It might be a risky time to predict the future, but Jim and Sharon have decided to give it a whirl! Based on shifts they’ve seen throughout the legal community during 2020, they offer their thoughts on what lawyers should keep in mind as the new year begins. With topics ranging from the movement away from physical office space to cloud-based lawyering to the rise of ransomware, and more, Jim and Sharon talk about which changes they think will stick and what impacts we may see throughout the profession.
Special thanks to our sponsors, Clio, Scorpion, Blackletter Podcast, Alert Communications.
The Digital Edge
What’s on the Horizon for Law Firms in 2021?
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’re listening to Legal Talk Network.
Sharon Nelson: Welcome to the 156th edition of The Digital Edge: Lawyers and Technology. We’re glad to have you with us. I’m Sharon Nelson, President of Sensei Enterprises, an information technology, cybersecurity, and digital forensics firm in Fairfax, Virginia.
Jim Calloway: And I’m Jim Calloway, Director of the Oklahoma Bar Association’s Management Assistance Program. Sharon and I both lecture a lot on the future of law and we’ve both been getting all kinds of questions about the new normal and practicing law, what it might look like, so we’ve named this podcast, “What’s on the Horizon for Law Firms in 2021.” Although it’s a risky time to predict the future, Sharon.
Sharon Nelson: It certainly is, but you and I have always been reckless about taking risks. Okay, before we get started, we’d like to thank our sponsors.
Thanks to our sponsor Clio. Check out Clio’s Daily Matters podcast for the latest on legal in the COVID-19 are. Listen to Daily Matters at clio.com/daily or subscribe wherever you get your podcasts.
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Jim Calloway: We’d like to thank our sponsor, the Black Letter Podcast, a show dedicated to making law exciting and fun with informative interviews and advice from esteemed guests.
We’d like to thank Scorpion. Scorpion is the leading provider of marketing solutions for the legal industry. With nearly 20 years of experience serving attorneys, Scorpion can help grow your practice. Learn more at scorpionlegal.com.
Sharon Nelson: Well, we sure did pick a timely topic, Jim, but it’s hard to see too precisely into the future whether you’re talking about the pandemic or the future of law practice. But let’s talk about one thing that both lawyers and clients seem to have changed their minds about the importance of physical office space. Until I read the Clio 2020 Legal Trends Report which has a combination of Clio users and non-Clio users, I had no idea that 21% of law firms were already operating without commercial office space and since the pandemic, another 7% of lawyers have given up their commercial offices and 12% are unsure they’ll keep them going forward.
So, I’ll bet the number really is even higher today because that report was in October and I hear from some of my friends that if they’re with a big law firm, they’re looking to exercise these subletting provisions of their lease. But since the pandemic forced us to meet via video conferencing and to sign engagement agreements electronically, it seems like we’ve all gotten used to that way of doing businesses and anecdotally, like I said, I keep hearing about this subletting.
What have you seen out there in Oklahoma, Jim, and what’s going on with you and law firms and office space?
Jim Calloway: Well, I’ve talked to people in several states about this topic, not just in Oklahoma, and Sharon, I really believe in some of the areas where office space is really expensive. We’re going to see some law firms downsizing to cut overhead significantly either by subletting or just waiting until the lease comes out or what it hits or whatever it may be.
Also, in the longer term, it won’t surprise me to see large partner offices go away. I know there’ll be a ton of institutional resistance to that, but I do really see a day when a lawyer shows up to work on the day they’re reporting to the office that week, that lawyer gets its signed office number seven, they walk over to office number seven, and has the lawyer’s name displayed digitally above the door and you open the door and the lawyer’s diploma and licenses and everything are all displayed on screens. It’s kind of like tomorrow yet another lawyer and the firm may be using that office but it’s almost sharing like that hot bunk concept in the navy where one sailor goes to sleep at a recently vacated bunk.
I think physicality is going to be reduced, but there’s still going to be a need for a home station for the offices to function, to receive mail, packages. Amazon delivery is another — for certified items.
Sharon Nelson: Yeah, it’s all changed, but I agree with you.
Jim, you and I have been saying for a very long time that the cloud protects the security of law firm data better than the lawyers would and that is so true. Although, listeners may have heard stories of cloud breaches. The majority of them are caused by users who misconfigured the security of the cloud and their presence in the cloud.
