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Legal Tech 101

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Legal Tech 101

With legal practice reforms enabling law firms to build their tech stacks and scale their services, coupled with the accelerating rate of innovation, now more than ever, embracing technology is necessary for legal practitioners to stay afloat in the era of digitalization. This 1-hour long CLE will explore how technology is the reshaping of key elements of the law firm business model and what lawyers can do to future-proof their practices and mitigate the problems that most firms and practitioners face today.

Presenters

Valerie Pennacchio
Transaction Advisor
Litera

Transcript

- Welcome to Legal Tech 101: A Primer for Lawyers on Staying Afloat in an Era of Digitalization. In case you are wondering, when I use the term legal tech, I mean technology for lawyers to support their practice and better serve their clients. During the presentation, we'll cover why now, more than ever, it is crucial to embrace technology in your practice. And then we will also explore tech solutions to common challenges in the business and practice of law. I'm your presenter, Valerie Pennacchio. I was a practicing attorney at two Am Law 200 firms for almost a decade. Part of my practice focused on counseling insurance companies in implementing emerging technology into their business practices. At the same time, I was growing increasingly frustrated by the manual and tedious administrative tasks performed just as part of my job, even though the firms that I worked for were heavily resourced. I just knew that there had to be a better way, and technology was the answer. So back in November of 2020, I joined a legal technology company called Litera. Currently, I manage Litera's global practice advisor team. The practice advisors are a group of former practitioners, like myself, who engage in peer-to-peer consultations with prospective and current customers to connect the dots between the practice of law and how Litera's workflow products can help. You'll hear only talk a lot about workflows today. Something in my experience, lawyers spent little time thinking about. I was also guilty of this. Now, before I begin, I wanna make clear that the views expressed in this presentation are mine and mine alone. Also, although I'm still a barred attorney, I'm not your attorney, and nothing in this presentation constitutes legal advice. Lastly, you will hear me talk about investments in legal technology, but this is by no means financial advice. Now let me briefly describe today's agenda. First, I will describe the acceleration of innovation, then we will discuss the possibility of disruption in the legal industry and explore what is meant by the term disruption. We will also cover your professional responsibility to stay abreast of technological advancements. Then I will describe some of the tools lawyers are using today to solve the myriad of problems attendant to the traditional practice and business of law. Lastly, I'll summarize today's presentation with a few key takeaways. The pace of technological advancements are accelerating. Technology that may be a competitive advantage today will soon just be an ordinary business practice. And it is incumbent on lawyers to keep up. Let's take a moment to think about how technology has changed your practice since the beginning of your career. Did you have the benefit of Westlaw or Lexis for legal research? Did you have e-filing, email, or even a fax machine? Now, I'm a bit younger than him, but I have one colleague who described to me how during the early years of his practice, he painstakingly red line documents with a ruler and a red pen. Now, let's think about the past 10 years. We have moved from BlackBerrys as a competitive advantage to everyone having smartphones and being hyperconnected. Speaking of connectivity, we saw the advent of social media being used for the first time to support our networking and marketing initiatives. During this time, we also began to see tech-assisted discovery review and document creation. Now, let's think about the past two years and all the changes to how we approach technology and legal brought about by the pandemic. Most obvious being the use of video conferencing like Zoom and Teams and other collaboration tools like Slack. You may have even participated in a Zoom trial or used transaction management software for the very first time. The truth is technological advances are snowballing and will not be slowing down anytime soon or ever. Jeanne Ross from MIT is quoted as saying, "The thing that's transforming is not the technology, the technology is transforming you." Now, I disagree in part. Technology is transforming, but what is true is that technology will continue to change us, how we connect, our worldview, and our careers. Whether we wanted to or not, the transformation is inevitable. Arguably, the digital revolution is already upon us. So I wanted to share a few industry non-specific statistics to keep in mind as we begin to dive deeper into how technology will transform the legal industry. First, global investment in digital transformation is expected to almost double between 2022 and 2025. Digitally-transformed organizations are expected to contribute to more than half of the GDP by 2023. Lastly, AI technology will be inserted into the processes and products of at least 90% of new enterprise apps by 2025. Supported by increased spending on transformation efforts. The pace of technological progress is accelerating. The law of accelerated returns is an observation, a term first coined in 1999 by futurist Ray Kurzweil. And this law dictates that the pace of technological progress, especially information technology speeds up exponentially over time because there's a common force driving it forward. The common force driving technological progress is computer processing power. Kurzweil's prediction is a corollary to Moore's law, which is an observation made by Intel co-founder in 1965, that computer processing power doubles every two years. Now, let's conceptualize Moore's law in action and assign computer processing power of value of one. By year 31, that value is 32,768. Jump ahead two years later, and the value is doubled to 65,536. Meaning that the equivalent of 31 years of progress was compressed into the following two years between year 31 and year 33. In the 90s, Kurzweil predict that 20,000 years of progress would be crammed into the next 100. Kurzweil uses an analogy to emphasize the power of the law of accelerating returns. He mentions the tale of the inventor of chess and the emperor. Emperor loved the chess game and offered a reward to the inventor. The inventor was aware of exponential growth and asked for one grain of rice in the first square, two in the second, four in the third, and so forth. By the time the grains of rice reached the last square, the rice price exceeded the emperor's wealth. And at this point, trying to stop innovation is like trying to capture rushing water in a colander. And if the past has taught us