Curing the data blind spot – the evolving leadership role of IT

In short:

• The need to maintain profitability within a long-standing business model, coupled with undervaluation of data as a critical asset of law firms, has increased the risk of significant disruption.
• Where the gap between technology hype and reality is reducing, IT leadership needs to focus more on making sense than making it work.
• IT leadership needs to better understand the day-to-day experience of lawyers and craft ways to drive tech adoption that go well beyond a traditional service-provider model.

Noting that the gap between AI hype and reality for the legal profession is smaller than some may assume, Mark Andrews explores what this means for IT leadership teams and the role they play in law firms.

Asset value, not so much in a financial sense but in the way the legal profession subjectively values assets, started very much with a people focus.

Individuals who were able to master complex laws, interpret them and provide advice to others were regarded as valuable and attracted a premium for their skills and experience. Increasing specialisation, along with opportunities to leverage support functions, created incentives for partnerships to form. These partnerships grew to the professional landscape we have today, which spans sole practitioners through to large international partnerships. Of course, this is a massively oversimplified gallop through history, but the point is that firms have long identified people as their most valuable asset.

During the past 25 years, the idea of brand having value in the legal profession has grown significantly as firms have worked hard to make client relationships stickier and more diverse. In this context, the value of brand has increased. While we certainly see client movement linked to partner movement, there is more recognition from clients of the particular service offerings of law firms and how all parts of the firm work together to deliver that service – rather than it being all about a single relationship with one partner.

Knowledge, whether it be in the form of precedents or the tacit know-how of lawyers, has enjoyed a similar growth trajectory to brand in terms of perceived value. Firms have invested significantly in teams and systems to support the more effective and efficient capture and sharing of knowledge.

A combination of a firm’s people, the knowledge they have and share, and the brand under which they operate is generally accepted as a reasonable way to perceive value. There are still two dominant thinking paradigms at play in law – a people-centric paradigm and a precedent-based paradigm. These dominant paradigms have served the profession well for considerable time, but they have also created something of a blind spot when it comes to data.

Many professions and industries have recognised the power of data and have been leveraging it. I am referring to data, rather than knowledge – i.e. what is stored in databases, generated by transactions, based on events etc. The fly-by-wire systems used so widely in commercial aviation are good examples of the data-based approach to management.

Law firms, by comparison, have been data-shy for many years. Although this is changing, there is a clear and present danger posed by AI both in terms of readiness and in terms of valuation. Let me explore these two aspects of AI readiness and risk a little more.

Data and AI readiness

The quality of insights we derive from AI is directly linked to the quality of the data diet of the AI that is in use. A set of unrepresentative, poor quality or defective data will guarantee poor results and, worse still, may have a multiplier effect as AI learns from poor data.

The people-centric and precedent-based paradigms must be overcome to allow recognition of the critical value of data, while an appropriate data strategy must be a priority for all firms. The key is to have the data house in order before investing in solutions that require data sharing.

Data valuation and AI risk

If firms are not valuing data, they are likely exposing themselves to significant business risk. Law firms are in possession of data that gives them significant competitive advantage. AI vendors want this data because they clearly see the value and power of being in possession of the data. This is not a criticism of vendors, but a wake-up call for law firms since failure to recognise the value of their own data may mean trading away competitive advantage or even business itself.

Business models

In my article earlier in the year, I talked about rethinking value in an AI-enabled world. This notion is worth underscoring as current business models, coupled with insufficient value placed in data, creates inertia to change. It is understandably difficult to expect lawyers with high billable-hour targets to invest the time to evaluate data and play an active role in the data strategy of firms.

What lawyers and, particularly, leaders can do is acknowledge that there is a burning platform and that a focus on data is essential and inevitable, and that a more widespread change of business model is more likely in the next five years than it has been at any point in the past 30 years.

Hype versus reality

The boy who cried wolf is, unfortunately, a reasonable metaphor for IT marketing. I say this because the promise on the tin is often very different from the reality when it comes to IT solutions. This has been the case for many years and, while responsibility for this is shared and certainly not exclusively the fault of IT, the result is an amplification of the natural scepticism that people bring to change, especially change connected to IT solutions.

The hype-reality gap is, I suggest, getting smaller with innovations such as AI. While there remains a hype-reality gap, the range of genuine and valuable use cases for AI this year has jumped substantially compared with last year.

Is AI the real wolf? Time will tell, but it is certainly howling like one.

The way data is valued, the pressure on existing business models, and the narrowing gap between hype and reality are shaping the environment in which IT must take on a larger role – both as a core function and through the leadership of IT executives.

From ‘making it work’ to ‘making sense’

‘Making it work’ is fundamental to IT since, without basic reliability, it is difficult for IT to have a role at the law-firm leadership table (or, to be clearer, not just making it work but making it work better). Beyond this, IT needs to play a greater role in ‘making sense’ of what is happening in the market, of AI and of the future.

There are several aspects to IT as a sense-maker, starting with improved understanding of how lawyers are working now. This could take the form of a shadowing exercise and needs to be at a more detailed and practical level than process mapping, which in itself is still very useful. This will require a significant investment of time, and that is challenging. Firms should examine how time is currently being spent to identify tasks that are less important, or can be postponed, so that more time is available for this activity.

IT as sense-maker of the market is another key role IT needs to play. This entails taking time to keep track of what is happening in the market, talking to vendors and networking. There is nothing especially new about this role, except for the need to extend this activity further into firms – going beyond having an understanding within IT to spreading this understanding more widely in the firm.

As a sense-maker of the future, it is not about IT leaders becoming futurologists, but rather putting together an understanding of how lawyers are working now with an understanding of the market to inform strategy and direction and to be able to articulate, in more concrete terms, how things will change in coming years.

Setting the pace is another aspect of sense-making that is important. IT has a critical role to play in spurring action re data and guarding against hasty decisions, particularly when data sharing is involved. IT teams, along with data owners, must work together to understand the value of data, determine what advantage that data brings when not shared, and what benefit third parties may derive from the data if shared. Only when that has been done should firms contemplate sharing data with vendors.

Awareness, attention, adoption

Promotion and awareness campaigns have been a common approach across law firms for IT teams – finding ways to cut through so people are aware of available solutions, with the expectation that awareness leads to adoption.

In an attention-deficit world, we are losing the awareness battle – and more of the same is not what is needed. Adoption is where we need to focus and this is often through very targeted, tactical and small-scale interventions – think, for example, of an individual or small group. Success is not how many people view a communications campaign, or visit a site detailing solutions; it is the extent to which people are working differently and gaining benefit by using technology solutions. This is very much about quality over quantity.

The leadership opportunity

More than ever, IT has the ability to shift up the relationship ladder (from making it work, to making sense, and from awareness to adoption are the necessary shifts). The opportunity for IT leaders and teams is to move from being a service provider to becoming a trusted advisor and, ultimately, a strategic partner.

Mark Andrews is Director, Global Practice of Law Solutions at Baker McKenzie. He has a varied background, including time in the public and private sectors, along with considerable professional services experience. He has held roles ranging from HR to management consulting and has previously been a guest lecturer in the business faculty of the University of Technology, Sydney – teaching at both Bachelor and Masters (MBA) level.