Remember when we applied basic business efficiency principles to legal services and outsourcing was the next big thing? Law firms dragged their feet and many are still trying to catch that wave twenty years on. The tide hasn’t changed, but the wave has gotten bigger, faster and stronger. A bit like Kodak in the race to digital photography, law firms cling on to the comforting old ways of the billable hour, worried innovation will cannibalise their source of revenues. Or worse, they rush to create ‘labs’ and jump into bed with start-ups in a desperate bid to remain relevant. Some argue KodakCoin is precisely that-an ill-advised step into crypto-currencies to revive a dead business. Instead, alternative providers have taken a multifaceted approach to innovation: still applying the FTE billable hour model while slowly shifting to the faster, better quality, fixed-fee model enabled by Artificial Intelligence.

Disruption is painful

While we think of the Kodak parable from a failure and fear perspective, we should celebrate what it gave us: the digital camera and a completely new, richer, more efficient way of recording the best moments in our lives. Disruption is by definition painful, as it breaks away from the known path, but it does deliver incredible positive change. Over the last twenty years alternative providers have contributed to create the prefect environment for an evolutionary split in legal services. The ‘old’ traditional legal ways continue to exist, but what we used to call ‘outsourcing’ is separating to create its own branch, offering efficient, high volume, high quality, legal services at everyone’s fingertips. Soon, choosing between traditional law or alternative providers won’t be an option and objections to technology will be risible and unrealistic. We will stop talking about innovation through automation, as it will pervade every aspect of law and beyond.

Outsourcing needs updating

The old outsourcing efficiency mantra will also need updating: technology, with Artificial Intelligence leading the charge, continues to lower the barriers to cheaper, more accurate ways of delivering the segments of the legal process that are traditionally delivered by external providers, such as document review, contract discovery and due diligence. Wage arbitrage is soon becoming an obsolete driver for business, so clever providers are finding different ways of bringing value to their clients. Technology is one of the answers, but not the only one and certainly not the core commodity, but rather an enabler for better solutions. We are quickly re-writing the definition, scope and impact of alternative legal services before they become the next Kodak. 

AI is future-proofing

It’s short-sighted to think all we must do to be future-proof is to acquire some Artificial Intelligence capability. It helps, but it will only get alternative providers so far. Legal departments need help figuring out how to go through this unprecedented moment of digital transformation. This means not just equipping them with automated contract discovery, but educating them on the potential benefits of a more holistic approach. Some enlightened GCs, like Kevin Lester of Anglo American, are already thinking in these terms and achieving phenomenal results that break through the barrier of the legal department and improve the performance of the whole organisation.

Smart players

Technology disrupts (it’s its prerogative) and it does so indiscriminately. Who’s to say legal providers need only speak to GCs? If the positive impact that starts from looking at processes in the legal department applies to the whole organisation, then why not take the conversation to the Board, the CEO and the C-suite in general. The alternative legal services market might as well morph into business consultancy with Augmented Intelligence. It’s certainly what smart players are doing: combining the legal expertise acquired over the years with a bottom line approach and access to the latest technology. Automation will be the stepping stone to a more predictive approach, where the opportunities to create value are limitless. 

Look at the bigger picture

Blockchain, GDPR, Brexit– it’s almost irrelevant which puzzle you are trying to solve, provided that you take a step back and look at the bigger picture, gather the people that know which pieces to use and how to put them together quickly and painlessly. In the world of the billable hour it is sometimes difficult to move the conversation towards meaningful innovation, but as younger, tech-savvy lawyers are entering the industry, the shift is around the corner. We just need to make sure that when it happens it’s the right type of Kodak moment, the rare, once-in-a-lifetime memory to frame for posterity.

Wayne Ramsay is Chief Strategy Officer at alternative legal and technology provider Exigent. With a career spanning innovation roles at Goldman Sachs, Citibank and Tony Blair’s Cabinet Office, Ramsay leads Exigent's transformational projects aimed at improving business performance through legal and financial data.