While the judges deliberated, I gave professors, students, lawyers, and technologists in the UK a glimpse of the technological innovations coming in the near and longer terms and sense of what this could mean for legal advisers.
I had the privilege of being selected to report on how ILTA (International Legal Technology Association) did on their predictions from 2013 up to today, during their 2020 ILTA-ON Conference. Even more fun, predicting what technology and LegalTech will look like from 2020-2025, and then going out to 2060.
Remember back when we had ‘Law Firm 2020 predictions’? In the first part of my ILTA-ON presentation, we will go ‘Back to the Future’ reviewing past predictions to see what came true and what we got wrong. Then, we will blast into a journey of what LegalTech looks like in the next five years. Lastly, for those who get motion sickness, grab your Dramamine, because we will take a 1.21 gigawatts ride, shooting into the future. We will predict what the technological and legal landscape will look like in 2030, 2040, and into the Singularity! Great Scott!
Part 1 – Jump Ahead (9:17): Grading the Law Firm 2020 report from 2013: https://youtu.be/UgyDyBSJ3AA?t=558
Part 2 – Jump Ahead (22:55) Predictions for 2020-2025: https://youtu.be/UgyDyBSJ3AA?t=1377
Part 3 – Jump Ahead (40:17) Technology Predictions 2030, 2040, 2050, and 2060: https://youtu.be/UgyDyBSJ3AA?t=2419
Originally published on AnswersOn.
By Gina Jurva – Joseph Raczynski
The Covid-19 pandemic is exposing long-standing societal inequalities that range from access to healthcare to access to childcare and place our society is under a microscope. One of the biggest challenges is getting stimulus funds to those who need it most, especially in those cases where the individual may lack access to a bank account.
Thomson Reuters technologist and futurist Joe Raczynski explores how the pandemic may end up being the catalyst that eventually solves the financial inequality gap for the unbanked population.
What does it mean to be underbanked or unbanked?
Joe Raczynski: Often employed interchangeably, the Federal Deposit Insurance Corporation (FDIC) classifies those people that underutilize their bank as underbanked, while individuals without any form of bank account are considered unbanked.
Cash is no longer king, and the underbanked and unbanked have struggled during the pandemic as paper and metal currency, their primary medium of exchange, has been dropped out of circulation. The paper money has been shown to carry diseases, further exacerbating a financial disconnect for the unbanked.
The single most salient dilemma, of course, is that the unbanked have less of an opportunity to build a good credit history, and as a result have less of a chance for reasonable loans.
What are some reasons a person wouldn’t have a bank account?
Joe Raczynski: There are a multitude of explanations for not having a bank account. The most challenging from a socioeconomic perspective, are those people without the means to save money. Another highly cited reason is that people simply do not trust banks. Their concerns orbit around the possibility of a bank folding or their money simply disappearing. These concerns are typically more prevalent in people who have experienced such issues in other countries.
Also, a smaller subset of individuals is actively avoiding a system that requires divulging personal information to open an account. These individuals may have more nefarious reasons to remain out of the system, however, and are in the minority.
This phenomenon shows up in certain ethnic communities. For example, African Americans have the nation’s highest rate of unbanked, at almost 17%, compared to other ethnicities. However, they have had a three-year decline in the number of unbanked households, according to the Federal Deposit Insurance Corporation (FDIC). About 14% Latinos are unbanked; and about 3% of whites, based on FDIC statistics.
What financial services do the unbanked use?
Joe Raczynski: While the unbanked are marginalized in a traditional financial capacity, alternative financial services and burgeoning technologies are enabling people to bypass this challenge. Some of these alternative financial services — such as check-cashing services or payday loans — often charge egregious fees and related costs that can be debilitating for an unbanked user. Other services — such as money transfers or the use of prepaid debit cards or gift cards — also pose their own costs and rates, but do offer users more options.
Finally, mobile apps like Square, Venmo, PayPal, and a host of others enable people to send money to others and buy goods and services directly, provided they have money in that app account.
If a person is unbanked, how could they receive Covid-19-related stimulus funds from the government?
Joe Raczynski: The initial phase of stimulus relief was strictly direct deposit for the banked and government checks for others. Recently, the prepaid debit card was used to assist the unbanked. This is the same mechanism that the Internal Revenue Service (IRS) uses for tax refunds; however, while these prepaid debit cards are helpful, they also pose significant risks.
Fraudsters have seized upon the anonymity of these cash-filled cards to steal from the government. In some cases, these criminals are filing up to 100 false personal income taxes via someone else’s social security number. These taxes are surreptitiously submitted with refund expectations, the refund is then loaded onto an untraceable prepaid debit card and sent to a ‘here today gone tomorrow’ P.O. box.
While the unbanked are marginalized in a traditional financial capacity, alternative financial services and burgeoning technologies are enabling people to bypass this challenge.
The rapid implementation of this form of tax fraud has outpaced many traditional fraud scams, and it is surmised that over the past decade, one-time drug traffickers now have opted into this scam instead.
What changes are taking place in the banking industry to appeal to the unbanked?
Joe Raczynski: The single most significant change is the recent proposal of the federal government to issue FedAccounts within the next several years. This possibility would mean that anyone with a mobile phone would have a digital wallet, and money could be transferred from the government to an individual in moments. A person could also use their FedAccount to send money to anyone else, or even to a business with ease.
