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The tech revolution stirring in SA's legal space

Aug 19 2016 14:07
Sean Christie

Yvonne Wakefield is founder of Caveat Legal (Image: Supplied)

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In April this year, the renowned legal futurist Richard Susskind issued a warning to the United Kingdom’s major law firms: “You have five years to reinvent the legal profession”, or risk perishing.

The basis of Susskind’s concerning prophecy is his contention that most of the world’s major law firms continue to follow a set of business practices that have remained unchanged for centuries, in spite of the existence of technologies that could drastically improve operational efficiency, thereby bringing down business costs and enabling the reduction of fees. 

Susskind first began calling for the reinvention of the legal profession during the global financial crisis of 2008, which focused attention on the high asking fees of big law firms as well as the quality of the work being rendered by those firms.

Traditional law firms, with their hefty partner bonuses and equity splits, prime real estate premises and glamorous art collections, did not bear up well under this scrutiny, and it wasn’t long before a new model arose to undercut the old one. It was a model which used the internet to connect clients to freelance lawyers, thereby negating the need to pay salaries, or many other traditional costs.

A catchy neologism was soon minted to describe this model: NewLaw (as opposed to BigLaw). In a short period, NewLaw companies such as US-headquartered Axiom Law, which today employs 1 500 personnel across three continents, and in the UK companies like Riverview Law and Rocket Law, were competing for clients with the biggest traditional law firms ?on the planet. 

NewLaw vs BigLaw

The waves of change were slower to reach South African shores. Many seasoned legal minds (in the boozy lawyer haunts this journalist once worked in on Cape Town’s Long Street) argued that, in the same way that South Africa’s low levels of external debt and its flexible exchange rate had helped to buffer the economy against the full blast of the global financial meltdown, so SA’s relatively slow rate of technological advancement would buffer local firms from tech-driven change. 

In 2011, however, a former Bowman Gilfillan Inc lawyer called Yvonne Wakefield founded Caveat Legal, a “virtual” legal services company that was soon poaching both business and lawyers from SA’s big firms.  

Caveat’s sales proposition is an enticing one. Using a freelance panel structure, Caveat is able to offer big law firm expertise at roughly half the price. For big firm lawyers the deal is just as sweet: the choice to work when, where and as much as they like, for fees higher than those attainable in the big firms. 

Caveat’s panel now stands at over 50 lawyers covering all the major areas of law, but the real heist is happening in the investment space.

“A very large portion of our work is done for private equity firms and venture capitalists. We will do everything for them from due diligence to the drafting of transaction documents, and what’s really nice is that we’ve gained traction in this space mainly through word of mouth,” Wakefield says. 

Caveat was followed into the alternative legal services space by companies such as LexNove, LawyerUp and Legal Legends, all “tech-enabled” platforms for legal services that offer clients the opportunity to have their legal needs scoped, bid for (by freelance lawyers with relevant expertise) and ultimately met, online. 

But it’s not a turkey shoot 

Andrew Taylor and Kyle Torrington founded LexNove in 2015, and have come to feel that the company’s value proposition, while “on par with global standards in the area of tech-enabled legal services”, is nevertheless “a few years ahead of the South African legal consumer”.

“We’ve experienced difficulties around the level of sophistication of our consumer – specifically relating to their level of understanding of what their legal needs are,” says Taylor.

“For example, a client might approach us asking for a joint venture agreement, but after considering his or her needs we’ll end up actually scoping out and providing a new company registration and customer shareholder agreement. This, coupled with the fact that South Africa has a lower level of internet penetration than some other jurisdictions, has convinced us there’s a need for a kind of bridging model,” he says.

The bridging solution Taylor and Torrington have hit upon is Legal Legends, which Torrington describes as, “an e-commerce approach to legal services”.

“You visit the site and can immediately purchase services – such as shareholders agreement, licensing agreement, and so on – without having to go through the friction of a proposal period. What’s nice is, from an SEO [Search Engine Optimisation] perspective, we have specific pages devoted to specific services, so it makes for a more searchable, findable legal service, which is consumable in a way familiar to South Africans at this point in time,” he says.

Taylor and Torrington plan to merge their Legal Legends and LexNove entities in time, and to move on to the integration and indeed the development of technological tools that will enable lawyers and providers of legal services to work with greater efficiency. 

Legal tech revolution

The development of new technological tools for the legal profession is the other major strand of the technological revolution in law, and it is becoming big business, as Wakefield found when she attended Legal Tech New York in February, a conference and trade show focused on technology for the legal profession. 

“There was so much content to be shared that the 2 000 attendees could choose between six streams of talks, running concurrently for three days,” she says. 