Recently, I began to say that the best time to move to the cloud was five years ago and the second-best time is today. Clio CEO Jack Newton has said that if you’re not in the cloud, you’re not in the game. That he calls the cloud table stakes, which I thought was a very interesting term. Also, of note, is the ILTA 2020 survey where the majority of respondents said, and I had to read it carefully, that how they were going to the cloud is that with every upgrade, they were going to the cloud. So, it’s a staged process but it’s in place for every upgrade.
What have you been seeing and hearing, Jim?
Jim Calloway: Well, I think what I saw for sure in March and April was when I was dealing with lawyers who were suddenly sheltering in place, those that had all their data in the cloud were way ahead of those who still had all their data locked in physical files. That’s one thing, but for solo and small firm lawyers where their life and their law practice are often more entangled, intertwined, the idea of having everything in the cloud — so if you get a call from a client at home at night, you can respond to it, if you decide you need to work on a weekend, you’re not stuck with the idea that if I’m going to work at home, I have to take the files physically home to be able to work. So, I definitely think data’s safe in the cloud even though it’s not always safe in the cloud if you don’t configure things correctly.
I wanted to talk a little bit about Professor William Henderson and Richard Susskind, two of the most notable scholars in the science and the data and where technology is bringing law practices. Professor Henderson talks about how the law has really bifurcated now into two totally distinct areas that aren’t really the same anymore. People law versus business and corporate law. And he predicts along with others that people law will continue to move away from the one-to-one consultation method to the one-to-many service delivery model. And I think solo and small firm lawyers should really pay attention to that because what that says is if you use your technology correctly and if you market it correctly, one lawyer can now expand and serve three times the clients using automation, delegation and a lot of tools, and that’s going to leave some lawyers without enough clients.
I think that’s something that we really need to pay attention. On the other hand, the access to justice challenge in the United States could really be addressed by lawyers being able to serve more clients and be able to serve more clients at a lower cost point for the law firm. We will see what’s going on but I fear that it’s like a game of musical chairs and some lawyers are going to be left standing up when the music stops playing.
Sharon Nelson: Yeah, I call it sometimes rearranging the deck chairs on the Titanic because we’ve been moving in really the wrong direction, not adapting to the future and so, I hope more lawyers will look to do that and honestly, Jim, I think their mindset has changed so many times during the pandemic about what they can and should go or do. I’m rather hopeful that we will continue to innovate and take a look at what we’ve always done and say, “Is this what we always should do?”
Jim Calloway: Well, one thing we’ve seen in our state is because we’ve had some bad infections shutting down courthouses, we’ve seen court clerks accepting documents by fax and email and dropping it off outside the box and all sorts of things and I think when that all goes away, the states like ours that don’t have broad electronic filing, a lot of the legal committee is going to say, “Why?”
Sharon Nelson: Yes, I agree with that in spades.
Jim Calloway: Before we move on to our next segment, let’s take a quick commercial break.
Sharon Nelson: As the largest legal-only call center in the US, Alert Communications helps law firms and legal marketing agencies with new client intake. Alert captures and responds to all leads 24/7, 365 as an extension of your firm in both English and Spanish. Alert uses proven intake methods customizing responses as needed, which earns the trust of clients and improves client retention. To find out how Alert can help your law office, call 866-827-5568 or visit alertcommunications.com/ltn.
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Sharon Nelson: Welcome back to The Digital Edge on the Legal Talk Network. Today, our subject is “What’s on the Horizon for Law Firms in 2021.” Certainly, one thing we know is on the horizon is ransomware, which has driven us all crazy in 2020 and it doesn’t look like that’s going to abate. I feel like we’re living in crazy town here, Jim.
It’s just been a nightmare of people calling and saying, “We’re down, we’re down, we’re down. We’ve got a ransom that we’re supposed to pay. What is all this about? What do we do?”
So, it is certainly clear that there is not a lot of incident response planning going on because they are just frozen in time and they’re down in the water. Cyber criminals of course are always sniffing for new opportunities and we certainly gave it to them with our new work from home environment. We saw more than a 750% rise in ransomware in the first six months of 2020 and home networks are about three and a half times more vulnerable than law firm networks. And using home machines rather than work-issued laptops or whatever that we bring home that are secured by the law firms, that just complicates the problems and the cost of ransomware is enormous.
Jim, you and I remember the days when a thousand dollars was a big ransom. Oh, boy, is that a long time ago. So, in the third quarter of 2020, the average cost of ransomware was $233,000 and change according to the cybersecurity and ransomware specialist firm Coveware.
