In my previous article, Radiant Law CEO Alex Hamilton shared his insight into the ‘Radiant Way’ and the keys to its success. Today, Alex shares his vision of the future of the legal profession and makes constructive recommendations for young lawyers.
Alex, many thanks for your time and for covering topics of particular interest clearly and plainly.
I leave you with the second part of the interview.
What would you say are the current challenges in the legal industry?
I think there are three key trends affecting the world of commercial contracts, where Radiant Law operates.
First, we have seen the never-ending upward march of billable rates from the traditional law firms. This was one of the key factors that led to the dramatic rise in in-house teams, with the number of in-house lawyers more than doubling in the last 15 years. The legal industry itself is driving the rise of in-house teams.
Second, these in-house teams are operating in companies challenged by a fast-changing world, forcing a need to innovate. These companies are looking at all aspects of their operations, and legal is not immune. GCs are not only having to address the complexities of globalisation and increasing regulation, but are also being asked to look at how their team can deliver “more for less” and “more value” to the business, while facing headcount and budgetary restrictions. High legal expenditure has been noticed by the CFOs, who aren’t going to reduce the cost-savings pressure during boom years.
The third aspect is that there are now better ways of delivering certain categories of legal services. There are increasing technological and process opportunities to solve the more for less problem. There are also a number of new managed legal services suppliers, such as Radiant Law, who can deliver process and technology-enabled services that allow the in-house team to focus on the more strategic work. GCs suddenly have a choice about whether they make it themselves or use a third party in a way they haven’t had before. In-house teams will be more able to fine tune their delivery models, combining managed legal services and other new law providers to work alongside their in-house teams in a way that traditional law firms haven’t been able to deliver cost-effectively.
How do you think will the legal industry be in 5-10 years from now?
It is hard to read. On the one hand, there is an increase in the need for help because the world has become more complex. However, on the other hand, there is a deep frustration with the legal industry. These are turbulent times.
You´re also looking at an industry that has been described by business strategist Roger Martin as “pre-competitive”. I´m not the first person to notice that you have the big three consulting firms, the big four accountants but there are no truly big law firms. Thus, the traditional response to that question is expect to see more mergers and larger firms develop, and that there will be more diversity in types of suppliers. I think with a time horizon of 5-10 years that is right because change is so slow in legal. It is painfully slow, though it is getting better.
At the same time, the increase in automation, the increase in process and the innovation challenge being set by clients will mean the more forward-looking Big Law firms will start to transform themselves into New Law. I think we are seeing early signs of that trend.
Generally, we are hitting the natural limits to how many lawyers you can keep throwing at the problem, and I think there will be a shift towards fewer number of lawyers who will be more supported in terms of tools and processes to be able to deliver value. So we will peak in terms of the number of lawyers and there will be much talk of the “bionic lawyer”. To be able to take real advantage of that, you have to move past the billable hour.
Meanwhile, the pure-technological solutions to clients’ needs will just keep growing.
Do you think that the liberalization trend will spread globally?
Yes, eventually. I think that, objectively speaking, the regulatory restrictions that the UK and Australia removed weren´t helping from the consumer perspective and I believe that the case has been made both in terms of “do we really need these restrictions?” and also in practice, “have there been any great disasters following removing these restrictions?”.
What is interesting is that there is an assumption by lawyers that they will always be part of the solution, and that is a very dangerous assumption. Many of the disruptions that are appearing on the horizon are coming from outside the legal industry and they are already able to step around the regulation in the US and elsewhere. These solutions are really looking at the needs of the ultimate consumers and how can they better meet those needs, without having to be regulated lawyers.
So the question is, “do we really need lawyers?”. I am not totally convinced that the future is going to be determined by who liberalizes the regulations. I think the future may be determined by the imagination of people outside the legal industry.
What are your thoughts on Artificial Intelligence (AI)? Do you think AI will eventually replace lawyers?
I find AI a very frustrating topic. We´ve got this massive hype around the term “AI” which completely blurs the very fundamental differences between the new tools and skips over what is currently possible. We are nowhere close to general AI, we don´t even have cogent theories about how to build general AI. You wouldn´t gather that from some of the commentators and suppliers in the marketplace describing AI in magical terms, but never quite clarifying exactly how AI is going to solve the problem.
I think we are in danger of creating the same hype cycle that lead to what some people called the “AI winter” in the 80s, when no one was even allowed to talk about AI because the whole term had been massively overhyped previously.
At the same time there are some really interesting systems coming through and approaches to quite specific problems in areas such as machine learning and natural language processing. These are not hugely ambitious systems, although we have seen where a combination of simple systems can lead, for instance self-driving cars. These are not tools that will fully replace what lawyers do, but a lot of interesting progress is being made.
I believe that AI currently shows most potential in disaggregating existing processes and making possible things that may not have been possible before, such as huge documents reviews. However, when you look at them, they are limited tools that can, for instance, pull out the relevant provisions in a contract but still can’t tell you what the provision means.
At Radiant Law we have a general approach which says, “there isn´t a silver bullet to solving what we are trying to do”. We have the approach of the silver shotgun cartridge, which means that there are thousands of little silver pellets that help you get better. What is good about this approach is that it allows you to absorb tools like machine learning tools and expert systems into your approach without saying, “we are just going to replace everything with this magic”. That means we can really make step-by-step iterative improvement.
In the long term, I believe that there will be disruptive solutions coming from outside the industry which will start to solve clients’ needs. However, they are not going to be about creating artificial lawyers, they are going to be very different.
What would you recommend to young lawyers?
I think it is different depending on whether I’m talking to people before they go to law school and after they go to law school.
Before they go to law school, I worry about recommending the law as a career. I think it is going to be going under a significant amount of change. There is an oversupply of lawyers and I worry about young people building up a lot of debt going into an industry that I think is going to be a little bit harder work than some other industries. Very disruptive changes are going to come down the line over the course of their careers.
If they´ve been to law school, then I think the question is how can you come into the legal industry and find a space where you can really grow as a person and really develop future-relevant skills when it is not clear what the end of your career path looks like.
We live in a world that no longer has pre-destined career paths and we´ve seen that with the chances of making a partnership in law firms. It is becoming harder and harder to make partnership and when you get there, you realize that it’s not all roses. This is happening in a world where the firms themselves are being increasingly challenged. If you want to be a partner, then go for it. There are plenty of places in the world where you can work in that system and there will still be partnerships in the foreseeable future.
But there are now other paths.
One of the obvious ones, is to go in-house at three to five years post-qualification. I think the in-house world is going to be increasingly interesting because of the opportunities to work within broader business. It is also the place where a lot of the innovations take place. However, in-house lawyers are in quite a tough environment for the reasons I gave previously.
Another option is the new law providers. We built Radiant Law as a place for the whole team to thrive, and there are many opportunities to grow as lawyers and to learn new skills beyond “just” being a great lawyer. You can be part of building the future which is hugely exciting.
I think the world is an amazing place. I am a great optimist and although there are lots of things that are wrong with the world, there are also lots of wonderful trends going in the right direction – we live in an age of abundance, even though it is easy to see scarcity. There are so many ways that lawyers can contribute. I believe that the rigor, discipline and thoughtfulness that lawyers can bring are fundamentally useful skills that can really add value even outside of the legal profession. So lots of opportunity, it just requires adaptability.