Law firms tend to lag behind other businesses when it comes to intentional change and innovation. They absorb change much more slowly; although, as change is absorbed, people adjust to doing new, different and higher-level tasks. The imperative for law firms today is to be prepared to absorb change faster, particularly the changes fostered by technologies such as artificial intelligence (AI). To do that, lawyers need a dose of creativity.
There can be no doubt that some tasks performed by staff and some lawyers will be replaced by technology. Those firms with the right leadership, culture and strategy, and those lawyers with the right skills, will be prepared to embrace the technology to create and innovate new ways of attracting clients, meeting client expectations and demands, and improving operational and talent cycle processes.
What is AI and what can it do today?
AI refers to algorithms and the computer systems that use them to perform tasks that had previously been the exclusive purview of humans. When machine learning—the ability of a computer to learn without being explicitly programmed—is superimposed, automation can extend much further.
Popular intelligent assistants Siri and Alexa quickly answer questions and set your baking timer when your hands are busy. They are always listening and learning. They will understand more tomorrow than they do today.
Alexa can integrate with Nest, a connected home device, and predictively learn from your home heating and cooling behaviors to automatically adjust the temperature based on your preferences. Cogito analyzes human voice and guides enhanced empathy in phone sales and customer-support representatives. Pandora has analyzed songs based on 400 musical characteristics and based on an individual’s choices, can recommend songs that would otherwise go unnoticed but that appeal to the individual.
Today, law firms can use AI to quickly research the law and engage in discovery and due diligence (ROSS); review and analyze contracts (Kira Systems, LawGeex, eBrevia); copyedit (WordRake, PerfectIt); and predict legal outcomes (LexisNexis, Westlaw Edge, Fastcase, Lex Machina). It’s all far from perfect, but the rate at which it improves is astonishing.
As much as AI presents threats to traditional ideas about the business and practice of law, it presents more opportunities for those who are curious and creative. This is made more difficult by the defensive posture implicit in the phrase, “disruptive technologies.” Defensive thinking leads to slow adaptation at best and attempts to prevent partnerships with non-legal entities and maintain law practices-as-they-are at worst.
Law firm leaders must go beyond adaptation if they want sustainable, thriving law firms long-term. They must see new technologies and other shifts in the economy, society and culture, and client behaviors and preferences as opportunities to explore and exploit.
Lawyers and firms that prepare to transform their business model, culture, and competencies will have a competitive advantage until the rest of the pack catches up. If your practice is in an area with many other lawyers, alternative legal providers, and/or a shrinking client base, the time to transform is now.
What can lawyers and firms do to find and leverage AI or technological opportunities tomorrow?
In the legal industry, change efforts often breed resistance. It’s difficult to break a habit. The professional act is the application of precedent: looking at what has happened and using history cleverly, effectively, logically and systematically. That’s the habitual problem-solving mindset for most lawyers. Creativity is a challenge. Yet, creativity and new ways of leading, developing strategy, and working together are required for the business of law to thrive.
Lawyers and firm leadership can do three things to find and leverage tomorrow’s opportunities: 1) invest in AI readiness; 2) create new business models; and 3) develop an organizational culture and strategy for success. These are not linear steps. They are iterative and influenced by each other. It doesn’t matter where you begin. Just start now.
1) Invest in AI readiness.
Data is and will continue to grow as a fundamental organizational asset. For example, the more contract negotiations your firm handles of a certain type within a specific industry that involve the same or related parties, the more data can be accumulated about possible and acceptable terms and objectives and even behaviors of the people involved. Imagine doing this for every process in your business model from the broad to the narrow, like the example above.
If you do not already have organization-wide data governance systems and centralized data lakes, develop them now. Collect and organize data to gain insights into client preferences, options to improve services, products, and experiences you offer to prospects, and how to produce those offerings with less energy, time, and waste.
If you don’t collect the data, you won’t have it to use later in AI applications to create a competitive advantage in your specialized area of practice.
2) Create new business models.
Law firm business models answer the broad question: What will you do to attract, retain, and keep the clients you want, happy and how will you do it profitably?
A few examples of questions to change your business model are:
- What model will give your firm the capability to [fill in the blank; ex. “price”]for all clients in a smart way?
- What data would you need?
- Where would you find it?
- How would you use that data?
- What resources should you dedicate to developing and continuously improving your model?
Pricing is only one area of possible business model innovation. You can innovate your prospecting, client experience, work processes, talent-cycle processes, or even the legal services offered.
For example, you could ask: What model will give our firm the capability to find promising new industries to focus client development in the next 2-5 years? You might answer that question by saying: We need a model that encourages the right people to continuously explore emerging businesses and industries. This might lead that group of people to explore, via reading, listening, observing in new spaces, where they might discover and explore micro-mobility or digital therapeutics. They might then take a deeper dive into one burgeoning industry to learn how to bring the product to market and potential legal problems. Opportunities for law-based solutions are possible in every transaction from bringing a product to market and its ultimate use.
3) Develop an organizational culture and strategy for success.
It takes the right leaders to develop the right culture and strategy to leverage the benefits of AI technology. The leader must: 1) understand and communicate the need for change to the rest of the firm, especially empowered rainmakers (It is the leader’s responsibility to explain the risks if the status quo continues and what will be different and better with change); 2) communicate a sense of urgency; 3) design and communicate the strategic plan. The biggest obstacle is the tension between the demands of individual rainmakers and the needs of the organization. Firms without an excess of that tension have a head start.
Leaders understand different technologies and their potential to improve organizational structures and staffing, work processes, and delivery of legal solutions to clients. They can establish a clear strategic vision and plan to leverage AI opportunities and develop a sustainable and thriving firm over the next five to 10 years. Understanding comes from immersive reading, observing, listening and employing IT experts to help develop a new level of awareness and enthusiasm among the lawyers empowered to drive transformative change forward or block it.
Part of the strategic plan includes changing the culture (hidden processes and values that affect how things are done), structures (roles, responsibilities, and connections between and among people), processes (how critical tasks of the business model are accomplished), and capabilities of the people in the firm. The culture needs to prioritize organic revenue generation over cost-savings, and collaboration and creative problem-solving over individual autonomy and traditional problem-solving. It must address the tension between the reliance on the demands of individual rainmakers and the best interests of the firm to thrive in the next 20 years.
Lawyers need opportunities and possibly training to think critically about the potential uses for AI and other transformative technologies. They should collaborate with IT professionals to examine data for insights and questions. They should examine the complex processes inherent in the practice of different legal disciplines for business transformation opportunities.
Finding the opportunities AI offers—those that reduce costs, increase revenue, and identify new streams of revenue—depends on creativity for approaching challenges when there is a less than complete information set and the information available is ambiguous. Creativity is a way of thinking and embracing different perspectives, mixing different ideas and information, and then experimenting to generate original ideas and evaluating them with an original perspective. That’s a true competitive advantage.
About the Author
Susan Letterman White is the managing partner of Letterman White Consulting, which provides strategic change management consulting for law firms, and is a practice management advisor with Mass LOMAP. Contact her at Susan@LettermanWhite.com.