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The year of technological clatter.

And there will be wars and rumours of wars... but be not troubled… for the end is not yet.

There is an unseen war of sorts being fought in the legal industry. A bit dramatic some might say. You be the judge.

The General Counsel is leading the charge with her ever-so-assertive in-house legal team and is unleashing an onslaught of demands and requirements from its legal service providers, the likes of which have never been seen before in the industry (e.g. freebies before engagement, alternative billing, eradication of hourly rates, spreading risk of payment on factors besetting the client’s own industry such as oil prices at certain levels, valuation of stock, valuation of profitability as reported in the books, unprecedented low annual retainers offered as legal insurance (regardless of time spent) to cover every need of corporate clients, including litigation, etc).

Big law firms are not just taking it but are pushing back. As discussed in the overview I wrote in last year’s edition of Chambers Global, the avalanche of mergers and combinations among law firms seen during the past couple of years has continued relentlessly. The mega law firms continue to wield their power and influence and keep getting stronger. In many cases, their over a thousand dollar/euro hourly rates do not seem to be under attack, so they like to argue.

Perhaps nowhere is this battle going to be felt more than by the unsettling clatter technology is making across the industry. One barometer to look at is the number of IT companies venturing into the legal market, as seen by the growing number of start-ups and other more renowned IT companies offering their technology services at the Association of Corporate Counsel (ACC) annual get-together where FLI and a number of law firms as well as other networks attend as sponsors regularly.

Among the services on offer the following are just a few worth considering:

Software includes features such as legal calendaring, legal workflow processing based on court rules, time tracking, billing and invoicing, payroll processing, law firm accounting and law firm trust accounting; others include features such as a contact manager, a customer relationship manager, time tracking and document management capabilities as well as introducing the client to a list of certified consultants who can help provide additional support for their IT-business model.

Other services include billing software for any company but which has an industry-specific legal edition for attorneys, as well as the American Bar Association (ABA) Task Codes, conflict of interest checking, trust accounting and trust reporting. Then there is legal practice management software that works with Microsoft Outlook, designed to organise one’s law firm’s Outlook email, calendar, contacts and tasks by client or project. This service allows attorneys to track and organise documents, phone calls, time and billing and other law firm practice information using Outlook; other software offers legal practice management targeted to law firms that seek a single integrated IT solution to run both Mac and Windows operating systems so that client management, email management, invoicing, trust accounting and customisable workflow automation can be provided to the attorneys working under the same roof. These services can now be offered as a desktop version or cloud-based solution. And the list goes on. By the time you, the reader of this overview, finish reading, there will be a number of other hopeful entrants to the industry hoping yet again to disrupt the market.

While this remains relatively early days, and thus the risk for failure for misusing the technology may render a firm vulnerable to claims over legal malpractice if items are missed and not caught by the evolving IT suite of services on offer, an element in the clatter becoming louder and louder is the recent focus by outside funding (some by non-lawyers) such as venture capital investment in legal technologies. This interesting development will bring an increased pressure from clients for firms to utilise those tools to optimise the delivery of the service and yes, reduce costs. It stands to reason that firms unable (or unwilling) to keep current with the advances in technology will experience loss of market share from clients who see a value to be gained from the use of technology. Firms will have to weigh the costs of these new services against the risk of clients going to a firm or network of law firms, as may be the case, that already has such capabilities.

Savvy outside investors are starting to eye a potentially colossal opportunity with substantial returns. The market is now seeing a small (but very well-funded) number of companies offering to bank-roll up front high-end litigation costs for lawsuits with a strong likelihood of successful outcomes but for the lack of funds.

So while there will continue to be external forces investing and looking to invest in our industry, from within the office of the GC, the in-house legal team will continue to push for technological enhancement to manage workflows for their internal matters. Matter management and workflow will follow the path of legal spend management and analytics. The previously unchallenged legal providers who had been acting for this or that client for decades will find themselves in uncharted territory. As in-house counsel gains greater access to a new and expanded set of rich data to track trends, law firms will have to demonstrate value through easily translated measurements. The insatiable appetite of the GC for intelligent data from which to precisely measure better results which in turn will require additional, faster, more precise data from which to measure yet even better results, is here to stay.

Internal process efficiency to manage resources will be applied with the same degree of emphasis as it is for legal spend, in order to keep in-house teams on target. This degree of precision will be expected from their outside legal providers. For many law firms whose compasses have not found this technology-breakthrough’s true north, they will be lost and left behind. No one is immune, but fear not and be of good cheer for the end is not yet. We shall see together how our industry unfolds amidst these challenges.

Article contributed by Orlando J Casares