While that alone is significant, this new digital wallet will likely enable greater use of cryptocurrency, control of personal identity, and the ability to store other property digitally via asset tokenization.
Outside of the government-sanctioned digital wallet and currencies are a pending wave of private companies issuing cryptocurrency that the unbanked could seek out and use as new forms of money. For those civil libertarians among the unbanked who wish to remain outside of future government-issued digital currency, they could rely on Bitcoin, Zcash, Monero coins, or any number of other cryptocurrencies. Some of these cryptocurrencies have at their base, Zero Knowledge Proofs (ZKP) that permit completely anonymous transactions without personal information. While this could help the libertarian unbanked, it creates some headaches for anti-money laundering professionals that will likely be chasing fraudsters in this area very soon.
What final tips can you share to help the underbanked or unbanked?
Joe Raczynski: While I still believe that opening an account at a trusted bank that has low to no fees is the best option, the hope of the FedAccounts is very promising for the unbanked. The idea that a simple digital wallet with digital dollars can allow you to bypass banks and credit card processers could be very appealing.
Originally published on the Legal Executive Institute.
By Gina Jurva – Joseph Raczynski
Is the COVID-19 pandemic more quickly moving the world to a cashless society? One where almost all financial transactions are not conducted with physical banknotes or coins, but rather through the transfer of digital information via a smartphone?
Thomson Reuters technologist and futurist Joe Raczynski explains why cash may no longer be king and how the fear of banknotes carrying and passing the coronavirus itself may help get us there more immediately.
Legal Executive Institute: The World Health Organization (WHO) recently indicated that washing your hands after handling money, especially if handling or eating food, is a “good hygiene practice” but they stopped short of issuing any formal warnings. How can technology help guide this conversation?
Joe Raczynski: Sooner than we thought, we will be moving away from the possibility of literal dirty money, meaning legal cash tender. Believe it or not, the United States was on the cusp of issuing a digital dollar on at the end of March. As part of the early draft for the COVID-19 stimulus package, bold and powerful policy makers vied for the creation of a Digital Dollar.
Having presented on this topic for the last four years, I was ecstatic to see this development. The concept was to have the US Department of Treasury issue FedAccounts to everyone in the country. Normally, FedAccounts are only issued to qualified banks.
In essence, these accounts would create digital wallets for everyone. Once released, stimulus money could be sent directly to each person in moments. Ultimately, the concerns around logistics and privacy became too significant a barrier, but clearly it is only a matter of time before we have a digital wallet issued by the US government.
Legal Executive Institute: China has taken measures to sanitize their cash. Is this really a path forward for global payment systems?
Joe Raczynski: Yes and no. Multiple news reports claimed that China was burning their paper currency to prevent passing bank notes infected with the virus. Based on the scientific evidence for how long the virus can stay on surfaces, it is logical to reduce the risk by avoiding paper or metal currency.
Fortunately, China had already transitioned to a nearly cashless society. With AliPay and WeChat Pay, nearly everyone in China is using QR Codes to exchange money digitally in person and through digital wallets online. From what I understand, payments via these two platforms make up roughly 80% of all payments in China. That’s huge! The next step will be the People’s Bank of China issuing a Digital Currency Electronic Payment (DCEP) sometime in the next six months. More than likely this will utilize the benefits of blockchain technology — immutable, secure, and transparent.
This last benefit is potentially problematic for the Chinese people. When their digital currency is used, China will have direct insight into the finances of everyone in the country, and beyond, as China’s plan is to roll this out globally, especially in Asia and Africa. The Chinese government has stated that this will help them fend off money laundering, as suspicious transactions can be immediately audited and examined with ease.
Legal Executive Institute: Prior to COVID-19, how close were we to moving to contactless payments?
Joe Raczynski: Most countries in Europe and Asia currently have available some sort of contactless payment system. In the UK and the rest of Europe, the popular payment method is hovering your debit or credit card over the terminal and the payment is processed immediately. They have been doing this for years. The US is just beginning to use the contactless card payment system. Apple Pay, Samsung Pay, Android Pay, all have been around for years now, and are popular with a younger demographic.
With the virus outbreak, more establishments have been pushing for these transactions, which still use banks and credit card processers like Visa, Mastercard, and American Express.
Legal Executive Institute: How feasible it is for retailers use contactless payments as a primary payment method?
Joe Raczynski: We are at a point where most, if not all transactions could be contactless. Many startups, semi-casual restaurants, and small businesses aim to only use contactless payments — for example, like Square does.
Similarly, individuals transacting with others can send money to each other via private bank enabling systems like Zelle, Venmo, Apple Pay, or Google Pay. Clearly credit cards and virtual gift cards have been popular with online merchants for years.
The primary setback for pure contactless and credit card transactions are the unbanked — US adults who do not have a checking, savings, or money market account. According to the Federal Reserve, about 6% of US adults fall into this category.
Legal Executive Institute: Are mobile payments the answer?
Joe Raczynski: Unequivocally yes! Most semi-modern mobile devices have the capability to add credit or debit cards by mapping them to your mobile app payment system of choice. This is a partial solution, for those with access to the banking system, which is the majority in the US. However, to cover all, the idea of the Digital Dollar in a government-issued wallet would be ideal.
Legal Executive Institute: In the US, major mobile payments apps had adoption rates of less than 10%, according to the Pew Research Center. What are the major hurdles for adopting mobile payments as a primary payment method?
