“The external environment is changing, our customers are changing, and the whole business is changing, so legal needs to change too”.
Rebecca Lim, Chief Compliance Officer and Group General Counsel, Westpac
IACCM’s research, and in particular our 2016 Future of Contracting Report, indicates that contracting activity is starting to focus far more on areas such as knowledge application, commercial innovation, business judgment, simplification and behavioral economics. The days of review and approval by the “Legal Function” are numbered. Given that typical estimates are that this represents around 50% of a Legal Department’s workload the choices appear to be either shrinking numbers or expanded value. The Legal Function of the future needs to be focused on how it can empower the business through self-service.
Lawyers cannot be immune from digitisation, it is a reality; and given the continuing need for contracts, business leaders will demand that contracting form and process do not stand in the way of this inevitable force. A digital world will make causes or sources of delay or quality issues all become steadily more visible, driving a need for all business functions to become far more adaptive and able to relate their services to rapidly changing business context.
Examples of this at present include an appreciation of the impact of machine learning, natural language processing, blockchain and other technologies which, according to many academics and business leaders alike, will dramatically impact white-collar work.
The legal profession is particularly susceptible to these technologies; indeed, Richard Susskind has written extensively about the impact of new technologies on the legal profession. “The end of the professional era is characterized by four trends: the move from bespoke service; the bypassing of traditional gatekeepers; a shift from a reactive to a proactive approach to professional work; and the more-for-less challenge.”
Companies that thrive in this increasingly dynamic environment will be those best able to respond quickly and innovatively to rapidly changing consumer preferences and market conditions, able to display agility on the one hand and resilience on the other. This calls for faster, simpler and more agile organisational models, as well as cost structures that reflect only the costs that consumers are willing to bear.
Paul Polman, CEO, Unilever
The CEO of IBM recently made it clear that she expects all IBM Sales Teams to be tablet enabled and for business contracts to be executable directly in the customers’ office.
A recent study by the Association of Graduate Recruiters cited Commercial Awareness and Communication Skills as the skills most lacking in graduates today. They are far from unique in citing Commercial Awareness as a core skill for business, “Based on talking to recruiters up and down the country, Commercial acumen is the single most desirable attribute employers look for in a future trainee and is becoming more and more important for modern day legal practice. Trainee solicitors are expected to emerge not only as good lawyers but as sound business advisors as well. Commercial awareness, simply put, is developing an understanding of the business environment in which law firms and their clients operate”.
“The General Counsel of the future will be like an Olympic decathlete – maybe not a world record athlete in all of the ten disciplines, but very good at all of them. And digital savvy.”
Ricardo Cortes-Monroy, Chief Legal Office and Group General Counsel, Nestle
Richard Susskind has recently published a new book, “Tomorrow’s Lawyers” and in it he describes the three phases of the journey to the future for the legal profession. The first is “Denial”; happily he concludes that we are nearing the end of that particular phase, there are very few Corporate Lawyers who harbor under the illusion that nothing needs to change. The next phase is “Resourcing”, the phase that we are in the midst of today, where the focus is on low cost legal resource, law firms and legal departments choosing to use cheaper people to do legal work, through outsourcing, off-shoring, the focus being on lowering legal operating costs. Finally, we will enter in to the phase of “Technology”, this is viewed as the stage of disruption where technology will indeed take on the tasks of intelligent human lawyers. The point Susskind rightly makes about technology is that there is no finishing line, there are no executives in Silicon Valley brushing their hands together and concluding that their job is done! The pace of change continues to accelerate and whilst the short-term view around Artificial Intelligence is clouding the long-term impact of this and other technologies, technology is pervading our traditional legal world and in Mr. Susskind’s view, by the early 20s the Technology phase will have taken hold. So, is it safe to wait until that time, or should we preparing for that inevitability now? I think the answer is clear.
The interesting thing to note is the view of Richard Susskind on the effectiveness of Law Schools, which mirrors the conclusions that we were able to draw from the interviews that we undertook with George Triantis, Charles J. Meyers Professor of Law and Business at Stanford University and Michael Hom, Assistant Dean of Career Development at Pepperdine School of Law. Law Schools are continuing to churn out a myriad of newly qualified lawyers, many of whom are unable to secure a job, or at least the job of their choice. Many Law Schools are still training 20th century lawyers rather than 21st century lawyers, indeed many law students have a conception of legal practice that bears no resemblance to reality and no resemblance to the needs of corporate clients. The view of all three of these individuals is that it will become more and more incumbent on the General Counsel’s of today to drive the Law Schools to teach the skills that they are looking for, certainly for Michael Hom at Pepperdine, he was unequivocal in his desire for this to happen; today’s in house lawyers need to help influence and shape the curricula of the future.
Whilst Mr Triantis confirmed that over the last 26 years there has been a dramatic shift in teaching, a shift from teaching traditional contract doctrine and case law, to a greater focus on drafting, designing contracts albeit with case law in mind, Law Schools generally remain woefully behind in terms of any focus on technology and the impact that technology will have on the profession over the coming years. Based on Richard Susskind’s predictions (and he is far from alone in these predictions) that is a worrying trend.
When questioned on the meaning of “commercial acumen” for lawyers, both Mr Triantis and Mr Hom were unequivocal in their view that this had to incorporate skills in accounting, finance, empirical method and valuation. What is clear is that most lawyers have an absolute aversion to quantitative work! In addition, and to quote Mr Triantis “…the holy grail for law students is teaching on risk assessment and risk management…”. Lawyers and contract professionals need to think about contracts as a portfolio; something that IACCM has espoused for years. What was incrementally interesting was the view that too few legal departments keep rudimentary records on, for example, the amount of time spent drafting versus the amount of time spent in dispute and litigation, is there any correlation between the two?
So, what will the lawyer of the future look like? What work will lawyers be doing? The 20s look set to be an era of re-deployment. Law firms and legal departments will be recruiting legal technologists; lawyers of the future will not be trying to compete with machines but instead will be building them. Technology will play an ever-increasing role in eliminating unnecessary cost from legal departments and outsource resources. Law firms are being challenged, and rightly so, by disrupters such as Elevate, Riverview Law and Integreon. Law firms of the future will be guided by a Leadership Team driving Innovation. Corporate Legal Departments will be focused on adding value that no one else can, not in the sense of traditional and basic protectionist behaviour, “…decision making from a business perspective…”, driving efficiency through their organisations, finding solutions not problems. Legal Departments of the future will be filled not just with lawyers, but with business people who have a legal background. Technology will enable non-lawyers to take over a lot of today’s “legal” work.
How will this change occur? It’s often hard to see, particularly in organisations that are trading successfully, why change is even necessary. However, you don’t have to look far to see companies once in the heart of the Global 500, disappear almost as quickly as they achieved that status. The successful law firms and legal departments of today are adopting an R&D approach, in the word of the CEO of Microsoft “…speed up the time to failure…”, “…how does one achieve success – it’s through a series of failures…”.
In conclusion, law school education remains antiquated; it is clear that there is a distinct lack of innovation in the legal curricula developed in law schools and an almost complete lack of any meaningful technology training. That said, it appears that there is a tremendous opportunity for General Counsel’s of our 21st Century corporations to start to drive and influence change in those curricula and importantly, a willingness on the part of the law schools to embrace those discussions.
 Professor Andrew Brown, Institute of Education, University College London
 The Future of the Professions: How Technology with Transform the Work of Human Experts
 The Ultimate Law Guide