Legal industry trends that could shape the 2020s

CBA National: What has surprised you the most about the evolution of the legal industry in the past ten years?

Jordan Furlong: There have been a lot of micro- and medium-level changes within the broader legal system. For instance, new law providers and alternative legal service providers became a thing, and are now very much an accepted part of the ecosystem. They're hauling in about $US 10-billion a year, which is a pretty good growth rate for ten years in a notoriously conservative industry. Legal technology progressed rapidly. Think of the tech-powered firms that have shown up just in the last ten years – Neota Logic, Ravel Law, Elevate, Radiant Law, Premonition, ROSS Intelligence, Diligen. Even Kira has been around since only 2015, and is a very well regarded company in the legal technology and legal "A. I." space. It also feels like innovation went mainstream in the law. Today, almost every law firm has either a chief innovation officer with budget, or has people pushing these issues forward and taking tech seriously. It's part of the conversation.

N: So, what hasn't happened that you thought would have by now?

JF: At the macro level, there have been fewer changes than I expected. I thought that clients would be more empowered than they are. Consumer, individual, family, and small business clients are still deeply disempowered. That's a disappointment because, even ten years ago, we could all see what LegalZoom and Rocket Lawyer were offering. There was every reason to think that this was the consumer legal revolution waiting to happen, but the failure of that market to catch fire and produce some clear wins in terms of access, consumer choice, affordability and convenience is an unpleasant surprise. In December 2009, we were still climbing our way out of [the financial crisis] and I would have assumed that that was going to kick start more change than it has. But law firms and lawyers are unquestionably still part of the social, financial and cultural elite of our societies, and they're riding high. It's still good to be a law firm and a lawyer — at least if you graduated before tuition went through the roof. The other big disappointment to me has been the failure of legal regulatory reform.

N: What do you make of recent regulatory reform initiatives in Utah, California, and Arizona?

JF: They're significant. I'm past the point of making broad predictions and pronouncements, but what we're seeing is happening in multiple locations, at the same time, in the ways and in jurisdictions that have the power to bring about real change. California gets all the attention because everything about legal regulations is on the table there, and in the American context, California has always been at the forefront of regulatory reform. So it has incredible potential to completely change the conversation as there is a push to improve access to justice and to get more legal services in front of more people affordably, conveniently and transparently. Of course, the organized bar is pushing back hard against it, so when California reports next spring, it could come out with much more watered-down reforms. But what's happening in Utah is equally significant. It's obviously a much smaller state and less influential, but it has actually gone ahead and done it — the Utah Supreme Court has approved changes. And it's creating this regulatory sandbox — a supervised safe space where alternative providers of legal services will be allowed to function with the blessing of the regulator to try different ways of providing legal services to people. I think that's a model that other jurisdictions are going to find much more attractive and within their reach than California's approach, which is "change absolutely everything at once." Utah is saying, "we're going to let people try stuff."

N: And how should the profession in Canada view these developments?

JF: It should pay close attention. And I think most law societies in Canada are. They're considering what it offers them in terms of possibilities and models they can follow, and what it says about shifts in the public mood and public expectations. Because if things change in California, everyone's going to talk about it. It's going to be in The New York Times and on CNN — not front page or top of the broadcast — but it's going to make waves, and people are going to get the idea that things can be done differently. Until now, one of the great secrets to the legal profession's longstanding success has been its ability to limit the imaginations of people around what legal services provision can look like.

N: You wrote recently about the emergence of a new legal economy. What do you mean by that?

JF: When the nature of what is bought and sold changes, that's a new economy. Think of someone who hires a litigator today to defend a claim. Chances are that litigator is going to do it in different ways than they would have 10 or 15 years ago. They might involve an e-discovery service, or there might be some expectations around project management. But the lawyer is still doing what lawyers have always done – evaluating the case, advising accordingly, mapping out the best possible strategy, fighting things out in discoveries and in pre-trial motions. But what happens if the client no longer has litigation matters or claims? Maybe the client has better internal risk monitoring systems. It has new workplace standards and enforces them, or it has changed to the nature of contracts and compliance is now more automated. All of these possibilities and more are coming where the client essentially says, "I don't need to go to a lawyer for this." This isn't just a question of the legal tasks disappearing from lawyers' desks. It's a new way of dispensing with these problems altogether so that they never actually arise in the first place. Now, if the client needs a way to completely change the culture of its business so that workplace harassment, product liability and breach of data claims don't happen – well, law firms are nowhere on that. Lawyers do not see themselves as problem preventers.

N: Do you see the legal services industry shifting in that direction in the coming years?

JF: Yes, and that is not to say that legal problems are going to disappear. But the nature of what is being bought and sold is going to be different because the nature of what clients are looking for is changing and diversifying. This isn't just about litigation, either. It's true for transactional and M&A work too.

N: How do you see the phenomenon of work automation unfolding in the legal industry?

JF: I'm not sure that the great automation revolution is going to come quite as fast and as soon as we think. We're overlooking the fact that we as a society don't want to lose the work and the labour that we do. We already know the things that can be automated and that can be done faster and better by technology. The problem is that we aren't seeing its implementation because the people who are in a position to control the means of production don't want that. The people who produce legal services don't want to automate them. For the most part, the people who buy legal services also don't want to automate them because it's completely unfamiliar territory.

N: Can the billable hours to one another ten years?

JF: Oh, yes. Lawyers are comfortable selling their work by the hour. And for the most part, corporate clients are comfortable buying it by the hour because that's the world they know. It's easy, it's convenient and it's profitable for the people who sell it. That's why we have it. Also, it's extraordinarily hard to price legal services, and it's extremely hard to match the price to the value your providing. It's not impossible, but it's a lot of work for both lawyers and clients. Some work has to ALSP platforms which, for the most part, is fixed fee. The work that remains in law firms and that is high value, complex and difficult is the work that probably should be charged on an hourly basis. The real problem for lawyers is that the billable hour was only ever truly profitable on the basic associate work. But if you try to bill your high stakes work on an hourly basis you are massively undervaluing yourself. So, if it takes you 50 hours at $1000 an hour to solve a problem that saves the client a million bucks, you're getting robbed. This is eventually going to come home to roost for a lot of lawyers. Because the kind of leverageable work that the billable hour was designed to generate profit is leaving the law firms. What's left is the kind of work that may be more convenient to bill by the hour, but you won't be making as much as you should make.

N: How do you see demographics having an impact on the way law firms and departments will be run?

JF: They are still important and influential, but the boomers' time as an active force is, I think, pretty much done. But the legacy they've left is going to take years to unwind. More and more managing partners, practice group leaders, and law firm executives that I meet are Xers and Millennials. It's their profession now, and they're going to spend a lot of the next ten years trying to tear down all the cultural and financial infrastructure that boomers left behind. It'll probably take at least a decade to reconfigure law firms in their image — maybe even longer — and frankly, it may be a task that's beyond them.