anything about the impact of technology, it's that it is imperative to keep up to stay afloat. I like to think of this as future-proofing your career. Technological innovation can come with what is referred to as disruption. Disruption is a concept that you may have heard of, and many have misconceptions about its meaning, so let me explain it. What is disruption? Disruption is the radical change to an existing industry or market due to technological innovation. A disruptive product or service helps to create a new market and value and significantly weaken, transform, or destroy an existing product, market category, industry. The term disruption evokes a negative connotation, but it's not a negative thing. It's a plus for the consumer because the result is a service that leverages technology to make the service or product more accessible and consumer-friendly. Also it's important to note that although all disruptions in the tech space can be defined as innovations, not all innovations are disruptive or come from startups set on taking down incumbents. We should also distinguish disruption from another type of innovation, known as sustaining innovation, which is when a company creates a better performing product to sell for higher profits to its best customers. One example of a sustaining innovation would be laptop computers that were sustaining innovation following personal desktop computers. In contrast, disruptive innovation generates new products, markets and values in order to disrupt existing ones. Now, there are many examples of disruption, but none are as dear to my heart as the rise of Netflix and fall of Blockbuster. As a child of the '90s, I spent most Friday nights at Blockbuster, selecting movies for my weekend viewing pleasure. Actually, there was a period of time when my giant crush on John Travolta led me to rent the movie "Grease" from my local Blockbuster every single weekend. I realize now that would've been just more cost-effective to buy the movie to get my Danny Zuko fix. But after renting it for the millionth time, Blockbuster was so gracious and gave me a copy. So I must admit my sorrow and aching nostalgia in telling this tale of its demise. So Blockbuster was an internationally known movie rental chain founded in 1985. Netflix was founded in 1997. CEO Reed Hasting said that after losing his copy of "Apollo 13," that he rented from Blockbuster and having had to pay a hefty late fee of $42, he saw an opportunity in a subscription model and knew that the DVD was on its way out. Netflix initially launched as a DVD subscription service, but shortly after, it shifted gears to keep up with innovation. Hastings credits the success of the company on this flexibility and built the company for the day he knew the internet would enable video streaming. Hastings wanted to give consumers the ability to stream films from the comfort of their homes using a subscription service without the hassle of late fees. Netflix took all the pain points of the old movie rental model and flipped that. There was no more travel to a brick-and-mortar store, no more $42 late fees, unlimited streaming, and high quality content like "Tiger King" in the early days of the pandemic, to more recently, my personal favorite, "Love Is Blind 2." And as a result, Blockbuster closed its doors in 2013. And if you're interested in learning more about this, I must suggest the documentary "The Last Blockbuster" that you can find streaming on none other than Netflix. There is disruption across all industries, in the media, entertainment, retail, and travel industry. Disruption not only is supported by a technological solution, but it also encapsulates a seismic shift in the business model. But as I suggested before, disruption is not a negative thing. It is a net positive for the industry. One reason is that it provides more growth opportunities. When you're on the lookout for disruption, you'll likely spot growth opportunities as well. Even if they don't qualify as true disruptive innovation, these new sales channels markets and products can help you scale your company and drive more revenue. Also disruption allows for higher customer fulfillment. Disruption occurs because it allows for better customer satisfaction, which again, turns to increased revenue. So what about the legal industry? According to the "Harvard Business Review," by definition, law is an information-intensive industry. As computing processor, excuse me. As computing power expands exponentially and legal services are unbundled and modularized, the practice of law is becoming increasingly susceptible to automation. Couple the ability to automate certain workflows in the business and practice of law with an insufficiency of supply against demand, and you have a recipe for disruption in the legal industry. According to a Citibank advisory, demand for legal services was up 6.6% through Q3 of 2021 over the prior year. At the same time, there's a war on talent. Associate moves between US firms were up 51% in 2021 over the average from the previous four years. Another indication of the unmet demand for legal services is the fact that a study cited by the American Bar Association in 2016 found that as much as 80% of legal needs goes unmet. Also for the vast majority of firms, the business model is reliant on man hours, billable hours, which are finite. There just are only so many hours in the day. The 2021 Cleo Legal Trends Report found that in 2020, the average lawyer billed just 2.5 hours of an eight-hour day and was not paid for 11% of the hours worked and billed. This is not because lawyers are lazy or have poor work ethic. In fact, I will say, in my experience, the opposite is true. Given the amount of effort that goes into the ability to practice LSAT, law school, then seven years of grueling education, followed by the bar exam. The practice of law is replete with high achievers. But why does the average lawyer only billed 2.5 hours of an eight-hour workday? It's because billing attorneys generally wear many hats. In addition to the billable work that they have to do, lawyers are participating in other activities necessary to keep their practices running, including office management and HR, business development and client relations, invoicing, and business strategy, just to name a few. So given the need for time-saving automation, allowing lawyers to take on more work and get paid for the work performed, the question remains, why have law firms historically been late adopters of technology? And so here are a few reasons. First, the billable hour revenue model is misaligned with time-saving automation. This issue is really one of perception. In actuality, and as I will show in greater detail later on in this presentation, the tasks that can be automated by technology are generally administrative and not recoverable in the first place. Or even if they are recoverable today, tasks that lawyers perform that can be automated will likely not be recoverable in the future. There is a concern by some that technology will devalue the work you perform or render your job obsolete. That concern