ILTACON 2016: Re-Imagining Legal Technology for the 21st Century

By Joseph Raczynski

“The story of disruption was just the first act of 21st century business, now begins the tale of total transformation.”

— Mike Walsh

NATIONAL HARBOR, Md. — So reverberated the words of Mike Walsh a Futurist/CEO of Tomorrow, across an audience of more than 3,000 legal professionals at ILTACON 2016, a four-day conference that centers on the intersection of technology and the legal industry.

Walsh gave the keynote on the opening day of the annual conference, and the lens he cast enlightened the onlookers to a futuristic view of our current world. He then bridged that technological vision to the 21st Century Legal realm and focused on several thought provoking questions.

Can you think like an 8-year-old?

The key to transformation is to be ahead of it. Through the optics of an eight-year-old we can view the direction that technology is shifting. They embrace mobile — why? Because parents have pacified their kids for years with iPads and mobile phones. Their learnings began on those platforms which became almost intuitive to them and will now dictate our future.

When will we be a truly data-driven world?

Now! The biggest social shifts are shaped by the data-driven world. Disney World offers the most advanced of data collection and use. Their MagicBands are linked to a credit card and function as a park entry pass as well as a room key. They know who you are, where you are, and increasingly know what you want — predictively. Food can be delivered to you without you ever specifying a location. All of this is using data and machine learning to better understand consumer, and thus human behavior.

disney

WeChat, an app primarily used in China, was also offered as a good example of where we are going. With this app, people in China can play games, pay for things and buy insurance — the whole time interacting with a bot that is constantly gathering data and learning. This is what we will begin to see in all businesses in the near future.

In preparation for his transition into a discussion around legal, Walsh offered another thought. The children of today will be the first generation to be raised partly by artificial intelligence (AI). If you think about the platforms that are prevalent now, kids are interacting with them increasingly — Alexa, Google and Siri. Law firms have to start thinking about how these eventual employees will work and interact with each other both inside and outside of the firm.

How will a 21st century law firm differ from a 20th century firm?

The world is now global. The largest corporations and law firms have back office and operations support overseas. As an example, Walsh talked about something he saw in India which illustrated where we are headed. An AI machine (physical computer) is situated alongside other staff in a cubical at an office center in India. It is fully embraced and accepted as a highly efficient employee — and continues to improve rapidly with its own productivity.

Speaking of actual human employees, recruiting people will transform, Walsh noted. The next generation of hiring future lawyers, and collaborating with clients should focus on rethinking how we hire. Offer a prospect a clean sheet of paper and ask them to come up with a solution to a problem. Another idea, after a month on the job, ask what processes the newbie might change based on what they are seeing.

int-about-mike

What kind of mental software are you new hires running?

Going forward, the operating system of a 21st century lawyer is as much about the culture as it is about the code. All firms will have to be agile, and firms will have to hire people that think that way. Everything around our traditional culture and space is changing. People will increasingly be working from other locations, so this concept has to be reimagined. Walsh’s suggestion was to think about the person you are hiring — are they energized by solving problems? Additionally, environments have to be reconsidered. How do you design an office for people that do not need one?

Lastly, are you leveraging all of your data?

Law firms are rife with all sorts of data. One question that Walsh suggested was worth posing is how are firms using that data? Increased productivity can be gained by applying analytics to the whole.

In closing, Walsh pleaded for the legal space to adjust their mindsets, how we see and use data, which people are hired, and what technological processes are in place. We need to think like an eight-year-old to see how the world will change and adapt now, he explained.

The data inside law firms has to be better leveraged and analyzed with new tools. When hiring, do so by unearthing agile people and creating more social workspaces. One of the best ways to do that is by rethinking your communities, picking some high-profile projects and challenging those new teams to experiment.

In conclusion, Walsh noted: “When preparing for this new future, embrace that the future means challenging everything we know to be true.”

ILTACON 2016: Looking into the Future & Building the Exponential Law Firm

By Joseph Raczynski

“In the not too distant future, exponential technology could upend the $650-billion-dollar legal industry — or, there will be a $78 to $120 trillion-dollar opportunity for agile players who are prepared.”

— Rohit Talwar

NATIONAL HARBOR, Md. — At ILTACON 2016, Rohit Talwar, CEO of Fast Future, spoke about the disruption in the legal industry occurring around us and more precisely which technologies will have the largest impact on law firms in the near future.

In his discussion “Building the Exponential Law Firm,” Talwar began with the baseline of Moore’s Law — the theory that processing speeds of computers double roughly every 12 to 18 months. Building on that, he added what he considers to be the core of this exponential growth: machine learning. These are machines with the ability to create visual perception, reasoning, planning, intuition and decision-making all starting from a simple ruleset.