Joe Raczynski: While smartphone use is at roughly 81%, according to Pew, the primary hurdle for contactless payment in the US is actually habit. We are accustomed to swiping cards or inserting them into a device for chip reading.
Education is also key — many people are unaware they can hover their card over a payment terminal to do the transaction. (Look for the wireless symbol on your card to see if this is feasible.) Clearly migrating to app-based transaction on your smartphone will grow in popularity too. And with the pandemic, the push to contactless payments is a given.
Legal Executive Institute: What might payments look like in the future, and how can we protect against fraudulent activity?
Joe Raczynski: I honestly believe some dramatic shifts are about to take place with our primary forms of money. With the advent of blockchain technology, there will be a fission between state-sponsored fiat money and privately-run currencies. The philosophical and theoretical concerns, challenges, and opportunities are innumerous, but not insurmountable.
Facebook’s Libra project, for example, is an effort by a private company to issue a global currency. The idea is to create a permissioned blockchain where a set number of trusted participants (100 or so) control the rules and define total circulation of the coin. While Libra has met with significant headwinds, this is very likely our future, in some incarnation. Facebook, or more likely, a large private company outside of the US will succeed here. If Facebook perseveres, it could create a global currency usable by half the world population overnight, which is extremely powerful, albeit a bit threatening to sovereign nations.
What will be fascinating to watch is the push by governments around the world to issue their own digital currency in the next few years to counter the private company coins. According to the International Monetary Fund, 50 countries are now exploring issuing their own digital currency.
The major dilemma for state-sponsored digital money, however, is the question of whether they pursue blind payments or clear payments. That means, will they allow people to use the digital currency like paper currency by concealing private information through cryptography? Or will they wander down the Chinese model and make it all traceable by the government, which would certainly help curtail nefarious transactions but could ebb civil liberties.
Recently I had the opportunity to present at the World Bank on “Access to Justice”. My focus for this talk was on how people around the world can be lifted from poverty with new tools enabled by mobile phones. Through the use of blockchain and AI, people can learn how to protect themselves and seek justice.
Originally published on AnswersOn
By Joseph Raczynski
I have been incredibly fortunate to have traveled extensively, which has impacted my global vision. Visiting almost 40 countries, I have witnessed firsthand the enormous discrepancies in wealth, opportunities, and lifestyles that exist around the world today.
I’ve seen the lavish gilded rooms, complete with Picassos on the wall, in the homes of 35-year-old billionaires in Dubai; and just a five-hour flight away, I’ve seen families hover around an open fire to stay warm alongside their metal sheet home on the outskirts of Kathmandu, Nepal, in the foothills of the Himalaya Mountains. And I’ve observed the steep mountain face of the drug-scared city of Medellin, Colombia — a concrete jungle with the activity of an ant hill. I’ve walked the rural farmlands of Cambodia, which are still littered with signs for landmines, and seen some children showing the stark evidence of their life-changing encounters with these mines; and I have wandered the extremely remote rain forest of Panama with its indigenous people.
The one element that buoys my spirits besides the genuine kindness of people, the promise of technology and our future.
One unexpected item that is omnipresent for both the wealthy and the less fortunate — a mobile phone. This is likely the most significant key to empowering people; and with a mobile phone, people around the world can connect, share ideas, and exchange money.
Joseph Raczynski will be speaking at the World Bank’s Law, Justice and Development Week 2019: Rights, Technology & Development in Washington, D.C., on Nov. 4-7.
Now, I am also seeing that connectivity energizing people’s legal liberties and human rights. We are evolving to a point where each person around the world has a computer in their pocket. Through this technological leapfrogging, a high school student in a remote village of Cambodia can be almost technologically on par with her counterpart in Amsterdam.
Exponential growth globally
Way back in 2015 I wrote about how we are entering a phase of Exponential Growth, and how that will impact the legal industry. What is evident now, however, is that this growth is not solely for the global law firms in the Western world, but is cascading to individuals in the most remote parts of the globe. Most importantly, we see how they will be able to take advantage of legal services which previously were nearly impossible.
Increasingly available chatbots empowered with Artificial Intelligence can now offer improved access to justice, helping people make decisions or even seek asylum. These applications, which are essentially legal workflow tools, can generate questions and answers via a mobile phone from anywhere in the world.
Further, blockchain is already impacting trust with small businesses. A family-run business in Argentina that enters into an agreement with a distributor can do so via a legally binding contract supported by smart contract technology securely saved to a blockchain. If a problem arises, for a small amount of money, arbitrators around the world can weigh in and help resolve the issue, all enabled through a mobile device.
The power of blockchain and AI is at work in Africa, where a farmer can opt into an insurance program on their phone. With as little as a dollar placed toward insurance, if the farmers crops don’t survive a drought, AI-powered satellite imagery can automatically pay those affected. Combing smart contracts on a blockchain with the AI-image recognition technology, people previously without legally binding contracts to support their business can sustain themselves. These types of significant changes will impact people positively.
I am extremely optimistic and passionate about our future, as technology-infused legal processes filter into all communities around the world. This new age will lift people out of poverty, reduce domestic violence and hunger, and improve the lives of people globally. With the technological power of a mobile phone and legal solutions infused by AI and blockchain emerging, there is a bright spot for all of us on the horizon.
For more on the World Bank’s upcoming event, listen to a podcast with Sandie Okoro, Senior Vice President and General Counsel at the World Bank, conducted by Thomson Reuters’ Joseph Raczynski.
