What will it take to change the Legal industry?

By James Paterson, Founder at Plainly
James is an entrepreneur and former General Counsel. Throughout his career, he has combined legal practice with technology. He's now on a mission to make legal work easier for everyone with Plainly.

I recently returned from Legal Geek's flagship conference which is held every year in the Old Truman Brewery in Shoreditch, London. I've been going since the first conference in 2016 and it's always a highlight. However, this year something painful dawned on me: in all that time, nothing's changed! 

The conference is still filled with new (and some not so new) vendors which are fundamentally going to change the way legal services are delivered, except they haven't. Speakers on stage still talk about how some new technology - in 2016 is was the blockchain, this year it was generative AI - will revolutionise the legal industry, except it hasn't (yet). Why not? 

The Innovator's Dilemma

You may be familiar with Clayton M. Christensen's seminal work "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail". If not, I highly recommend it.

In the book, Christensen suggests that incumbent firms excelling in today's market often find it challenging to allocate resources and attention to potentially disruptive technologies. Disruptive technologies are typically inferior when compared like-for-like with existing ones, at least initially. This makes them less attractive to existing customers and offers lower profit margins. 

As a result, rather than properly engaging with disruptive innovations, incumbents tend to focus their attention and resources on improving existing products or services. In doing so, they will generally miss/undervalue the advantages offered by innovations such as lower cost, simplicity, and/or accessibility. The result: well-managed, industry-leading companies can end up failing in the face of disruptive technological change.

A salutary lesson

Christensen cites numerous examples. Here's one: prior to the emergence of personal computers (PCs) in the 1980s - companies relied on mainframe computers for their computing needs. PCs by contrast offered lower performance and so computer providers concentrated on enhancing their existing products to satisfy the needs of their customers. They didn't develop their own PCs. We all know what happened next - the PC market exploded and it didn't take long for performance to improve and for PCs to take over many tasks previously performed by larger computers. This led to the rapid demise of yesterday's computer giants and the likes of Apple, Microsoft, Dell, etc becoming household names.

Insufficient investment

The same may be happening in the legal industry. Looking around, it's still pretty much business as usual. There's an awareness of the need to change - change is coming - but incumbents are still devoting insufficient attention and resources to technologies that could fundamentally disrupt what they do. Yes, most large firms now have, under different guises, an innovation function. However, as was apparent from numerous conversations I had at Legal Geek, this function remains under-resourced and generally doesn't have the wholesale backing of the partnership. 

Ultimately, it's not about finding ways to make the billable hour more efficient. It's about fundamentally rethinking how you deliver legal services, and developing new business models to support this. 

Truly courageous law firms (and indeed in-house teams) will do this while voraciously adopting new technology, not being afraid to experiment and make mistakes. I believe that the ones that do so will win. Those that don't, according to Clayton M. Christensen, will fail.


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