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No more firsts

There can be few legal roles in the US of as much significance and substance as White House counsel. And when Beth Nolan jettisoned film school for law school, she had no idea that her eventual career, including serving as White House counsel for President Bill Clinton – the first female to ever take on that role – would be almost the stuff films are made of.

But the path to what could be termed the ultimate general counsel role was not an obvious progression for Nolan. Eschewing private practice thanks to an interest in public policy law, she found herself as a junior attorney with the US Department of Justice (DOJ), tasked with working on government ethics.

‘I was really disappointed when I was given that assignment if I’m honest,’ she recalls. ‘The Office of Legal Counsel is known for handling the weightiest questions of executive power and executive privilege and I felt like I was going to be advising whether somebody can accept the free gift of tickets to a tennis tournament.’

But Nolan’s initial reservations turned out to be unfounded, and her burgeoning passion for ethics would go on to shape the course of her career. After four years at the DOJ, Nolan began teaching at George Washington University, where she taught constitutional law, but wrote about government ethics and lawyering.

‘That’s the specialty that was eventually of interest to President Clinton in the White House when I first started as an associate. There were scores of constitutional scholars but there weren’t that many people who really knew government ethics, and so that changed the trajectory of my career and my life,’ she reflects.

APPLIED ETHICS

Of course, at the time, as a recently tenured associate professor at George Washington, Nolan still didn’t know that. After volunteering for the Clinton Presidential Transition team, she was offered a role running the government ethics programme at the White House.

‘My original four years in the Justice Department were during the Reagan administration. There had been eight years of President Reagan, followed by four years of President Bush. So there weren’t that many Democrats who had government experience in government ethics laws, particularly some of those that had come through from the Ethics in Government Act of 1978,’ explains Nolan.

‘I was somebody who was teaching it, writing about it and had prior government experience actually doing it. So I got called to the attention of the people in the White House, went to meet with them and was offered the job.’

Her burgeoning passion for ethics would go on to shape the course of her career.

Putting academia to the side, Nolan was given a leave of absence to return to government. And although she’d spent the past eight years focused on government ethics – the realities of her new position would set in almost immediately.

‘I think I had a misconception that I would still have time to think about theory. I had this image of myself as being tucked away in some basement of what’s now the Eisenhower Executive Office Building working in my office on difficult issues,’ she says.

‘Instead, it’s a rodeo ride. I remember having to slow down to take a breath. When I look back at it, I remember having to tell myself – as a friend advised me to – “Stop and take a picture in your mind.” I really tried to do that.’

Nolan spent two and a half years doing conflict of interest counselling and vetting non-judicial presidential nominees and appointments, before returning to teaching – anticipating spending the rest of her career in academia. But then the former ‘vetter’ found herself on the other side of the equation.

‘In the spring of 1996, I was asked if I wanted to return to the Justice Department as the nominee for assistant attorney general for the Office of Legal Counsel. Sometime in the start of President Clinton’s second term I was nominated, and I waited a year before I got a confirmation hearing,’ she explains.

‘I had my confirmation hearing, waited a year and still hadn’t had a vote on my confirmation hearing – it was caught up in politics. I of course respected the Senate and their prerogative, so I just waited and waited.’

But in another twist of fate, as one door closed, another door opened for Nolan. In the summer of 1999, she was invited to return to the White House, this time as White House counsel.

FOLLOWING MR SMITH

The White House counsel is the chief legal adviser to the president (in their official capacity) and the White House staff. A non-statutory position, unlike the statutory standing of the attorney general role, the White House counsel is there to advise as the President wishes, meaning that each Presidential incumbent can have a counsel who fulfils different roles, depending on their relationship.

‘But in a well functioning, modern White House, I’d say there are some things that you would expect the White House counsel to always do: to serve as a liaison to the Department of Justice; to coordinate legal issues with other departments and agencies in the executive branch; to help respond to congressional inquiries and investigations; and then to provide advice and counsel to help the White House staff stay fully within legal boundaries as they execute on their policy agenda,’ explains Nolan.

Like any general counsel role, this involves handling multiple constituencies – although, in this instance, those parties are Congress (both the House of Representatives and the Senate) and other executive agencies, all of which have interests that might be incompatible in any particular moment – in a mission-driven environment.

‘The mission of the White House may change a great deal depending on who the President is, but some of the mission has been pretty consistent over time too. Ultimately, it’s to do what is seen as being in the best interests of the American people or the nation.’

And of course, not many general counsel roles involve an interview with the President of the United States!

‘That moment does stick with me, particularly because the meeting was in the main floor of the State Rooms of the White House itself, not in the West Wing,’ Nolan recalls.

‘I think if people had seen me going through the halls of the West Wing to the Oval Office to meet with the President, there might have been speculation. So instead, it was in the White House itself – which is just majestic, and you have such a sense of history.’

That sense of history is significant, not just from the perspective of the long-standing history of the institution itself, but for those who came before Nolan and laid the foundations for her to be selected and assume the role of White House counsel.

‘I came in as a successor to Chuck Ruff, certainly not as his replacement, because no one could ever have replaced him. But I’d had the opportunity to work with him, as well as John Podesta, who was the chief of staff, and with Cheryl Mills and Bruce Lindsey, who were the deputy White House counsels. And, to be frank, if Cheryl Mills hadn’t already decided that she was going to leave government, she would have gotten the White House counsel position and I wouldn’t be talking to you about this at all,’ admits Nolan.

‘Funnily enough too, being nominated as the assistant attorney general for the Office of Legal Counsel and not receiving confirmation actually helped me significantly. Had I been confirmed, then it’s likely that this opportunity would never have arisen for me, but it also meant that, as a result of that process, I had already been thoroughly vetted.’

TAKING THE REINS

Despite coming in after the impeachment proceedings against President Clinton had concluded, Nolan entered into a highly charged political atmosphere, replete with investigations alongside the day-to-day role, itself stuffed with with plenty of variety to keep her busy.

‘I remember one day where there was an urgent national security matter that we had to attend to, followed by another urgent call about the implementation of the Easter Egg Roll! Sometimes it really was just like that,’ she says.

Of course, not many GC roles involve an interview with the President of the United States.

‘What I learned was that you have to really love and embrace every kind of real issue and question that arises during your role. I was very fortunate, as I had a really great staff of lawyers who did that – it wasn’t always just down to me or my personal obligation.’

The day-to-day workload also encompassed matters of executive privilege, questions about political activity, nominations and appointments, conflicts of interest, congressional investigations, independent counsel investigations, as well as the everyday business of running a government agency. But despite the absorbing nature of the role, Nolan retained a fangirl’s appreciation of government fostered by her days as a student – and teacher – of its apparatus.

‘I had the privilege of being there at the start of the administration and then at the very end – albeit in different roles. But the machinery of government transition never failed to awe me – that at 12 noon one person is President, and at 12:01 another one is, and almost the entire White House staff changes in that minute. To someone who loves and taught constitutional law and focused on government issues in my research, there was really no better opportunity to be a witness to the way our government works than those moments of transition,’ she says.

‘[At the end of an administration] you don’t leave things. It’s not like at the Justice Department, where one administration leaves and another comes in but there’s a vast group of civil servants who continue on – there, it’s only the top layer that changes and all the documents and records and files remain. In the White House, everything goes. It’s not tossed – it goes to the National Archives and then, in many cases, to the Presidential Libraries. But it’s not in the White House – you come into empty filing cabinets and computers that have nothing on them, and a staff who largely have no idea what they’re doing.’

That means that each new administration and its staff – and subsequently its counsel – have the opportunity to shape their own role and agenda, though, in large part, the role of the White House counsel in particular will, by its very nature, be one that is as reactionary as it is prescribed.

‘I think, in the 2000s, national security matters have played a much more prominent role. I certainly had to handle my share of national security matters, but that focus on terrorism in the 21st century, I think has certainly changed the White House counsel’s job,’ says Nolan.

‘During my time in the White House, we were dealing with multiple congressional investigations. This White House is just starting to face that now, whereas in the first two years they didn’t really have to deal with that at all. That’s going to shift the role for the current White House counsel. But, in large part, I think in any general counsel position there’s certain bread and butter things you have to do. Sometimes it’s going to be more bread and butter, other times it’s a lot more cake and jam!’

I BEG YOUR…

Another potentially significant aspect of the White House counsel role – albeit one that could potentially be handled differently by every White House – is the thorny issue (even to this day) of the presidential pardon. The US Constitution allows for the President to issue pardons, or official forgiveness, to felons convicted of a federal offence. President Clinton issued a large number of pardons on his last day in office, sparking controversy.

‘We certainly handled pardons at the end of the administration in a way that was different from the way they’d been handled before, because the President really wanted to be sure that he was able to exercise his pardon power, and the rate of pardon recommendations coming out of the Justice Department was very slow. Although we tried to get people alerted that we wanted a faster process early on, things just didn’t proceed that way. We ended up in the White House reviewing some pardon applications directly, still working as closely as we could with the Justice Department,’ Nolan explains.

‘We would review their recommendations, in some cases we disagreed with their recommendations, and we’d advise the President that in some cases we agreed. We’d give the President – and also the chief of staff was involved in some of these as well – our best advice about whether or not to grant a pardon. But ultimately, it’s the President’s power – I read my copy of the Constitution and I didn’t actually see the counsel to the President being given any authority in this.’

One pardon in particular that stoked the flames of controversy, causing a federal prosecutor to be appointed to investigate its legality, was Clinton’s pardon of Marc Rich. A financier and commodities trader indicted on charges of tax evasion and trading with Iran while the country was under embargo, Rich had fled the US.

‘I did testify about that after I left the White House – the President waived any privilege with respect to that pardon. I testified at the time that I did not recommend that you grant that pardon. I didn’t see anything improper about him granting the pardon, I just, as a matter of policy, didn’t think it was a good exercise of the authority. But, as I said, I had no doubt about the question of policy on who got to make that decision,’ says Nolan.