is just not unique to legal. I wanted to rethink the notion that people are resistant to change. People accept change when they accept that the change will benefit them. For example, if you win the lottery tomorrow, that would bring about a lot of change in our lives and some of it overnight. These changes, we would readily accept because we'd appreciate that change benefits us. But changes in the workplace are a bit more tricky. Not the result of a change aversion, but rather a loss aversion. So I think it's important to approach this topic with empathy. For those of us who work full time, we spend the majority of our waking hours working. For me, a significant part of my identity was shaped by who I was at work and whether I was good at my job. Feared losses could include job loss, being devalued, fearing of failure, just maybe they're not using the tech the right way. And I also, I confronted this issue many times in the insured tech work that I did. For example, smart contracts are insurance policies written code on a blockchain where the claim would be automatically paid upon the loss. And generally, it was an easily verifiable loss, such as flight delay insurance or drought insurance. Now, imagine explaining smart contracts to a room full of claims handlers. You could imagine that did not initially go over well. But after a bit of consolation and empathy, they were able to understand that by reducing the time spent on these simple claims, they would be able to focus their efforts on the more complex claims and in turn, provide more value to the company. The key to change management is effectively demonstrating that the change, in our case, the new technology, will be beneficial. Another reason that law firms are late adopters of technology is a lack of budget. Given its reliance on the billable hour, legal services are difficult to scale without increasing headcount. And currently, most state professional responsibility laws do not permit non-lawyer investment in law firms. So it is very difficult to raise the capital needed to innovate. Lastly, lawyers have developed a reputation as being Luddites and having a conservative or stayed work culture. I'll venture to say that this is not because lawyers do not wanna succeed, but rather because lawyers, by their very nature, are skeptical. Dr. Larry Richard is recognized as a leading expert on the psychology of lawyer behavior. He's the principal consultant for LawyerBrain, a management consulting firm that specializes in improving lawyer performance through personality science. Over the past 30 years, Dr. Richard extracted personality information from the Caliper Profile, and the data consistently revealed that people who choose laws profession tend to have certain personality traits that are highly atypical. And one such trait is a high level of skepticism. Now, I had the privilege of interviewing Dr. Richard about over a year ago, and he explained to me that skepticism is high for lawyers because it is the single most important skill that you learn in law school. So when you went to law school, you learned to think like a lawyer. What does think like a lawyer means? It learns how to spot problems, learn how to look out for what's wrong and what could go wrong, learn how to be vigilant about people's motives and don't take anything for granted. It's that type of skeptical thinking that's essential. The same skepticism that makes lawyers great at their job is arguably also the reason why lawyers are late adopters of technology. But to stay competitive, legal teams will have to be better able to adapt to new technology 'cause we are seeing hypergrowth in legal tech. 2021 saw record high investment in legal technology. According to Crunchbase, legal tech companies saw more than $1 billion US in venture capital investments in 2021. This smashed the $510 million invested in 2020. The previous all-time high was 989 million in 2019. The Thomson Reuters Peer Index Report found that a 3.3% increase in tech spending by firms, and experts at Gartner expect legal departments to increase their spending on legal technology threefold by 2025. In tandem with increased investment in legal technology, we are also beginning to see innovation-friendly reforms to state professional responsibility rules. In August of 2020, the Utah Supreme Court unanimously approved a slate of reforms that allow for non-lawyer ownership and investment in law firms and fee-sharing with non-lawyers and permits legal service providers to try new ways of serving clients during a two-year pilot period. In May of 2021, that period was extended to August of 2027. Non-traditional legal services entities, generally referred to as alternative business services, ABSs, will have the opportunity to operate in a regulatory sandbox, the state supreme court established. The court also created an Office of Legal Services Innovation that will evaluate and recommend sandbox applicants to the court, as well as oversee the applicants that are approved for entry into the sandbox. In March of 2021, a Utah-based registered agent company said it was launching the first entirely non-lawyer-owned law firm in the United States, made possible by the state's pilot sandbox. According to a statement by the company, its law on call service charges clients $9 a month for unlimited phone access to licensed lawyers with legal work starting at $100 per hour and no retainer. Arizona has also passed an amendment to rule 5.4 and permitted non attorneys to have an economic interest in law firms and non-lawyer fee sharing. This is key to allowing firms to raise the capital needed to innovate and adapt. Before Utah and Arizona, only the District of Columbia was the only US jurisdiction to explicitly allow for non-lawyer ownership and investment in a law firm, provided that certain requirements were met under the DC Bar Rules of Professional Conduct. However, in practice, very few ABSs had organized in DC. At least two potential issues tempered their use. One, many DC lawyers are barred in other jurisdictions and may be concerned that the formation of our participation in ABS in DC will constitute a violation of the Rules of Professional Conduct in their other jurisdiction. And two, the prohibition in most US jurisdictions, other than DC, limits the ability of an ABS to expand beyond DC's boundaries. That may change as other states permit non-lawyer investment in ownership. Florida also announced plans to launch a three-year laboratory program modeled after Utah's regulatory sandbox. This program would allow non-lawyers to hold non-controlling equity interest in law firms, but would ban passive ownership from outside third parties. Several other states, including New York, North Carolina, Connecticut, California, and Illinois are at different stages of considering changes to rules prohibiting non-lawyer ownership and investment in law firms. We should also take a minute to note that non-lawyer investment and ownership in firms has been permitted in the UK since enactment of the Legal Services Act of 2007 and since 2001 in Australia. And looking