Originally published on the Legal Executive Institute
By Joseph Raczynski
WASHINGTON, D.C. — The Government sector strives to ramp up its efforts to more widely integrate cutting edge technologies like blockchain, artificial intelligence, and the Internet of Things (IoT), it is running into a myriad of challenges.
Not the least among them, is separating the reality from the hype of these miracle tech solutions.
At Thomson Reuters 4th Annual Government Day, panel attempted this separation by focusing on blockchain, working to uncover the reality of this technology today for governments and cut out the hype of this innovative technology.
Government supply chain management
One area the panel focused on with blockchain is the tech’s potential to change supply chain management, offering a scenario in which a state or federal agency needs to identify the ground zero genesis of a fruit or vegetable foodborne illnesses. The newest proof of concepts utilizes a blockchain-enabled IoT supply chain management technology ecosystem that can save lives by greatly reducing the time it takes to track contaminated tomato from the salad bar back though delivery, distributers, wholesalers, to pickers and finally to the farm.
The panel also discussed how a Massachusetts-based farmer could partner with a technologist to track his tomatoes from vine to fork. The farmer uses IoT temperature gages from the pickers to the platers. This is an example of a public and private partnership where produce with clear data on temperature, handlers, and distributers can be audited through the entire supply chain, all supported on a distributed ledger.
Harnessing this collection of technologies, any listeria outbreak can reduce seven days of research to just seven minutes, ensuring that the U.S. Food and Drug Administration (FDA) have rapid response and control.
Another area the panel discussed included identity management solutions. Breeches to our own private information are commonplace. In fact, recently Facebook suffered yet another attack where 200 million users’ phone numbers were found in a publicly facing open database, including the number of Facebook CEO Mark Zuckerberg. (In case you are wondering, calling Mr. Zuckerberg’s phone number goes to a generic voicemail.)
Not surprisingly given the stakes, various federal agencies have been surveilling this space for some time. An emerging concept about how to prevent such breaches and other identity security mishaps in the future is taking form.
The panel also took up the “radical” idea that the U.S. Department of Homeland Security (DHS) could issue a new unique identifier to replace a citizen’s Social Security Number (SSN). In a major shift, this identifier would exist on a blockchain. This decentralize system would place the control of the identifying number into the hands of the individual, removing a central repository, which could be hacked.
Panelist Alan Cohn, a partner at Steptoe & Johnson, pointed out how this could more securely enable our current voting system, curtailing the chance of fraud and make voting easier for all.
Finally, the panel explored the shifting landscape of digital assets. Cohn said he expects a huge swing in the way we look at assets from a personal perspective and in how the government views it.
The panel concluded that with Facebook launching its own cryptocurrency, Libra, this process has been legitimized. The discussion amped up around what will happen next. I suggested to the panel that Libra could be dead in the water in the United States because of a heightened regulatory concern, but this blockchain-enabled asset cannot be placed back into the bottle. Indeed, with years of consternation ahead from regulators on Libra, companies around the globe will move forward, and the next organization to create what amounts to a world currency will be a messenger app which has 500 million users, Telegram. (Expect its launch before Halloween 2019.)
In all likelihood, governments around the world will be spooked by the immense power an app founded in 2013 will create. They will have a scalable, frictionless asset with features that could bypass anti-money laundering (AML) rules and Know Your Customer (KYC) regulations.
Panel moderator Jason Thomas, Manager of Innovation at Thomson Reuters, and panelist Gail Gottehrer, of the Law Office of Gail Gottehrer, noted that there is significant promise ahead with the intermixing of multiple technologies in combination with blockchain. Indeed, governments are beginning to adopt and adapt in this environment; and with a push from the private sector, state and federal agencies will continue to adjust.
The synthesis of technologies like IoT, AI, and blockchain will create processes which should stamp out farm- and distribution-based foodborne illnesses. New initiatives around the security of personally identifiable information through blockchain will place the control of information into an individual’s hands, removing central points of failure and reducing costly and damaging data breaches.
Lastly, one of the most significant changes ahead is the look and feel of our ownership of assets when everything becomes digital. The opportunity is immense, but so are the concerns around our government’s ability to counter AML as assets become increasingly liquid and frictionless across the globe.
Originally published in Legal Insights Europe.
By Joseph Raczynski
Like the legal industry itself, legal technology conferences are transforming and Legal Geek is leading the change. These industry events are finally beginning to mirror the, more, customer centric start-up community perspective. Taking a step back, a decade ago the most renown and popular legal industry conferences in the US included International Legal Technology Association (ILTA), now ILTACON, and LegalTech now rebranded Legalweek. Both conferences have established a forum by ushering in a global audience for multi-day events centred on a mixture of vendor products and industry specific legal technology discussions. LegalWeek itself is a spectacle with hundreds of vendors vying for compact, tightly knit cubicals in a midtown New York City hotel in the middle of January. ILTACON, a mega conference, roams from city to city each year in late August with a five-day event in some of the largest hotels in the US. While the original intent was to educate, the creep of vendors and suppliers into the space may have watered down the primary mission. With the recent upheaval at ILTA and their executive leadership, one can almost sense the tug and pull of the shift in focus.