The Faster Pace of AI

In his fascinating discussion, Talwar pointed to a recent development with Google, using DeepMind, its artificial intelligence (AI) computer, and playing Go — one of the most complicated games known to man. In this scenario, Google did not program the computer, only gave it rules of the game.

Rohit-Talwar-pic-300x216

In short order, the world Go champion lost 4-to-1 to DeepMind in dominate fashion. While this happened in early 2016, this was not expected to be possible until 2026 — a full decade in the future.

What Talwar was illustrating through the AlphaGo example and countless others is that AI is here and is being used all around us. It is becoming pervasive, embedded, augmented, immersive, and connected to a multi-sensory network.

There were a host of various legal sector applications he cited as occurring now, such as those in areas such as:

  • Automation of Legal tasks and Processes — Firms have developed a computer program that can sift through government regulatory registers to check client names for banks, processing thousands of names overnight. Others have created an automated personal injury claim case assessment program.
  • Decision Support and Outcome Prediction — This includes advancement in document review in M&A, that extracts and analyzes key contract provisions and provides rapid summary and analysis; or analyzes entire briefs to find potential missing points of law, or alternative arguments not cited; and premonition programs can predict which lawyers win with which case types and which judges.
  • Creation of New Product and Service Offerings — This includes development of online document generation for startup formation; online education impact analysis; and online chatbots that can advise on privacy law and generating client-specific compliance policy in real-time.
  • Process Design and Matter Management — Firms have developed automated generation of process flows and project plans; real-time impact assessment of process changes on timeframes, resources and costs; and come up with suggested narratives based on how clients react to and prefer to receive information
  • Practice Management — This involves benchmarking across practice areas for comparable tasks from document production through to completion of key stages in a matter; identifying potential human resource challenges using social media sentiment analysis of comments; and providing dynamic modelling of alternative billing approaches and matter-team formation based on personal characteristics.
  • In-house Legal Applications — Some firms have developed a lawyer advisory app that can, for example, create an ordering of corporate contract negotiations; other tech entities have created apps or programs that can streamline and standardize regulated superannuation funds’ breach assessment processes, and that can help financial institutions meet requirements, determine applicable regulations in terms of situations concerning money laundering, liquidity risk and financial crimes.

The Coming Blockchain Revolution

Over the next several years Talwar said that he believes blockchain technology will have a monumental impact on law firms, providing firms with the ability to store information in a secure distributed ledger. In fact, Goldman Sachs estimates a cost saving of $4 billion annually on its legal bill by moving real estate titles to distributed ledgers that use blockchain technology.


Talwar pointed out that law firms have a huge potential upside with all of the technology that is emerging. However, he warned, if a firm does not adapt and become agile it will be very difficult for it to keep up with the pace of change that will be occurring, and ultimately its intransigence will make it difficult for the firm to win business.


In the second phase, being tested right now, the Decentralized Autonomous Organizations (DAOs) will execute contracts free of human intervention; and in the future, we’ll reach Algocracy, a full automation of the law.

In this scenario, we would have a complete rewriting of the law that would be embedded in software. This would allow for automatic fines, standardized open source legal documents and automated judgments. For example, if someone stole a candy bar from a convenience store, their own body camera would catch them and automatically impose a fine on that person. A payment would be removed directly from their bank account, and would be executed without human intervention.

Not surprisingly, Talwar pointed out that law firms have a huge potential upside with all of the technology that is emerging. However, he warned, if a firm does not adapt and become agile it will be very difficult for it to keep up with the pace of change that will be occurring, and ultimately its intransigence will make it difficult for the firm to win business.

The wonderful aspect about this change is that it is all new. Most of these technologies are not governed by law, which creates an incredible opportunity for legal advice because clients have to understand how to handle these new technologies.

Law Firm of the Future – The Trinity of Forces: Infinite Processing Power, Memory, and Machine Learning

By Joseph Raczynski

In ten years, it is predicted that 40% of the Fortune 500 companies will no longer exist1. This forecast originally cited in Fast Company is from a Babson Olin School of Business study.  This notion is nearly incomprehensible, but may have a significant impact on the legal business.

Why is this happening now, and what impact might it have on the law firm?

We are at an extraordinary moment in time with the evolution of technology on three fronts.  The trinity of forces are colliding at once, propelling change with everything around us.

