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August 08, 2024
John Matheson; Co-Founder, Quant LegalTech Pte Ltd. Singapore.
This is the third in a trilogy of Blogs; the first explaining how AI will become another technology available to all of us (hence the headline- AI; the Great Democratizer) and the second, the “Platformization” of legal everything. In this third piece I tie these strands together to address a more pressing question of; How Platforms will Transform the Business of Law, and an equally important sub-plot of what Law Firms need to do to win in this new paradigm. But first a little story…
When I arrived in Asia several decades ago, I was invited to a wedding held in a rural area in one of our neighboring ASEAN countries. As a newcomer to the region, I felt privileged to experience a special ceremony in a rustic but slowly modernizing society. The groom, who had invited me to the event, had decided to buy his wife’s family a refrigerator, which at that time was not standard issue. Long story short, when the fridge was opened the following morning, we were surprised to find that the proud new owners had identified a more pressing function namely, that of housing the family’s shoe collection.
I share this story, not as a critique of the culture I was experiencing, but to highlight that many leaps in technology are met with a wave of resistance, where early adopters pave the way for those who follow. These observations lead me to a very important question…
Why Aren’t Law Firms More Aggressively Deploying Legal-Tech?
Followers of this area will have seen headlines announcing the bold moves that leading firms are making to bring innovation to the practice of law. These include some impressive initiatives but they are largely confined to a small sub-set of practices. For the vast majority of firms, they focus on making incremental purchases of legal-tech components, and often, on an individual department basis. The result in many cases, is a fragmented assembly of productivity tools that either don’t speak to each other or offer no client-facing value. The observation here is that in many cases, well-intentioned technology-plays become so fundamentally underutilized that, they are as useful as a refrigerator full of shoes…
And that’s where our discussion returns to the unifying power of platforms.
Platforms R Us
A platform may be defined as a common interface and central repository for communication and exchange of information. An essential part of this structure is that the controller of the platform can integrate any number of client sub-groups and advisors so that the value of the platform multiplies. Here, I borrow the concept of “network effect” which essentially means that the usefulness rises in a non-linear (hopefully, exponential) fashion as a function of the addition of, client groups, data sources, advisors, business models etc.
For Law Firms to get real value from platforms requires a modest IT budget and, more importantly, a mind-set change where the value is to be extracted by the firm as a whole and not just one department looking for a component for a transaction (eg; a virtual data room). My observation from 2 decades working in-house, is that clients don’t see Law Firms as “departments”, but rather, a single organization that solves legal problems and provides pro-active counselling. In this context (and also, having been a partner in a law firm), firms generally lack a culture of cross-selling of services because fee-earners are paid for doing their own work not marketing the firm and, even when they do, the cross-selling often consists of perfunctory references; oh, and we have a very good litigation department too…
Platforms have the capacity to solve this problem and can be structured to showcase the suite of services offered by the firm. Take for example a finance group in a law firm that advises on securities issues. Unless its directly within scope, the group, will not be thinking about safeguarding the trademarks in a sub-licence or how privacy provisions could be enhanced, but if the firm engages via a platform, the various functional barriers can be removed and business opportunities pro-actively identified.
Take for example, a compliance platform that defines a relevant dataset of legal tasks, serves up reminders, captures proofs and provides a dashboard showing “status”. Compliance is a professional function but in substance, it covers multiple disciplines making it an ideal candidate for proactive lawyering. This is particularly relevant where a compliance task has an internal workflow that involves multiple lines of defence, working together to contribute to an output. Law Firms are not usually privy to these internal processes because it’s not perceived to be cost-effective. But… what if the Law Firm had visibility into the workflow and the ability to post explainers?
Show Me the Money?
If firms take a holistic view of their role and could obtain full transparency into their clients’ compliance datasets, it provides a huge opportunity and there is no reason why it couldn’t be offered on a low-cost retainer basis. This, I would argue, is a good example of where technology can enable new and exciting business models. Let’s see what this looks like;
Prediction
[This note; it’s errors and grammatical inconsistencies was generated by a real person. The artwork was generated by AI.]