By Joe Andrew, Global Chair, and Jeff Haidet, U.S. Co-CEO, Dentons

J. Stephen Poor, chair emeritus of Seyfarth Shaw, does a superb job in his article“Investing in Tech is Just One Piece of ‘Big Law’ Puzzle,” examining why law firms and corporate legal departments are slow to develop and implement new technologies even though the best of these offer clear benefits to clients. Poor raises two common obstacles for firms that want to invest in cutting-edge technology: how the investment will be paid and the nature of the investment. He concludes his article with the suggestion that firms must recognize the need to invest in technology from the perspective of money and people to benefit clients.

Different Approaches to “Heavy” Investment

We agree with Poor that heavy investment in technology is not only important, but also necessary. We also agree that it is difficult to make the case to invest heavily if the money has to come only from the partnership, whose members are understandably focused on the bottom line of each fiscal year.

However, the largest law firms in the world (often collectively known as Big Law) need to recognize that they are in a better position to invest in technology that can benefit our clients and the profession as a whole. This is due to our wider access to resources, significant capital base and ability to use the benefits of scale to test and improve new technologies. Clients, in turn, need to recognize the value proposition that Big Law brings to the table that even the most elite smaller firms will not be able to match in the future.

For example, Clifford Chance recently announced its partnership with artificial intelligence provider Kira Systems. This demonstrated commitment to emerging technology is part of the firm’s overarching dedication to global innovation, which includes investments in people, process and technology.

As another example, last year Allen & Overy announced the creation of an experimental group, i2, to experiment with new technologies. The group, which primarily consists of young lawyers and technologists, receives “seed corn” funding from the firm. Allen & Overy has already invested in other technologies and i2 is designed to build upon that success as part of the firm’s overall service delivery initiative.

We applaud both firms — and the dozens of others from Big Law that are making similar creative, long-term investments — for their forward-thinking approaches to putting accessible capital into technology development and the recognition they have gained from doing so. The ultimate question is, do clients recognize the foresight and, dare we say it, courage to prioritize their long-term interests ahead of either the firm’s, or even the clients’, short-term interests?

Two Challenges and An Opportunity — Putting the Pieces Together

Innovation in technology is a long-term commitment and investment, which poses a challenge to firms and corporate legal departments alike. It seems a new approach is needed to produce a sustainable effort to invest in technology — an approach that would not be impacted by the short-term performance of a firm or its available capital.

Last year we launched Nextlaw Labs, a business accelerator focused on developing, deploying and investing in new technologies and processes to transform the practice of law around the world. Approaches like this create the perfect innovation pipeline. It has the benefit of drawing on lawyers and professionals from around the globe, opposed to just those based in New York, London, or Silicon Valley. Together, lawyers, computer scientists, legal process experts, and venture managers help either develop, or more often, vet and craft products and services from outside technology providers, which will in turn create solutions that assist real lawyers, working with real clients on real issues.

The challenge for most legal technology companies is how to test their products and services with real lawyers and real clients. A small law firm simply does not have the resources, nor the variety and diversity of clients, to assist most of these companies.

Although Dentons is currently the only investor in Nextlaw Labs, we anticipate taking outside funding as we test and develop new technologies throughout the world. This approach has been taken by almost all of the companies in which we invest our talent, our money and our time, progressively making them more practical, client-centric and value-driven entities. By offering new technologies to clients, observing which aspects provide tangible value and adjusting based on those observations, rather than what computer scientists and law school professors might imagine provides value, we have created a new model. This model clearly is in clients’ best interests. It even allows the largest firm in the world to multiply its investment.

But by developing a separate brand, Nextlaw, we also make it easier for small and mid-sized firms to partner with an entity that is a collaborator, not a competitor. This creative approach helps address the challenge small and mid-sized firms and corporate legal departments face by presenting an opportunity: partnering together so that Big Law’s heavy investments are shared with others to everyone’s benefit.

Imagine clients and firms outside of Big Law having access to important investments, such as first-in-class system security, that they otherwise could not acquire on their own? This is a win-win for everyone. Clients’ data is securely protected, smaller firms take advantage of technology that was previously out of their reach and all parties tap into a more diverse vendor group.

Taking it a step further, what if Big Law could bring firms together in a network to offer technology investments to all members? We established Nextlaw Global Referral Network to attempt just that. With more than 300 member firms in 160-plus countries, we will provide direct access to the most sophisticated and innovative technologies in the legal industry as they are developed. We want to bring together more pieces of the technology puzzle through innovation, collaboration, better quality service and, ultimately, greater client value.

A Completed Puzzle?

In this constantly changing industry, it is hard to imagine that a puzzle, especially one with new technology as a piece, could ever be completed. However, going back to Poor’s final point, there is a need for technology investment in both money and people. Successfully incorporating new technologies requires more than a financial investment; firms must also have people with the vision to set and realize these technologies’ strategic goals. Even if Big Law could invest an unlimited amount of capital in the most cutting-edge tech imaginable, people are who ultimately hold the puzzle pieces together. That is why Big Law, often the subject of cynicism, has the ability to put the puzzle pieces together not only with clients, but also with collaborators to build not just big, but better law. We look forward to putting the puzzle pieces together with you.

First heard on Bloomberg Law.