Highlights of the Wolters Kluwer 2019 Future Ready Lawyer Survey

Episode Notes

Transcript

The Digital Edge
Highlights of the Wolters Kluwer 2019 Future Ready Lawyer Survey
04/26/2019

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Intro: Welcome to The Digital Edge with Sharon Nelson and Jim Calloway, your hosts, both legal technologists, authors and lecturers, invite industry professionals to discuss a new topic related to lawyers and technology. You are listening to Legal Talk Network.

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Sharon D. Nelson: Welcome to the 136th edition of the Digital Edge Lawyers and Technology. We’re glad to have you with us.

I am Sharon Nelson, President of Sensei Enterprises, an information technology, cybersecurity and digital forensics firm in Fairfax, Virginia.

Jim Calloway: And I am Jim Calloway, Director of The Oklahoma Bar Association’s Management Assistance Program. Today our topic is Highlights of the Wolters Kluwer 2019 Future Lawyer Survey.

Sharon D. Nelson: Before we get started, we would like to thank our sponsors.

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We are very pleased to have as our guest, Stacey Caywood, who is the President CEO of Wolters Kluwer Legal & Regulatory, a leading provider of information, software, and integrated workflow solutions for legal and business compliance professionals worldwide.

Our other guest is Dean Sonderegger, the Vice-President and General Manager of Legal Markets Innovation at Wolters Kluwer Legal & Regulatory US. He is responsible for the rapid development of advanced digital products and services to enhance customer’s efficiency and workflow. Thanks for joining us today Dean and Stacy.

Dean Sonderegger: Thanks for having me Jim and Sharon. Pleasure to be here with you today.

Stacey Caywood: Yes, thanks to you both. This is such an interesting and timely topic. It’s bound to be a great discussion.

Sharon D. Nelson: Well, we know that just about everybody who’s listening knows who Wolters Kluwer is, but not maybe as much as they might. So tell us a little bit more if you would Stacey.

Stacey Caywood: Yes Sharon. So Wolters Kluwer is focused on serving professionals around the world and helping them achieve better outcomes through expert solutions. In our legal division, we have a long-standing relationship with legal professionals in the US and in Europe, having worked with them very closely over many decades.

Jim Calloway: Can you tell us a little bit more about the survey, why you conducted it and who participated in it?

Stacey Caywood: Sure Jim. I think we can all agree that the legal industry is really at an inflection point. External forces are driving change. It’s no longer if, when, or how transformation is coming, it’s really now.

So Wolters Kluwer wanted to explore what that will mean for legal sector, how ready are legal professionals for what’s coming and what they can do to be best prepared. And so we commissioned an independent survey conducted by a global research firm to examine this. So the Future Ready Lawyers Survey included law professionals in law firms in corporate legal departments and in business services firms across the US and in ten countries in Europe.

The survey asked lawyers to assess their current state and future priorities and preparedness to identify what it will take to be future ready in the areas of tools and technology, client needs and expectations and organization talent, and then just for context the outlook for what we were calling the future relates to future related questions is three years out. So thinking about 2022.

Sharon D. Nelson: Got you. Well, as the Chair currently of the Future of Law Practice Committee for the Virginia State Bar, I know what everybody really wants to know the most is what were the biggest takeaways from the survey, and maybe you could start Stacey and then Dean can chime in.

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Stacey Caywood: Great Sharon. So at the highest level, the survey found that the future of law is truly global with many similar findings across the US and Europe even across different types of organizations, and I think that’s a new element and a sign of the times with a more global economy. While some differences were found based on specific geographic or organizational type, the most significant differences overall were between what we found to be the technology leaders and those transitioning and trailing organizations who are still not leveraging technology fully or really at all.

So the Future Ready Lawyers Survey found that while most organizations today rely on at least basic foundational technologies such as data security or encryption, those that are already leveraging technology to a greater extent, the so-called technology leaders have an early adopter advantage over other organizations.

We found that those technology leaders outperform the others across all categories including tools and technology, client needs and expectations, and organization and talent. And interestingly, they also report higher profitability. In fact, 68% of the technology leading law and business services firms report increased profitability from 2017 to 2018 compared to only 52% of transitioning law firms.