‘Congress and the US attorney all were interested enough to investigate the exercise of the pardon power – so it wasn’t treated as a hands-off issue completely. In fact, my very first day as counsel to the President, I was delivered a subpoena from Congress to testify about pardons that the President had granted before I even became counsel. So Congress has, in other times, not been shy about investigating or reviewing the exercise of the pardon power. I never felt tested as I didn’t see anything improper. I think that the President likely has the authority – Congress can complain about it – but it will be interesting to see if there are other limitations that get explored over time.’

WHITE HOUSE TO IN-HOUSE

After leaving the White House at the change of the administration, when President Clinton handed over the proverbial keys to President Bush, Nolan chose to tread a different path. Following a career spent working within the government apparatus, she pursued a brief tenure in private practice.

‘When I left the White House, I thought to myself that I really liked being a general counsel and knew that this type of role was a strong fit for me. But I also realised that while I’d had government jobs and academic jobs, I didn’t have any experience on the private side,’ says Nolan.

‘That’s why I chose to go into private practice, so I could get that exposure to a broad range of clients and legal issues, but perhaps most importantly, I needed to get some experience on the business side.’

‘The machinery of government transition never failed to awe me.’

Nolan would join Crowell & Moring as a partner, where she spent five years working in the firm’s white-collar and securities litigation practice – a period she credits with instilling the requisite broad-based knowledge to successfully assume a commercial in-house role.

‘Gaining that experience was really valuable for me, but I felt a strong desire to be a part of a team, not just an adviser to a team, but a member of the team with ownership of the matters on which I worked,’ she explains.

‘I also wanted a job where I felt aligned with the mission, so when the opportunity to return to George Washington University as general counsel arose, I knew it was one that resonated with me. I’d been a law professor there ten years earlier and it really hit the objectives that I was looking for. I think having served as a faculty member who had been through the tenure process only enhanced my ability and service as the general counsel.’

The opportunity to come back and serve as the chief legal adviser to the university that served as the springboard for her professional life ties the career of Nolan together with a bow that is almost too perfect – perhaps the final stop in a career which has truly come full circle.

A MOMENT OF REFLECTION

Looking back, Nolan exudes a sense of pride in being the first woman to serve as White House counsel, and in having played a role in felling a professional barrier for women. Since her appointment, two more women – Harriet Miers and Kathryn Ruemmier – have served.

‘But I think the feeling I had in the moment was mostly very personal. It was a mix of pride and excitement and sober awareness of the responsibility,’ she says.

‘And then I look forward, and what I look forward to is the day where there are no more firsts, and it’s not remarkable that a woman is appointed. I think we keep moving along that path. We’re not there yet, and I had that opportunity to be a first, but I’d love it if there were no more firsts.’

Now with the benefit of experience on her side, reflecting on a life in law which has spanned the pinnacles of government, academic, private practice and in-house functions, Nolan says that there’s no secret solution for success – but did offer some sage advice for the next generation:

‘I can only say what worked for me, and the important thing to consider is that what works for one person may not work for another. What worked for me is that I followed what interested me, I tried to know myself well enough to know exactly what that is,’ she says.

‘To add to that, I think one of the really important things is to figure out how you can be yourself at your job and, if that isn’t working, you have to focus on what needs to change. I’d say sometimes that’s the job, sometimes that’s you and sometimes that’s a combination. But use disappointment as a tool to learn and grow and, perhaps most importantly, don’t forget to enjoy the ride.’

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GC Powerlist: United states 2019

Since we published our first GC Powerlist in the United States, the series has gone from strength to strength in countries ranging from Australia to Costa Rica, and South Africa to China. We have interviewed tens of thousands of general counsel, and highlighted some of the very best GCs and in-house teams around the world. And now, in early 2019, we find ourselves back with the United States. But for the biggest legal market, where do we go from here?

Simple answer: bigger. For the first time, we have expanded the GC Powerlist to include the leading 500 GCs, representing some of the largest global corporations, to tech-savvy start-ups and everything in between. And for the first time, we have also included the leading lights in legal operations, an area which is threatening to dominate the in-house conversation for the next decade.

The full GC Powerlist is available from 22 March 2019 at legal500.com/gcpowerlist, and features interviews and insight from the pre-eminent in-house leaders in the United States, including:

‘Last year, I had sole responsibility of negotiating with over 460 law firms on a comprehensive engagement agreement. This effort was the foundation of fundamental changes in how we engage and retain law firms,’ – Alan Bryan, Walmart.

‘The wider company has profited not only by the expert legal advice delivered in a non-judgemental, collegial way, but also by the sense of common purpose that results from a true partnership between in-house lawyers and their business clients,’ – James E Ballowe Jr, E*Trade.

‘The number one piece of advice I would give an aspiring in-house lawyer is to read and listen. I need to anticipate what’s coming so that business can be ahead of the curve,’ – Susan L Lees, Allstate.

‘I deeply believe that the legal function must be an integral part of the company, rather than viewed as standing in opposition to what the company is doing,’ – Rena Hozore Reiss, Marriott International.

The Legal 500’s GC Powerlist is sponsored by Linklaters, Basham and Yerra Solutions, and is supported by the International Bar Association and the Association of Corporate Counsel.

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Keeping your friends close

Unease with the anticipated digital and disaggregated future is real in many dusty corners of the legal profession, and with around 1,400 legal tech companies fighting for a share of the global legal services market, the prevailing story has been the threat these offerings pose to traditional law firm models. However, this narrative hides a subtler shift in how some law firms are approaching this impending disruption: they are working with the innovators, not against them.

Getting into bed with the enemy

In the past two years, law firms have started to create technology incubator programmes within their own walls. Much like the ecosystem of incubators and accelerators famous in Silicon Valley and tech hubs around the world, the idea is to take a business concept in the early stages of development and provide any combination of support, mentorship, facilities and even investment.

This shift might seem counterintuitive to some: why would the old hands team up with the young upstarts whose end goal, in many cases, is to capture the law firm’s own clientele of general counsel who are under continued pressure from the board to minimise their contribution to the $600bn dollar global industry that is big law?

For some firms, engagement with start-ups is the result of a process of introspection, one that began in an attempt to root out the pain points of its lawyers’ working lives.

This growing cohort of law firms is convinced that that there is much to be gained from a willingness to demonstrate a pragmatic grasp of today’s legal marketplace.

Typically, the rewards for the law firm are financial: should they hit on a unicorn, the monetary returns can be huge, as well as the reputational boost given by being associated with a true disruptor in the legal market.

But while the money and fame are both good, oftentimes, the best rewards are less tangible.

‘It’s true; it’s difficult to show to the business real and tangible KPIs. They are more intangible ones,’ says Francesc Muñoz, chief information officer at Cuatrecasas, one of the many law firms around the world who have entered this space. Cuatrecasas is a Spanish firm that has teamed up with innovation platform Telefónica Open Future to create Cuatrecasas Acelera, an accelerator now on its third call after launching three years ago. Cuatrecasas Acelera supports companies at the pre-series A1 phase with mentorship in marketing, finance and business models, as well as 20 hours of free legal advice from 40 participating Cuatrecasas lawyers.

For Cuatrecasas, working with a multinational blue chip like Telefónica has amplified the reach and impact of its Acelera programme. But Telefónica itself also reports the benefits of collaboration in extending influence in the innovation space.

‘On one hand, our network of partners extends our reach and provides us with shop windows to new industries and ecosystems. This allows us to learn from them and eventually enter new markets, hand in hand with market leaders. On the other hand, our partners help us improve our value proposition to entrepreneurs by putting more resources, investment and business development opportunities on the table,’ explains Agustín Moro, global head of partnerships at Telefónica Open Innovation.

‘But some of the start-ups that we are helping become small clients and we hope that they become, in the future, big clients. So you are putting some seeds into the business sector to see if start-ups grow in the future,’ Muñoz adds.

Edmond Boulle, co-founder, Orbital Witness

‘The team comes from the space industry and, when we set up, we were looking at how we could use satellite imagery to solve problems in real estate transactions and litigation. But the real pain points were around other datasets – so accessing all of the information that is required for searches, making that information easier to digest, easier to report back and then communicate to clients. Our system is learning what features to look for from the data, which trains our system to recognise the types of, for example, restrictive covenants, easements, restrictions on the Land Register, and other data sets outside of Land Registry data, that may be indicative of a particular risk in a given type of property transaction. We were one of the first start-ups chosen for the joint PropTech accelerator programme, Geovation, run by HM Land Registry and Ordnance Survey, which means we have their help to innovate with their data.

We came to MDR LAB with very much a fledgling concept, being the earliest stage company they had taken on in the first cohort. The lab was helpful in a number of ways: in terms of access to great advisers, in understanding the wider real estate industry – not just the legal side. By far and away the most important thing was being able to sit down with over 40 of their real estate lawyers, day-in day-out, and just go through how they work in an almost forensic way. This allowed us to identify which bits don’t add value to their practice and were time consuming and repetitive, which we could then meaningfully make an inroad into, in terms of helping them with speeding up or automating.

A good solution is one which works at both ends, so they made introductions to their clients – in fact we’re piloting with a few of them as well. It will be between the law firm and the client to decide how best to allocate the use of our platform, so maybe the client can do some of the work in-house, and then the law firms can maybe do the deeper dive on the due diligence themselves a little later on, and still get the benefit of using us to work more quickly and more effectively.

Lawyers are still typically very risk averse – even among the firms who are pushing innovation, fundamentally, some individual lawyers are more risk averse. I think there’s a sense in which you can be welcomed in initially, and then it can soon feel that you’re having to battle more traditional attitudes. But then, I don’t even put that on the law firms. They are responding to the risk that their clients are willing to take. So if their clients express a desire to take a little bit more risk, the reward from it will be a faster and lower cost service. Quite often, they want to reduce fees as well, but they still want that quality service.

Very recently, at an insurtech conference, someone made a really nice point that when lawyers talk about innovation, they often use the image of a robot. And when they talk about machines replacing lawyers and a) how concerned they are by that, or b) how ridiculous they think that is, they also use the image of a robot. So even in the industry, they’re not quite sure what to make of this.

We’re starting to make some great headway; we’re working with a number of early adopter law firms who are highly respected in the field, and a leading title insurance company and we are going to continue along that path, at least until the end of the year. There’s a point at which you can’t call the next client an early adopter any more!