Gordon Moore, an Intel chip scientist, formulated a well renowned technical law.  Moore’s Law states that roughly every 18 to 24 months, the processing power of computers doubles. That is, the ability for a computer to perform calculations is increasing exponentially.  For some perspective, if you were to buy a $1,000 computer in the year 2000, it would have had the processing power of an insect brain. Buy a new computer in 2010 and you would have the processing power of a mouse brain.  Fast-forward to 2024 and the expectation is that a new computer will be as powerful as the human brain.  In 2045, a $1,000 computer purchased from Amazon.com will process as fast as all of humankind.  The implications of this are staggering.

In the second of the three forces, we couple what amounts to unlimited processing power with the advances to storage and memory for computers. In 1965, IBM built a computer with 5MB of storage.  It was as big as a bedroom and cost $120,000. In 2004, a memory chip the size of a fingernail cost $99 and held 128 MB.  Ten years later, we can purchase a 128 GB chip for $99.  This is the hockey stick picture of momentum with exponential growth accelerating rapidly up the graph for both processing power and memory.

The third and last piece of this triumvirate of significant change is programming and algorithms.  We are at a state where computers are beginning to teach themselves.  Machine learning is becoming an increasingly important part of many businesses.  Through an algorithm, a programmer builds a foundation from which the program can learn and continue to adapt and grow.  There are a plethora of examples that are starting to take hold.  IBM Watson has the most buzz right now with its cognitive computing platform.  Uber uses machine learning to price rides, location drop-offs and pickups. Amazon can couple complementary products with your purchase.  In the legal space, WestSearch®, the fundamental algorithm behind WestlawNext®, learns as people conduct research.  It surfaces up the most pertinent content and good law for the researcher.  Other legal examples include e-Discovery where many products utilize predictive analytics to help reduce the number of eyes necessary to review documents.

The blending of these three forces – processing power, memory, and algorithms – is a mixture for infinite growth and transformation at law firms.  The opportunities are immense.  Here are some possible changes afoot as the trifecta take hold over the next 10 years.

  • As predicted that 40% of the Fortune 500 companies will no longer exist because of these forces, law firms will likely mirror this as some who do not adapt and embrace these technologies will struggle to survive
  • In the next 10 years, because of unlimited storage and processing power, most document review will be completely automated and computerized.  No longer will the first years or contract attorneys be reviewing documents for 18 hours a day
  • Workflow solutions will reign over the next five years, but beyond that the trifecta of forces mentioned will push these solutions into complete automation so that drafting documents will be computer generated.  This is actually happening now with 20 percent of Web news articles written by computer
  • We are in an interstitial period with the Cloud.  Currently, security frightens many firms from taking advantage of its scale and low cost.  In the coming years, most firms will move everything they can to some type of Cloud, including private or hybrid
  • Everything will be outsourced at the firm.  Phone systems, HR systems, back office, administrative and technical support, where the portal will be hosted, office tools like Microsoft® Office, and all things technical will likely be moved away from the firm and managed by vendor experts.  This will greatly reduce costs for the firm as they tap into the three forces
  • As a result of the above, most attorneys will work remotely, and law firm office space will be dramatically smaller
  • Big firms will get bigger and the medium may get smaller.  The mediums who adapt will find their niche as a regional player, local generalist, boutique, or litigation specialist
  • The impact on speed and adaptability on new attorneys will begin in law school.  Some schools have already begun a two-year program with the third focused on technology, lawyer tools, and recalibrating how the attorney will work in the new firm

The law firm of 10 years from now will certainly be different from what we have today.  In this extraordinary time, with the evolution of technology and trinity of forces, firms will have to adapt rapidly.  This fundamental shift will be an opportunity for the firm to become more efficient, create new opportunity, and ultimately serve their clients better.

1 John M. Olin School of Business study

ILTACON – Legal Technology Innovation: Bolstering and Destroying the Legal Profession

By Joseph Raczynski

The Napsterization of the legal industry is growing more plausible every day. The innovation and disruption seen in the music business around digitization and file sharing is happening right now to the legal industry.

Ryan McClead of Norton Rose Fulbright led a panel discussion, “Legal Technology Innovation: Bolstering and Destroying the Legal Profession,” at ILTACON 2015. Looking at the current state of the legal market, McClead drew a comparison to Napster and record companies circa 1999. The music industry thought their customers were interested in the CD and the packaging. The reality was all customers wanted was the music. Napster saw this and without intending to do so, used common technology to disrupt the record business.

McClead then applied this logic to the legal industry. His premise: law firms think that they are selling a lawyer’s time. However, if you ask a lawyer’s customers, they are most interested in the outcome, not the time itself. Law firms must adopt new technologies which focus on the outcome, not the time spent billing or even fixed pricing. With automation, firms can begin to replicate processes; establishing a faster, better, cheaper solution for their client.