Law firms are getting hit left and right among many other people and, of course, recently, we’ve had you know government agencies hit more of an — that seems to be more business espionage than it does about ransomware. But now, we also have, with the law firms, we have the double ransom where the bad guys steal your data before they encrypt it. If you’re able to recover from backups without paying the first ransom demand, you will then get a second ransom demand for supposedly destroying your data and, of course, we always trust cybercriminals, so that’s what we do. We pay them and trust them that it’s gone. They will send you samples to show you that they have the data or they’ll post them on the dark web to scare you into paying and if you pay for the decryption key in the beginning, then you’ll still get that second ransom as a rule.
And for some reason, and I guess I understand it, insurance companies are often choosing to pay rather than pay for an extended business interruption and possibly the costs associated with the theft of the data. So, fully 25% of victims today are paying ransoms. I don’t really see this getting any better soon, do you, Jim?
Jim Calloway: No, unfortunately when the Internet evolved, we were all so excited we could be connected with anybody in the world and now we know there’s a lot of people we don’t want to be connected with, Sharon.
Sharon Nelson: Isn’t that the truth?
Jim Calloway: I want to talk a little bit about computers and software actually doing legal work. One growing area is contract review software tools that includes products like LawGeex, ThoughtRiver, LegalSifter, and Della AI. These tools use AI to compare contracts with clauses in their databases and offer suggestions about clauses and other drafting changes. They can also learn from new contracts and may query you about whether you want to use that old covenant not to compete language because you’ve been using new language in other documents. Certainly. these tools are not cheap, but if you manage and draft many contracts, they are all cheaper than hiring an associate.
There are also AI-based legal research tools. We’ve recently heard the news that ROSS is shutting down to focus on its lawsuit with Thompson Reuters saying that they will resurrect the company when they prevail, but the suit says ROSS used their data, so we’ll see how that turns out. But Thompson Reuters and LexisNexis have a paralegal research tool and case text includes its AI tool CARA at a really affordable monthly price of $65 a month.
Now, many lawyers are also using automated document assembly to prepare not only the first drafts of legal documents but the final drafts. So Sharon, computers are actually doing legal work today. It’s not just what’s happening in the future.
Sharon Nelson: Yeah, I think that took us a little bit by surprise and it was probably propelled a bit by the pandemic, don’t you think?
Jim Calloway: I think it was a little bit. Some of these tools have been around but suddenly, they made a lot more sense when people were working from remote locations.
Sharon Nelson: Yeah, I think that’s what has done it and I’m seeing more and more of that as it’s being contemplated. I don’t know about being implemented, but it’s certainly being contemplated. So, I think we’ll see more as time goes on and we start to reach a new normal, which we don’t obviously really know what that looks like yet but we’re beginning to make some calculated guesses.
Jim Calloway: I would think the lawyers that reviews 20 or 30 contracts a month would really think this was a great tool. On the other hand, if they’re doing that by the billable hour, there may be some contemplation.
Sharon Nelson: There is and no question about it. I mean, people want these tools for the express reason that they want to lower their bills and that’s against what most lawyers want to do. So, there is resistance as well as positive adoption. So, it’s not clear to me where we’re going to land. I’ll let you be the guru on that one and predict the future.
Jim Calloway: Well, I knew when PC Magazine was running features on the best 10 contract management software tools, it was becoming mainstream.
Sharon Nelson: That’s a dead giveaway. You’re right.
Well, let’s talk about business email compromise, which is a very big deal these days. One of the strange benefits of being a former Virginia State Bar President is that I am in the contacts of a lot of prominent Virginia lawyers. So, when their accounts get compromised, I often receive the phishing or scam emails that are sent out to their entire contact list and I’ve been getting lots and lots of those. So, that keeps me very educated on how often business email compromises happen.
We saw a 75% increase in business email compromise in the first three months of 2020, but the whopping great statistic was that we then saw a 200% increase each week from April to May. I have to assume that this means that cyber criminals are having some great degree of success using these compromised accounts and people ask us all the time because they realize I’m in their contacts, so they say, “Well, what can we do about this?”
And I have to tell them, look, once they have all of your email, your contacts, your calendar, et cetera, you can’t do anything about that once they have it and, of course, what they should have done is have multi-factor authentication which prevents 99.9% of business email compromise attacks. And wherever you can do that, you should enable MFA. It’s almost everywhere these days and it’s a matter of security versus convenience because they don’t want to have to enter a text from their phone or something like that and have a special number that they’ve got to type in, but if you can block 99.9% of these attacks, Microsoft itself thought it was so important that they made MFA free, so why don’t people do it?