We’re working very closely with our first customers because their feedback really helps accelerate product development. And Mishcon de Reya was our first customer. We’re also piloting and testing our products with small teams and GCs at the clients of the law firms that we work with. The issues around that are quite interesting because if you’re working with a big law firm with upwards of 50 lawyers, you have one pricing model, which has to scale appropriately and allow for disbursable cost elements. But then you come to an in-house team with three or five people, so you have to think, “How do I make my pricing model work for them?” It’s a different game. How do you go from being a product that’s serving large departments, to serving a client with a smaller number of lawyers in-house if, for example, you are offering a subscription service?’

Those seeds could include investment, although that is not the point, says Muñoz. At Cuatrecasas Acelera, the firm doesn’t take a stake in the businesses that pass through the programme. But the agreement includes an option that, at the next investment round, Cuatrecasas could invest under the same conditions as the lead investor, up to a percentage.

‘It’s really quite a minor percentage of the start-up. It’s completely an option, but other acceleration programmes take a stake in advance of 2%, 3% or 5%,’ says Muñoz.

Culture change

But there is a broader cultural benefit to be enjoyed much sooner, according to Muñoz. ‘You are putting the most innovative people that you can find in your sector in contact with your lawyers, with your teams. It creates a really beautiful circle and a lot of passion within the people that are interacting with them and giving advice,’ he explains.

The head of another law firm-founded incubator agrees: ‘I’ve seen how the legal sector is quite traditional, but also how the firm’s people – the partners, the associates – have actually become a lot more innovative in their thinking just by spending time working on a day-to-day basis with those start-ups based in their building. And actually, with the companies from last year, the majority have continued to work with the firm and have integrated inside, so the firm is now using these new technologies, making them a whole lot better, and they’ve changed their own mindsets, too.’

However, opening up to innovation often means letting go of a mindset focused on success, ingrained by the often adversarial nature of both litigation and corporate law. The reality of start-up life is the ever-present whiff of failure, and that is something that law firm lawyers, accustomed to being the experts, must adjust to. For many, that’s a case of learning how to ‘fail better’ and move on. Being the expert in one vertical might simply not be enough in today’s marketplace, where openness to innovation might be less of a soft skill and more of a business imperative.

‘As a former lawyer for stock markets, I always keep an eye on the new trends in the legal tech niche. The transformation speed in this traditional vertical is so fast that I could not think of a law firm that aspires to be market leader without working with start-ups and using their technologies. All the leading firms that I am aware of have programmes or initiatives to capture and benefit from innovation,’ says Moro.

Making a mark

In a profession often noted for its resistance to change, there can be kudos for those bold enough to be a first mover. According to Edmond Boulle, co-founder of Orbital Witness, a start-up real estate intelligence platform that employs satellite imagery and property data analysis to flag legal risk in real estate transactions, there is a clear advantage for those who get in on the ground at an early stage in technological development.

‘They have a meaningful say in product development. We are listening to that and we are designing our products around the things that they are telling us are painful. They are seeing iterations of the product and feeding back on that, so if you’re an early adopter, you’re bespoking it a little bit to your style of working. As soon as you’ve got a critical mass of customers, it ceases to scale from the start-up’s perspective to adapt your product to individual needs and preferences, and from the customer’s perspective, it’s more of a fixed offering,’ he says.

But, perhaps the bottom line speaks loudest. A spokesperson at one law firm accelerator claims that a growing willingness to embrace technology has meant that not only is there no better time to be a lawyer – but that the efficiency savings of legal tech could even grow market share.

‘Let’s be fair, some parts of a lawyer’s job are not very fun. You don’t want to stay up reading the same lease a thousand times, you don’t want to chase signatures at midnight or hang out at the printer. You want to do the legal work and so the technology enables that by taking away a lot of the drudgery. The smart lawyers understand that they can pull that off, they can get more work, win more competitive panels, they’ll grow their share of clients and have a more fulfilling legal practice.’

A helping hand from Goliath

For the legal tech start-ups themselves, the benefits are much more tangible. For Orbital Witness, coming into the MDR LAB, run by UK law firm Mishcon de Reya, was an opportunity to adapt a fledgling space tech concept – it was the earliest stage company the lab had taken on in its first cohort – into a viable legal tech one, by gaining an inside view of the workings of a law firm.

‘The genesis of the Orbital Witness platform, frankly, was seeing lawyers’ desks covered in papers – from the local authorities, from specialist search providers, from the Land Registry – and every time they were trying to find a piece of information talking about a property, instead of being able to jump to what they wanted, they were either searching through document management systems on their computer or rooting through the desk strewn with papers. It just struck me as very laborious,’ recalls Boulle.

But on top of the opportunity to forensically analyse the working methods of 40 lawyers in the firm, Orbital Witness was able to learn about the real estate industry beyond the legal side and, crucially, meet some clients.

‘We’re piloting with a few of them now. And we’re actually going a little bit further than that as well: we’re building collaborative tools. We saw that a lot of time goes into emails and phone calls between a lawyer and a client. Now, obviously, that’s part of the personal relationship with the lawyer and client, and that’s not going anywhere. But if you’ve got five emails back and forth trying to describe what part of the land the lawyer is talking about, that’s just inefficiency. So by bringing both the lawyer and the client onto a collaborative workspace on the platform, you can cut out a lot of that needless, repetitive back and forth,’ explains Boulle.

For some firms, engagement with start-ups is the result of a process of introspection.

Other benefits for start-ups that join such innovation spaces might include the opportunity to adapt an existing product to a new legal and regulatory environment, or to get that first customer. Those in the latter position face a slow, and sometimes demoralising sales cycle into big law of 18-24 months.

‘We started as a DMS (document management software) six years ago with a focus on law firms. After some years, we realised that law firms are slow to decide and that they don’t have the big budgets large corporations have for growing their organisations. Therefore, we changed our strategy and began offering our product and service to large corporations,’ explains José Manuel Jiménez, CEO of Webdox, a Chilean start-up and beneficiary of Telefónica’s Wayra Chile programme.

Beneficiaries of law firm accelerators benefit from compressing that cycle by piloting their technology to an audience with an intellectual, if not financial (yet) stake.

If a law firm doesn’t ultimately take the bait, the legal tech model, often comprised of Software as a Service companies charging per user even while their founders sleep (as opposed to billing hours), seems to be increasingly appealing for institutional investors – which bring professional management expectations and software company economics into the legal tech ecosystem.

Don’t fear the new legal ecosystem

The result of all this is a new ecosystem within the legal community. Firms are no longer at odds with legal innovators, and lawyers shouldn’t let a fear of ushering in their replacements stop them from securing benefits of their own out of this new norm.

But is any residual fear within the legal services industry justified? At Cuatrecasas, Muñoz thinks not: ‘We don’t see lawyers disappearing from here; we see keeping probably the same amount of lawyers – doing different things, sure, and in a different way, sure – with more support of technology, probably working much more with engineers in order to set up a full legal service, not only legal advice.’

Boulle agrees that the sector will change, but not necessarily to the detriment of lawyers. ‘Certainly the product that we have now is just about starting to make their lives easier and better, and it works in symbiosis with them – we can’t work without lawyers,’ he says.

‘I think there is room in certain parts of the industry to remove particular tasks from lawyers altogether. I don’t think of ours as a “putting lawyers out of a job” tool, it’s just simply saying there are some things where, if the volume and cost of the work means it’s not feasible to have a professionally qualified individual doing a detailed analysis, it makes more sense to balance the risk and the cost and have a machine to assist in the process.’

The realist of start-up life is the ever-present whiff of failure.

In-house legal departments, driving this market with their continued disaggregation of external support, also stand to benefit from a diversified job market for their own skills, as the legal tech sector expands, offering hybrid legal-entrepreneurial roles.

Of course, this is likely to be some way off. Legal tech companies with true brand recognition remain few and far between, with much of the investment cultivating companies applying state-of-the-art technology to commonplace tasks like contract review – hardly the stuff of dreams. And as companies progress beyond the start-up stage, growth will be a challenge, as multiple small operations compete for the bandwidth of law firms.

If the law firms incubating and accelerating legal tech are to believed, private practice has more to gain than lose from embracing technology. An easier life, greater professional satisfaction, and an enlarged – and happier – circle of clients who remain loyal because they share in the efficiency dividend all beckon for those with open minds.

But for those who think that is too good to be true, perhaps becoming a stakeholder in the digital future is at least a way to avoid ending up at its sharp end – sharing the gains of technology rather than counting among its casualties.

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Data Analysis: Part 2 Big Budgets, Big Future

It’s no secret that general counsel are being asked to do more with less – in fact, that’s likely true for almost all facets of business in the current climate. But rather than piling up hours at desks to make ends meet, the results of our survey suggest that an increasing number of in-house teams are turning to technology in order to improve efficiency within their departments.

80% of the in-house counsel surveyed reported that the use of technology within their departments had increased over the past five years, with 21% describing that increase as significant. But that number didn’t align with an increase in budget for technology, with only 56% reporting an increase in budget over the past five years – a figure which the underlying numbers reveal to be significant.

Of the 44% of respondents who did not receive an increase in budget, only 4% reported a significant increase in the use of technology within their departments, with 30% reporting no change or a decline in use. That figure stands in contrast to those who did receive an increase in budget, where 86% of departments reported a subsequent rise in technology use – suggesting that those teams who did receive an increase in budget were not only spending it, but ensuring that it was being deployed across their departments.

For those with stagnant budgets but a desire to utilise new technological solutions, looking internally instead of externally was a common solution – although the numbers suggest that it’s not having the impact seen by those with deeper pockets.

‘Because we’re at heart a technology company, we’ve been able to mobilise our internal resources to help our department become more modern. Our IT department have been proactive in working with us to implement new systems, while members of the legal team have sought solutions which emulate what other departments are doing, only without the associated cost,’ reported one general counsel from the IT sector.

That sentiment wasn’t uncommon – particularly from general counsel heading smaller departments. For legal teams of ten people or less, only 47% reported seeing an increase in their budget for technology.