at how our friends overseas fared, it's been observed that as a result of the reform, the legal profession was jumpstarted, not hijacked. Clients are benefiting from market competition due to new entrants and incumbent firms are flexing their innovative muscle to keep up. Investors and owners of law firms who are not lawyers will not put up with the inefficiencies that are just parts of the law business today. Also, law firms will no longer be limited to the difficult to scale billable hour model, have more capital and more motivation to invest in technology. And this will may reframe the law firm business structure. Reforms like these two legal practice rules permitting non-lawyer investment in an ownership of law firms are placing new entrants in the legal services industry, including the Big Four accounting firms and alternative service providers and contributing to the rise of consumer legal services apps. The Big Four are making a play for a larger piece of the market traditionally dominated by law firms. For example, in 2019, EY acquired Thomson Reuters Pangea3 Legal Managed Services business, part of the Big Four's firm plan to ramp up its legal consulting services. The EY's legal function consulting team is focused on helping clients improve how they operate their legal function. In July of 2020, Deloitte unveiled a new US legal business services practice, which will work with in-house legal offices to streamline functions that track client contracts, invoices, e-discovery, and other functions. Many lawyers perceive the Big Four only as tax and auditory services. But according to a 2019 Thomson Reuters report, 20% of large legal companies stated that they competed with such a firm in the last year, whereas 23% stated that they lost clients to them. In addition to the expansion of the Big Four into legal services, we're seeing the emergence of another new entrant into this space referred to as the alternative legal service provider, the ALSPs. In the most reductive terms, ALSPs are businesses that offer services for task traditionally handled by law firms. ALSPs are diverse in the business model and function. One example of an ALSP function is contract lifecycle management, CLM. Contract lifecycle management is the process by which organizations create, execute, manage, and analyze their contracts. ALSPs that provide CLM services support areas such as contract reviews, drafting administration, and template management. There are also ALSPs that support e-discovery and services provided include expert consulting and data identification, data collection, early case management, high-speed data processing, automated and native redactions, secured data hosting, document production, and manage review. A third category of ALSPs are those that specialize in flexible legal staffing. As in-house teams strive to become leaner and more cost-effective by working closely to capacity, they require extra support to manage some of the peaks in their workload and cover vacancies. ALSPs that focus on staffing connect legal departments and law firms with well qualified experience and often self-employed lawyers who undertake contract work. Recognizing the increasing proliferation of ALSPs, in 2020, Chambers released its first rankings report of ALSPs. The last new entrant in the legal marketplace that I wanted to discuss are consumer legal service apps, such as LegalZoom and Rocket Lawyer. These applications provide do-it-yourself legal documents and some offer guidance on filling them out. In 2021, LegalZoom received its ABS license from Arizona, and Rocket Lawyer is taking part of the Utah sandbox and is applied for an ABS license in Arizona. And whether it's application was granted is unknown at the time of this recording. In light of reform of legal practice rules permitting non-lawyer investment in and ownership of law firms, coupled with technological advances, we are likely to see some changes in the business model for legal service providers. Alternative business structures enable law firms to join forces with semi-external organizations, take advantage of new technology and improve its service to clients in both efficiency and variety. As discussed, the ABS is a firm that has non-lawyers in its ownership and management structure. This allows the firm to involve key people who bring additional experience and skills beyond legal advice or advocacy, such as accounting, auditing, or digital legal solutions. Comparing this to the old law firm structure, which is relying on the work of junior lawyers and billable hours, which are finite. There are many different ways to structure the ABS. One business structure relies heavily on the work of paraprofessionals and tech solutions and then outsources the work of the law partner. And now, firms are increasingly committing to innovation. The Altman Weil Law Firms in Transition 2020 Survey asked respondents about efforts to make innovation part of firm's strategy and efforts to increase efficiency. They asked respondents, "Has your law firm done any of the following to make innovation and integral part of the firm's strategy? And select all that applied." The top four answers were include innovation initiatives in firm's strategic plan. That was 61.8% of respondents. Create special projects to test innovative ideas or methods. That was 60.3% of respondents. Budget time and/or funds for innovative projects experiments. That was 53.4%. And lastly, include innovation initiative and practice group plans. And that was 47.3% of respondents. The survey also asked, is your firm doing any of the following to increase efficiency of legal service delivery? The top answers were using technology to replace human resources. That was 53.6% of respondents. Rewarding efficiency and profitability and compensation decisions. That was 45.8%. Ongoing project management training and support, 31.3%. And lastly, formal knowledge management program. That was 22.3%. Advancing key improvement in innovation efforts will likely require a different set of skills or perspectives than those typically groomed in a traditional legal education. The legal ops role was once a novel addition found almost exclusively in the tech or financial sectors. But now has reached mainstream status. In 2020, Gartner conducted a survey of legal departments across all industries, and 58% of survey departments reported filling a legal ops role. That was up from 34% in 2018. Hiring a legal ops continues to increase. The Association of Corporate Counsel's 2021 survey of chief legal officers found that 61% of legal departments reported that they employed at least one legal operations professional, and 38% reported that their department's most important strategic initiative fell within the area of legal operations. And that was almost three times the percentage who selected any other area. In tandem with the rise in legal ops, and not coincidental, is the rise of KM in law firms. As successful KM projects help their firms solve one or both of the top problems they face. Operational efficiency and pricing pressures. According to the 2015 Altman Weil law firm report, 68% firms with 250-plus lawyers reported to have knowledge management resources to improve efficiency. Now, let's jump ahead a few years later to 2020, and ILTA's 2020 Knowledge Management Survey reported that 78% of law firm respondents maintained a dedicated KM department. 