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10 lessons about technology that law firms must learn: Woldow

In the second of a series of reports on the recent World Masters of Law Firm Management conference in Sydney, ALMJ reports on the key messages for law firm leaders from acclaimed American consultant Pam Woldow.

Pam Woldow has little doubt there is an increasing gulf between lawyers at traditional law firms and their general counsel clients. They have very different pressures and goals. While some firms are starting to change the way they do their work and deliver their services, many lawyers in firms still fall into the camp of being technology resisters. Woldow says that will not fly with GCs, who want to use the latest technology advances to create greater operational efficiencies and cut costs. Law firms, she contends, absolutely must become technology adopters.

“Technology will express itself in both opportunities and pressures,” says Woldow, one of the keynote presenters at the World Masters conference, whose session was entitled Through a Glass Darkly: Legal Technology and the Dynamics of Change. “If there is a capability it will come out, no matter if there are resisters or not – the technology will continue to advance.”

Despite a raft of innovative new IT, cloud and software options for law firms, Woldow says the truth is that most lawyers are not even up to speed on basic tools such as Microsoft Word and Excel. So can they really expect to be part of the technology evolution? “How can they talk about being cutting edge when many lawyers can’t even use the stuff they’ve got now in any kind of decent way?” she asks.

At the same time, studies reveal that lawyers’ computer and tablet keystrokes have risen dramatically over the past decade, leading cost-conscious clients to bemoan that “we’re paying partners to type.” Even more worrying, according to Woldow, is the non-use or under-use within law firms of expensive technology solutions such as budget and pricing tools, automated process flow chart generators and sophisticated legal project management (LPM) suites. Although many firms have been disappointed with their return on investment from such costly tools, the fact is that in many cases lawyers and staff simply do not know how to properly use them.

Woldow is internationally renowned as a consultant in LPM, which promotes effective project scoping as a crucial first step for delivering legal services efficiently, on time and on budget. Lawyers and their clients can also use LPM to prepare action plans and budgets, develop work paths and performance metrics, monitor progress, and use lessons from their experiences to ensure even greater future efficiencies. “It is a powerful synthesising force,” Woldow says. Part of the project planning and implementing process is to link technologies that may previously have acted independently and to integrate and take advantage of data and knowledge that already resides within a firm. “LPM is not a bolt-on technology. It fundamentally changes the way we think. And it will change the way we work as it synthesises all of the different information we have.”

Through her interactions with many progressive corporate legal departments, Woldow has noticed an increasing trend whereby general counsel teams use technology to analyse their electronic billing information – allowing them to compare service delivery between the external law firms they use. She remarks that as of yet most law firms do not follow suit, perhaps because they are just happy to get paid.

Woldow says such e-billing analysis can deliver incredible insights into staff allocation on cases, costs and results. “For all the clients you have e-billing relationships with, I’d be asking them how they use these reports in their organisations and, if they’re using it to evaluate your law firm’s services, would they be willing to share this.” She says most clients love such collaboration and are happy to share the information because it can help law firms learn about competitive pricing, better allocation of staff and overall performance improvements. Law firms can also use such e-billing analysis to get a clear picture of internal service costs, which in turn allows more accurate pricing.

There is a lot of buzz around innovative firms such as Axiom, AdventBalance and Bespoke, which have excelled at finding different ways to deliver legal services. Part of their edge is using technology to drive down costs and pass on the benefits to clients. “We are really seeing the growth of entrepreneurial firms in Australia and globally, and many of them are using technology to replace the bricks-and-mortar overheads that we used to have,” Woldow says.

These so-called NewLaw firms are not to be taken lightly. Axiom has about 2300 lawyers around the world, AdventBalance is hiring from big law firms, and Bespoke is highly regarded as a virtual firm that is shaking up the sector. “So you’ve got very innovative, entrepreneurial firms stealing the march and taking away business from law firms that are in the traditional mode,” Woldow says.