Dean Sonderegger: The interesting thing is that difference in profitability that we saw tracks with other sources that we see in the market. So if you look at the last Peer Monitor Report from Thomson, you’ll see that on average law firm revenue and like in the last year has grown by about 5.5%, which is a great number, but there’s still a lot of firms that are seeing decreases in revenue.

And so when you look at the top 100, the Am Law 100, you see about a quarter of the firms are contracting and if you go down to the second 100, that number jumps up to about 40% and that carries down further down market.

And so what we also asked in the survey is to say whether or not these firms were planning on increasing their technology investment over the next three years; and in fact, what we saw is that 65% of the firms that were labeled themselves as technology leaders are in fact planning to increase their technology investment over the next three years, compared to 45% of the transitioning firms or firms that are planning to increase technology but aren’t using it to its full extent at this point in time.

And that’s an interesting thing. That implies that that distance or the gap between the haves and have-nots in the market is going to potentially get wider as opposed to narrow over time.

Jim Calloway: Well that’s very interesting. I certainly see that even in the solo and small firm market, the technology adopters are getting to realize on their investment. Was there anything in the survey that actually surprised you?

Stacey Caywood: Yes, there definitely was. For me, one of the biggest surprises was the gap between the high impact legal market trends and organizations’ readiness to address them. So about 70% of lawyers said that the top trends they believe that will impact them is first coping with increased volume and complexity of information; second emphasis on improved efficiency and productivity; third understanding which legal technologies will deliver the highest value; the fourth meeting clients’ changing needs and the expectations they have.

And then finally, financial issues such as greater price competition, alternative fee structures, and cost containment pressures. But what’s interesting is that only about 30% of the organizations surveyed overall say, they’re well prepared to handle any of these. So we see that there’s a gap between the 70% who say these trends will have an impact and yet 30% feeling that they’re really ready to address them.

So I think the focus really needs to be what it is going to take to get to future-ready and optimizing technology as you mentioned Jim is really going to be key to their success. So the Wolters Kluwer survey found that the technology leaders reported much higher rate of readiness with 50% of them feeling more prepared to manage the ongoing changes that are taking place in the legal marketplace.

Jim Calloway: Very interesting. Before we move on to our next segment. Let’s take a quick commercial break.

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Sharon D. Nelson: Welcome back to The Digital Edge on the Legal Talk Network. Today our subject is Highlights of the Wolters Kluwer’s 2019 Future Lawyer Survey, and our guests are Stacey Caywood, the CEO of Wolters Kluwer Legal & Regulatory, and Dean Sonderegger, the VP and General Manager of Legal Markets and Innovation at Wolters Kluwer’s Legal & Regulatory U.S.

Boy, that’s a lot of read. You guys are impressive. All right. I’m going to ask Dean a question. So these leading organizations that you guys were talking about, what do they have that the others don’t? Why are the others having so much trouble?

Dean Sonderegger: Yeah, I think when it comes to the approach to technology, there is a focus that’s key here. And so when we — if you go back into technologists and you talk to them, they have this concept of something called a used case, which is roughly defined as what are you trying to accomplish in any given task. And organizations that are effective and using technology do an excellent job of purchasing technology to solve very specific problems or what I would call narrow used cases, and we will define those as tractable problems, things where success is clearly defined.

An example of that might be say, hey I want to use some technology to find comparable or standard language so that when I’m drafting contracts, it’s a much faster process for me. So we find these leading organizations are very good at narrowing down and I guess buying things that are very specific to the problems.

The broader used cases and I would call these the so-called robot lawyer used cases tend to be a more costly and difficult to implement. They might lack a specific application that ties the things that the attorneys care about, revenue and profit. And organizations that try and purchase technology, for technology’s sake in the absence of a solid used case, they tend to struggle on, it’s not uncommon, we are seeing the investments being abandoned after a period of time.

Jim Calloway: What will the transitioning and trailing organizations need to do to catch up with those leading organizations?

Stacey Caywood: Yes Jim, a good question and as we noted earlier, the survey found that those technology leaders outperform the other organizations across the board. So for those organizations that are not confident, that they’re well-positioned, I would advise them to do a few things, and I tend to start with the future.

So first, what’s your vision and the strategy for your organization? Do you know where you want to be next year and three years or beyond and make sure it’s clearly defined and communicated to everyone in the organization.