50% responded that KM played a major role in their firm's innovation strategy. According to the 2021 Thomson Reuters Peer Monitor Index, unlike marketing and business development spend, which was down 44.6%, knowledge management spending increased 5% in Q2 of 2021, compared to the same time the prior year. Lastly, anecdotal evidence suggests that lawyers and firms with KM tend to have higher realization and profitability. I wanna make clear that when we think about applying technology to the practice of law, it's not about overhauling the entire profession, but there will be things that can and should be streamlined with technology. The point is to create an overall better client experience, not to take away interaction with the client. And while technology improves the client experience, and that alone is reason enough to embrace it, lawyers also have an ethical obligation to stay abreast of technology advancement and arguably an obligation to incorporate these advancements into their business operations. Acknowledging the importance of keeping up with technological advancement, in 2012, the ABA Model Rules were revised to include a duty of tech competence. So the Model Rule Professional Conduct Rule 1.1, comment eight says, to maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology. Now, I realize that this comment does not require the lawyer to use the new technology. However, let's look at Model Rule Professional Conduct Rule 1.5a, which says that a lawyer shall not make an agreement for charge or collect an unreasonable fee or an unreasonable amount for expenses. So where technology can significantly reduce the time spent on legal work, arguably time billed to manually perform this work is unreasonable and against your professional responsibility rules. Since 2012, 40 states have adopted the duty of technology competence into their rules of professional responsibility. In addition to this two states, Florida and North Carolina, require tech training as part of its CLE requirements. Also, to help future lawyers entering the tech enhanced marketplace, law schools are adding legal tech coursework to its curriculum. A few examples include Suffolk University Law School, which has a Legal Technology & Innovation certificate program, Vanderbilt Law School has a legal project management course, and Penn State Law has a Legal-Tech Virtual Lab. So the question remains, what can you do as a lawyer to keep up and future-proof your career? Strive to be the T-shaped lawyer. In short, a T-shaped lawyer has deep legal expertise, represented by the vertical bar of the T, but also a solid grounding in another subject, presented by the horizontal bar of the T. This other field of knowledge could range from technology, business, and analytics, to human resources, politics, or more. The requirement of extra knowledge comes as the clients of today are demanding and expecting more. They need lawyers who can use technology to give them the most efficient and cost-effective service possible. The client wants someone who knows the world of business or the industry in which they, themselves, operate or require legal assistance. And while it's not necessary to become an expert coder, hacker, or Bitcoin master, lawyers of the future will need to understand how these industries align with their client's interests. The T-shaped lawyer must also have a strong interpersonal and project management skills. This is because the legal profession is seeing a move towards horizontally integrated firms. Now, given what we know about the impending rise of legal tech, let's shift our focus to the problems many lawyers face today that can be addressed by technology. And I really hope to answer a question that you may be asking yourself, what's in it for me? I really appreciate the quote from Albert Einstein. "If I had an hour to solve a problem, I'd spend 55 minutes thinking about the problem and five minutes thinking about solutions." The thing about technology is no one is going to adopt technology for technology's sake. As I mentioned earlier, a cornerstone of change management is that the change must be perceived as beneficial. For technology to be beneficial, it must solve a problem. I'm about to share information about solutions that my company sells. This, however, is not a sales pitch. I don't know your workflow, your current tech stack, and the problems that you face in your practice. With that in mind, I cannot possibly know if any of these solutions are right for you. The purpose of me sharing the solutions and the problems that they help solve is to get you thinking about the challenges that you face, whether they are commonplace or not, and to begin to consider whether there is a solution out there to help you. For me, I, at times, had a hard time identifying problems in my practice, mostly because I felt that some of the inefficiencies or gaps in my work were just a part of doing business. On occasion, it took me considering various solutions to determine whether the problems that they solved were problems that I personally faced. People work across firms wearing many different hats, and technology can be leveraged through the client matter life cycle, from the business to the practice of law. Today, I'm going to focus on three use cases for legal technology. Drafting, workflow, and firm intelligence. As I mentioned before, this is to get you thinking about your own practice and your own needs. Let's first think about the challenges attendant to the document drafting process. Legal documents must be carefully drafted to protect the client's interests, clearly define their obligations, and defend their positions. With legal documents, the stakes are always high, and that makes the challenges of drafting particularly daunting. Interestingly, one of the first areas to be transformed by technology, document drafting is still one of the least advanced. After the initial leap to word processing, drafting processes in many legal practices have stagnated. Many law offices seem to believe that standard word processing technology is just sufficient for their needs. But is it? Legal documents are longer, more complex, frankly, they're just more important than other documents from court filing, to memoranda, to contracts, and correspondence, documents are the backbone of legal practice. And that's why lawyers continue to spend a substantial portion of their time creating, polishing, and reviewing their documents. An incorrect client name, date, or dollar value can irredeemably damage a contractual relationship. A mistake in cross-referencing or citation can cause a court to disregard a legal filing. Even when these errors don't have catastrophic consequences, they're tremendously embarrassing. Legal professionals need a way to ensure that their documents are