More or less every article on legal tech is based on the same story. Law firms lack behind in digital transformation but disruption is inevitable and lawyers will sooner or later have to change their ways to survive. The mantra has been chanted for years, and yet, nothing seems to change.
The future continues to be the future, the law firms keep earning money with the old methods and the legal tech products stacks up as dusty shelfware. Sometimes, it is hard not to get the feeling that legal innovation is just hype while we wait for real artificial intelligence to be developed, and that all this talk of inevitable change is mostly thrown around in an echo chamber of innovation hungry youngsters at the bottom of the food chain.
Legal Tech Weekly are not the first ones to ask if the modern legal tech scene is, in fact, an echo chamber. Earlier this year, legal tech guru Bob Ambrogi voiced concern that legal innovation conferences were for the “10 percent of the legal industry dominated by the world’s largest law firms and corporations.” That sparked a broader debate on whether legal tech is mostly just an over-hyped topic for a “group of similarly-delusional people preaching to the lonely choir of each other” or “the message IS loudly breaching the walls of the so-called-chamber, attracting capital and clients, while changing minds and hearts.”
On the one hand, investments are record-high; on the other, we are yet to see a legal tech product really break into the market. So to get a better understanding of the problem, we have summoned the Australian lawyer and futurist, Quddus Pourshafie who is one of two voices in The Future of Law Podcast, and founder of the company Futurelab.legal. We asked him his opinions about the concern, and if so, how we can bridge lawyers and tech providers to secure a successful transformation of the industry.
A flawed legal fraternity
“The fundamental issue” begins Pourshafie “is that often times, the people who do legal tech are not necessarily lawyers. The issue with that is that lawyers are a fraternity. They work very hard to achieve their status because of all the hoops they have to jump through to make it there; whether it is the years of studies, the high entrance requirements or the laborious practice that they have to do for many years. Also because of the societal role of the lawyer, they have placed themselves in a bubble that is extremely difficult to penetrate.” According to Pourshafie, that makes it hard for young tech entrepreneurs without a background in law even to make it to the hallways of the law firm.
Furthermore, Pourshafie thinks there is a fundamental incompatibility between the legal tech providers and the law firms because the firms are stuck in a model that does not have the capacity to change: “Just having the firm see that they need legal tech, does not mean that legal tech will solve their problems. There is actually a fundamental shift in the system thinking that needs to happen,” he says
According to Pourshafie, the structure of most law firms is no-longer the appropriate vehicle to make maximum advantages out of all the new tech solutions. Where most law firms are structured in rigid silos defined by the practise areas, the legal tech products can rarely be cased into such structure. Instead, they tend to overlap and exceed such boundaries: “Legal tech is becoming its own monster,” he says, and then elaborates: “The law firms don't even have a methodology to understand how to use new products and where to fit them in their environment. So when a new thing comes, they go “Nah.. that doesn't fit” or “We don't know how to use it”. Some of it is the firms' fault, some of it is the legal techs' fault because the UX/UI is not good enough.”
So you say that there is a problem with the maturity level of the legal tech products and the structure of most law firms?
“It is not just problems with the structure. It is fundamentally flawed to be able to use any future advancements of the technologies.”
So you think that there is a gap and that it creates an echo-chamber?
“There is a huge gap and an echo chamber on both sides. Lawyers talk with other lawyers about innovation. And legal tech people talk a lot to other legal tech people about innovation,” Pourshafie answers.
“I think that what is happening is two parallel bubbles of hype. In the law field, you have a lot of people talking about innovation of this and that, and when you dig a bit deeper it is more of a marketing exercise instead of real implementation. We know that it is a popular conversation to talk about innovation. So we talk about it and have a panel on it but what are we actually able to do? I spend the money, I came to the conference, I ate the food, I listened to the talk, and then I went home to the same pattern of behaviour,” he also explains.
Escaping the echo chamber and bridging the gap
Unsurprisingly, Quddus Pourshafie points to his work in FutureLab.Legal as a potential way to overcome the two parallel echo chambers that he has identified on both sites of the gap.
“I can't really speak to any other solution than the one I created. It is going to be education, and it is going to take time. The best way to see it, is as an emergence of an industry or a sub-niche within the legal industry that is purely focused on transformation. What is happening is that legal tech companies are often SaaS-based companies so their core-function is to build the technology, iterate on it, improve it and sell it out on a subscription basis. Their support does not extend beyond the “Hey, we had a bug”. The law firms are not SaaS-companies and they are focused on their particular thing. They can’t step out of clocking their hours and making sure they bill those hours. Lawyers are not business people, They are experts. That is why there is going to be an emerging market whose sole focus is to build a bridge between the two,” explains Pourshafie.
He identified a lot of problems in the way law firms work when he began to work as a lawyer in Adelaide a few years back. He then took up a systemic approach and interviewed some of the important protagonists in the legal industry to get the full picture of the problem: “I realised that the solution we need to be developing can no longer be isolated to one particular protagonist or area of the industry. If you want it to work, we need to understand that regulation needs to change, structures need to change, the way law firms work need to change which impacts the universities, and it goes round and round and round. The purpose of FutureLab.legal is to bridge all the protagonist of the legal industry,” he explains.
Pourshafie calls the current times a “Wild West in the legal industry” since there is so much talk of change and innovation, that no-one knows where the market is going. He therefore believes that the future winners are those to are able to navigate in the chaos and figure out exactly where the market is going: “The Catch-22 for law firms is that they cannot spend time or resources because they don't have any methodology to figure out where things are going. They have to use every second they have to keep making money while the margins are getting tighter. It is going to implode on itself,” he explains.
“The gap that I found, and the way I structured FutureLab.legal was understanding there is a time very soon where people will recognize that what they need is an organisation that can seamlessly attach itself to the firm, understand its problems, diagnose it and work alongside the firm to build the capacity to change. I have tailored my solution on a subscription model that builds capacity within a firm with exercises and workshops, as well as consulting and auditing to understand these things. I realised that education is the answer, and I am sure you had the same thoughts about it which is why you have Legal Tech Weekly. Let us look at changing the mindset, let us look at the skills set and let us expose you to some of the tools that exist on the market now and will exist in the future.”
We hear that over and over again that the market is determined to change. And yet, there is no sense of urgency, so why is it some inevitable?
“That is fascinating. It is the classic response,” responds Pourshafie, “When people start building solutions that can scale beyond jurisdiction which is happening already, that is going to take their market share. The reality is that the change is real. There are real firms popping up every day that run a tech-stack that can deliver something far superior, quicker, cheaper and at a higher scale.”
He then finishes with a story to prove our momentary disillusioned scepticism wrong. “We have local entrepreneurs in Adelaide that built an app called Sweat. They started through Instagram and made a huge group of people follow a 12-week bikini body plans and then built an app on the back of it. Last year, they were valued at 486 million dollars and had 77 million dollar in revenue. The company has been around for 3 years, and it was based on a platform that did not exist 10 years ago. They used Instagram to build a product that drives them 77 million dollar in revenue, and the owners are under 30 years old. Someone like that is going to need legal services. But someone like that may not appreciate walking into a fancy office of a legal firm knowing that the fees he is paying are the overheads he is walking into. Someone like him built his entire fortune on a platform that didn't exist 10 years ago and he didn't require any brick and mortar per se to generate that much revenue. When people are doing business like that and they become clients of legal services, you have to start to ask yourself; why would client expectation not drive change?”