‘There is still the need for smaller teams to provide increased efficiencies, but the budget doesn’t allow for it. It’s then left to us to find ways to use technology to provide efficiency, but essentially for free. That’s not to say it can’t be done, it’s just more difficult,’ said one general counsel from the consumer goods sector.

Have you received an increase in budget for technology over the past five years?

Teams with smaller headcounts had the worst rate of uptake of technology, with 42% of departments with less than ten people saying that they didn’t use any legal technology at all (compared to 7% of departments with more than ten people). Despite that, all of the general counsel from smaller departments who were yet to implement specialist legal technology said that they believed it can enhance outcomes for in-house legal departments.

One general counsel from the food and beverage sector said that while they saw the potential for technology to have a positive impact on in-house legal departments, for smaller teams, the type of work it could currently assist with meant that it would not provide a meaningful return on investment.

‘Technology will improve efficiency on a long-term basis, however, this will most apply for standardised processes or transactions. Larger teams will see higher benefits. At present, I do not yet see a great benefit for small teams dealing with non-standard issues,’ they said.

While reporting a moderate increase in the use of technology within his own legal department, Konstantin Pogrebezhskij, deputy head of legal for Kronospan GmBH, says that a small headcount – not necessarily budget – can make implementing meaningful technology solutions a challenge.

‘The main disruption for us, generally, is the time required to customise the technology solutions and fill the data into it. At some point, you feel that you waste the time saved by the technology just to keep it running,’ he says.

For teams with a larger headcount, particularly those with more than 50 people, technology was seen as a higher prerogative. 100% of respondents in legal teams numbering between 50 and 100 employees said that they had both received an increased budget and had actually increased their technology use in the past five years.

Those with very large legal teams – those with a headcount of more than 100 employees – fared slightly worse than those with a headcount of between 50 and 100, with 61% reporting an increased budget and 72% saying their use of technology had increased.

One general counsel from the banking sector attributed a lower increase in budget and technology for the very largest teams to an unwillingness of these general counsel to upset the status quo.

‘Technology forces in-house teams to identify low-level repetitive work and to find solutions for it which do not involve large amounts of legal manpower,’ they said.

‘That remains a challenge and perceived threat for a certain cohort of in-house lawyers, but an opportunity for those genuinely keen to focus on more strategic work.’

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Emerging technology: Blockchain

The proliferation of blockchain technology has forced nearly every sector to re-examine traditional ways of doing business. Nowhere is the potential more apparent, or the sector more traditional, than in the negotiation, creation and execution of contracts. If the blockchain evangelists are to be believed, the manner in which parties’ contract will be changing drastically in the not-too-distant future. But while a number of high-profile success stories illustrate the transformation potential of the technology, it’s clear that there is still a way to go.

Blockchain understood

To understand blockchain technology and the potential value that it brings to business, think of how an ordinary business transaction works: there is an agreement and exchange of goods or services between parties. Each party keeps their own ledger, which records the transaction. But because the ledgers are held independently, there is scope for discrepancy between them – be it through error, disagreement or fraud. Traditionally, this was mitigated by introducing a third party to the transaction – usually a bank. But reliance on a third party introduces cost and inefficiencies that need not be there if there was a way to create and maintain a singular, shared ledger – one that is equal parts transparent and secure.

Enter blockchain

A blockchain is a series of mathematical structures, inside which individual transactions are recorded. The record of each transaction – each ‘block’ – is mathematically contingent on the block that came before it. The transaction becomes a permanent part of the history of the blockchain and, in that way, it cannot be tampered with: once it is added to the blockchain, all subsequent transactions are recorded in relation to that block and all of the blocks that came before it. Following each transaction, the updated blockchain is distributed to each participant. In this way, blockchain becomes a decentralised ledger that is impossible to tamper with effectively: any attempt to change a record in the blockchain will put it at odds with the version held by every other participant in the blockchain, as well as all of the subsequent transactions that have been recorded.

Put simply, blockchain technology allows for a distributed, decentralised and secure ledger that eliminates the need for third parties, while providing a level of validity to participants that would otherwise have been impossible. It is this technology that has made cryptocurrency like Bitcoin a viable endeavour. But the applications of blockchain are far more varied.

Smart contracts

Smart contracts are one such innovation made possible by blockchain technology – though as a concept, smart contracts have existed since the early 90s. The idea is that instead of a paper contract – one that amounts to the words on a page and the interpretation that third parties give them – one could record a contract in the form of computer code. The code not only provides for the terms of the agreement, but the execution of it as well. When the obligations of one party are satisfied, the platform behind the contract will automatically release the benefit owed by the other party.

The key to smart contracts is decentralisation – there are no banks or other third parties involved in the execution of the agreement. The idea is to allow the creation and execution of a contract between two people to be as simple and direct as possible.

The obvious question follows: where is the smart contract actually stored and how can it be possibly be trusted?

Blockchain technology is the solution. The decentralised, theoretically uncompromisable central ledger makes for a perfect arbiter for the integrity of these agreements. Once coded, the smart contract is added to the blockchain ledger, with its integrity provided for in the same way as anything else on the blockchain. If the transaction calls for it, the money at stake can be paid by each party into the smart contract using cryptocurrency, at which point the contract will hold the money in escrow until the necessary conditions are satisfied.

In theory, removing the element of trust between parties to a contract should make for more reliability.

‘What we have realised is that smart contracts are rapidly becoming an alternative way to transact, with more than $10bn raised through smart contracts in the last 18 months,’ says Olga V. Mack, vice president of strategy at Quantstamp, a company working to build security infrastructure for blockchain-based smart contracts.

‘What we have also noticed is the rapid proliferation of this technology. The widely cited figure is that, globally, there were more than 500,000 smart contracts that existed one year ago. That number has grown to about five million that exist today. The use of smart contracts has been growing exponentially and is showing no sign of slowing down.’

Smart and secure

The trepidation surrounding blockchain and smart contracts is by no means limited to those that don’t understand it. Plenty of ardent advocates for the widespread adoption of this technology acknowledge that, like most innovations, users should exercise caution against overreliance.

The execution of the agreement is where the real value of smart contracts is realised, but the process of negotiating, agreeing and coding the contracts themselves necessarily requires a human element. As such, it is subject to the same kinds of vulnerabilities as virtually anything else. There have been a number of high-profile breaches and hacks brought about by improperly coded smart contracts that have resulted in the losses of millions of dollars. Because the process is decentralised, and the money is wrapped up in the contract itself, the normal process of testing, reporting on and fixing erroneous lines of code will not suffice. Smart contracts need to be airtight from day one.

The DAO is a smart contract protocol. By June 2016, over $250m worth of cryptocurrency had been invested in the DAO by nearly 20,000 individuals. On 17 June, a vulnerability in the core code of the protocol was exploited and used to drain over $50m in virtual currency.

blockchain technology allows for a distributed, decentralised and secure ledger.

Vulnerabilities in code are nothing new – even the most diligent traditional financial institutions commissioning software intended to govern staggering numbers of monetary transactions will not expect their code to be free of bugs or vulnerabilities. The potential for catastrophe should these vulnerabilities be exploited is limited: as soon as they are identified, they can be corrected and updated. But because smart contracts rely on the ever-present and immutable blockchain ledger, once a smart contract is let loose into the world, changing it becomes difficult, if not impossible.

This question has led to a burgeoning economy of auditors whose speciality is to review smart contract protocols in order to expose vulnerabilities. This isn’t perfect for the same reasons that any piece of code isn’t completely unexploitable, but the extra step of third-party verification may go a long way in making sure that would-be investors or end-users are confident.

Taking Blockchain In-House

Before taking on her new role as vice president of strategy at Quantstamp, Mack spent nearly a decade working as an in-house counsel, putting her in the unique position of being able to consider the impact of blockchain technology for corporate legal departments.

‘I think at a high level, the opportunity is not all that dissimilar from electronic signatures. I think it will free GCs to be more creative and more impactful on the business side. Smart contracts will be another tool at the disposal of the modern GC, but we’re probably not quite there yet – the infrastructure and platforms are being built as we speak,’ she says.

‘Once we figure out the platform protocol and infrastructure challenges, I would expect at that point the proliferation of applications to take place. It’s good for lawyers to get into this now, both to understand and frankly to help build it – so they are part of building applications as opposed to suffering the results of misinformed others building it.’

‘It’s certainly a revolution. But so far the most impressive applications I have seen are outside the legal world,’ adds Vincent Martinaud, counsel and legal manager at IBM. ‘The most advanced are in trade finance (we.trade consortium), global logistics (the cooperation with Maersk) and in the food ecosystem (Carrefour being the last eminent player joining Walmart, Nestlé and Unilever amongst others), and all these initiatives are underpinned by blockchain technology.’

The Maersk example that Martinaud refers to is TradeLens, the blockchain platform born out of a partnership between global shipping company Maersk and IBM. The aim is to bring the global supply chain into the future by using blockchain and smart contracts to enable smarter collaboration between importers, exporters, customs agencies and other governmental bodies to make international shipping a smoother process without compromising on auditability and security.

‘In the legal field, I don’t think there is anything comparable yet. I’m not saying smart contracts aren’t used or going to be used, but at this moment in time the technology is not as pervasive as in other, more mature sectors.’

It is not hard to imagine the potential uses of blockchain within the legal sphere: anything which relies on record-keeping between multiple parties could find value in the technology. Land registries, particularly in developing countries where record-keeping is beleaguered by inaccuracy and corruption, could be revolutionised, as could intellectual property registers around the world.

That blockchain technology hasn’t become a staple of the in-house toolkit makes sense: the broader business world is still working to realise its potential. It’s also a highly technical and often misunderstood area: while lawyers are used to quickly digesting and using foreign pieces of information, this is a different beast entirely.

As these innovations become increasingly common within business, lawyers will not only have to begin thinking about how they can be leveraged for use on their own in-house teams, but how they can put themselves in a position to give legal advice in a post-blockchain world.

This may not be a perfect fit for a profession that has long been accused of technological aversion.

Blockchain is a field where the two worlds of software development and legal expertise meet. As the applications of blockchain and smart contracts move towards the legal realm, the pressure is on for lawyers to grow their understanding of a field typically left to the CIO.