absolutely perfect. Lists must be correctly numbered, cross references and citations must be flawless, court filing requirements must be completely satisfied, and every document that leaves the office should have a consistent look and style that inspires trust and respect. And this doesn't even address getting started. The blank pages can be extremely daunting. Now, we all know that we usually do not start with a blank page as lawyers. Historically, lawyers created efficiency through the use of precedent documents to avoid reinventing the wheel. However, reusing documents poses two distinct challenges. First lawyers must be able to find the best, most current standard documents to begin with. Second, reusing content creates risks of introducing incorrect details from those exemplars. This resonates with me. Time and time again, one particular partner I worked with noted typos in my work product and repeatedly suggested that I print my work and review it on printed paper. Given the number of years I had been practicing at the time, this was definitely not the type of feedback I wanted to receive. And every time he noted a typo, I just wanted to crawl under rock. Of course, I listened to that partner and printed my work product and painstakingly reviewed the hard copy. And then after typing my written edits into Word, I had my legal admin perform a second level review. And even with this process, typos would slip through. Many times, these typos were unique to legal documents. Incorrect paragraph references and contracts, misciting legal precedent, or the most cringeworthy, not properly scrubbing the details that were not applicable to the case such as the wrong client name, address, or valuation. But I shouldn't feel too bad. For better, for worse, I guess I'm in good company in my embarrassment, as even the US Supreme Court justices are not immune to typos. For example, Justice Breyer, in the first sentence in a 2018 antitrust case dissent misspelled laissez-faire. And now this is especially embarrassing, given that justice Brier is French-speaking. Similarly, Justice Clarence Thomas, in a 2018 concurrence, misspelled palette as in painter's palette. The palate that Justice Thomas wrote pertains to the palate on the roof of your mouth. Now, we've come a long way from bare bones word processing capabilities. The materials for this course provide examples of tools that Litera offers to assist with document creation, editing, collaboration, and publication, such as Litera Create, Check, DocXtools, Compare, Metadact, and pdfDocs to name a few. For example, Litera Check uses natural language processing to automatically surface and flag issues in realtime to help ensure the validity, accuracy, consistency, and clarity of all document terms at each stage of the document creation process. Check allows legal teams to assess their document's legal health with a single click, instantly seeing items that need attention. Users can then sort issues by priority and category so that they can fix the most urgent problems first, such as numbering and formatting errors that's caused by copying and pasting, reusing previous documents, or errors that arise when working with multiple collaborators. Check also has integrations with Lexis Advance, Casetext, and Fastcase, ensuring that all citations, whether in their full or short forms are correct in court-approved formats and they're up-to-date. Litera Desktop consolidates Litera's drafting solutions into a single word ribbon and supports three aspects of the drafting workflow, Create, Check, and Collaborate. Create first drafts with our template and document assembly solution. You can find and use your best clauses faster with our clause library and style any document from any source consistently and quickly. Check, as I mentioned before, allows lawyers to repair and stabilize documents faster, proofread more effectively by reviewing your entire document for potential issues in a consolidated dashboard. Lastly, Litera's Collaborate tools allow lawyers to instantly compare complex documents, protect against metadata exposure over email, and share files. Although drafting is a very important thing that lawyers do, it's only a part of their workflow. Lawyers generally have a workflow which may deviate in some respects for matter to matter, but little time is spent in putting any of that workflow into words. And I was also guilty of this, perhaps because the practice is fast-paced and our time is spent in the weeds. But today, I'm gonna challenge you to take a 30,000-foot view of your matter life cycle. In doing so, you will better be able to find areas where technology can better support some of the tasks required to service your client. As an example, let's think of the traditional deal workflow, and we'll start with due diligence. There are many risks associated with the traditional due diligence process. When it comes to due diligence, resources are often limited, so lawyers are focusing on where they deem to be high impact risks and reviewing the largest contracts where they think there might be the most important commercial terms. They are reviewing what they deem to be material. But the result of this traditional approach is that lawyers are only reviewing a percentage of the contracts and documents. They are only reviewing the contracts and documents that fit that predetermined materiality criteria. But even relatively small and insignificant contracts might not be reviewed under traditional materiality standards. And they can include terms such as non-competes, most favored nation clauses, exclusivity, or even affiliates provisions that can potentially pose significant risks to a transaction or to the post-deal success of the parties. Now let's turn to the closing process. With the traditional deal closing workflow, there are many steps that consume a lot of low value administrative time, which is difficult to bill for. This process also requires additional systems and steps such as saving or pulling documents from the DMS, circulating documents via email, searching emails for the latest version of a document, and the phone calls and meetings required to keep everyone up-to-date on the status of the deal's progress. So let's first think about the deal checklist. A deal checklist outlines all the deliverables that are required to close a deal. Typically, checklists are created in Word or Excel. The problem with this is that as the transaction progresses, a checklist will constantly need to be updated and recirculated to all the parties. And this leads to repeated searches through emails to make sure that you have the most up-to-date copy and too much time spent preparing for status calls. And that time, unfortunately, is usually written off. Then when we think about negotiation of documents, which requires multiple emails, red lines, and little peace of mind that, again, you're working on the most recent version, so then, you're led to conduct multiple searches through the email and DMS. And all of these processes bleed together, and throughout, clients lack the transparency into the deal