The future: build your own

“The best way forward is not to predict the future but to invent it.”

With these words, lawyer and IT guru Richard Susskind launched into his keynote address to the Society’s conference “The Legal Profession in Five Years’ Time”.

The celebrated consultant, speaker and writer’s latest book, The End of Lawyers? is due out in late summer. If the work, his seventh as it happens, sounds like a Harry Potter-style final showdown, his objective in his conference speech was to deliver the strong twin messages, first that we shouldn’t kid ourselves into thinking that the way lawyers traditionally work will survive the technological revolution that is coming; but equally that we are not helpless in the face of such advances.

A revolution still to come, you may ask? Surely it has already happened? But that way of thinking, Susskind told us, is a pitfall lawyers often fall into as regards advances in IT. In one of several “you ain’t seen nothing yet” moments, the professor (he is a visiting professor at Strathclyde University) warned that on the graph plotting the increasing pace of change, we are still only on the cusp of the curve. Back in the 60s, he told us, it was predicted that computer processing power would double every 18 months or so. That has effectively held good ever since; and if we project forward to 2020, a laptop will be able to equal the 1017 calculations per second currently carried out by the human brain, and by 2050, it could have the same power as the whole of humanity.

No more hourly rates?

Scary numbers apart, Susskind illustrated his theme with a five-model diagram of legal service provision, all set in a left-right progression:

• Bespoke, the creation of something never to be reused;
• Standardised, which could relate either to using checklists in a process or standard forms in the substance of a transaction;
• Systematised, where electronic workflows create and assemble documents, issue reminders etc;
• Packaged, by which stage something can be left to non-legal staff to issue, with no real advice-giving function; and 
  
• Commoditised, where differences between similar products from different firms are eliminated, an accepted form evolves and the price tends towards zero.

The market, in this model, pulls steadily to the right.

Another big mistake, he added, is to take the attitude “Our firm does mainly bespoke work, and that is how it should be.” Why a mistake? We shouldn’t kid ourselves that we do bespoke unless we do something new every day. Clients will want to move towards commoditisation: it encourages efficient working as it goes hand in hand with fixed pricing; and there is a quality issue because commoditisation involves collective expertise.

“I have no truck with hourly billing”, he declared – though it appears he has yet to persuade about half of the firms who engage his consultancy services. Pointing to how even banking and financial services in the City are heading down the commoditising road, he suggested that at most 5-10% of work should be charged on an hourly basis. Don’t charge a whole transaction in one way, but break it into its component parts and see how each should most efficiently be handled. Yes, it’s “decomposing” your work, in current speak.

The challenge: more for less

As is often said, everyone is feeling the squeeze. For major clients, the dilemma pulls three ways (a trilemma, possibly). There is the pressure to reduce internal headcount; the pressure to reduce external spend on legal firms; but also the pressure that there is more legal and compliance work than ever – and it is high risk. So if you, a law firm, want to increase your hourly rates – if you insist on charging that way – you are left, according to Susskind, with two possible strategies.

One is efficiency, through cutting costs, commoditising, or multi-sourcing. The other, “more disturbing” one (in the sense of causing a rethink of working practices) is collaboration – sharing costs with others, harnessing the collaborative power of IT, embracing the online community.

As for new ways of working, Susskind had a word of warning about those who tend to confuse public interest and self interest when they defend the status quo. “So many of the arguments are about protecting the interests of lawyers”, he declared. “The law is not there to serve the livelihood of lawyers any more than ill health is there to serve the livelihood of doctors.”

In other words, he added, “If all disease could be eradicated, we wouldn’t keep a bit just for the doctors.”

So what is the way forward? Susskind likes the mission statement of global accountants KPMG: “We exist to turn our knowledge into value for the benefit of our clients.” If we can find better, more creative ways of providing that value, he added, clients – existing and potential – will go for that.

Beyond automation

How innovative does this need us to be? In questions at the end, someone asked whether they could achieve these goals with their existing IT system. You can make a big difference by thinking imaginatively with what is already available, Susskind answered – “be commercially flexible and entrepreneurial”. But it’s what he called the “disruptive technology” that will present the big challenges – developments that bring in completely new ways of working. Like online dispute resolution, he suggested.

The professor’s reply reflected a point in his address that he headed “Automation v Innovation” – the former applies IT to processes that already exist; with the latter IT enables you to provide new services that you previously couldn’t. The paradigm example is the banks’ ATM systems (now there’s an innovative use for a hole in the wall).