Gloria Sánchez Soriano, group vice president and head of transformation, legal at Santander, has considered how disruption of this kind might impact the kinds of lawyers that can thrive in in-house teams.

‘Lawyers, and the people we will be hiring in the future must be able to provide legal advice to innovative projects. If you don’t understand blockchain, it will be very difficult for you to provide advice on this. And we are also considering all this in our training programmes at the Santander Legal Academy,’ she says.

Blockchain is a field where the two worlds of software development and legal expertise meet.

‘Santander has a department which is in charge of the legal advice of our innovation areas, but there are also many other areas – for example, corporate investment banking – which have just done a blockchain project with a very technological base, so the lawyers who were traditionally advising these businesses now need to be able to advise about technological issues.’

There is an appreciation among lawyers interviewed and surveyed for this report that while this technology will be important going forward, lawyers are currently not equipped to deal with the change. Just 14% of those surveyed felt that current lawyers were adequately equipped to deal with technological changes within their profession. 61% felt that they were not.

Ready or not, change is coming, but these changes don’t spell doom for the legal profession: they simply mean that there will need to be an adaptation.

‘I do think that it will transform the expectation of competency for lawyers. In doing so, I also ultimately think it will make our jobs more exciting so that we don’t have to do all those administrative things that can be minimised and we can really drive volume- and quality- generating for our businesses,’ says Mack.

‘I think the next 10-20 years will be an exciting time to practice law. We will have an impact, we will be true partners to other business units. There is an increasing trend for legal to be a partner, to be volume and quality generating and to measure all of that. I think this is a technology that will help us to get there sooner and will help legal to become embedded and solidify the support of any business.’

Trepidation and regulation

While businesses marvel at the potential of blockchain, governments around the world are fighting their own battles with the technology. With the potential of blockchain to have a major impact on many highly regulated areas of business, it is inevitable that a regulatory response is coming.

The philosophy at the foundation of blockchain already sits uneasily alongside current regulatory and governmental structures: for instance, the EU’s General Data Protection Regulation (GDPR) dictates that individuals be able to request for their personal information to be deleted by those that hold it, yet the biggest draw of blockchain is the permanence of its record.

The anonymity that blockchain provides for cryptocurrencies also lends itself to use in more illegitimate endeavours. Tax evasion is a concern. Because cryptocurrency transactions are not easily attributable to individuals (if at all, depending on the currency being used) it makes it difficult for tax authorities to detect the lost tax revenue and punish those involved.

Then there’s the hard kind of criminality – money laundering, terrorist financing and drug dealing. For these, the EU has already taken steps to include cryptocurrency in the existing regulatory framework. The latest iteration of the EU’s Anti-Money Laundering Directive (AMLD5) brought cryptocurrency exchanges and certain e-wallet providers within the scope of the regulation. It would put these entities in the same position as traditional firms when it comes to their obligations to implement preventative measures and report suspicious activity relating to money laundering. The new directive entered into force in July 2018, meaning that EU member states will be required to comply by 10 January 2020.

The AMLD5 is not comprehensive, and certain corners of the cryptocurrency world are not covered, including certain wallet providers and independent trading platforms. Also, being an EU creation, it is only applicable to EU member states. As adoption of this technology grows, the need for global collaboration will increase, given its borderless nature.

Other jurisdictions have taken a more suspicious view of the technology. China banned cryptocurrency entirely in 2017. In the same year, South Korea banned initial coin offerings and interested parties are now eagerly waiting to see how the government proceeds from here. Japan was one of the first countries to recognise Bitcoin as a currency, though regulators have been silent on other blockchain-backed innovations.

The tension at the heart of proposed cryptocurrency regulation is an old one. With convenience and efficiency at the core of the blockchain and smart contract value proposition, the inevitable attempt by world tax authorities to take their cut of these transactions may hinder the core draw of the technology. On the other side of the coin, is there really any need for complete anonymity when it comes to financial transactions? This tension will inevitably shape the approaches to regulation of blockchain technology and, ultimately, play a major role in uptake – both for in-house purposes and beyond.

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Data Analysis: Part 3 Trickle-down innovation: redefining the firm-GC relationship

The pressure on general counsel to innovate could be having a trickle-down effect on the external legal advisers they instruct.

The overwhelming majority – 91% – of in-house counsel surveyed for this report felt that it was important that their external advisers kept abreast of new technologies.

‘It is absolutely essential,’ says Gábor Kukovecz, head of legal and operations at Diageo. ‘The baseline is that we must be able to communicate very effectively with our external law firms. This requires that they use state-of-the-art communication and cloud-based collaboration software. In the near future, we will implement a collaboration software in which we work together with our external law firms that they must also fully implement.’

How important is it that your external law firms keep abreast of new technologies?

Despite there being a common recognition that it is an important factor, nearly as many in-house counsel reported that they didn’t know if their external providers were implementing technology to deliver their legal solutions (36%) as those that answered that they were (40%). Just 37% felt satisfied with the use of technology by external firms; 25% were not satisfied, and 38% were unsure.

As the conversation around alternative fee structures and the traditional firm-client relationship continues, many in-house counsel made the point that there is no reason that their efforts to reduce costs and increase efficiency via technology shouldn’t be replicated by their external counterparts. After all, in a number of ways, the GC is to the law firm as the business is to the GC – which is to say, the GC is the client and it should be incumbent on the firm to provide the best value for money.

‘Clients are no longer willing to pay for high numbers of billable hours when they are aware that many tasks can be done faster and cheaper,’ opined Tobiasz Adam Kowalczyk, head of legal at Volkswagen Poznan.

Are you satisfied with the use of technology by your external law firms?

‘Paralegals and associates who once devoted hours for document review can be now easily replaced by e-discovery processes. In a constant pursuit for efficiency and optimisation, clients expect more for less, which has made the legal market even more competitive. Fresh players have entered the market, providing clients with automated and cost-cutting solutions. I see automation as the way forward, making projects smarter and more efficient. Legal automation won’t be un-invented, and – eagerly or not – more and more firms will need to adopt it out of necessity.’

There are also rewards to be reaped in terms of collaboration. The initiatives taken by external firms can serve as a useful model for in-house teams trying to create efficiencies of their own.

‘External firms must have technological systems updated in order to provide us with the most modern solution and to share it with our internal legal team,’ said Ana Soriano, head legal counsel at Inveravante.

Not everyone is as bullish on technology, however. To some, the use of technology is mostly smoke compared to other, softer competencies.

‘The improvement I actually want from law firms is not based in technology,’ said Ruth Pearson, general counsel of LendInvest. ‘I’d be far more inclined to instruct a firm that could demonstrate an investment in understanding their clients – for example, by hiring non-lawyers to improve their commercial acumen and understanding of what drives their clients, moving away from billable hours to a client-focused incentive structure, understanding risk appetite and being able to advise within those parameters, than a firm that thinks it can demonstrate technological innovation.’

‘I prefer a good lawyer not using tech to a bad lawyer using tech,’ stated the general counsel of one large French manufacturing company.

When asked if the question of technology arises when undertaking a panel review of external advisers, just 35% said that it was a factor, while the majority (41%) said it wasn’t a factor at all. With panels becoming narrower and more deliberate all the time, the points on which firms differentiate themselves will take on an increasing importance. Given GC’s evident interest in the use of technology by external firms, this factor may grow in significance in the near future.

‘Depending on the jurisdiction and the business activity being undertaken, it is of moderate importance,’ said the group counsel of one global engineering company. ‘However, in the selection of lead counsel for C-suite-led matters, it has moved to the forefront of selection criteria.’

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A look ahead

Despite clear interest from the in-house community, the growth of legal tech hasn’t achieved the same blistering pace that fintech has managed. The rate at which the financial sector has caught on has meant wide-ranging technological innovation, at every level of the industry.

‘As successful fintechs have rapidly matured from start-ups to mature technology disruptors, banks have started the journey to transform their core digital capabilities, with several areas of focus. These include: a digital-native customer experience; big data and advanced analytics; moving towards a scalable technology landscape through cloud and automation; adoption of APIs (Application Programmable Interface),’ says Giulio Romanelli, associate partner at McKinsey & Company.

Part of the reason for the legal profession’s shortfall is a lack of enthusiasm on the part of the legal community and a natural aversion to change, but that doesn’t tell the whole story.

‘There’s a lot of hype in the space and I think there are often very clever technical solutions looking for problems,’ says Chris Wray, chief legal officer of Mattereum, a start-up working to bring blockchain technology to business.

‘Although there is interest in the theory or the potential, I think there’s also, quite rightly, a demand for: what’s the use case right now? I’m not sure I would criticise the profession generally for being somewhat cautious. I do think there’s a curiosity and a willingness to try and learn about both the potential implications and to update skills accordingly but there’s also, I think, the correct recognition that a lot of the use cases are still in the future.’

The reality is that, for blockchain, alongside more prosaic types of technological assistance, many legal teams remain in monitoring mode – surveying the field and keeping tabs on likely applications, but not necessarily investing just yet.

‘We simply have to be clever in finding the right applications, and also doing a little bit of trial and error rather than just rushing to one of the service providers, buying their generic application and then learning later that it was not the most suitable application,’ says Dr Alexander Steinbrecher, head of group corporate, mergers and acquisitions and legal affairs, Bombardier Transportation.

‘I’d rather invest a little bit more time window shopping and defining our needs rather than rushing ahead and being the first users.’

The sense among the in-house counsel surveyed was that their private practice counterparts aren’t faring much better: just 40% of respondents said their external legal advisers were implementing new technology to deliver their legal services and solutions. Still, one common sentiment among those interviewed was that private practice has a role to play in being a first mover in the legal tech takeover, setting the example for in-house teams to follow.

‘When we first undertook the research process of finding out what was in the market, it came as a pleasant surprise to see that law firms are leading innovation in the legal sector and how many are doing things like working with start-ups in developing new technology,’ says Cristina Álvarez Fernández, head of legal Europe at transport infrastructure developer Cintra.

