“I like to think (it has to be!), Of a cybemetric ecology, Where we are free of our labors, And joined back to nature, Returned to our mammal brothers and sisters, And all watched over By machines of loving grace.”

Thus wrote the beat poet Richard Brautigan in 1967.  He was definitely on the side of technology bringing humanity nearer to heaven.  His contemporary, the late Steve Jobs believed that technology would liberate both the consumer and the citizen. However, for many, the discourse on technology has recently taken a different turn. Some people believe that we are living in one of the least innovative periods of human history.

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According to the Information Technology & Innovation Foundation (ITIF), “Fingers are being pointed at the technology industry for ushering in a winner-takes-all economy: a capitalist’s dream but a worker’s nightmare.” There is increasing talk about the rise of robots, the destruction of jobs, the erosion of employee’s income and rights.

Management consultants are equally divided on the subject. There are those that nod approvingly at an ‘Amazon Future’ – a time of relentless competition, a paradise for consumers and a hell for workers. Others see a ‘Microsoft Future’ – where the best of all monopoly outcomes being a quiet life.

Both sides may be overblown. There doesn’t appear to be anything about today’s technologies that is, on balance, more problematic than previous world-changing technologies, such as the printing press, rail roads, the electric telegraph and vaccinations.

So, I don’t think the question is whether the legal industry will have a Fin-Tech moment, like the banking and financial services industry has experienced in recent years. The real discussion should be around when the legal industry will have its Napster moment?

Digital disruption

Somewhere around the dawn of the dot-com era, the music industry faced what it regarded as an existential threat from technology. In the early 2000s, a young man by the name of Sean Fanning wrote “Napster” – a Peer-to-Peer (P2P) programme that allowed anyone anywhere to share MP3 music files with people everywhere.

The effect was immediate, dealing something close to a death blow to the sale of music on physical media. Instead of responding to technological change with its own digital offerings, the music industry launched countless lawsuits that branded all P2P providers as pirates and eventually drove Napster out of the free music business. But the damage was done, and the recording industry changed almost beyond recognition.

A quick look at my own vinyl collection shows you Napster’s impact. Most of those record labels are now gone. But, and here’s the point, last year (2016) the music industry grew at 6%. That’s faster than it has done since 1997 (pre-Napster). Interestingly, today 90% of sales are controlled by the same “big four” labels – Universal, Sony, Warner and EMI – that dominated the industry before Napster.

What’s more, revenues from streaming services – the commercial descendants of Napster and the P2P players – have surged by 60%. That’s ironic when you consider that it was streaming that nearly killed off the industry in the first place.

Understanding the first step to exploiting technology

I wonder if we will see a similar pattern in the legal market? It is certainly true that ‘Big Law’ is more than aware of the challenge and, as explored in a previous article, ‘The New Spectrum of Legal Services’, is already responding.

And it’s about time. The industry has been under pressure to reinvent itself since the Lehman Crisis. According to Beaton Capital, the global market for private practice legal services hasn’t grown much since 2008.

But, things are changing. A managing partner at a magic circle firm told me, “I’ve seen more change in the past two years than in the past 20.

Law at an inflexion point

I think the legal industry is already at an inflexion point. It’s about to have its own Napster Moment. Because the perfect storm of declining capital markets, recession and technology are demanding changes in the way legal services are requested and delivered.

What does that mean in practice? Well, unfortunately there is no silver bullet – no single, one-stop shop solution. There can’t be, because the range of services needed is so varied and diverse. However, all the necessary services can be provided by a mix of providers, each capable of executing a task to the highest standard and at a reasonable price.

There will be traditional law firms on one side, looking after the most sensitive projects that require experienced and expensive legal talent. At the far end of the spectrum, expect to see more automated technology providers, dealing with high volumes of tedious but relatively untaxing work, for a much lower fee.

The broad middle-ground will be filled with law firms that are fighting to innovate, along with Legal Process Outsourcing providers, all supported by the so-called “New Law” outfits like Axiom. In fact, I think partnerships between New Law and the Big Law firms that have dominated the market for so long will become increasingly common.

That may sound like a patchwork approach. However, this much more dynamic legal landscape is the only one capable of meeting the challenges economic challenges the world is now facing.

Music to the legal industry’s ears

Although the jury is out on whether the notoriously conservative legal industry will recognize the inevitability of change and respond appropriately, it will not have a choice. As William Gibson quipped: “The future is already here – it’s just not very evenly distributed.”

In the end, as the music industry discovered, it is the customers that call the tune.

This article is a follow-up to the Legal Innovation and Tech Forum which took place in Hong Kong on June 8, 2017

Posted by Patrick Dransfield

Patrick M. Dransfield is Client Relations Director at Alsuwaidi & Company, Principal of Clearway Communications and Co-Founder of the Managing Partners’ Club.

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