As all things evolve, hopefully, the next iteration of this evolution is the British Legal Technology Forum. This conference has mixed up the notion of what a legal conference looks and acts like. With an open mimosa bar in the morning bleeding into a beer fest for the rest of the day, this environment is starkly different than the traditional suit-clad legal technology events. In addition to the social-centric aspect of the one-day event, the British Legal Technology Forum has quicker sessions, sometime only 15 minutes enabling speakers to discuss a specific topic that is tight on scope. Vendor presence is strong at this event, but not as fully emmeshed in the fabric of the event sessions.
Legal Geek, the prime example of the conference revolution, originated in San Francisco in 2015, but gained favour in London—and so made it ‘home base’. This is the latest iteration of collaboration in the legal tech community. Over the last several years Legal Geek London has received rave reviews among legal technologists, consultants, investors, lawyers, and legal students alike. It has built a bit of a cult-like following. The founder, Jimmy Vestbirk, offers perspective on why Legal Geek has such fandom. The philosophy: come to make friends, not to sell; dress comfortably (please, please, no ties); come to learn and to teach; look after your fellow law-gends, you may need their help someday; and, this is your community, please pitch in and help. You will be rewarded. This elicits a mental shift of mindset for all who come to this legal technology event—from the typical conservative, staid legal conference approach—to the hip, cool, cutting-edge vibe of a grass-roots start-up company. There’s even promptings to ‘high-five’ your fellow delegates throughout the day.
Recently I attended the first Legal Geek North America in Brooklyn, New York. There was a buzz about this event weeks prior. Attendance reach over capacity with 450 people from around the world. A waiting list of dozens were reported—and understandable with an enterprising agenda of 60 presenters, from six different countries, speaking between 8-12 minutes each—and only three vendors present. The speaker line-up was geared to technologists and lawyers, from both private practice and in-house—on what legal technology is out there and why it matters.
This event had potential to be an earthquake event in the industry. The biggest difference at this conference, presenters are not supposed to talk about their products, at least until the very end of their 10-minute spiel. It was effective.
Blockchain for non-disclosure agreements (NDAs): Jim Brock, CEO of TrustBot, is working on creating a tool that creates NDAs very quickly through a document automation system. Its primary goal is to solve for the problem for the user accepting the agreement. Anyone can adopt the agreement, then you share the URL. Each party is adopting the NDA prospectively—so that when you agree to it, anyone else who has already agreed to it is already set. You are accepting the ‘hash’ or the signature stored on a blockchain. This is all verifiable.
Access to Justice: Stevie Ghiassi, CEO of Legaler, is endeavoring to help legal services reach 1 billion people. Through the use of all of the latest buzz words—digital scarcity, smart contracts, programable value, internet of value, digital identity—Legaler is creating a blockchain operating system for legal services. One component of this is LegalAid—you can donate money to this fund using a blockchain and see who the money goes to using a smart contract. This enables the tracking of your donation and you can see how it impacts an individual’s life. Another aspect of the operating system is a Litigation Fund which pools people’s money together, raising money for a group of people who want to sue a mega company in a class action suit.
Distributed Law Firm: James M. Fisher II, Founder & Managing Partner of FisherBroyles, LLP has created the first distributed law firm in the world. It has just cracked the AmLaw 200. Their platform is based on compensation, people, location, and technology. They use smart contracts on a distributed network where all partners can see how everyone is billing, it’s automated and in the clear. Partners get 80 percent of all billable work for their clients. If you work with another partner, you receive 48 percent of the earnings. The cost savings comes from having no physical office space as every partner is geographically distributed as well. Their people join the programme from some of the biggest firms in the world with the attraction of no commutes, no overhead, increased professional growth potential, and an extremely diverse partnership. Lastly, their technology is a mix of both cutting edge and traditional tools to help their clients.
Legal Geek North America, still in its infancy, is primed to shake up the legal technology community. The shortened sessions and its focus on the customers and not product is something to watch for the next several years. Likely the North American event will soon rival the mega-success of the Legal Geek Conference in London.
Originally published on Legal Insights Europe
by Joseph Raczynski
Technology discussions once reserved solely for select Chief Information Officers (CIO), Chief Technology Officers (CTO), and technologists—are now commonplace for executive committees, partners, and associates at law firms. This transformative shift over the last four years is remarkable to witness. With wider audiences leaning into the conversation, the reality has surfaced that technology is becoming a differentiator with the business and practice of law.
Having met with just shy of 500 law firms, corporations, government agencies, and startups in the legal space during the last thirteen years in the US, I have always wondered what is happening abroad, beyond what I read. Late last year a unique opportunity to travel to multiple international locations for work surfaced. This presented the chance to consider that as the technological revolution takes hold around us, is the legal technology world shifting at the same pace globally?
Traveling 37,000 miles, I started in Washington DC, and then went to New York, Grand Cayman, London, Dubai, Auckland, and finally Sydney. Before this trip, I visited with legal associations and legal industry personnel in Canada, Costa Rica, and Poland. These discussions included intimate gatherings of global law firm leaders, heads of startups, medium sized regional law firms, and leaders in the US and UAE government sectors.
The differences, similarities, and nuances of legal technology around the world
The legal industry around the world is pivoting and many are passionate about legal technology. Transitioning away from a niche world of a select few inside law firms caring—to a current world where the doors are being blown open to everyone tilting their head to listen. Partners, associates, internal support group, and the executive committees are all immersed in the conversation. Prompted by their clients inquiring about use of technology, and quite frankly, lawyers are also worried about their own jobs and the viability of their business as technology, such as document automation, is now able to handle some of the more repetitive legal tasks.