And then next, those organizations need to take a good look inside to assess where they are today in terms of the overall performance and capabilities, everything from technology to talent, the business processes and services and also consider the external forces that are driving change in the legal sector, things like the need to be more productive and efficient, changing client expectations and increasingly complex and high volume of information that these organizations are dealing with.

And then, the organization should have a good foundation upon which to build a solid plan that fills the gaps and strengthens the capabilities on an ongoing basis, and let’s not leave out the tech leaders. I’d say that even for the technology leaders, the secret to success is continuing to evolve.

So there’s a saying from Will Rogers, the American humorist once said, “Even if you’re on the right track, you’ll get run over if you just sit there.” So that’s true even for the tech leaders. Complacency really poses a risk so they need to continue to drive success and change for all those organizations as well.

Dean Sonderegger: And I think the thing I would add to that is that this was in the survey result is that the leading organizations continue to invest more in technology than the trailing or transitioning organizations. And so, I think obviously the planning is critical but in order to catch up with the leading organizations, these organizations need to commit to higher investment levels and then of course, take a hard look at the things that are preventing them from following suit with the technology leaders.

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Sharon D. Nelson: Well, Dean how do you persuade the C-suite, that’s where people seem to always get stuck is when they’re trying to get the C-suite to sign off on stuff and they just won’t?

Dean Sonderegger: Yeah I think that, Sharon, I think that the community case for innovation or investment always maps back to business fundamentals. It’s either revenue or profitability that needs to be addressed. And I think it’s interesting, you look at it, on average right now attorneys bill about 13 hours per month less than they did a decade ago. So we can do the math and you translate into a 156 hours per year which, so let’s just take a number of $415 an hour, it’s about $74,000 a year per attorney.

And because that drop in attorney productivity is driven by a bunch of factors, but one of the largest that we see is that there’s write-downs that the clients unwilling to pay for certain tasks. And my advice to attorneys looking to start these types of projects and then to sell into the C-suite is look specifically at write-downs and again, we’re talking about law firms as opposed to corporate legal departments, but look at the write-downs and identify technologies that can be used to reduce the time required to perform that work.

And I will give you an example. I think when we look at M&A activity and you go through due diligence, and you go through contract review on that, clients right now, by and large, unwilling to pay full rates for this work. There’s document review tools, AI or machine learning document review tools around that greatly reduced the effort to find things and like the best classic example I give is contracts that are not assignable, right.

And so, when you use those tools the law firm spends less attorney time on what’s a partially billable activity or they’re freed up from the expense of hiring contract lawyers to come in on the engagement. And when you find tasks like that and match them up with the right technology, it makes the development of the business case much, much easier.

Sharon D. Nelson: That was a really a very good and practical answer. I might have stolen a little thunder from you here, Stacey, with my asking that question, but other than the C-suite what you see is the biggest roadblocks?

Stacey Caywood: No, absolutely I think it all ties together. So really interesting right, so one of the things that the Future Ready Lawyer Survey found is that while technology is an enabler, a better performance overall, the top reasons organizations so I think sort of getting to your question a bit Sharon.

One of the top reasons organizations resist technology is that for 36% of the respondents, they simply lack the technology understanding, the knowledge, the skills that they need to know in order to invest properly, right.

Sharon D. Nelson: Right.

Stacey Caywood: So I definitely think that these organizations should look at is there a gap, do you have the right talent to help move forward not just great lawyers but perhaps somebody to actually drive technology adoption. And then, other reasons for resistance to technology and this is from about 34% of the respondents said that there were organizational issues including things such as resistance to change, lack of technology vision from leadership. And then again, back to your point, another key reason for roadblocks around implementing technology was 30% are saying that they are related to financial issues.

So direct costs, not understanding if there’s a return-on-investment, but was really interesting to me is that we also see that the organizations that are already optimizing technology also report they’re investing more in the future.

So I would say to those leaders of these organizations, maybe reach out to peers and understand, we know it at a high level that there is a positive ROI otherwise these firms wouldn’t be continuing to invest more right, so there are good business cases and with some of the examples that Dean just provided in, how do they learn and how do they make sure that they are investing in the future for a positive ROI.