In just a handful of years, technology has appeared that assists with jobs such as time capturing, workflow management, document reviewing, case law research, automatic document generation and more, and while early iterations of many of these technologies were incapable of handling the nuances particular to the legal profession, Wakefield points out that “more recent versions are showing signs of having overcome these shortfalls, and now even claim to be superior to traditional methods, because they eliminate human error”.

She cites artificial intelligence technologies such as Ravel Law, “which uses big data analytics to produce interactive visualisation maps showing the big picture on any given search query”, and also Ross, built on IBM’s cognitive computer Watson, “which uses natural language processing to understand a legal question posed (as opposed to conducting a keyword search). It then uses machine learning to sift through thousands of content sources, provides an answer and lists its authorities ranked by relevancy.”

It has been suggested by many legal pundits that the new generation of legal services providers, being flexible and already tuned-in to the power of technology, are better placed than big firms, with their big bureaucracies, to embrace new technologies.

Not necessarily. 

Those large firms that have chosen to embrace technology have the money and the historical relationships required to drive the often costly development of new technological products. In South Africa, for example, in May this year law firm Webber Wentzel (one of South Africa’s so-called ‘Big 5’) announced the launch of an app created in conjunction with business technology solutions company LexisNexis.

Called TMT, the app was designed to assist Webber Wentzel clients to stay abreast of developments in the complex and fast-paced technology, media and telecommunications sector. It is highly unlikely that any alternative legal services provider could, at this point, exercise similar relationships towards comparable ends.   

The local arm of global law firm Norton Rose Fulbright exercised its internal capacities to create POPI Counsel, an interactive app designed to assist businesses with implementation and compliance in respect of the Protection of Personal Information Act ?of 2013.

“We originally wanted to create an e-book,” says senior associate and business development manager Nerushka Bowan, “and in considering how to secure the pdf we engaged with Ryan McClead, the technology innovation architect in our New York office. He looked at our content and made the observation that we could make our checklists much more interactive.”

Preaching the tech gospel

Bowan’s professional story is intertwined with the POPI Counsel story, and is fascinating for what it reveals about the likely future of big firm lawyering.  

“I have no formal academic history in IT,” she says.

“We rotate between various disciplines in law, and during my six month rotation in the technology law space I found I was endlessly stimulated. It was agreed that I would stay on permanently as an associate, and through being passionate, and also because I’m a naturally analytical person who enjoys things that require a lot of logic, I found myself becoming more involved in the technological side of the industry,” she says.

Bowan learnt about software development on the job.

“When we approached McClead with our e-book idea he happened to be launching a technology called Neota Logic, which is a platform non-developers can use to develop logic-based technological products. Ultimately, four local Norton Rose Fulbright lawyers, including myself, were trained to become developers on this platform, and in the process my colleague, Kerri Crawford, took over development of POPI Counsel,” she says.

“During this process I realised that lawyers need new skills and new opportunities in order to diversify what we’re already doing. Clients aren’t happy to continue to pay the rates firms charge anymore, and if firms don’t find alternative ways of making money, or develop efficiencies that allow them to decrease costs and maintain business, they won’t be able to keep up.

“Change is coming,” she says, “and any lawyer who gains the ability to develop technological products is going to be very well set. Why? For starters, you can turn the current product development model on its head, by collapsing the roles of developer and subject matter expert into one person, thereby cutting out the need for a business analyst [being the person who traditionally translates between developers and subject matter experts in the process of developing new legal products]. You will be able to save your firm time and money, and in the process allow for a reduction in client fees,” she says. 

Developing more “legal technology engineering capacity” is one of Bowan’s many new tasks, in addition to her traditional lawyering duties. 

“The secret to entrenching a tech-savvy culture in a large firm, I’ve come to realise, is incremental change. At the moment I have more product ideas than I have capacity for, but the fact is I can’t train 30 lawyers in this stuff at a time. We have another four in training, and if I’m lucky two will emerge with the right expertise,” she says, adding that there’s a culture of fear to overcome, too.

“I’ve done a lot of internal evangelising, telling lawyers that they should see technology as an opportunity instead of a threat.

I’ve been trying to put out the message that, if you take a genuine interest in the opportunities in your particular area, you can become the expert, because tech is new to everybody,” she says. 

To make her point, Bowan pointed out that McClead, who assisted in identifying and bringing together the technology products used to create POPI Counsel, was “hired by one of the technology providers of POPI Counsel, and appointed business transformation and innovation architect to develop and sell products like POPI Counsel to other law firms.” 

“There’s a lot happening, and South Africa is definitely in the mix, but the time for both individuals and firms to open up to the possibilities is now,” she says. 

But are law schools keeping up with technological advances? Find out here.

This article originally appeared in the 11 August 2016 edition of finweek. Buy and download the magazine here.

tech trends  |  law

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