TECHNOLOGY

LEADERSHIP

TALKING TECH
Combining Innovation &
Technology for Real Change

W
Imagine new business elcome to our new column, Talking
models that use technology Tech, where we will explore how tech-
and innovation to enhance nology is one of several disrupters in
existing services, or, better
yet, to create new offerings.
the legal industry. Legal information profes-
BY KATHERINE M. LOWRY sionals are experts who are dedicated to un-
derstanding how to apply innovation and tech-
nology for the benefit of their member
organizations, as well as their own firms’
underlying business imperatives. Through-
out each column, we will explore tolerance
for change, innovative new technology, ven-
dor solutions, and disruption made within our
member organizations. Talking Tech will also
feature guest columnists who will expand on
their expertise in specific areas of technology.

30 AALL SPECTRUM | WWW.AALLNET.ORG

 Setting the Foundation
Technology is often referred to as
an innovation, but most agree that
just buying technology, such as new
AI-enabled software, may only serve
as a Band-Aid to a problem or make
matters worse. Real innovation hap-
pens when the underlying processes are
examined and transformative new ways
of solving a problem or creating a new
service are identified. Either way, select-
ing technology as a solution comes later
in the process.
Innovation appears to be all the rage
these days, but many already believe
it is an overused term. Arguably,
many are getting lost in the seman-
tics. The real question is whether the
legal industry is a legacy industry so
addicted to the benefits of its legacy
that it inhibits its ability to innovate
and adapt. In examining the role of
innovation, there is no better place to
start than to reflect on the teachings
of economist Joseph Schumpeter. He
promoted the term “creative destruc-
tion” to describe a theory of economic
innovation in which technology and
innovation replace older means of pro-
duction/services—one where innova-
tion can replace or completely displace
existing companies or entire markets.
Thus, either innovate on a daily basis
or run the risk of becoming obsolete.
In his book Capitalism, Socialism, and
Democracy, Schumpeter declares:
The opening up of new markets,
foreign or domestic, and the orga-
nizational development from craft
shop and factory to such concerns as
U.S. Steel illustrate the same process
of industrial mutation … that inces-
santly revolutionizes the economic
structure from within, incessantly
Image © iStockPhoto.com/ Peshkova
The Legal Nexus of Forces … surfaces many fundamental issues
being driven and changed by technology. Namely, it identifies
new competitors and new strategies of existing competitors, and
it provides insights on how technology modifies firms’ relationships
with clients.
production technique, or open a com- and it surfaces many fundamental issues
pletely new market. Entrepreneurs are being driven and changed by technol-
a main catalyst for change that causes ogy. Namely, it identifies new com-
the most disruption by modifying our petitors and new strategies of existing
current process for delivering goods competitors, and it provides insights on
and services or by creating entirely new how technology modifies firms’ rela-
services. Change is constant under the tionships with clients.
creative destruction model and culture The Legal Nexus of Forces breaks
is a main component to change. Both the analysis down into four categories:
are viewed as being critical to economic
growth. 1. Client Sophistication;
2. Change in Competition;
How Does an Existing Organization
Avoid Becoming Obsolete? 3. Law Firm Innovation; and
One possibility is to make it table stakes
for every organization to innovate, 4. Emerging Technology.
which might suggest that organiza-
tions incorporate R&D (Research & Each category pulls together common
Development) groups to support a themes and market examples. As the
more routine approach to innovation or landscape of the legal services market
assign direct responsibility to an inter- changes, this framework can provide
nal intrepreneur that is responsible for a basis for evaluating new initiatives—
taking an idea to a finished product. both internal and external.
Imagine a group of intrapreneurs
serving as a main catalyst for change by 1. Client Sophistication
offering new business models that use Client sophistication undoubtedly drives
technology and innovation to enhance legal technology changes. With the
existing services, or better yet, to cre- advancement and consumerization of
ate new offerings. An example of this technology, law departments are able
notion is provided by BakerHostetler’s to do more with less—and that trend
Legal Innovation team’s use of its Legal will continue. Reports show that law
Nexus of Forces framework, which they firms have been losing market share,
created to analyze the competitive pres- and while corporate clients are seeing a
sures to innovate that are present across modest increase in legal spend, the only

destroying the old one, incessantly
creating a new one. This process of
Creative Destruction is the essential
fact about capitalism.
Schumpeter placed a heavy empha-
sis on entrepreneurs and their ability
to create a new good or service, a new
the legal industry. It is an adaption of
Gartner’s “Nexus of Forces,” which
is used to explain the disruption that
social, mobile, cloud, and information
would have on industries everywhere.
(Learn more at bit.ly/JF19Nexus.)
The Legal Nexus of Forces frames
the issues from a law firm point of view,
increase in spend is occurring within the
law department.
2. Change in Competition
Legal Process Outsourcing (LPO) and
Alternative Service Providers (ASPs)
increasingly take market share away
from law firms. With an estimated

