal nor practical – for conveyancing firms to store original authority and instruction forms, yet we would wager most still do. And we eagerly anticipate the most pedestrian of technological advancements, such as the prospect of one day being able to access Landonline without Microsoft Windows. Oh, and the Cloud.

The Cloud is not that cool

Perhaps surprisingly (but not really), the Cloud is nineties technology. Our own Cloud document storage provider NetDocuments started in 1998. Eighteen years later and lawyers still haven’t caught on. The minority who have are considered innovative.

Cloud-based storage is barely more interesting than the humble USB stick. What a sad indictment of where we are as a profession. Why are we so far behind? A few reasons.

Monopoly

Until recently, lawyers have enjoyed a practical monopoly on the provision of legal services and advice. This is the case even though the “reserved areas of work” in the Lawyers and Conveyancers Act 2006 are fairly limited. The lack of external competition for legal work has made lawyers complacent about how technology can (or should) improve service provision.

Simply put, there was never any real market pressure on us to do better. Clients had no option but to see their lawyer. Provided the lawyer matched the low technological standards of the profession, they were in business. Software is changing that.

Time billing

Time billing is a big one. Most software aimed at lawyers is designed to save time. Since time is the cashflow lifeblood of most firms, there is a natural and powerful disincentive to use any such software, let alone pay for it. While lawyers are legally obliged to charge a fair and reasonable fee, lawyers are also people and people respond to incentives.

A disincentive to be efficient is a pretty good reason not to adopt software that makes you more efficient and, by implication, at risk of being less profitable. There is also a certain security that comes from having the standard of a fair and reasonable fee being measured against other lawyers doing exactly the same thing as you.

Institutional inertia

Law firms seem to be even slower to adopt a new technology if the benefit is not immediate. It is almost as if this tunnel vision is built into the incentive structure of most firms. The lack of enthusiasm for investing in technology yielding long-term benefits may, therefore, be institutional.

Once a lawyer attains the ultimate goal of partner or director in their firm – a long, hard road – the focus is on maximising revenue and lowering costs. The practical necessity is to make as much money as possible for the limited time the lawyer can occupy the top position at the firm. Because on retirement, passive income opportunities from the firm, and the window of higher-earning potential, may be limited.

Compounding this, hungry younger lawyers will be hot on the heels of older partners, and seeking to attain the highest position themselves as soon as possible. Law, as everyone knows, is an extremely competitive industry. When you get to the top, make hay.

So any capital outlay must yield an immediate benefit in terms of cost or revenue. If the pay-off is long term, it will most likely be unattractive to the managing partners. Their focus on short-term gain, while entirely understandable, is a barrier to innovation. You might even call it institutional inertia.

Tradition

We would be remiss not to mention traditionalism. Generally speaking, lawyers look to what has gone before for guidance on the future. While this backwards-looking perspective is essential for the proper application and maintenance of the law, it doesn’t inspire innovators who change the status quo.

New Zealand

Finally, we live in New Zealand. As at May 2015, we ranked 42nd worldwide for Internet speed and 25th in terms of internet users (82.78% of New Zealanders are online). That’s decent, don’t get us wrong. It just demonstrates that the Internet, first available to uni students here in 1989, is still taking hold. Other countries are well ahead and their legal professions will benefit before ours. Their lawyers will be better adapted to the meshing of law and tech. New Zealand lawyers will need to think ahead if we are to keep up. And with the gradual roll out of fibre connections, there is going to be less of an excuse for holding back.

So let’s not hold back. Let’s look beyond the pot plants, but also beyond the Cloud. Let’s be open to future, developing technologies rather than be forced to play catch-up with established ones from the nineties. Let’s look at our current practice methods closely and see where can start innovating. Let’s learn from what other professions, particularly accounting, are doing.

Xero

Look at how Xero has taken away basic bookkeeping from accountants, previously their bread-and-butter, and forced them to innovate and diversify. And look at what Xero is up to now! How will we respond when the legal version of Xero comes to town? Will we be capable of diversifying away from our bread-and-butter practice areas? We’ll see. Viewing the Cloud as a boring old utility rather than some new-fangled tech would be a good start.

The end of lawyers? Yea, Nah

Before we get too Susskindian, we should pause to emphasise that the world’s second oldest profession is not coming to an end. Machines and software will erode the service offering of today’s lawyers, there is no doubt. But the intangible skills and expertise of good lawyers will be very difficult, maybe impossible, to replicate artificially. Things like exercising professional judgement, assessing practical risk, weighing different, conflicting, and new legal principles, and understanding different nuances due to the parties involved in a matter. The ‘human’ element you might glibly say. The stuff that truly requires a lawyer and probably always will.

Get on board

The reason lawyers should embrace technological disruption and innovation is because it holds great potential for enhancing those skills only a trained, human lawyer can possess. Those skills are the ones clients should be paying for rather than the mundane and repetitive administration tasks that commonly make up the bulk of legal work. Indeed, the only lawyers who should fear the impact of technology are the ones who can be replaced by it. That category might well include the authors one day (if not now). It might also include you.