‘Clients in particular are trying to change the way that they invoice, looking at alternate fee arrangements or, in some cases, bringing more work in-house. As a result, I think they have been forced to find ways to reduce cost and maintain their profitability. But at the same time, they will have no doubt seen other industries disrupted by technology and seen that this is the way forward.’

In an increasingly competitive European marketplace for legal services, corporate pressure on the billable hour is driving law firms (including those at the sharper, mid-sized end) to increase their own efficiencies, and reshape their service offering and value add for companies.

‘Let’s be fair: some parts of a lawyer’s job are not very fun. You want to be doing the legal work and so the technology enables that by taking away a lot of the drudgery. The smart lawyers understand that they can pull that off, they can get more work, win more competitive panels, they’ll grow their share of clients and have a more fulfilling legal practice,’ says a spokesperson at one law firm-sponsored legal tech accelerator.

Bridging the Gap between Technology and Four Generations

When acting for in-house counsel, adaptability is a quality that independent law firms have in their favour. It is the agility of their operations and the ongoing awareness of novel developments that can give them the competitive edge.

Globally, experts predict that by 2020, millennials and generation Z will account for more than half of the world’s working population. For the first time in history, four generations with an age gap of over 50 years will be working side-by-side in the same environment. Millennials are rapidly becoming the most powerful connector between these generations and will soon be in leadership roles within firms and in-house counsel positions. They are the first generation to grow up in a fully digital society, which accounts for a completely different approach to objectives. Leveraging the most technically savvy talent, coupled with a firm’s visionary decision-makers, will inevitably create a lucrative approach to meeting and exceeding client expectations.

As found by a survey for millennial lawyers and their millennial clients conducted by World Services Group, firms should look to develop expansive multigenerational strategies for their new client groups, offering the most comprehensive array of professional services. They should look internally to create committees that focus on the millennial client, on process efficiencies, and on keeping current with the latest technological developments. Then, by focusing on the client’s business as a whole, savvy firms may quickly become trusted partners asked to act on their strategic advice for deals or territories that they had not previously supported.

The biggest evolution to the legal industry is yet to come, and while technology is the cause, it is also the very thing that is bridging the generational gap in the industry. The successful law firms will be easily identifiable, not because of the technology they utilise, but because as a firm, the indispensable need for flow among the generations will create a new culture that more easily matches client needs.

But some in-house are more sceptical about the extent to which law firms are truly aboard the innovation wagon.

‘It’s mainly driven out of fear. It’s less: “Let’s be super innovative and change the market and then ultimately be super profitable”, it’s more: “I think something’s happening and it may have a negative impact on our business model so let’s work on it to manage the negative impact”,’ says Matthias Meckert, head of legal at PGIM.

‘The activity on the side of the law firms – all of them talk the talk but only a few are actually able to deliver. It may have something to do with the fact that law firms are run by lawyers and rarely by entrepreneurs. Behind the scenes, many admit that they are fearing the investment. The ones who invest do really exciting stuff.’

While in-house teams might be more cautious when it comes to making decisions on which solutions to adopt, at law firms, the conversation is sometimes clouded by existential angst.

‘The conversations we are having with in-house teams on the application of AI technology are different to the conversations we are having with law firms. With law firms, there’s always that concern of: “If we adopt this technology, how is it going to affect our model? How is it going to change the way that clients perceive us? Is it going to make the client value us less because we’re using technology to support us in the work?” Whereas with in-house teams, it’s fairly straightforward: “I need to make a change, and I can see that this is going to make my life more efficient, more interesting and more stimulating” – it’s a much less complicated discussion,’ says Emily Foges, CEO of legal AI platform, Luminance.

Disruption – at the margins

When asked whether technology had the potential to disrupt the legal profession over the next five years, 84% said they believed that technology will be disruptive. The real trouble comes when trying to drill down on what form this disruption might take.

Just 6% of those who believed technology will be disruptive in the next five years thought that the disruption would be negative. 66% felt that it would be somewhat positive, and 29% thought that the disruption would be entirely positive.

Between the believers and non-believers, there is room for nuance. Many GCs are taking an approach that falls dead in the middle of those who think that tech is going to revolutionise the profession in moments and those who think it’s all smoke and mirrors with no real capacity for change. Instead, they believe that rather than technology being a disruptor of the in-house legal role, it does not go far enough to modernise and truly transform.

‘By implementing some tech tools you get a 10%, maybe 20% efficiency increase. This is not really disruptive, this is where I am improving a little bit, I’m streamlining existing structures, but not changing the fundamentals,’ says Meckert.

‘Change gets really exciting once you say, “Let’s start big picture and not with the details – why are we doing that, how do we create value for our business, should we outsource or should we collaborate with others?” Then you start really changing the game.’

Most in-house commentators are confident that the core tasks carried out by lawyers are unlikely to face the kind of disruption that renders the profession obsolete. Although standard and routine work is likely to eventually be automated, businesses will still require lawyers to provide advice on more complex issues such as risk management and corporate governance. Many anticipate an opportunity to engage in more strategic, value-added work, such as relationship-building, lobbying and training across the business. Jobs lost are predicted to be on the routine end – perhaps paralegals, those providing exclusively contractual or notary services, or those providing non-complex high street advice.

private practice has a role to play in being a first mover in the legal tech takeover.

‘According to one global consulting firm, 85% of the jobs that people will have in 2030 don’t exist today – which is quite frightening, because it means that only 15% of today’s jobs will survive to 2030. But I would not say that 85% of what I’m doing with my legal team will no longer be done by us in 2030,’ says Steinbrecher.

‘… Smart in-house legal teams will have managed to develop in-house legal expertise and knowledge in areas where they are no longer dependent on external lawyers, and they can only do that because they are no longer wasting their time and energy on low-skilled, legal administration work.’

Far from reducing headcount in-house, it will actually help combat attrition, some predict.

‘People are less interested in doing day-to-day work on a repetitive basis. People would like to do projects which are more challenging, would like to be empowered. So if you could outsource more administrative and bureaucratic things to a service provider or a tech solution, super, as those tasks need to be completed,’ says Meckert.

‘We embrace those solutions as resources would become free to do higher value, higher risk, more intellectually challenging, more fulfilling work. This keeps my team engaged and allows a better contribution towards the business.’

Similarly, on the law firm side, a digital revolution must be accompanied by an analogue one for any real disruption to occur.

‘Law firms need cultural disruption. Lots of law firms talk about being disruptive, but very few are. There has been very little disruption of law as a service and the change that will be best received by their clients is unlikely to be technology led,’ says Ruth Pearson, general counsel of LendInvest.

A (value) chain reaction

The ecosystem of law firms, their clients, businesses, their in-house teams, and third-party legal tech providers has always been delicate, but the surge of innovation and technology is challenging the value chain to shift to accommodate the changing roles played by each link.

In light of this, each player must go through a process of understanding the space they occupy in this new value chain. Suddenly liberated by the digitalisation of research, due diligence, analysis and document drafting, lawyers will be free to build on the customer relationship by being more responsive and alive to the impact of their advice – particularly in companies moving at a highly innovative pace.

‘If my business is now fully embracing, for example, processing and collecting data and I could patch my piece of the puzzle – the legal data – into that platform, that’s great. In the age of platform industries, the law department can’t be an island, it needs to be integrated and fully aligned with the business and its digital strategy.’ says Meckert.

‘The best inspirations are those I get from conversations outside my “home” industry or with non-lawyers. Those ideas challenge the way we think traditionally.’

Patching into the corporate zeitgeist enabled the Cintra legal team to leverage company-wide investment in technology for the legal team and plan its own technological upgrade. The legal team has worked closely with the IT team to investigate potential new legal tech tools.

‘This isn’t something that’s unique to legal, it’s been happening in other departments already. In general, our company and the group are very interested in innovation and new technology,’ explains Álvarez Fernández.

‘I think that in time, we will see the relationship between in-house departments and external firms change as a result of technology – mostly where fees are concerned. I suspect that the fees of law firms can be reduced, or at least controlled, depending on the market and matters at hand. But I don’t think the interplay will shift.’

Many agree that they do not see an Uber-type revolution arriving on the horizon for the external legal services market, although most concede that there will be some future adjustment of legal service providers.

‘It will be a game changer in the end. Alternative service providers are entering the market in Europe (some have been in the States for a long time now) and some of them have their own technology,’ says Sánchez Soriano.

‘I’m also seeing small law firms with very, very specialised people in technology projects. I think that is becoming interesting because these are not the typical law firms that we are used to working with, but maybe for very technological projects, you’d call these people who are doing things in blockchain or using other technologies.’

Human resources

One other very significant way in which this trend towards technology is changing legal departments and private practice firms is in the makeup of their personnel. 60% of those surveyed for this report felt that today’s lawyers were not adequately equipped to adapt to technological changes within the legal profession.

In response, a focus on technology innovation has led, in some cases, to the creation of roles to specifically facilitate transformation, as innovation managers, data scientists and legal technology administrators begin to enter the field, particularly in law firms. However, such functions are currently less common in-house.

‘Sometimes I have found people in-house who, additionally to their own duties, are in charge of innovation, but the problem in many cases is that these people don’t have a real budget for implementation or even worse, that they don’t have the support from the general counsel or the wider business,’ says Sánchez Soriano.

But, at least on the technical side, some predict that these roles could eventually permeate the in-house ecosystem, as legal specialists with the responsibility for licensing and maintaining tools and platforms like the standardised written and coded terms utilised in smart contracts. Digital legal officers or lawyers that compile software tools with intelligent applications could evolve.

‘The new role of lawyer is more likely a legal process designer to some extent,’ says Dr Volker Daum, general counsel of B. Braun Group.

‘… This will create and maintain jobs, and may even create future jobs, because it’s not just legal advising anymore – we are part of the process and the value chain.’

But equally, although the nature and nascence of new technology makes it difficult to immediately separate the truly transformative from the passing curiosity, hard tech skills of some sort will inevitably be in need of an upgrade.

‘We have projects focused on everything from blockchain to machine learning, so as lawyers, we need to understand these technologies but also provide legal advice for the new questions and challenges that will arise as a business,’ says Sánchez Soriano.

‘We put a high premium on lawyers who understand our business well.’

