Is Big Law Falling Behind on Legal Tech?

As thousands flooded the Hilton New York Midtown hotel for ALM’s Legalweek: The Experience conference this week, they were greeted by over 200 vendors promising the latest in e-discovery, security and contract management software. As Big Law Business hit the exhibit floors, the word from many vendors was that Big Law is falling behind.

Driven by internal pressure to act more like business units, in-house legal departments are increasingly looking to technology to help them inexpensively take care of legal work they once had to outsource for higher fees, according to Chris Bright, co-founder of e-discovery company Zapproved. Bright said he skipped law firms and started out marketing directly to corporate counsel when he launched the company in 2008.

“We’re trying to take the power and put it back into the corporation’s hands,” he told Big Law Business when we stopped by the company’s lime green booth.

Beyond e-discovery, corporate legal departments are finding they can leverage intelligent software to do much more legal work in-house. According to ALM Intelligence data presented for the first time at the Legaltech conference, 80 percent of corporate law departments are in-sourcing more than they used to, 68 percent are increasing their use of outside providers, and 40 percent are decreasing their use of outside counsel. The size and scope of the survey wasn’t immediately available.

David Holme, CEO and founder of legal outsourcing firm Exigent, said none of his clients have ever told him they’d like to outsource more, rather than less, of their work to law firms. “That’s a deafening silence,” he said.

Citing a 2016 Deloitte study predicting 39 percent of all legal jobs in the UK could be automated in the next two decades, Holme told Big Law Business that traditional law firms are putting themselves in a precarious position by continuing to hire the same number of people despite falling productivity and demand. “I wouldn’t be advising anybody to take a law degree right now,” said Holme, who is based in London.

Not all vendors were so pessimistic, however. Andy McDonald, CEO of e-discovery firm Consilio, said while he sees in-house counsel taking more of a role in day-to-day workflows, the need for outside counsel won’t disappear. “It’s not a straight-out abdication,” he said.

And there are still segments of the Legal Tech industry with their sights set squarely on Big Law. Chief among them are security companies like eSentire, according to Mark Sangster, vice president of marketing, who said he’s been after firms to step up their internal security protocols.

Most lawyers understand their individual duties of confidentiality and security, but that doesn’t mean they understand system-wide risks, Sangster told Big Law Business.

“Law firms don’t know how to translate their fiduciary duty into one’s and zero’s,” he said. Because law firms by design lack a unified ownership structure, many executive boards remain disconnected from operations and IT departments, leaving sensitive data protected from one side but exposed on the other, according to Sangster. His advice to law firms: remember that they’re also third party providers. If their clients are regulated, they are too.

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