McClead stated to the audience that the legal industry is partaking in its own version of the Napster event, adding “We have a choice to restructure our firms, rebuild our processes or the industry can do nothing, maintaining the status quo and see what happens.”

Stuart Barr, Chief Strategy Officer for HighQ, had an equally riveting discussion. He spoke about the real fears and promises of what is coming in legal. He noted that the advent of cognitive computing will see white collar jobs being eliminated. Using various examples, Barr cited how the revolution started with blue collar positions being jettisoned and will shift to white collar workers soon.

While jobs are being eliminated, new opportunities are emerging. Eight years ago, the mobile app industry didn’t exist; now it is a $100 billion business. Barr suggests that the legal industry will shift and lawyers will have to become more technical. He calls this new lawyer a hybrid legal engineer who knows both the law and technology.

The last discussion of the panel focused around M&A and contracts. In this arena, the panel saw huge possibilities leveraging cognitive computing. Currently a firm might review only the top 300 of 10,000 contracts for a large corporation’s pending merger. The firm may charge $500,000 for this work. The corporation is taking a gamble by not having the other contracts reviewed to save some money. With contract reviewing software, a law firm could offer to review 1,000 contracts for $750,000. In this scenario, both the corporation and law firm win.

The panel left many jaws agape after their rapid fire predictions. There is little question that many of these technologies are going to have a significant impact on the legal industry in the months and years to come.

Exponential Growth—The Data Explosion and Resulting Challenges and Opportunities for Law Firms, Part 2

By Joseph Raczynski

Over the course of the next several years I predict that many law firms will begin hiring data scientist. In my previous post Exponential Growth – The Data Explosion and Resulting Challenges and Opportunities for Law Firms, Part 1 I discussed how our current data explosion threatens experts at law firms but could yield vast opportunities. Recently Robin Grosset, Distinguished Engineer and Lead Architect at IBM Watson Analytics, described the importance of having a data scientist in your business. Underlining this point, he stated that in the United States there will be three-times the positions available in this field than can be filled.

How firms turn the big data challenge into opportunity

Why should law firms invest in a data scientist? Firms sit atop of massive quantities of very important specialized and typically siloed data. Grosset mentioned that a recent Mckinsey & Company report showed a firm could increase its operating margins by 60% by using the data they have currently. With the exponential growth of data, law firms will need to decipher it into understandable bits so they can make actionable decisions and find opportunity.

How could this be accomplished? In the past we know that eDiscovery practices utilized computer learning and analytics to create efficiency for large cases. As law firms continue to utilize flat fees as they seek out business, they will increasingly need to take advantage of analytics-based tools with a layer of human interaction. The human interaction is a piece that allows you, the expert, to ask simple or insightful questions for which the tool will serve up answers. Those intuitive results rest upon the underlining data which can be drilled into for greater understanding. The core piece to this human-level interaction is Semantic Analysis. In essence it adds meaning to data. That is, it creates data clues like data type, patterns, range density, sample values, and correlations. You essentially have a massive set of rules that are bundled together and sift through the data, eventually learning on its own and creating new interpretations of what lies within the data.

Why would a law firm use this? Business development, client retention, analysis of lawyer productivity, assessing resource allocation and a myriad of other untapped areas will be explored using a data scientist. With the ability to process massive quantities of information and find the white space, real opportunity will be found by those that go down this road. In fact, the analysis that IBM Watson puts forth states that most firms estimate that they only analyze 12% of their data currently and that 88% is left on the on the dark-grained, bamboo-laden law firm floor.

Ultimately, the exponential growth of data is currently creating challenges for some law firms. What will be fascinating over the years ahead is who will seize on this evolving opportunity and how will they approach it.

Exponential Growth – The Data Explosion and Resulting Challenges and Opportunities for Law Firms, Part 1

By Joseph Raczynski

We are currently living in the hockey stick portion of explosive data growth. That is, 90% of data humans amassed has been collected during the past two years. According to IBM Watson, this is gathering speed exponentially such that 2.5 billion gigabytes of new data is generated every day and the majority of this is unstructured. Simply stated, the numbers are massive and the data is not organized—and this impacts all businesses, but increasingly is a challenge to law firms.

True expertise is fading without computer learning tools

Recently I had the opportunity to watch Robin Grosset, Distinguished Engineer and Lead Architect at IBM Watson Analytics steer an entertaining and provocative discuss around data analytics. His focus was on how big data can impact expertise and how cognitive analysis or computer learning can meet this massive data challenge and build abundant opportunity.