‘…We will be considering all this for the training we need to give to our lawyers and the people we will be hiring in the future, so that we are able to provide legal advice to innovative projects. If you don’t understand blockchain, for instance, it will be very difficult for you to provide advice on it.’

Counsel are divided over the extent to which it will be necessary for lawyers to learn coding, beyond the skills that will likely be taught as a routine part of elementary education for future (and, to some extent, current) generations.

Shaking the foundations?

If lawyers entering the profession today are required to be of a different breed than those that came before them, the question must be asked: are legal education institutions preparing them for this?

Up until now, the bedrock of a solid legal training has been the time spent as a trainee or junior lawyer on due diligence, contract drafting and analysis.

‘We can already remember (fondly or not) the time when, not so long ago, junior lawyers would spend hours preparing first drafts of transactional documents and hence were indirectly trained to the underlying issues behind a specific drafting or wording,’ says Olivier Kodjo, general counsel of ENGIE Solar.

But even if the potential impacts of automation and AI are overblown, these institutions will have to adjust to avoid an undermining of the experiential foundations of the profession. Alternative training models will likely have to be found: a training that neglects the technological skills that are becoming part and parcel of the job is becoming increasingly unfeasible.

‘As educators, we need to be doing these things… Even if you are not convinced, you need to better train your students on these kinds of tasks because they ask for it,’ says Professor Christophe Roquilly, Dean for Faculty and Research at EDHEC Business School.

However it is achieved, demystifying technology for lawyers at all levels – and thereby equipping them for an innovative, digital future – will likely be a bridge to the elusive culture change that underpins the successful evolution and future-proofing of the industry.

‘Innovation flows much better when people are able to see machine learning not as magic, not as something that someone with a magic wand goes ‘Ping!’ and it starts working,’ says Professor Enrique Dans, Professor of Information Technologies and Systems at IE Business School.

In today’s business world, more than ever before, learning is a lifelong pursuit and it is the responsibility for those at the top of each organisation – the corporation, the law firm, the law school – to have the foresight to set a tone that prioritises innovation and agility. For true innovation to take hold, there needs to be an agreement of what constitutes good service and an alignment of priorities and mindsets throughout the organisation and the value chain – to avoid each party being left incompatible with the other.

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Data Analysis: Part 4 Positive Disruption

Much has been said about whether disruptive technologies could spell the end of the legal profession as we know it, but GCs aren’t worried. In fact, they’re excited.

Of those in-house counsel surveyed for this report, the vast majority agreed that technology will disrupt the legal profession in the next five years, with 94% acknowledging that technology will be at least somewhat disruptive. 32% said that they feel this disruption will affect the profession to a great extent.

Every respondent that said they expected there to be some disruption in the next five years felt that this would be positive, with 71% saying that the disruption will be ‘somewhat positive’, and 29% saying that it will be ‘entirely positive’.

‘I’m fully convinced of the benefits of the AI, and we all need to adapt to what is coming, because it is coming, whether we like it or not,’ says Cristina Álvarez Fernádez, head of legal at Cintra. ‘I’m 100% optimistic this technological revolution is going to be good for us: we’re simply going to provide legal services differently.’

This positivity is echoed by the approach many of the GCs interviewed for this report have taken to the issue: embrace disruption and reap the benefits.

‘The legal function needs to and can play a role in showcasing the benefits of introducing technological solutions in an enterprise,’ says Johan Huizing, associate general counsel at Itron. ‘We must be leaders in adoption of high-performing technology and not merely followers. Only then can we play a role as thought leaders and will we be accepted as team members that have value for the business.’

To what extent do you agree that technology has disrupted the legal profession in the past 5 years?

‘Legal professionals who want to thrive in modern business must lean towards technological transformation,’ adds Tobiasz Adam Kowalczyk, head of legal at Volkswagen Poznan.

‘The great news is that lawyers have the tools at their disposal to enable this change. The digital revolution offers us the chance to compete, and it provides law firms and legal departments with the ability to transform into something much more exciting. The legal profession will not disappear, but it will surely change due to technology. This shift will most probably trigger new forms of what being a lawyer means. The sooner we accept it as the new normal, the better off we’re going to be.’

One general counsel from a prominent international engineering firm, who did not think that AI will be a factor within the next ten years, said that their main concerns were ethical.

To what extent do you agree that technology will disrupt the legal profession in the next 5 years?

‘How can you build trust in code? There are ethical questions around its use in certain applications such as disciplinary actions or other employment-related areas,’ they said.

‘It’s not all hype, but the profession is very conservative and the ultimate question is: to what extent will management trust a “machine”?’

Virtually all of those surveyed agree that AI will be a disruptor in the legal industry, with just 9% feeling that it will not be a disruptor at all. Despite this apparent enthusiasm, just 6% said their team currently uses an AI solution, all of whom said they only use it to assist in low-level work. Within this small group, overall feelings on AI’s ability to act as a disruptor in the industry are positive: 83% agreed that AI would be a disruptor, with half feeling that such disruption would come between the next five and ten years.

When asked which factor was more important when considering adopting an AI-based tool, all respondents cited either the reduction of costs (38%) or an improvement in quality of work (62%).

‘Looking forward, AI will be able to cover all technical and easy legal work: cost reduction, quality improvement,’ says Artem Afanasiev, general counsel of DIXY Group.

Overall, the key disagreement comes over the question of when, not if. Over half feel that AI-based disruption would come between the next five to ten years, but a portion said they thought the disruption would come much later: 23% think it won’t be a factor for at least ten years.

Overall, how positive do you think technology disruption will be?

Then comes the question of preparation. If disruption is coming for the legal profession, all eyes will turn to the incumbent lawyers to see how they fare in response to the seemingly inevitable changes heading for their profession. Whether or not legal education institutions and professional development programmes throughout Europe have left today’s lawyers well placed to adapt and thrive will be imperative.

When asked about current lawyers’ preparedness for technological disruption, the in-house counsel surveyed and interviewed were less enthusiastic. 14% felt that today’s lawyers, on average, were adequately prepared; 61% did not. The rest were unsure.

‘AI is limited for the majority of in-house right now because the base data sets are not in place, substantial enough or well enough maintained,’ explains the general counsel for a prominent consumer goods brand.

‘This is a real point of difference with the accounting/finance world where recording data in a structured way has always been the order of the day – that area will see a huge impact from AI in the near future whereas in-house legal first needs to get its ducks in a row, change its behaviours and set that foundation upon which expensive AI solutions are built.’

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Foreword: Francesco Gianni

As corporate leaders, in-house counsel are faced with the challenge of determining which new technologies can bring the biggest impact to their operations. As we hear from in-house lawyers and others who have contributed to this survey, AI and other forms of technology can enhance in-house legal departments in many ways: due diligence review, first-draft contract preparation, contract management, legal operation analysis, litigation analysis, legal research and much more. AI can create efficiencies in previously labour-intensive legal processes, and therefore provide counsel with the luxury of time for problem solving and applying legal judgement and analysis.

But the pace with which technologies are developed necessitates a complicated analysis of return on investment, and whatever path is chosen is always done so with risk.

These new processes will certainly influence change within in-house departments and law firms alike. Focusing on where time is best spent and developing a strong base objective is only the tip of the iceberg as these developments continue. Going forward, the legal leaders in organisations will be constantly tasked with seeking technologies that best fit their unique business needs and objectives.

The key for decision makers will be to strategically choose and implement systems and processes that unlock the true potential of their teams, and point the way to the future of their organisations. It will require a change of mindset.

As a strategic business partner to in-house counsel and our members, WSG makes technology and innovation a cornerstone of its core service objectives. With immediate access to distinguished professionals and the real-time sharing of leading-edge information, we support firms and clients in their ability to capitalise on business objectives.

As customers, professionals in and around the legal profession – such as those leaders featured in these pages – will be arbiters of the success, or otherwise, of new tools, applications and services. Professionals such as these are at the helm of this potentially unbounded – yet risky – integration as machines and humans share everyday challenges.

WSG congratulates those who participated in this report, and thanks them for their keen analysis of new technologies – and the future of the industry.

Francesco Gianni

Founding Partner Gianni, Origoni, Grippo, Cappelli & Partners Chairman

World Services Group

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The State of Play

Between the reams of paper (literal and virtual) spent discussing the question of how technology will affect the legal profession, as well as the thousands of legal tech companies springing up around the world, technology is on the minds of in-house teams of all sizes and from all sectors.

But, often, what isn’t communicated is exactly how in-house counsel feel about the technological revolution hitting their profession and how their teams and businesses have responded – if at all.

To that end, GC magazine in partnership with World Services Group went out to a selection of elite general counsel from across Europe with a comprehensive survey covering all things related to the use of legal tech at in-house teams.

The responses came from a vast selection of in-house counsel in a diverse range of industries. From finance and insurance, to healthcare and IT, the opinions collected and presented in this report paint a fascinating picture of the contemporary state of technology within the in-house legal community in Europe.

These responses, explored in detail in this report, provide a valuable framing of the wider discussion about technology and its various applications, both from the perspective of an in-house remit, as well as a broader look at its impact on the profession. From the pressures on external advisers to get ahead of the technological curve, to the so-called revelation of blockchain and its predicted effect on how legal work is conducted, the topic is vast.

It’s evident that technology is already making an impact on the profession. Of those surveyed, 84% of in-house respondents reported that they use some form of specialised legal technology within their legal department, with 82% revealing that their department’s use of technology had increased in the past five years. For a profession that’s often accused of being filled with technological laggards, that’s a significant change, and one which only stands to become more pronounced when you consider that every single survey respondent acknowledged that technology can enhance outcomes for in-house departments.

there is clearly an appetite for the kinds of solutions being offered in the legal tech marketplace.

At a base level, there is clearly an appetite for the kinds of solutions being offered in the legal tech marketplace. Why this need has arisen, what form it should take, and what effect this is likely to have on the profession in the long term are more nuanced questions, requiring a holistic view of not just the survey responses, but the opinions and activities of the various players in the legal tech market.

Why bother?

With over 1,400 legal tech companies around the world, the world of innovation has exploded into the lives of lawyers – in-house and private practice alike – with some interesting (and, at times, conflicting) results, not least given the notoriety of the legal profession as an outpost of conservatism.