UK: My discussions and experiences have led me to believe that the UK legal market is on average ahead of the curve when it comes to the use and implementation of legal technology. I witnessed medium sized firms rapidly testing and using many of the latest artificial intelligence (AI) infused applications to seek efficiency. While they acknowledged no solution was perfect, they felt compelled to test these solutions to see where they could find competitive gains. Law firms in London, and the greater UK, endeavor to take more chances than any other part of the world. The business structure of how law firms are run is certainly a motivating factor. Another significant pressure for UK based firms are the Big Four accounting firms taking business away, due to the legislative change from the Legal Services Act 2007 which added the model of ‘alternative business structure’ and permits non-lawyers to own a legal practice. In this scenario UK, law firms are first to truly experience this competitive pressure, but significant changes in market practices is increasingly becoming global, clearly edging into the US.
In addition, before the latest trend for law firms to link up with universities was in vogue, partnerships with universities was particularly robust in the UK. Upon meeting with the University College London, they echoed these same sentiments of active participation from law firms and corporations.
Supporting these firsthand accounts, is evidence from Acritas’ Global Elite Law Firm Brand Index 2018. The firms producing the largest leap forward in brand recognition are clearly global, recently merged with a significant presence in the UK: including Clifford Chance, Linklaters, Allen & Overy, and Herbert Smith Freehills. Based on my conversations with these firms and the statistics, I believe their innovative strategic plans are pushing them further, faster.
The courts in the UK are also making advances through technology. In 2014, the Rolls Building, which is part of the Royal Courts of Justice (RCJ), began deploying an electronic filing solution—C-Track from Thomson Reuters. The system enables the UK legal profession to adopt more efficient and cost savings work practices by using digital technology for case management and e-filing. To date, the RCJ continues to expand the use of this digital technology into other courts in the system.
US: The US market is rather bifurcated. There are firms pushing the envelope along the same lines as what the progressives are doing in the UK, but still many firms stay on their traditional course. By firsthand account, a typical strategic plan remains similar to years past, if not decades ago with incremental change for many in the medium law firm space. Investment in new tools and workflows come at a cost to the partners, who must commit to that investment for the future, and many are not inclined. I was asked to present to a US based firm with 200 attorneys recently by their Executive Director. He pleaded with me to describe to his committee about the impact of AI on the firm in the next five years, so they could prepare as he was near retirement. The committee dismissed the notion that AI would have any impact on the firm. This view is not an outlier. The recent statistics in Peer Monitor’s 2019 State of the Legal Market, supports this account of those who adopt legal technology or deny it. We see the Global 100, more specifically the top 50 firms, growing while the rest stay below market averages. There are exceptions in niche markets who buck this trend and have seen upticks in their profitability. However, on the whole, those firms that have not evolved are stagnating.
Another statistic from Acritas surrounds the support for innovation in this space. They draw a direct correlation between those firms that have established plans around innovation and growth. Their report cites, “Innovation can spark increased client advocacy and budget spend, so that when clients view firms as innovative, client advocacy almost doubled and share of spend was 50 percent higher than non-innovative firms.” While this exists across jurisdictional lines, medium sized law firms in the US could have the most to gain from these learnings.
UAE: What stood out the most for me in Dubai was the commitment from the government to advance the ease of legal access to the people. If you were to turn the US government on its head, you might get some of the innovation that the Emirati are advocating. All forms, requests, and even initial court filings will be completed online. The response times are slated to be rapid. By 2022 the Dubai government will have most of their public information moved onto a blockchain, for redundancy and security. Likely in this upgrade will be company records and public records—think deeds, corporate filings, as well as birth or death certificates.
As for law firms, one of the biggest in the UAE that I met with is pushing what they can do with all currently available technology tools on the market. Law firms in the UAE seem to reflect a lighter version of what is happening with legal technology in the UK, typically with a direct connect into those firms for direction and strategy.
New Zealand: Outside of the top eight firms in the region, several other firms I spoke with were crafting their portfolio of technology tools to assist their practitioners be more efficient. One firm was building a workflow automation tool on the transactional side with a bevy of coders onsite as well as in India to support the development. They were embracing an Agile method, in which they frequently discussed these tools with their clients. This collaboration further solidified the relationship and were an integral part of increasing the efficiency for work completed on the client’s behalf. Of the advancements in operational practice, one area that surprised me was the slow acceptance of alternative fee arrangements by firms as each firm awaiting the results of early adopters.
Australia: What most impressed me in Sydney was both an adventurous spirit when it came to legal technology, but surprising a generally cautious nature toward adopting new ways of doing things. After spending time with numerous managing partners and innovation officers, it seems that Australian firms have the potential to lead the way into newer technologies. That said they sat similarly to their neighbors in New Zealand. Fixed fee arrangements have been around for years, but are not used frequently yet. One managing partner told me that Australian firms have leaders that can make bold decisions, but are testing the waters with newer forms of legal technology in their marketplace and looking for someone to jump first on the boldly visions.
Legal Tech startups are thriving in Australia. This is certainly supported by the most recent Tech and the Law 2018 Wrap Up guide by Thomson Reuters. “In 2018 more than $1 billion was invested in legal technology, three times more than the previous year”, globally. In Australia alone, there are currently 93 legal startups with legs in the country. The Australian Legal Technology Association continues to thrive with interactions from both the startup community as well as traditional lawyers with curiosity.