Like I said, they’re afraid they’ll have to enter a code from their smartphone, on their laptop or other device, but in most cases, that’s not true. It might be true of your doctor’s office. It might be true of your bank or your stock broker but you can establish most of the time trusted devices so that no code is needed under normal circumstances unless you buy a new device, you change your password or perhaps you’re visiting someone and using their device for some reason.
And I think this is a good place to turn this subject over to you, Jim, so you can expand on the different kinds of MFA and which is the best.
Jim Calloway: Well, I may defer to you and John on which is the best after we talk about all of them because you’re the experts of the area, but it’s certainly critical to use multi-factor authentication. Recently, we’re trying to move people away from text messages because SMS text messages can be so easily compromised. But let’s be clear, if you’re about to set up two-factor authentication with text messaging and you’re listening to this podcast, don’t cease to do that just because you’ve heard there’s something better. It’s way better than nothing.
But the authenticator apps and authenticator tools are what’s going to replace both two-factor authentication and multi-factor authentication. There are actually these hardware tokens Sharon talked about like Yubico’s YubiKey line or CryptoTrust OnlyKey where you actually have a physical thing you carry on your key ring or in your purse and it plugs into either your USBA slot or USBC slot or lightning for iPhone users or those type of devices.
But really, most people are going to prefer the software tokens like you have mentioned, the Microsoft authenticator, Google authenticator, there’s one called Authy that works with every site that’s set up for Google authenticator that made things a little easier and the like. These apps constantly generate new codes that are only valid for about 30 seconds, so when you log into an account, you’re prompted for a code, you just open your app and enter that most recent code and you’re good to go.
I guess the good news is for those lawyers that have been meaning to do this, Sharon, but haven’t quite gotten to set up two-factor authentication or multi-factor authentication. Now, they can just go ahead and start with the authenticators and miss that intermediate step that other lawyers are going to have to get out of. So, what do you think’s best, Sharon?
Sharon Nelson: Well, I’m quoting John, because this is not my specialty but clearly, text is not the best but way, way, way better than nothing. The preference is to use authenticator apps and I think that’s where most people are moving right now and then I think tokens, that will be the third thing and who knows what comes after that, but tokens are not the primary way that people are operating right now. Some are, but it’s a minority. But I think we’ll see much more of that starting next year.
Jim Calloway: One thing we haven’t seen a lot of that we thought we would, Sharon, is the biometrics. I think people are concerned it’s okay on your device, but you only have 10 fingerprints and so, getting one of those compromised seems like it’s a bad step.
Sharon Nelson: Yeah, and there’s so many people who have our biometrics already and will have our biometrics, so we’ve never liked the idea of using biometrics. So, I much prefer these other suggestions.
Jim Calloway: Before we move on to our next segment, let’s take a quick commercial break.
Sharon Nelson: The legal industry is undergoing a fundamental transformation and the Daily Matters podcast is here to give you a competitive edge. In Daily Matters, Clio CEO Jack Newton interviews prominent legal experts to explore the new normal for law firms and how you can succeed in a work from home world. To listen, visit clio.com/daily or subscribe to Daily Matters wherever you get your podcasts.
Jim Calloway: The Black Letter Podcast demystifies complicated law and business issues by breaking them down into simple understandable bites. Hosted by Tom Dunlap of Dunlap Bennett & Ludwig, this show features fun and informative conversation with esteemed guests like CEOs and former AGs of the CIA. You can listen to Black Letter today on iTunes, Google Play, Spotify or wherever you get your podcasts.
Sharon Nelson: Welcome back to The Digital Edge on the Legal Talk Network. Today, our subject is “What’s on the Horizon for Law Firms in 2021?” So, when the pandemic hit, we got out of our office in about two hours. Somebody in our office had been exposed to COVID and, of course, the person hadn’t told them until the job was done, thank you very much. I know, I know, that that just killed me. But what lawyers are doing now that they were not doing before, let’s start with e-contracting and I have to make a confession that my own company was not doing e-contracting and I guess I attribute that to the fact that I’m sort of an old-fashioned lawyer myself and just had not pursued that and I should have pursued it. But I will say that within 24 hours of relocating to home offices, we had set it up and sent out dozens of contracts in a very short order of time including many that involved the people who were getting hit by ransomware, which was going crazy at about the same time.
So, DocuSign was our preference. A lot of folks like that we use that. Every lawyer now knows about e-notarization, which they didn’t before. There’s a I think a widespread adoption of client portals and case management software, Clio, Rocket Matter, in my case, but the clients love the security of client portals where they can go in anytime and see their documents, see their bills, et cetera, and no, Outlook is not a case management system even though there are still some die-hards out there.