JANUARY/FEBRUARY 2019 | AALL SPECTRUM 31

 TECHNOLOGY
Innovation has the ability to change markets and break
down boundaries. The economic growth of our industry depends
on legal informational professionals with substantial domain
expertise to help lead the charge for innovation.
revenue of $8.4 billion, these provid-
ers are growing rapidly and represent
services once provided by law firms.
Two other notable shifts in the market
place include PricewaterhouseCoopers
announcement of its “New Law”
initiative, and DXC Technology Co.
entering into a five-year contract with
UnitedLex Corp. (Read more at
bit.ly/JF19Report.) Both are signals
that the legal staffing market is chang-
ing, allowing companies to better scale
up their legal staff or completely out-
source it altogether.
3. Law Firm Innovation
Law firms continue to leverage tech-
nology and new services to differentiate
themselves in the marketplace. One
key observation is that some firms have
created dedicated teams to focus on
innovation. Governance levels of these
teams range from informal to formal.
Those with the most support and direc-
tion from upper management tend to
make the largest advancements and
have the greatest ability to meet client
demands for greater efficiency, pre-
dictability, and cost effectiveness in the
delivery of legal services.
The market is ripe for firms to drive
innovation and transform delivery of
legal services. It is a formative time for
attorneys, information professionals,
and technologists to explore solutions
together. Innovation teams provide
great settings to rethink both the busi-
ness and the practice of law.
4. Emerging Technology
The emerging technology category is a
direct reference to the Gartner Nexus
of Forces, but streamlined to the legal
industry. Today, vendors in the legal
32 AALL SPECTRUM | WWW.AALLNET.ORG
market are foundationally suited in two
areas—advanced analytics (machine
learning), and other forms of artificial
intelligence such as natural language
processing.
The legal industry faces a far greater
challenge in unstructured data. Most
information created by attorneys is
simply unstructured, with nearly every
document and email in the document
management system falling into this cat-
egory. Technology that creates insight
from unstructured data will transform
both the business and practice of law.
Motion metrics, clause analytics, and
time entry/narrative analytics all have
profound implications.
There is, however, a steep learning
curve—but this presents a new oppor-
tunity for organizations. The machine
learning model includes feedback loops
and learning cycles. This creates a crit-
ical need for domain experts and teams
of people who understand how to train
the system. Quite honestly, this is where
legal information professionals have an
opportunity to create something unique,
insightful, and transformative.
Now What?
Together, innovation and technology
create a constant wave of creative
destruction that stimulates economic
growth by creating new inventions
never before imagined. This action
could possibly make older services,
goods, and techniques obsolete. If we
look at the landscape of technology
start-ups in the legal industry, we will
find that hundreds of companies are
now on the scene and impacting how
we operate our businesses. From one
vantage point, it might be a technol-
ogy that corporate law departments
now use that was once a service that
law firms provided, or, from another
perspective, it might be a new role that
legal information professionals play in
data classification. It is clear that inno-
vation and technology coupled together
are a powerful market disrupter, and for
your organization to avoid becoming
obsolete, it comes down to a willing-
ness to change, and a commitment to
the investment of time and money to
embrace creative disruption.
Are We a Legacy Industry That Can
Transform?
Yes, I believe so. Why? Because there
is an early prize for those able to suc-
cessfully innovate to the point that
traditional companies must succumb
to the pressure of new inventions. It is
market power. Innovation has the abil-
ity to change markets and break down
boundaries. The economic growth of
our industry depends on legal infor-
mational professionals with substantial
domain expertise to help lead the
charge for innovation. Be disciplined in
innovation and seek new ways to create
new services.
AALL ALERT
See Katherine M. Lowry present on the
topic of innovation during AALL’s Innovation
Bootcamp: Add+Venture Initiative,
April 25-26 in Chicago. Register now at
bit.ly/AALL-innovation.
Research + Analysis
Information Management
© 2018 BY KATHERINE M. LOWRY
KATHERINE M. LOWRY
DIRECTOR OF PRACTICE SERVICES
BakerHostetler LLP
Cincinnati, OH
klowry@bakerlaw.com
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