In a recent conversation with Stevie Ghiassi of Legaler based in Sydney, who specializes in blockchain enabled legal solutions and scheduling, he described this community with gusto. What he is trying to do is bring the latest tools available to the legal industry. In doing so, it is likely that they will disrupt many of the current law firm functions and he is happy with that philosophy—as are many of his peers.
After hitting 98,000 miles for the year in total travel, I am witness to a significant shift in the way that law firms look at technology. Changes evolving from the back-office support centric views of yesteryear, to the front and center underpinnings of how new tools can alter business and practice legal workflows. The shift is here, though each country seems to have various degrees of acceptance of this new reality and more importantly the practice of it. What creates the distinction are outside factors which either push or pull a firm to accept this new norm. The progressive state of the legal system in the UAE and UK has legal technology at the forefront, and it will be interesting to see what adjustments will occur around the world as a result. I do believe that while our legal technology community is large and expanding, the collective will continue to converge, eventually reaching the point of an e pluribus unum around the world.
Kleros.io is a blockchain startup which Thomson Reuters incubates in the Legal Technology space. They recently published a book about dispute resolution using blockchain technology. I had the good fortune to work with Federico Ast, Founder & CEO on a chapter for the book.
Please feel free to download a digital copy here:
Kleros’ Handbook of Decentralized Justice available for download NOW!
Here is a section from my conversation with Federico:
One of the cores of our work at Kleros is researching the prospects of legal tech and the impact it will have on the legal business in the coming years. Joseph Raczynski, Thomson Reuters’ resident legal futurist is one of the select few we always love discussing.
Joe has a wide view of the legal industry and the business and technology that will affect it in years to come. Let’s dive into the conversation!
What’s a legal futurist, what’s the job description of that?
There is none. I think they’re still working on that in some dimly lit back room. It comes down to this – I’ve spent a lot of time on the core pieces of technology, either building computers, working on networks, white hat hacking systems and delving into how businesses processes work by studying sociology and believe it or not, nature, which inevitably impacts how we interact and develop.
I have an undergrad in economics and sociology, so I hope I understand the business world, but also believe I have some thoughts on how humans think, how we work as groups. The grad school education formalized and enhanced some of my thoughts with an MBA, and a Masters of Science in e-commerce.
I tried to spend my time on what people are doing in other businesses, in the financial world, in the medical world, and then pull that into what is happening in the legal industry.
Sometimes the legal profession might be a tad further behind the curve with what we see in other industries, so what I can do is peer into how others are working and parlay that into what may happen for legal.
As a practical example, I was mining Bitcoin in 2011 trying to understand how it works. Most of my friends and colleagues asked ‘what is this, what are you doing?’ They thought it was pointless, and the jury was out in my head about it, but I found it very intriguing, so I continued to explore it.
If you play around with these technologies before most know about them, at very early stages, you can get a better picture of what is going to happen in the future with different industries, the legal industry being one of them.
The next thing to take a gander at is memory on organic materials – imagine saving all of your firm information to a tree? Seems bizarre, but at some point these things will happen.
You don’t have a background as a lawyer, but in business and social science. How did you become interested in the legal industry?
I see the legal industry as one of the spaces with the greatest opportunities. You know this is growing because of all of the startups that have infiltrated the industry. There are so many startups that are looking at the legal space right now, because there are two parts to it – the business of law and the practice of law. Both of these are ripe for great efficiency across the board.
These startups are looking at different aspects of these two facets, thinking of how to make it more efficient, to make it a bit easier for the clients to better serve themselves, or to work with law firms and have law firms better service their clients.
I see AI and blockchain leading the way – the AI algorithms making things faster and more efficient and blockchain saving this information and hopefully making it so that the trusted third party is now a computer network.
The perfect example of this is what you guys are doing with Kleros. I honestly think this is one of the best examples out there in terms of how we can create better efficiency in a “trustless” environment, working with blockchain to be able to save information, secure it, but also have people leveraging this tech to create a better environment for all parties involved in a dispute.
Since you mention Kleros, what caught your attention about our project?
What I find the most fascinating about Kleros is the idea that you are going to leverage blockchain as a space in the ether that allows people to file a complaint, process that complaint, and eventually resolve it, using a system based on blockchain, and wisdom of the crowds.
Crowdsourcing enables the expansion of the pool of people making the decision. This makes a lot of sense, as it can greatly enable efficiency and reduce costs in a large number of dispute resolution processes.
The economic model that aligns individual incentives with honest decision making is a great innovation within the legal industry.
How do you see a new technology like blockchain interacting with traditional government courts and regulation? Are legacy legal systems going to adapt to blockchain or are they going to be disrupted?
That is a great question and I think the answer depends on where you are in the world.
In time, I think blockchain will absolutely disrupt the way the government interacts with information and the way they verify it. I was in Dubai some weeks ago and met with government officials working on a full-on blockchain enabled verification system that, when decisions are made, puts everything on the blockchain.
Anyone will be able to look up that decision with ease and they want to have this up and running within the next 18 months without having to go through a proprietary company. In Dubai, it is the government who is pushing law firms in this direction. The government is leading there.
In the United States, on the contrary, you find that traditionally it is the corporations that lead change. Law firms tend to follow, then eventually, a little bit further down the road, you may see the government starting to get involved in the space.
