published October 21, 2015

By Noelle Price

Law Firms Are Working Like It’s 1995

What can law firms do to take advantage of today’s legal technology to improve how they operate?

Even though the legal realm has enjoyed many significant advances in technology, many firms are stuck in the past, with their massive paper files and written time-keeping practices. However, according to The Atlantic, many firms, due to increased competition, are catching up.
Ralph Baxter, the former chairman and CEO of Orrick, Herrington & Sutcliffe, explained, “The billable hour is the culprit of everything.” Many firms are resistant to change that would eliminate some of their billable hours. For example, Lex Machina , a start-up, can actually fly through and analyze litigation information that would take a group of associates months to dissect. With technology like this, several associates may see their billable hours decline. Therefore, does the firm really need them? Does the firm even need additional office space?
In a separate article by The Atlantic, many ponder whether the billable hour is already obsolete. Georgetown Law’sReport on the State of the Legal Market” said, “In the six and a half years since the onset of the Great Recession, the market for legal services has been changed in fundamental—and probably irreversible—ways.” Primarily, the power has shifted from the firms to the clients, who want cost-effective and efficient work.
Some firms, however, have embraced the updates in technology and have adapted their law firm business plans to the same. For example, Todd Smithline owns a tech-focused firm called Smithline PC in San Francisco. He cut out the billable hour altogether, and instead offers legal services on a subscription basis. Clients pay monthly fees that vary from $8,000 to $25,000. In exchange, they receive as much legal work as they need. Though many clients were skeptical at first, Smithline said that “clients value predictability.”
Similarly, Baker & McKenzie has used a digital tool to help attorneys identify any antitrust issues in mergers and acquisitions deals, Financial Times adds. The Global Merger Analysis Platform, or GMAP, has been implemented by 300 of the firm’s attorneys around the world, which allows them to provide a detailed analysis of major risks in M&A transactions within mere hours, as opposed to several days.
Jason Boehmig, the co-founder and CEO of Ironclad, a legal software company, said that a number of clients are actually ready for the legal industry to change. “Clients have the incentive to take advantage of technology because they are the ones really feeling the pain of the billable hour.”
Many entrepreneurs have used this knowledge as inspiration for new projects. Chad Burton is a former “Big Law” attorney who built a new firm with “low overhead, but sophisticated work.” He met a number of other attorneys who wanted to do the same, so he created Curo Legal, which is a consulting and staffing company that helps attorneys start up on their own. He also teaches a course at Dayton Law School about creating a new law firm.
Nikhil Nirmal, who used to work for Yelp, noticed that prospective clients looked for attorneys based on their locations. However, clients do not always have to use an attorney in their area. To help bridge this gap, he created Lawdingo, which matches clients with attorneys online.
Of course, most lawyers avoid risk if at all possible. However, branching out can provide significant rewards. Nicole Bradick, the founder of Custom Counsel, which matches working mothers with understaffed law firms, said, “You have to be scrappy to be an entrepreneur but there is now tremendous opportunity in the industry.”
Joe Borstein, another former Big Law attorney, serves as the global director of the legal-outsourcing firm Pangea 3. Borstein said there are both monetary and social benefits to updating one’s practice. Borstein said it “should (and does) make innovative lawyers very rich.” Christopher Marston, the founder of Exemplar, a law and financial-services firm, said, “These attorneys improve access to rights and justice for millions of people. Changing this profession for lawyers who are categorically miserable is my calling.”
Of course, the industry as a whole is noticing the changes that are being made. The American Bar Association dedicates one issue of its magazine each year to “legal rebels,” or attorneys who are changing the face of the law. Additionally, there are many trade shows with hundreds of vendors who demonstrate their legal tech products.
However, it’s still early. Many firms are unclear as to how much technology is sufficient to stay current. Boehmig said, “At one end of the spectrum, where lawyers are doing everything, is wrong, but the other end of the spectrum, replacing them entirely with software, is also wrong. The winners in this space will be the ones that are able [to] appropriately involve lawyers in the process.”
Baxter explained that, even if progress is slow, the legal world is still moving in the right direction. He said, “Step by step, law firms, clients, and legal start-ups will make improvements and will gain market share. The market will turn towards more innovative, creative solutions.”
Source: The Atlantic
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