On June 22, 2015, I attended the launch of what is described as an “industry cluster,” LegalX. The launch took place at, and was sponsored by, the MaRS Discovery District. Based in Toronto, MaRS “is one of the world’s largest urban innovation hubs… It provides expert advice and market research, and makes connections to talent, customers, and capital.”
The official announcement of the launch states that LegalX is “dedicated to moving the legal sector forward through enterprises — whether startup or established corporates and law firms — LegalX at MaRS will connect the technologists, designers, coders, engineers and lawyers who are driving change.” As noted by Jayson Moyse of Elevate Services who, along with Aron Solomon, is one of the LegalX founders “Technologists, designers, developers, engineers and savvy business people (with no legal background) who like to push boundaries—as well as lawyers—are all necessary players in driving [this] change.”
The centrepiece of the launch was in two parts, the first being demos from two legal start-ups, the second being a panel discussion involving six key players in the segment.
The demos were from Law Scout and Beagle. Law Scout describes itself as “Canada’s first online platform connecting small businesses to legal services at upfront, fixed fees.” It essentially provides a platform for lawyers to bid on potential engagements from clients and then for the client to track the engagement’s progress from the winning bidder.
Beagle Inc., based in Kitchener, Ontario, declares that it “uses the power of artificial intelligence to automatically read a contract, highlight what you need to know and provide a feature-rich real-time collaborative environment.” It also states that it “gets smarter the more you use it, providing personalized results and intelligence.”
Beagle provides annotations on agreements and can, among other things, allow the lawyer reviewing it to refer clauses to others for their review.
Both of these demos gave the audience a view as to how much technology will end up changing the legal sector.
We then moved on to the panel discussion, hosted by Jayson Moyse. The participants were (in alphabetical order):
Monica Bay, US-based lawyer, writer, and self-described “provocateur”
Mitch Kowalski, lawyer and legal writer
Cian O’Sullivan, founder of Beagle
There were so many comments made during the course of the panel, it was not possible for me to capture them all. Here, however, were a couple of note:
Cian O’Sullivan: “There’s no difference between a legal and a business issue: it all comes down to money.” He pointed out that business is dependent on contracts, “but contracts suck, and no one wants to look at them.” He also noted that business people don’t consult lawyers when they should. Their biggest problem, of course, is month-end, but it’s an issue that lawyers remain blind to.
Sanjay Kamlani: “Every law firm is, in fact, an LPO.” He said that LPOs now are doing work that law firms used to do: legal drafting, legal research, compliance issues, EDD, etc. In 2000, there was only one organization outsourcing its legal work: GE. That’s when Pangea3 was created. By 2010, Pangea3 had grown to over 1,000 lawyers. Legal functions are now regularly outsourced to lawyers in cheaper jurisdictions. The key, of course, is technology. LPOs are using technology tools to reduce the time that lawyers usually take by half, every year, the best example being EDD.
I tried to take notes of the panel discussion on the fly. Here’s what I was able to capture.
Jayson asked, “What are critical success factors in legal industry?”
Dan: “What I learned at Avvo was that inserting my lawyerliness into the process was actually counterproductive.”
Mitch: “Why are big law firms not into this? Lawyers trained from law school to avoid risks and to avoid failure. But that stops innovation.”
Monica recommended a “great book,” Only the Paranoid Survive,” by Andrew Grove. Grove notes that that Kodak didn’t see what was happening: “They didn’t move with the inflection points.” She also noted that San Francisco has lost the position it used to have in the legal environment: the leading large firms are gone. But firms like Littler, Orrick, and Sedgwick have thrived. “They each do one practice area and do it really well.”
“If we can take the things that don’t need to be done by lawyers, you free them up to spend the time on what they should be spending it on.”
Noah: “Big Law has not innovated because they don’t believe that they can be more efficient.
Lawyers believe that if they do their job better they will make more money. But really they need to focus on technology.
As to an R&D effort, some law firms do it, but most don’t. “Other professional services firms outside of law are spending a ton of money on R&D. He noted that there are many new legal tech companies in the sector, which is actually helpful to the players in the market.
“It takes time to convince law firms about the need for legal technology.”
Cian: “The law applies to everyone, not just the law firms. You need to look at law from the perspective of all potential clients. Look at this from a grand scale, and then see what potential collaboration is possible.”
Dan: “It’s crucial to get input from ‘non-lawyers,’ since they can potentially provide important insights.”
Sanjay: “At Pangea3, there was mix of professionals and tech, although the majority is made up of professionals. But other LPOs are much more tech-focused.”
What was obvious – but far from surprising to those of us who have been in this area for a while – throughout the panel discussion was that all these changes happen through and as a result of technology. Many panelists noted the resistance to technology adoption that has for so long been a hallmark of LawLand. But, as Bruce McEwen recently noted in a posting entitled IBM Watson & Machine Learning, in discussing how IBM Watson may affect the practice of law, “For once it would behoove us to respond with alacrity and nimbleness in place of denial, resentment, and behind-the-lines guerrilla resistance.”