status and require time-intensive status communications. Now, let's consider the signature process. Many lawyers use Word to manually create and add signature blocks to documents. This is particularly time-consuming for large transactions with many signers, as it means copying, pasting, and editing each signature block individually across all transaction documents. Things are especially complicated when there are last minute changes as each change needs to be manually incorporated into each and every document. Then signature packets are created. Creating signature packs is typically a laborious process that involves using first, a PDF editor to separate individual signature pages and create a single PDF document of all the signature pages relating to each signer. Sometimes, this is then sent to signers alongside the documents, to which they relate. If they are sent for e-signatures such as through DocuSign or OneSpan, then each line that the signer must sign in the packet will need to be manually tagged. After they are sent, each signature page must be tracked to ensure that every page is received. Once a packet is returned, the pages must be manually matched back to the host document, again, using the PDF editor to create a final executed copy. This is a long-winded task with a high risk of error. Lastly, closing books need to be created. Sometimes, more than one, each containing different documents. This requires collating the documents, creating a table of contents and then inserting the necessary hyperlinks and bookmarks to make it easy for the client to navigate. This, on average, takes six to 10 hours, and it's not uncommon for closing books to be provided after the final bill, and, therefore, none of that time is recoverable. I once actually had a partner confide in me that he did not even provide a closing book unless until the client asked three times because it entailed so much non-billable time. Now, there are solutions that can help you confront the risk posed by the manual workflow. At Litera, our workflow suite currently includes Transact, Kira, and Litigate. One solution to the due diligence risks that I just described earlier is incorporating artificial intelligence into the review process. Before going into more detail, I think it's important to clarify one big misconception about AI. AI is not meant to replace the work of humans. The truth is machine plus human is better than machine or human alone. Too many times, we've been met with the concern that AI devalues the work of humans. Rather, AI is a resource that makes the humans, lawyers, better at their jobs by mitigating risks of overlooking key contract terms and creating efficiencies that never existed before. Litera offers an AI-assisted contractor review platform called Kira. So what does Kira do? Kira automatically highlights and extracts contract provisions that are important to you and helps you organize your data for analysis. Kira was trained by our in-house team of legal knowledge engineers, we call them LKE, to identify and extract over 1,400 contract provisions, what we refer to as smart fields, which include all the provisions commonly reviewed during the course of due diligence. Let me just distinguish a smart field from a simple keyword search. For example, say you wanted to review a contract's change of control provision. That provision may contain both the words change and control or just the word control, or just the word change. And in that case, it may be picked up in a keyword search. But many times, a change of control provision won't include the words change nor control. And in that case, a mere keyword search would just be insufficient. Regardless if the change of control provision contains the words change or control, Kira would be able to identify and extract that provision because it was taught to identify and extract that provision by our LKE team using publicly available example contracts. If, however, the project requires the review of additional or unusual information, firms can also train Kira to identify their desired clause. With tools like Kira, lawyers now have the ability to conduct much broader review on bigger sets of documents. The approach, compared to the traditional approach, better enables firms to do more for their clients and engage in more important conversations about risk tolerances and costs. Another growing space in legal tech is transaction management software that streamlines the deal closing process. At Litera, we have a transaction management solution called Transact. Transact provides a collaborative customizable checklist that gives you the flexibility to manage deals more efficiently and securely. These checklists, which can be customized and saved as templates for future deals, provide this real time view of all documents, versions, and deliverables throughout each stage of the deal process and allows internal and external parties such as counterparties and the client to collaborate directly in the platform. You can also append all the versions of each item into this interactive checklist for ease of review and to ensure that you're working on the most current version. Because it is important for transaction management solution to work with other tools in your tech stack, Transact integrates with both iManage and NetDocs. Transact also automates many of the tasks required to collect and track signatures and execute final documents. This eliminates time typically spent creating, sending, and tracking signature pages and packets to provide a seamless signing experience that can be completed anywhere, anytime, on any device. Our solution also integrates with e-signature providers DocuSign and OneSpan. Finally, transact lets users create closing books in minutes, not days or weeks. The table of content is automatically generated and can be easily edited to create closing books in the preferred format for each transaction. So the traditional deal workflow entails approximately 49 discrete tasks, irrespective of the number of items on your checklist, and many of these tasks need to be repeated many, many times. Transact can reduce that number of tasks to just 17. Now, so far, during this CLE program, I've addressed many problems unique to the practice of law, but law firms also face challenges on the business side, namely firm intelligence challenges that technology can address. Business of law challenges include information that is in multiple systems. We call these silos, hard to capture information from lawyers, poor data quality, each practice sector and geography having unique needs, requirements that change over time, and limited IT resources. As a workflow practice advisor, I engage in many conversations about the practice of law and the challenges that I faced as a lawyer that could be solved by technology in practice. But I also face challenges in my business development efforts. For example, when I was practicing, I was tasked with building out a new, specialized insurtechs tech practice group. And part of that was identifying my colleagues who could support this group. That first started with