Woldow acknowledges that “disaggregation” of legal services has been an important factor in the legal services sector in recent years. Clients are driving this phenomenon as they seek to deconstruct and prioritise different cost factors. What should be offshored? Which projects need a contract lawyer? When should work be done by an external law firm and when it is better to handle it in-house? “There is no doubt we have begun significantly disaggregating our legal work for cost-control purposes,” Woldow says. Yet she is of the view that disaggregation is a short-term solution. A lot of the work that is now being outsourced to locations such as India, the Philippines and Malaysia will, she suggests, ultimately be handled by technology. “I don’t think it’s a solution that will go very far into the future, particularly if technology continues to invade the lower-level tasks that are now outsourced … So outsourcing will not be where the future takes us.”

In her role as a global consultant, Woldow sees both the best and worst of corporate and law firm practices. A particularly smart American firm, Akin Gump, has won her admiration. She told World Masters attendees that GCs at one of Akin Gump’s clients, the Fireman’s Fund insurance company, had a mandate from management to slash costs by about 30 per cent. Part of that cost-cutting effort involved issuing an ultimatum to Akin Gump to outsource some of its legal services to respected Chicago-based firm Novus Law, which has strong operations in India and is known for using cutting-edge technology to provide cost-efficient document review, management and analysis. Failure to collaborate with Novus could have seen Akin Gump being shut out.

After some initial reservations, Akin Gump’s partners agreed to the deal – and sensed an opportunity. Noting that all its clients were making the same noises about lowering costs, the firm proactively entered into its own arrangement with Novus Law and pitched the partnership between Novus and Akin Gump to clients as a way for them to save money. The upshot? “Akin Gump took away a lot of work from other top-tier firms in the US,” Woldow says.

Woldow has been closely watching the rise of AdvanceLaw, a business that helps participating GCs to collect and share valuable law firm performance information. In the process, they get priority access to firms that have been examined for their performance, client service and innovation. While some may scoff at the prospect of corporate legal departments sharing data and information, Woldow says the group already has more than 90 members who have signed up, including the likes of Google, Panasonic, Nike and eBay. She describes it as an example of the “yelpification” of law, referring to the phenomenon whereby online communities use the Yelp website to review all manner of businesses ranging from restaurants to medical practitioners. “I think it’s a very significant advance,” Woldow says.

Leaping into hyperspace, Woldow waxed lyrical at World Masters about Watson, an artificially intelligent computing system into which creator IBM is investing more than $1 billion. She thinks Watson will be the greatest digital disruptor of all because of its ability to process huge amounts of information in a human-like way – only better and much faster.

“It’s a huge game-changer in a lot of ways … Now imagine if Watson were able to read every law, statute, regulation, court decision, legal blog, law review article, everything in your entire law firm and maybe elsewhere on the planet and be able to synthesise that into useful information. You’d have something that’s pretty amazing because the human mind can’t hold or access all that information.” Woldow believes that Watson and similar cognitive computing systems have the potential to deliver far greater efficiencies and benefits to law firms than disaggregation, and that they represent the potential for major transformation of legal practice.

In the evolution of legal technology implementation, first, we had the Chief Technology Officer, who was essentially a computer ‘mechanic’, followed in fairly quick succession by the Chief Information Officer and the Chief Knowledge Officer. With each evolution, the role of managing technology and collecting data has become more sophisticated.

Next in line will be the CWO, or Chief Wisdom Officer. Woldow expects this burgeoning role to include initiatives such as enabling firms to embrace the likes of Watson and pursue truly transformational technology change. CWOs are unlikely to be lawyers, but they will be crucial to the future of law firms. “As we move forward in the future, a major challenge will be fostering the collaboration between our technology and our lawyers. There’s going to have to be a melting point between these – it cannot always stay separate.”

In closing, Woldow told World Masters attendees to expect that the forces of technology will lead to faster disruption than most people expect.
“What is true about disruption, whether it’s in law or any place else is this – at first disruption is invisible, then it is invisible and then it is invisible, until suddenly it becomes overwhelming and undeniable.”

Pam Woldow is a partner and General Counsel of global legal consulting firm Edge International, having earlier served in those same roles at the legal consulting firm Altman Weil. She is recognised as a global authority on legal project management and, before turning to consulting, held positions as Chief Counsel of the Pennsylvania Department of Insurance and Pennsylvania Deputy General Counsel, Director of Litigation Management for a $2 billion public financial services company, and General Counsel of a subsidiary of a diversified consumer services corporation.