But there is a clear need, and to predict where legal tech is going, it is crucial to understand what is driving that need for in-house counsel.

For the 84% of survey respondents who indicated that they were utilising specialist legal technology within their departments, increased efficiency was the most frequently cited factor that general counsel were considering when implementing new technology, at 84%. That was followed by ease of use at 50%, customisability at 32% and ability to integrate with existing systems at 31%.

If the pressure driving the push to adopt legal tech is the need to provide the business with better efficiencies and more value for money, then the cost of entry for many of these legal tech solutions is a barrier that needs to be overcome in order to gain the support of the wider business. A clear-sighted approach to tech only intensifies the imperative for a cost-benefit analysis, and, seldom a profit-centre, in-house departments know more than most about the need to do more with less.

How is technology changing relationships in the legal industry?

The headlines are fraught with impending doom and gloom for lawyers today. The reality is that there are only a handful of law firms racing to implement the latest innovations that technology has to offer. Law firms are slow-adopting, service-based partnerships driven by providing the best value to their clients. It is the relationships that hold the most significance for both in-house counsel and law firms alike. Therein lies the reason why, ultimately, the true drivers of change within firms are their clients.

In-house counsel can better identify reasons to pressure firms to evaluate their processes, and firms are doing just that to find opportunity. However, it is the re-evaluation of simple processes and the use of current technology within the firm that can bring enormous gains in creating better efficiencies without ever adopting anything new.

For the leading firms who are a part of World Services Group (WSG), being able to leverage innovative technology with firm relationships globally is just one resource that has enhanced the speed with which firms can react to in-house needs. Though technology will continue to play an incremental role in the firm’s evolution, it is the ‘people’ that will continue to be the key to success in the legal industry.

Like the motivation for WSG, which is to create a powerful relationship-based network among the premier firms in each location of the world, it is not the technology, but the access to important technology, that will be paramount. There will be no ‘robolawyer’ to take away the personal relationship required between in-house counsel and their advisers to achieve true results. It is the proven, results-focused relationships that are becoming the true innovation.

Firms are not losing business because of their lack of cutting-edge tech, but they should take time to analyse processes, investigate new technologies and invest in access to long-term solutions for their clients. That is what will retain ongoing, long-lasting client relationships in the face of an increasingly tech-heavy world.

‘To remain competitive, we need to increase productivity while enhancing the quality of legal processes against an ever decreasing cost base. In order to achieve this there is no other solution than to embrace technology,’ explains Johan Huizing, associate general counsel EMEA at Itron.

It was common refrain to hear a willingness from general counsel to adopt legal tech solutions throughout their department – but getting buy-in from the business and the necessary budget to execute was a clear hurdle for many. While 70% of the in-house counsel surveyed for this report felt that their company was supportive of implementing new technologies, only 56% had seen this translate to a bigger budget allocation on their balance sheets.

‘If you consider that it’s a strategic issue for you, probably it’s better to internalise, or to invest into some legal tech and then to see the results. I mean invest in terms of putting money into external projects, not only buying a product or a service,’ advises Professor Christophe Roquilly, dean for faculty and research at EDHEC Business School.

But for teams with a smaller head count in particular, taking that first step was often the hardest. Teams with smaller headcounts had the worst rate of uptake of technology, with 42% of departments with less than ten people saying that they didn’t use any legal technology at all. They were also less likely to have received an increase in budget for technology over the past five years, with only 47% reporting an increase in budget for technology (compared with 57% overall). Yet, in many cases, it was smaller teams who thought they stood to benefit the most from tools that can deliver better bang for the buck.

‘There is still the need for smaller teams to provide increased efficiencies, but the budget doesn’t allow for it. It’s then left to us to find ways to use technology to provide efficiency, but essentially for free. That’s not to say it can’t be done, it’s just more difficult,’ said one general counsel from the consumer goods sector.

Some corporates we spoke to were lucky – or large – enough to have internal resources for tackling bespoke software development projects, or budgets for cultivating start-up arrangements – though the latter is much less common for in-house teams than for law firms. But whatever the infrastructure or budget available, investment in tech requires bravery, given the unpredictable return on investment and, in many cases, the long-term nature of that return.

But while budget proved to be one of the biggest predictors of tech use and implementation within in-house legal departments, communication and demonstrating the value – particularly for larger companies which required a higher degree of coordination across existing systems – was also proving a challenge.

the predictive power of technology is encroaching on the legal system itself.

‘Money is nice, but implementing a new bit of technology will require the cooperation of the whole business – from the board down to the IT department. So money is something, but it’s not the only thing,’ explains one general counsel from the utilities sector.

Types of tech

The legal applications of technology are vast, ranging from the rudimentary to the complicated. Generating by far the most interest among those surveyed were the basics: for example, the most commonly cited use of technology was for contract management, from 55% of respondents.

But technology can provide legal departments with solutions far beyond a contract management system (often little more than a repository of documents) or a standard contract template.

Software for law firm relationship management, including e-billing and increasing transparency around legal spend, is often seen as a boon, and such tools can be make or break for a frictionless relationship. At present, 20% of respondents cited that their use of technology included tools for law firm relationship management, but based on the interviews complementing the quantitative research, this is an area that appears to be prime for expansion in the short term.

‘We demand use of our billing platform and insist that our rules for invoice submitting are followed. This has increased our understanding of the drivers for outside legal spend and budgeting and resulted in a better control of such spend,’ explains Huizing.

‘We move away from firms that are low performers when it comes to the use of our billing solution or that execute poorly on following our instructions for entering reports or invoices.’

At the least, technology can assist external firms to be more cost-efficient, so that those savings can then be passed on to their in-house clients. But there are more benefits to be reaped from an internal-external relationship that leverages technological solutions. Through this, the firm and the in-house department can cut through the noise that comes from two independent, far-away entities trying to collaborate with one another.

‘We’re building collaborative tools. We saw that a lot of time goes into emails and phone calls between a lawyer and a client. Now obviously that’s part of the personal relationship with the lawyer and client, and that’s not going anywhere. But if you’ve got five emails back and forth trying to describe what part of the land the lawyer is talking about, that’s just inefficiency. So by bringing both the lawyer and the client onto a collaborative workspace on [our] platform, you can cut out a lot of that needless, repetitive back and forth,’ says Ed Boulle, co-founder of legal tech company Orbital Witness.

‘The baseline is that we must be able to communicate very effectively with our external law firms. This requires that they use state-of-the-art communication and cloud-based collaboration software,’ adds Gábor Kukovecz, head of legal and operations at Diageo.

‘In the near future, we will implement a collaboration software, in which we work together with our external law firms, that they must fully implement.’

Far from being limited to external relationships though, tools and platforms which assist legal in becoming more accessible to the wider business also proved popular.

‘Legal is building knowledge management tools to get to a single source of truth – a lot of the technology we’re using, because we’re operating at scale, supports us when we need to have information held reasonably accessible, so that everybody can rely on them,’ explains Nina Barakzai, general counsel for data protection at Unilever.

IBM also has a shared knowledge platform called the Legal Community, which is used to integrate items such as contractual provisions, presentations and internal processor memos on regulations.

‘It’s a collaborative community space, and that’s very useful. You have owners, who can replace or change things on a particular subject, and it is shared with all the rest of us who are members,’ says Vincent Martinaud, counsel and legal manager at IBM.

Teams with smaller headcounts had the worst rate of uptake of technology.

Legal case management is another popular focus and 40% of in-house counsel surveyed cited case management as one of their uses for technology. This can include the basic paperwork-inducing case management tasks, but can also extend to case review administration and analytics.

Increasingly underpinning many tools is artificial intelligence (AI), as machine-learning tools are designed to quickly parse and categorise vast amounts of information, presenting it back for lawyer review in a fraction of the time taken for junior associates or paralegals to do the same.

‘I really think that our job will change, especially the analysis of documents, because of the way AI now is able to read and understand natural language – including your notes and the ability to decipher a picture, for instance,’ says Martinaud.

At the outer reaches of technology applications in the sector are predictive justice tools, employed to forecast case outcomes, including judges’ decisions – although these are by no means widespread or particularly popular among those who contributed to this report. But, as algorithms creep into our everyday lives, often unseen, the predictive power of technology is encroaching on the legal system itself, for example, in the criminal justice system.

‘[In Spain] work is being done on “algorithmic justice” – for petty thefts and things that are repetitive, the possibility of being able to come up with a first verdict, of course allowing the two parties to appeal if they don’t agree with the verdict, but releasing many human hours that could add value in more complex cases,’ says Enrique Dans, professor of information technologies and systems at IE Business School.

‘All the things related to an insurance claim, traffic problems when there’s no victims for example, these could be very well examined right now, with the current state of technology, by algorithms. You could ask one insurance company to negotiate with the algorithm of the other and get into an agreement, only bringing the human lawyers in if they are really required. That could take away a significant part of the burden for lawyers right now.’

Measuring the impact

When asked whether technology had the potential to disrupt the legal profession over the next five years, 84% said they believed that technology will be disruptive. The real trouble comes when trying to drill down on what form this disruption might take.

Just 6% of those who believed technology will be disruptive in the next five years thought that the disruption would be negative. 66% felt that it would be somewhat positive, and 29% thought that the disruption would be entirely positive.

Short of profession-changing disruption, technological tools like collaborative platforms, AI document review and smart contracts, and the increased automation that they facilitate could adjust the day-to-day lives of lawyers in subtler ways, by disrupting routine, everyday processes. However, introducing more technology often means more constraints on flexibility.

‘It does start to mean a little less flexibility and a bit more rigidity around the terms you’re putting in place and the structure of the relationships – because it has to have been thought out in advance, especially if you have multiple parties involved in supply chains,’ says Chris Wray, CLO of blockchain start-up Mattereum. ‘It’s kind of legal design – mapping out who are the parties here, what are the contractual relationships and what are the key provisions and then, given all that, once that’s clearly in mind, what is it we’re trying to automate, and have we mapped out different kinds of disputes that may arise and provided appropriate procedures for the resolution of those disputes?’