A new un-normal – nothing permanent except change

While COVID-19 has upended the way we work and socialise, this article examines why legal technology was not very welcome in the pre- COVID era. In the backdrop of recent developments in Australia, UK, US and UAE, the positive transformation in the legal industry has been analysed.

Tuesday, 25 August 2020 was a historic day in Australia – the first where those governing the country participated in parliamentary debate, virtually. While in the past, some politicians may have preferred to avoid the commute to Canberra, now many will perform key parts of their job from home. To say that the Covid-19 world has changed the way we do things would barely cover it – it has upended the way we socialise, the way we consume, the way we work and now, the way our democracy operates.

Similarly, the recent US Democratic Party nominations were conducted online in an electrifying manner, where the first woman of colour on a major political party was confirmed, virtually. As celebrations of this monumental moment erupted online, one got the sense that the lines between the digital world and the real world are increasingly blurred and that progress cannot be held back by the pandemic.

In the post-Covid-19 world much has changed. Demand has moved significantly online. Many newcomers online joined the digital crowds already jostling in the booming online retail market. A large percentage of those contributing to the stellar results of Australian retail made purchases for the first time, giving rise to prime examples such as JB Hi-Fi which recorded a 44% increase in July sales and whose share price has doubled since the pandemic began. First time online consumers accounted for 40% of online sales in the US. New technologies have also enhanced the online shopping experience, with businesses now offering augmented reality and virtual reality tools that allow customers to ‘try on’ clothes from the comfort of their homes.

These factors have also impacted the legal profession.

Pre-Covid-19, the legal profession was working in much the same way it had been for the last 100 years. While there have been some significant advances in technology that have impacted discovery processes, due diligence and legal research, much of the profession chose legacy models over technology-led future models. There are many factors that contributed to this, and three resonate strongly:

  1. The Commercials – It’s hard to tell business owners that operate at significant profit margins that their business model is broken. Indeed, Old Law has delivered tremendous value for those privileged equity holders in leading firms. Some may now be questioning the fundamentals of that model.
  2. Loss Aversion – The upside of technology adoption did not outweigh the potential risks associated with adopting a new way of working, which would require significant changes to behaviours and remuneration models that are culturally entrenched in the delivery model of traditional legal services.
  3. The Promise – The promise of LegalTech had not yet delivered at scale, was in a febrile state and frankly, commercial models to monetise it and deliver value to clients were not well understood.

In April, approximately 80% of the US workforce was stood down or working from home. For those working from home, firms experienced a 28% increase in productivity. This is staggering. I cannot recall a single management act that has increased the productivity of a workforce to this degree, but apparently the answer was simple – go home. But what does this mean for the legal profession?

Many law and professional services firms are examining their high cost base, their city offices across the globe, their leverage human resource model, technology proposition and more. They are focusing on questions such as: Where can costs be cut and resources optimised? What is the right combination of remote working tools and how does one retain talent to keep market share or even increase it? Those who focus on a ‘return’ to the office will miss the opportunity that this great re-set has presented, as to return is to retreat and the landscape has changed too much to automatically revert to the old ways of working. Those who build new capabilities, new operating models and embrace the technologies that may have otherwise taken five to ten years to adopt, will benefit from the advantages.

Just as Excel spreadsheets did not do away with accountants, LegalTech will make for better lawyers and better client experiences. We see potential in automation tools for document production, advanced machine learning and natural language processing tools for document review, Compliance Tech to support businesses cope with an ever-changing regulatory environment and workflow optimisation tools to get the right work to the right lawyer at the right time.

The United Kingdom has recognised the opportunity this creates and recently formed the LawTech Sandbox to drive R&D in LegalTech, and unite government, regulators and the private sector to solve problems that will deliver solutions to issues such as access to justice and an inequitable legal system that costs Small & Medium Enterprises GBP 50 billion in late fees and GBP 11.6 billion in litigation related fees each year. And in my current home in the United Arab Emirates, Abu Dhabi operates the world’s first digital courts that provide end-to-end dispute resolution and court proceedings through remote working technologies, automation and digital technology solutions, combined with leading international judges such as The Honourable Kenneth Hayne. Known as ADGM Courts, it enables businesses to flourish by providing a platform that supports innovation and adheres to international rules and regulations.

As a world-renowned Common Law jurisdiction, Australia is well positioned to benefit from the opportunities the current environment presents, and positive steps are being taken. For example, on 6 August the Minister for Trade, Tourism and Investment, Simon Birmingham, and Chan Chun Sing, Singapore’s Minister for Trade and Industry, digitally signed the Australia-Singapore Digital Economy Agreement. This important agreement and the subject matter it covers are positive steps forward in the digital trade world and provide the platform for regional leadership. But what role will Australia and its transforming legal industry play in the world-wide transformation of the legal profession? That’s where the excitement is.

Jamie Levy is the General Counsel of Abu Dhabi Investment Office, an Advisory Board Member of the Australian UAE Business Council and was previously a corporate law partner in KPMG Law – Sydney, and led its NewLaw services platform.