a mass firm-wide part in the interruption email, asking which attorneys had experienced in the areas that were applicable to this new practice group. Next, we took this information and painstakingly inserted it into a spreadsheet which had to be constantly updated via a repeat of the whole process. This was drudgery, and I just knew that there had to be a better way. The key challenge in order to deliver so many critical functions, most firms have to overcome the problem of siloed data and disparate data. Law firms run on data. However, it is in separate applications and locations, each built for their own purpose. Now, I realize each application may be great for what it's designed for, but when you have to answer questions that require looking for information across these applications, it's difficult and time-consuming. Traditionally, none of these sources were connected, and that makes data very hard to find. If data is the new oil that's because it's both valuable, but also because it's hard to extract and refine. There are now legal tech solutions that support the business side of law. Examples of these solutions and what we have at Litera are Foundation, Clocktimizer concept, and Objective Manager. Let's take a deeper dive into Foundation. Foundation centralizes and transforms data, so users can leverage it to surface the firm's intelligence across matters, people, and clients. Foundation focuses on knowledge, experience, and strategic relationship management for law firms. Foundation allows firms to use its data to better sell its capabilities more fully and to better understand its strengths as well as to find areas where they may need to look for additional talent to grow firm services. In addition, foundation provides new insight and transparency into the firm's clients. Foundation passively collects data from systems like time and billing, docketing and CRM, combining, mapping, and transforming it to provide a clean, normalized single source of truth. Beyond technology created specifically for the legal industry like I just described, non-industry specific tools will also continue to shape the practice of law like the Microsoft Office Suite has done for many years. For example, it will continue to be crucial for legal professionals to embrace how technology can make the new distributed workforce model work more seamlessly. In the wake of the pandemic, many firms just took a get it done approach to working remotely and collaboration, but now, firms have this opportunity to revisit those decisions and integrate tools that best support their needs in this brave new normal. The 2022 Everywhere Workplace Report from Ivanti, Ivanti surveyed 4,510 workers and 1,609 IT professionals across the United States, UK, Germany, France, Netherlands, Belgium, Spain, Sweden, and Australia, and nearly nine out of 10 survey respondents do not wanna work from the office full time. Nearly half would be happy to never step foot in an office again, while 42% indicated that they would prefer a hybrid model that splits time between home and the office. A research paper from the Ronzetti Initiative for the Study of Labor Markets predicts that working from home will stick after the pandemic ends, with 20% of full work days to be performed remotely long term versus the 5% previously. As a result, firms will continue their reliance on video conferencing and collaboration tools such as Teams, Slack, Zoom that are non-industry-specific. Rather than single point solutions, I encourage you to think about your tech stack as an ecosystem because your solutions will need to work with each other. Lawyers routinely need to switch between different platforms and systems, some of which don't communicate with each other. A key tool in one application may not exist in another. And the constant juggling, not only disrupts workflows and impacts efficiency, but also introduces abundant opportunities for human error. An API, application programming interface, is a set of functions that allow applications to access data and interact with external software components, operating systems, or microservices. At a very simple level, an API consists of code that allows two separate technology systems to communicate and interact with one another. Especially at the enterprise level, law firms are increasingly turning to APIs to get the most out of their tech stack. Many of our solutions at Litera have open APIs. One such example is Kira, the contract review platform that I mentioned before. For example, in addition to our data room integrations, you can use Kira's open API to connect Kira directly to your specific document source. So now, we're nearing the conclusion of our program. Here are some key takeaways. One, the pace of technological advancement is accelerating. Two, as disruption has impacted nearly every industry, the legal services industry will be drastically changed by technology. Three, considering growing investment in legal technology, coupled with innovation-friendly reforms to the legal practice rules that are placing new entrants in the legal marketplace, and giving incumbent firms capital to build their tech stacks, the changes in legal may be just over the horizon. Four, for lawyers to stay afloat and comply with their duties under the rules of professional responsibility, lawyers are required to stay abreast of technological advancement. Five, in thinking about how technology can support the business and practice of law, first, give consideration to the problems you face, and then to solutions. Lastly, I wanted to leave you with just a little food for thought. In his book, "Crossing the Chasm," Geoffrey Moore elaborates the marketing techniques to successfully target mainstream consumers. "Crossing the Chasm" is a concept for visualizing the adoption of a new technology over time, starting with a small handful of innovators, the tech enthusiasts, and early adopters thought of as the visionaries, which make up about 16% of the population and collectively referred to as the early market. Then moving through the massive mid-market, eventually into the hands of even the most change-resistant consumers. The chasm is the gap between early adopter and early majority group. This gap represents the chasm that the technology has to cross. It signifies the credibility gap that arises from using the innovators and early adopters as a reference base for the remainder of the mainstream market. Now, I want you to think about where you fall on this curve. And I realize depending on the technology tool, you may fall within different groups for different tools, but invariably, the innovators and early adopters will experience some competitive advantage before a tool becomes commonplace within the market. Now, think about the problems you face and your firm face and how that can be solved by technology. And when you consider where to begin, also consider where you will gain the most value by being ahead of the curve. Thank you for your time today.
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1h 3m 51s

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