A look at four technology forces set to change the dynamics and define the future of the legal market.
Many observers are watching in alarm as the outside legal market size shrinks, 80 percent of potential clients are completely unserved, and lawyers are questioning whether incurring the immense debt of law school was worth it.
Clio’s first annual report on the state of small law suggests that farmers are doing better economically than lawyers. And we all know how impoverished small farmers are today.
Law firm expenses are exceeding revenue growth and are only being offset by increased hourly rates. Although seemingly illogical, Ken Grady says these are signs of transition, not irrationality on the part of outside and inside counsel alike.
Should we lower the storm shutters and head for the hills? No, let’s buckle up and get ready to take off.
Of course, our ears are ringing with terms such as artificial intelligence, blockchain and interoperability. However, get ready for a fourth buzzword: recombinant technology. Each of the first three listed disrupters are in themselves alone sufficient to evoke significant change in the legal services industry. However, the fourth concept of smart technology working in combination will be the game changer. Let’s take them each in turn.
1. Artificial Intelligence
Most are suggesting that 2017 will be the year of artificial intelligence. At the recent AI World Conference held in Los Angeles in November, any technology startup with a proof of concept applying artificial intelligence to a known problem began at a market valuation of $5 million. Even without built technology, revenue or customers, but with a sound POC, investors were looking to invest and valuation was assumed.
While watching Kevin Kelly’s TedTalk on AI and a Second Industrial Revolution, it occurred to me that the inevitability of AI is incontrovertible. As Kelly explained, “the path of a raindrop down the valley is unpredictable, but its direction is inevitable.”
No one can reasonably suggest that AI will fail to invade every crevice of human endeavor in yet unanticipated ways. Now that Google AI in my smartphone tells me when to leave in order to get to my next appointment or even where I usually go to brunch on Sunday, can it be surprising that AI will improve the speed, quality and cost of legal services?
UK legal technology expert Sarah Burnett of Everest Group in London identifies a large number of applications of AI in law already changing the profession and believes that, in as little as five years, law firms will be unrecognizable.
2. Blockchain
As Gartner has recognized, blockchain technology is at the peak of the hype cycle. Nonetheless, blockchain remains a key driver in the business and commerce of tech-driven industries in 2017, according to the Gartner Top 10 Strategic Technology Trends for 2017.
Nashville, Tennessee, my hometown, seeks to be the blockchain capital of the world, and its health care centric tech industry is hard at work doing so. A meeting of over 70 health care executives, lawyers and technologists gathered with only a week’s notice when the topic was blockchain. BTC Media hosted the first blockchain in health care conference in October here in Nashville, and over 600 people from around the world traveled to attend.
However, when PC Magazine predicted that 2017 will be the year of the blockchain smart contract, lawyers should sit up and take notice. Consider the manner in which distributed ledger applications will expedite contract creation, execution and dispute resolution. This is a tsunami for traditional legal service delivery.
A Deloitte survey of CEOs at mid to large companies reveals an amazing degree of investment in blockchain applications despite a general lack of knowledge about the technology. Lawyers working with clients in consumer products, manufacturing, life sciences, healthcare, tech, media, telecom and financial services should be boning up on distributed ledger in 2017.
Are there any major industry sectors not investing heavily in blockchain? Only legal.