Legal Market Change Isn’t Always Incremental

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Legal market change isn’t always incremental, it’s often variegated and asynchronous. The sector is also prone to the ‘flooding’ of particular niches when the right conditions and drivers come along. The evidence is right in front of us.

Change Happens

It’s often said that the legal market is very slow to change, that it’s some kind of lethargic leviathan, only edging under duress toward micro-improvements. But, there are plenty of examples of rapid change, both in relation to tech and otherwise:

The move to remote – when Covid hit and everyone in the legal world realised they were going to have to conduct multi-million dollar deals and massively important litigation remotely, some understandably feared for the worst. In fact, the change to an entirely digital interchange of legal information was remarkably fast, and for many fairly painless. Online courts expanded like wildfire and transactional teams found – perhaps to their surprise – that an atomised M&A practice without any physical connection and everything taking place digitally, could in fact work. And all of this no doubt has indeed sped up adoption of legal tech tools because any barriers that existed on the basis that ‘we couldn’t possibly use software to do this’ are rather redundant now.

Going global – some readers may not remember this one, but it was massive and life changing for many lawyers at the largest commercial law firms, especially in the UK. From around 1999 to the mid-2000s, roughly over five years or so, a chunk of the largest firms in London went global, merging with peers across the planet, but especially across Europe. E.g. Linklaters, Freshfields, Clifford Chance, Allen & Overy, what was then Lovells, and more. This was not simple because the law firms in, for example, Germany, were very different. German lawyers begin their careers in their late 20s, it’s a Civil law jurisdiction – as is most of the EU – the firms also had a quite different remuneration structure, different Bar rules, and clients were used to paying different fee levels. The culture was not the same at all.

Yet, these UK firms, and also several large US firms, either merged with smaller peers all over Europe, or hired in so many partners that in just a few years they had built the equivalent of a new small law firm in places such as Amsterdam, Paris, Frankfurt, Madrid and Milan. This was an extraordinary period of change for the top end of the commercial legal market. And largely it was successful. There were some teething problems, for sure, but they did it, and they did it very quickly.

And it happened because 1) there was a huge opportunity to globalise, and 2) their globalising clients also wanted this. And of course 3) if they didn’t then they’d need a very good alternative strategy e.g. Slaughter and May’s ‘best friends’ approach, to prevent competitors taking away their clients. That great change has played itself out now, but it’s living proof that the legal market – or part of it – can change significantly and rapidly.

NLP and M&A – In 2016 when Artificial Lawyer started, the number of law firms in London that even had a realistic idea what NLP was (i.e. using ‘AI’ to read documents), could have been counted on one hand. By 2018 more than a dozen large UK firms had figured it out, some even building special teams to handle training needs for M&A due diligence. Now in 2021, those firms in the UK Top 50 who want to use such tech – when it makes economic sense for them to do so – use it. I.e. it’s not universal by any means, or constantly used. But, it’s become just another practical tool in the tech stack of many large commercial law firms. And that was again, relative to this group, a rapid change.

This is where the variegated aspect can be clearly seen. While some firms may use such tools for M&A work whenever it makes sense to do so, across the street may be a firm which doesn’t use these tools at all. In short, adoption appears in ‘patches’ across the market. But, where it is present it is notable.  

The same could be said of globalisation. A two-person law firm in the Shetland Islands might say: ‘Globalisation? What globalisation? Nothing has changed for us.’ Meanwhile, the managing partner of a Magic Circle law firm in London would not even consider for a moment that their business comprised of lawyers in perhaps two dozen or more jurisdictions around the planet, it would be a fact of life. I.e. change across 100% of the market is rare, but that doesn’t mean rapid change is not happening, or has not happened, in a variegated way.

NLP and CLM – As explored several times in Artificial Lawyer, in the last couple of years literally hundreds of millions of dollars have poured into CLM companies, especially those seeking to use NLP for doc analysis to extract key legal and business data for the clients. Now, investment does not automatically mean uptake. But, this group of companies, (let’s say there’s about half a dozen of them in this core group), are all growing. That means, QED: more uptake of this approach. And, relative to the vast history of how inhouse legal teams have operated over the last few decades, this change is also fast.

Again, is it total? Nope. It’s variegated. The changes are also asynchronous, i.e. they are happening out of step with other aspects of the inhouse world. For example, someone might say: ‘If the billable hour is still being accepted by inhouse teams then nothing has really changed. They are still totally stuck.’ But, then how do we explain part of the inhouse world adopting something quite rapidly and that does make a difference? It’s because not all change is connected. We tend to want to think in absolutes, (e.g. ‘the market always changes incrementally’), but reality is not like that. For example, we own a mobile phone with the most modern communication capabilities ever seen, yet perhaps send Christmas cards by post. Different parts of the system are moving at different speeds.

NLP and Legal Research – the use of NLP approaches to improve legal research and provide litigation analytics is a good example of what we can call ‘niche flooding’. Tech that can improve search and provide more relevant results is a no-brainer for a case law platform.

Again it took a relatively short time – when compared to the entire history of case law research – for providers to embrace NLP approaches, integrate them into their platforms, and improve their output. We also saw a range of startups come into the market offering this approach.

This all happened very quickly. It ‘broke the levee’ and ‘flooded’ the legal research niche. Now, many people who use these tools may not notice that there was a big change, no more than we may consider what Google is doing. It ‘just finds stuff that we need’. But a lot has changed under the hood. The key point here is that most large legal research platforms have now invested heavily in NLP approaches, and better products have been the result, which in turn have benefited the legal market – at least those lawyers who can afford to pay for these tools. But, however you look at it, this change was fast, i.e. a notable improvement in about five years.

Conclusion

The legal market rarely changes totally, en masse, although it sometimes can, e.g. going remote. The trend is more toward change that manifests itself in a variegated and asynchronous way, with the occasional flooding of particular niches.

So, does this mean that incremental change doesn’t actually happen? Not entirely. There is incremental change, for sure, just as there is no change at all in certain parts of the market. It’s just that what we really have is not a monolithic entity that is totally homogeneous where change has to be incremental and that moves on an equally absolute basis. What we really have is a complex, multi-layered ecosystem where there are moments of rapid and localised change, and where the end results of that change live cheek by jowl with a lot of other parts of the ecosystem that have not evolved.

Therefore, legal market change isn’t always incremental and change that is rapid and noticeable is indeed there, it’s just not uniform, or all happening all at the same time. For the change agents reading this: focus on your passion and keep pushing, because the market can and will change, just very rarely all at once.

By Richard Tromans, Founder, Artificial Lawyer and Tromans Consulting – December 2021.