Tuesday, August 7, 2018

"Legal AI + The Industrialisation of Cognition"

This is far from state of the art but is a good short background for a couple posts to come.

From Artificial Lawyer::

[This is an automated re-post chosen by the AL Editor Algorithm, the original story is from August 2017.]

The Industrialisation of Cognition
After the financial crisis of 2008/9, the term ‘the New Normal’ was used to describe how corporate legal teams were suddenly pushing back on bills and demanding transparency, efficiency and project planning.

After years of clients rarely saying no, with few really doubting the external firms’ ‘means of production’, something finally happened. ‘This is not good value,’ the inhouse lawyers dared to utter.

What had changed? They had been pushed internally by the C-suite, whose job it is to do the best for customers and shareholders. They had been asked to justify their legal spend. And, in truth, they couldn’t.

This simple, yet seismic change, paved the way for the eventual entrance of legal AI. As revolutionary leaders will tell you, having a plan to topple the old regime is all fine and good, but you still need ‘the right conditions’ for real change to take place.

And let’s face it, not all inhouse lawyers wanted to push back. The buyer and the seller had become a little too close for comfort, one might say, and it really wasn’t doing the end client – the shareholders of the business – much good.

The surprising thing is that it took something as bad as the worst economic crisis since 1929 for the people who actually owned the businesses that were being served so inefficiently, to realise just how bad a deal they were getting.

And, worse still, it was their own inhouse legal teams that had allowed this to get so out of hand. What kind of repeat buyer lets the seller push the price up every year for doing the same thing in the same way, where the product stays the same and there is no improvement in the outcome?

One answer to that is: a buyer who is faced by a monopoly. But, law is a free market, right? Buyers can pick and choose between several equally good firms? Everyone is always saying how hard it is to differentiate between law firms in each market segment. What was stopping a buyer exercising their power and just picking a firm that was willing to play ball? 
And they did. But, few in the legal industry wanted this change. Let’s not kid ourselves here. There were no lawyers demonstrating outside court houses demanding they be allowed to be more efficient. GCs were not resigning from their posts because external law firms had yanked up prices for the 10th year running for the same outcome.

It was driven from outside by market forces and increasing transparency inside companies about how legal work was produced.

Legal sector commentators were fast to see the new trend and declared it to be a new norm, from which there was to be no going back. And they were right there. Though, the higher value, more complex and bespoke advisory matters continue to see increasing charge out rates.

But, for the rest of what a law firm did? There were no more guarantees. A new approach was truly emerging after years of conference discussion and occasional warnings from firebrand GCs that had previously come to little or nothing....