And then we have the folks who were, for a long time, refusing to accept credit card payments and I’m amazed that that is true because 40% of consumers according to one of the Clio surveys would never hire a lawyer who didn’t take debit or credit cards. So, that’s crazy and then they had another statistic that I’m not sure I agree with because we’ve been doing electronic payments for a long time but they say 57% of electronic payments get paid within the same day, which is very high to me and 85% get paid within a week, which is also very high to me. So, I’m not sure I fully accept those statistics but I will say that we have emailed our clients asking those who are doing checks to shift over to credit card payment and that we have seen a marked increase in people paying promptly and the cash flow is very dependable. The fact that the mail was slow was one of the reasons, but I think in general, people are moving over, who never wanted to move over before, from check to the electronic payments.
So, I don’t know if you have any comment about that, Jim, or I can just ask you the last —
Jim Calloway: I do have one comment that if you’ve ever had a client bounce a check, you are a hundred times better off with a credit card payment that’s been contested than a check that’s bounced and you’re trying to collect it because there’s a process and the lawyers are often going to win that process if they’ve done their business correctly with signed agreements and billing statements and all that.
If somebody’s looking for a takeaway on credit card payment, Sharon, I would say if your law firm isn’t sending out bills electronically with a payment link, fix that, you’re missing the boat. And if you all don’t have your phones fixed up when a client happens to mention to you that they need to pay a bill or something where you can’t say, “Oh, here, let me text you the payment link.” That’s a high priority as well.
Sharon Nelson: It certainly is and it works really well. So, what shall we deal with for our last item, Jim?
Jim Calloway: Well, I was going to start out talking about what I think will stick after the pandemic is over and then see what you thought. I think video conferences is definitely going to be the big one. Right now, we may all have Zoom fatigue and when it’s safe, there will be a big boom in in-person meetings and conferences again. But now that the legal profession has learned to video conference, always the challenge with technology in our area, Sharon, the power of this tool is just undeniable. It’s just really helpful to look opposing counsel in the eye when you make that settlement offer as opposed to having a voice-only phone call.
And in a voice-only phone call, when you’re emailing documents back and forth, you should realize I should just be on Zoom or whatever so I can share these documents on the screen. I had even heard of lawyers who are having trouble getting a journal entry or court order drafted when there’s three or four counsel involved and they just have a Zoom meeting and throw the journal entry up on the screen and just edit while everybody’s looking at it.
So, video conferencing is definitely going to be a big boom and one final thing about that, Sharon, if you’re late to an appointment in your office with your most important corporate client, it’s far better to leave him or her waiting at their desk getting a few more things done than sitting in your waiting room.
Sharon Nelson: I agree with that completely and I agree about the video conferencing. It has been too much too fast and we haven’t handled video conferencing well a lot. We’re learning about and I think you had a post about how to look good and use video conferencing effectively and we still haven’t seen all of all of that happen. But we’re going to learn and then I think we will go back to a more hybrid of in-person but more clients seem to like the video conferencing. They don’t have to go anywhere. They don’t have to take time off from work, so they like the video conferencing. So, I think that’s one of the big things that will stick and certainly at this point, we’ve seen over 70% of lawyers are very comfortable using Zoom just to mention that one platform and Zoom is something that is so easy to use that almost all clients and prospective clients know how to use it, so it is the preferred video conferencing platform.
So, having said that, Jim, I just want to wish you a very happy holidays and a happy and healthy 2021 and I would like to see 2020 squarely in the rearview mirror.
Jim Calloway: I think that’s one observation you won’t make any arguments with anybody about. We’ll all know now what our worst year was, so we won’t have to think about it as we grow old.
Sharon Nelson: That’s the truth and that does it for this edition of The Digital Edge: Lawyers and Technology. And remember, you can subscribe to all the editions of this podcast at legaltalknetwork.com or on Apple Podcasts and if you enjoyed our podcast, please rate us in Apple Podcast.
Jim Calloway: Thanks for joining us. Goodbye, Ms. Sharon.
Sharon Nelson: Happy trails, cowboy.
Outro: Thanks for listening to the Digital Edge produced by the broadcast professionals at Legal Talk Network. Join Sharon Nelson and Jim Calloway for their next podcast covering the latest topic related to lawyers and technology. Subscribe to the RSS feed on legaltalknetwork.com or in iTunes.
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