Jim Calloway: Based on your observations Dean, what is the most compelling case that can be made for convincing lawyers to advocate for innovation within their own organizations?

Dean Sonderegger: Thanks Jim. I think it comes back to the finding that we talked about previously which is just simply that the firms that are investing in the technology are seeing greater increases in profits than the ones that are not, and I think that’s a pretty compelling case, is if you’re able to drive more profits per partner at the end of the day that’s the name of the game.

Jim Calloway: Before you move on to our next segment, let’s take a quick commercial break.

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Sharon D. Nelson: Welcome back to The Digital Edge on the Legal Talk Network. Today our subject is highlights of Wolters Kluwer 2019 Future Lawyer Survey and our guests are Stacey Caywood, the CEO of Wolters Kluwer Legal & Regulatory, and Dean Sonderegger, the VP and General Manager of Legal Markets and Innovation at Wolters Kluwer’s Legal & Regulatory US.

We’ve learned a whole lot Dean today about what legal professionals can learn from the survey. Is there anything you’d like to add to it? It just seems to me it’s a very educational study to take a look at.

Dean Sonderegger: Yeah it was really quite informative for us. I think one of the things that was interesting and we have focused a lot on law firms, part of the survey focused on corporate legal departments also, and question was asked of them was to say what are the most important factors in evaluating law firms per use as outside counsel. And it’s interesting, even with all the emphasis on legal technology we’ve have here, the top three factors used, and this is true in Europe and in the US were price, ability to understand client needs and partner with clients, and specialization, and the order has been different between US and Europe, but they both were at the top three, and use of technology was way down on the list.

This to me continues to confirm that technology remains to be a means to an end and not an end unto itself. So we see successful firms investing to help manage their costs to provide better insight the client needs and to provide the ability to specialize more and that’s all to the ends of better service to the clients, but not for the technology sake itself. So I thought that was an interesting thing that the corporate legal departments had not shifted over the emphasis on technology over those other items.

Jim Calloway: If you conducted a survey like this three years from now, what do you think the biggest differences would be?

Stacey Caywood: Yeah, I think one of the biggest differences will be technology being more integrated into firm processes and client services. In fact, in the survey about eight and ten lawyers said the technology will play a greater role in how they deliver service by 2022.

So we’ll continue to see technology becoming more and more integral to legal services overall. I think this will be driven by client demands and also by the demographics of the workforce. In terms of the next wave of new technologies such as artificial intelligence, predictive analytics, robotic process automation, the millennials we surveyed said these transformational technologies will have important application and strong impact in the legal sector.

Dean Sonderegger: Stacey also mentioned earlier one of the biggest challenges with adoption of these technologies is simply an understanding of the technologies themselves, and that’s not really surprising given that a bunch of these technologies, particularly analytics and all the forms of the AI that we see are relatively new from a product perspective.

My sense is in three years you’ll see the products and product categories themselves mature significantly, which I am like understanding and navigating the choices a lot easier, and I would use eDiscovery as an example. Nobody really questioned whether or not eDiscovery is a viable technology now, and I think the same will be true for many of the enabling and transformational technologies three years from now.

Sharon D. Nelson: I think you’re probably right and your projection and your crystal ball look pretty good to me. I want to thank both of you Dean and Stacey for being our guest today. This was a really valuable survey. I think it’s particularly relevant that technology is not really the focal point and yet technology is the underpinning of so much of what is happening out there and making things better for law firms, but we really enjoyed your report on this survey. We thank you for bringing it to our guests. I know they enjoyed listening to all of your remarks. So thank you both for being with us.

Dean Sonderegger: Well, thank you Jim and Sharon for having us. We really enjoyed the conversation, and I think that we’re at an extremely exciting point in the evolution and really the adoption of legal technology.

Stacey Caywood: Agreed. Thanks so much Sharon and Jim. It was really a pleasure to speak with you about the new findings of the Future Ready Lawyer Survey.

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Sharon D. Nelson: That does it for this edition of The Digital Edge Lawyers and Technology. And remember, you can subscribe to all of the editions of this podcast at legaltalknetwork.com or in Apple Podcast. And if you enjoyed our podcast, please rate us in Apple Podcast.

Jim Calloway: Thanks for joining us. Good bye Ms. Sharon.

Sharon D. Nelson: Happy trails cowboy.

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