Excitement, as opposed to fear, is a better response. Wouldn’t it be good for the law to have lawyers focused exclusively on the things that actually utilise their training and skills? Maybe lawyers would have greater job satisfaction and enthusiasm for their profession if they were doing more law and less admin.

A recent survey in the United Kingdom, for example, showed that only 37% of senior associates would choose law if they had their time again. That is a sad state of affairs. While there may be many factors contributing to lawyers being unhappy, the authors know from personal experience that continually performing tasks you know could be done by smart machines is, to put it mildly, soul destroying.

If we don’t, someone else will

Lawyers should be helping to create those machines. At the risk of sounding elitist, the knowledge and expertise that is undeniably possessed exclusively within the profession means it is critical lawyers lead the charge in implementing the inevitable assimilation of technology. The raw materials of the law are, quite rightly, publicly accessible. It is only a matter of time before those outside the profession see the possibilities in unlocking the vast ocean of legal knowledge at people’s fingertips. That is not to argue that the law should be inaccessible to the general public. It absolutely should be accessible. However, there are inherent risks in new means of disseminating legal knowledge being developed predominately by those without a legal background.

We cannot afford for the increased efficiencies technology will bring to be at the expense of quality. Lawyers have an obligation to ensure that service standards are maintained. It is hard to see how that will be possible if the profession is not at the forefront of developing legal software. That, however, is an exciting prospect. It means the reality of practice can start moving towards the expectations of the next generation of law students.

First goal: adapt to the present

To get to the future, we first need to adapt to the present. It is not only our profession’s recent over-excitement about the Cloud that indicates we’ve got a long way to go. The continued existence of the fax machine in legal practice is another indicator. In our firm, fax messages are diverted to email. We only have a fax number because other firms and institutions insist upon using the ancient facsimile. A good sign of progress will be the elimination of that redundant device, not to mention redundant practices. When they (pointless machines and practices) combine, it is nothing short of infuriating.

Kill the facsimile

Behold this great example. We have a PO Box for snail mail like every other law firm. (Original documents are still required in law, so we can’t get rid of them just yet. That too will change.) NZ Post helpfully lets us know when we have mail to collect by sending an email notification. Imagine the delight of finding that, in most cases, the mail being collected in response to that email has already been sent as a fax, and received as email. One can easily picture the farcical chain of events leading to this absurdity. A scene that plays out countless times every day in firms everywhere. One that could be a source of comedy, if it didn’t so starkly illustrate the dire state of practice.

A tragic tale

A partner leans back and rests their shoes on the desk. A short reply is required to an email from another solicitor. The reply is dictated for typing up by a secretary. The three-sentence dictation is sent to the secretary who then prepares a draft letter. The secretary prints the draft letter and makes his or her way to the printer for the seventeenth time that morning. Nathan from accounts stops our poor secretary in their tracks for small talk.

The letter is duly collected and placed on the partner’s desk for checking. A typo is detected. A fresh letter is prepared and printed. This time the harried secretary takes the long way around the office to avoid Nathan. The letter is reviewed again while our secretary waits with bated breath. Relief washes over the room as the letter is approved.

But the mission is not yet completed. The letter must, of course, be re-printed on expensive letterhead. The one with the nice gold trim at the top. Another treacherous trip to the printer. At last, the letter can be signed in nice wet ink. It is now nearly ready to make its intrepid journey.

To hasten the letter’s arrival, let us harness the power of the facsimile machine. A copy (on coloured paper!) is first made and added to the file. A fax cover page is prepared heralding the letter’s transmission via fax and, of course, the number of pages to be expected. At last we arrive at the final step – sending the letter. After all, it has been printed and signed by the partner. Why wouldn’t the recipient of the fax also enjoy a physical copy? Everyone loves physical copies.

A final, unexpected hurdle – we have run out of envelopes. Next to forage around the stationery cupboard, again avoiding Nathan’s snares en route. The letter is carefully slotted into the envelope, and the envelope is sealed shut and placed in the mail-out tray. Some office junior will collect it later for posting out, maybe tomorrow. Time for a coffee break, to reflect on a job well done.

Three days later, one of the authors receives an email from NZ Post and arranges a trip to the PO Box. Driving, parking, walking, entering a PIN number, opening a lock, and pulling out some envelopes. Back to the car and the home office to peruse. The Law Society tells you as part of its Trust Accounting Supervisor’s course that this task is very important. Mail, you see, is one of the ways people can defraud a trust account. So we take the mail opening process seriously. It becomes a joke, however, when most of the mail you open never needed to be posted in the first place. The mail was received three days earlier by some better form of communication and has already been filed electronically.

The joke stops being funny when that better form of communication is fax.

We need to go faster

Hopefully things change soon, but not until we eliminate the fax, modernise other outmoded practices and technology, and stop obsessing over the Cloud – a glorified virtual hard drive.

Yes it’s great, but let’s get on with developing the tech that will actually make good legal advice more accessible and easier to provide, and the legal profession a more fulfilling, inspiring one to pursue.

In short, we need to think bigger and further into the future. There are plenty of reasons to be hopeful about where law is heading. We just need to get there faster.

Thomas Bloy is a director of Evolution Lawyers and CataLex. Kieran Boyle is a solicitor at Evolution Lawyers.

Last updated on the 5th October 2016