Depends on where you are and how this works, but clearly some changes are afoot in the next five years.
What about AI? How is it likely to impact the legal industry?
It’s a funny one. All we see in the news is the AI and how it’s going to disrupt law firms or the legal industry in general. There is so much talk about this every single day, how the robot attorney is coming…
I had the good fortune to meet the pre-eminent legal technologist, Richard Susskind last year in London. One thing he says is that, in the short term, we are probably overestimating the power of AI, but in the long run we are probably underestimating it. We’re at a stage that AI is in the news and most of the attorneys, partners, and managing partners of law firms that I meet ask – is this really happening?
It’s clearly cresting atop Gartner Hype Cycle, similar to what is happening with blockchain, there is a lot that may happen with both of them. On the AI front, you are seeing companies that come along and have very smart ideas about how they can change a section of how the practice or business of law works.
For example, let’s say there is a merger between two massive organizations, both have 50,000 employees. One of the core things they want to look at are the employees they have for both organizations to see if they mesh well. In order to do this, they need to review all 100,000 employment contracts identifying golden parachute language… For example, if anyone got a $50 million bonus if the merger took place.
Currently, many global law firms do this due diligence. They put 100-200 attorneys on it by having them read every single contract and making sure that those documents are standardized – not containing that golden parachute.
Increasingly there are algorithms and associated programs on the market that go through all the contracts, looking for all the standard language, kicking out those contracts that don’t have the common phrases or terminology. Those kick-outs are then reviewed by a human, resulting in a massive increase in efficiency and less people hours.
These startups who are creating these applications, are pushing the bar in legal. They are devising better ways to get the job done using AI – in an incremental way. Will we see a robot attorney in the next few years? No. But these types of tools leveraging some AI will ramp up quite considerably across the board.
What is the result of all this? In the world of AI and blockchain, in fifteen years, say, what’s the place of lawyers in all this? What does the legal system look like?
Ten years out, and these are just guess, all of the lower tier work that we traditionally see law firms doing, be it the e-discovery, some of the contract work, all of that will probably go away.
E-discovery now still has a lot of human eyes looking at a lot of these documents, after a first pass that maybe a computer completes. In time, that will probably be all computer. The documents that are out there right now, the normal contracts, that will all go away.
It’s that very top level where you need human imagination, human thought, collaboration that will be the furthest out to be disrupted. But there are a lot of attorneys that are doing just day-to-day work, canned phrases that you use to build up that document, a lot of that stuff will be impacted in the next, say, five years. In ten ten years, I’d say it’ll definitely be impacted. That’s the direction that I personally see it going in.
Law firms that don’t change the way in which they work will probably go away.
Lastly, what we are starting to see in Europe, as well as Australia and New Zealand, is that the Big Four of auditing and accounting are starting to take away some of the business from law firms.
Not only can they now handle law firm work, they can handle everything else – they have full-on accounting, the business processes, all of that is going to be fulfilled by these massive organizations. That will absolutely impact law firms. This will come to the US soon, it is inevitable.
What advice would you give to a law student preparing for this new world?
Don’t practice law. (Laughs) I’m kidding.
I think it’s still a fantastic profession which requires a great deal of talent and unique thought processes. The advice that I actually gave to a few people who were interning here this summer, who were looking at law school: spend as much time on understanding the basics around law.
If your passion is around helping people and the love of law, go to law school. In preparation for your studies look at some of the startups like Kleros and try to work there to see what a lawyer will be doing in the future. Understand the growing relationship between technology and the law.
Clearly law rules the roost, but technology will continue to play a role in how it is practiced, and frankly what will be done by the future attorney.
I think companies should bring in a few aspiring attorneys to help them understand where we are going as a society, as a business. The future student should work with startups, work with bigger companies that are involved with e-discovery or anything in the legal technology world to help them get an understanding of how the technology works, how the vendors work and how this stuff may impact the way they practice law. Getting a full-rounded perspective of where the world is heading is essential – especially if you are dropping 300K USD on education.
One last thing I’ll mention about this is – I don’t know who originally thought of this concept, but there is a phrase called a T-shaped attorney. It’s literally like the letter T. Across the top of the letter T, those aspiring attorneys are learning everything they can about the business and the practice of law. They are learning a bit about project management, maybe they’re learning a bit about how to code or how vendors work.
More and more we are hearing about attorneys learning to code in different languages, so they have a better understanding of how that works. Understanding how vendors work, how startups work in the legal tech space. That’s the top of the letter, and the deep part, the extension of the letter T is the practice area they’re in, litigation, automotive practice or any else which they know almost as an expert. We are really talking about a well rounded attorney.
What books or other resources can you recommend to people to read and start learning about the future of law?
Some of the best books out there about legal technology and what impact its’ going to have are by Richard Susskind, most are aware of him, but if you haven’t seen or heard this gentleman from Scotland, he is on tour frequently, he talks about amazing things which should be happening in the legal industry.
He has a plethora of works out there. I spend a lot of time on YouTube in my off hours, looking at what people are thinking, what they’re talking about in many different industries, clearly within the legal tech industry as well, so that’s a great resource. Twitter has a plethora of great discussions that are happening as well.
Shameless plug, you can always check out my blog at https://JoeTechnologist.com, there’s always one or two hopefully decent ideas there that could be something worthwhile.
A presentation of Kleros with some extra flavor given by Joe Raczynski