Susskind’s clear message was that “we must go beyond automation”. Wikipedia, Facebook, MySpace – “the way our children collaborate and communicate today will be the way of the world tomorrow”. Good thing or bad, we will have “relentless connectivity” with clients; they will select and instruct firms online; they will collaborate with each other (especially the in-house sector) to share costs and content; there will be more recycling of work for different clients. That will make that 10% of bespoke work all the more precious…

Does our education equip us to address these issues? was another question. “It’s hard to generalise”, Susskind replied. “By and large most law schools are teaching the law as if it was going to be practised in the 1980s. The profession is rather channelled into thinking this is how lawyers operate.” And he added, with an eye to the alternative business structures to which the Society’s AGM signed up the day before, that this could be where external investors come in – combining legal and business skills and helping the profession get the balance right.

Maybe the profession – whether individually or collectively – needs to focus more on what industry would call R&D (research and development)? “Sony doesn’t know where its money will come from in five years’ time, and it spends 17-18% of its turnover on R&D.”

They’re working on it

But he concluded by insisting that he was optimistic: “The future is in our own hands.” Lawyers still have distinctive skills and talents that can’t be replaced; they simply have to realise that complexity can be modelled, and creativity exaggerated. The likely roles for the lawyer of the future are hybrid ones: legal knowledge engineering, legal project management, legal risk management.

He may be cast in the role of prophet, but he is no John the Baptist voice crying in the wilderness. As he pointed out during the question session, “For all my ideas, someone has already done the case study.”

MacAskill : Welcome for " forward looking" policy

The Cabinet Secretary for Justice is “hugely encouraged” at the legal profession’s response to the Office of Fair Trading report on business structures, and will work to develop proposals as soon as parliamentary time allows.

Kenny MacAskill, the first to take the platform at the Society’s conference, was speaking the day after the annual general meeting voted to support the Society’s policy proposals for future business models.

In doing so, he paid tribute to the “huge role” played by the Society, as a non-political organisation, in enhancing the quality of Scottish legislation, and before the days of the Holyrood parliament in making sure Scotland’s voice was heard.

Acknowledging that the relationship between the Society and the Executive had come under strain when the Legal Profession Bill was before the last parliament, he pledged that it was his personal priority to restore constructive engagement.

The forward looking approach now being taken by the Society, he added, was a tribute to Richard Henderson and Ian Smart, and he wanted the partnership to go further in bringing in new and improved services – ARTL, automated SDLT, online legal aid. He also looked forward to the recommendations of the Gill review, expected to propose radical reforms.

Returning to the policy paper, the minister declared: “I can’t pre-empt the statement on the legislative programme, but I will work to develop proposals as soon as parliamentary time allows.”

He agreed with the principle that the new regime should not set out to prescribe permitted forms of business model, but a framework to protect the values of the profession. He also welcomed the Faculty of Advocates response – while there were differences of approach, it was broadly in line with the government response to the OFT and represented the basis of a way forward.

The future, he added, was not just about the big firms, or the supermarket model, or the niche provider. “Small firms will survive as providers of legal services one way or another.”

The Justice Secretary observed that in Scotland we don’t do praise, or thanks, very well, but “the legal profession has firms that punch well above their weight, and we should stop doing ourselves down”. As a small country on the edge of Europe we have to go forward and compete, and the government “will do everything it can to ensure the profession continues to serve Scotland, and serve it well”.

He also took the opportunity to announce an uplift in civil legal aid rates – the unit rises from £19 to £21, with a comparable increase in detailed fees, and there will be new scales for complex family law cases. And on the continuing rumbles over summary criminal legal aid, he insisted that the government had made radical changes from the original proposals, and that the new scheme, driven by the summary justice reforms, would provide a fair reward.

Looking at the broader picture, MacAskill stated his desire to see a fully integrated tribunal system (though the Westminster parliament still has responsibility for the UK-wide tribunals); commended the proposed reforms in the Judiciary Bill, under which the judges and not the government would run the court system; and heralded moves to promote Scotland as an international centre for arbitration (“Why do our large companies use English law in their contracts, and the English courts for disputes?”). Look out for a consultation on this subject during the summer.

He concluded by pointing to the Herald editorial that day, expressing the view that restrictions on professional practice were justifiable if they protected core values. His promise: “Tesco law it is not; a modern Scottish legal system it will be.”