True human expertise is at a crossroads. No one person can possibly absorb the vast quantity of data that is being produced in various disciplines. Traditionally in the eDiscovery space, firms hired first-years out of law school to review and classify thousands of documents for a case. Now, in many instances, data has ballooned well beyond what a team of attorneys can handle. Expertise is lost among the data. Audio, video, pictures, database information and social media are increasingly in profusion around cases to be analyzed. The ability to be an expert with a complete understanding of a case is nearly impossible now without the proper tools.

The solution to this dilemma of data and expertise is to wrap instruments that interpret and understand this data around the information. With cognitive computing it begins by dealing with the volume, variety and velocity of the data. Once that is understood, the real key is adding a human intuitive interface on top of that massive data-crunching, cloud-processing power. This aspect is the edge of where this field is headed currently. It then allows an expert to unearth the data through analytics and their own analysis. Firms can then sort through the mountain of information to understand and interpret trends and more importantly find white space. Now the expert can reclaim their seat, and from this challenge start to seek out opportunities for their firm.

In the next part of this series I will focus on how law firms can turn the big data challenge into opportunity.

The World of Advanced Endpoint Security

By Joseph Raczynski

Surprisingly the vendors in cybersecurity differ on their approaches to protecting your law firm. At the ILTA LegalSEC Summit 2015 in Baltimore, MD they had a panel discussion on how each vendor tackles the ever bounding threats.  For background when this post refers to endpoint security I am describing securing the user at the device level; i.e. the mobile phone or individual’s computer.

Gal Badishi of Palo Alto Networks started off his analysis with ominous statistics.  On average a firm does not recognize that they have been breached for 225 days after the initial strike.  In addition, of those attacks, 84% are found by third parties.  His primary theme throughout the conversation to counter these attacks was the proper implementation of a “Next Generation Firewall.”  This is defined on Wikipedia as “an integrated network platform that combines a traditional firewall with other network device filtering functionalities such as an application firewall using in-line deep packet inspection (DPI), an intrusion prevention system (IPS) and/or other techniques such as SSL and SSH interception, website filtering, QoS/bandwidth management, antivirus inspection and third-party integration (i.e. Active Directory).” (Wiki, 6/14/2015)

Keith Palumbo of Cylance fascinated the audience with a unique and futuristic tact to cybersecurity for law firms.  They use a form of Artificial Intelligence to uncover and deflect penetration from malicious intruders.  In fact Keith described the use of mathematical endpoint solutions including algorithms to help predict what types of “ones and zeros” will be malicious based on like or similar files.  Their equations employ similar processes financial institutions have devised for rapid electronic trading.  The cutting edge autonomous driving cars also operate under similar algorithms.  What fosters this is the utilization of extremely efficient computers and their prowess in mathematical processing.  In essence, Cylance collects samples of viruses, extracts common features in the code then transforms that code into feasible branch code.  At this stage the software vectorizes the viruses to then train the system on what might arrive at the firm’s door.  Finally it classifies the virus and clusters it into a defined grouping for future learning.

The third speaker, Harry Sverdlove of Bit9 begin his discussion with the statement that, “antivirus protection is almost pointless.”  He noted that what firms have been employing for the last 20 years with virus detection through updates is dead.  With the number of virus on the Internet, there is no feasible way to scan, collect, submit and maintain a log of the rapidly changing viruses.

Harry suggested that each firm start from the assumption they are or will be breached.  He painted an example of a house that a thief gains access to daily.  If you think about it in this sense, prevention of that thief from entering is no longer enough.  Firms must invest in detection and response.  Most firms do not have systems that seek out real-time detection mechanisms.  This lends itself to much longer periods of time that the thief remains inside the firm’s firewall.  If the initial firewall breach was not detected by the firm, that intruder could remain inside for significant periods of time.

Ultimately the three panelist concluded that a three pronged approach to endpoint security was necessary; prevention techniques, detection once the breech has occurred, and lastly creating a documented response using various tools and processes.  Whatever solution, they all suggested turning your firm data (logs, user profiles, patterns of access) into intelligence.  If you set precedents for how people access your network, you can identify the variance and seize the thief.

Citation:

Wikipedia, Next-Generation Firewall, 6/14/2015, https://en.wikipedia.org/wiki/Next-Generation_Firewall

 

Form a Phalanx: Law Firm Lessons on Managing Cyber Security through Talent and Culture

By Joseph Raczynski

The 5th Annual Law Firm CFO/CIO/COO Forum

As law firms continue to appreciate the significance of creating an understanding surrounding security and risks, this starts with a sharp focus on talent and culture.  The first component that the panel discussed during the Data Privacy, Security & the Globalized Law Firm CFO/CIO/COO Forum, surrounded protection and prevention methods.

Protection and Prevention

Barry Strauss, COO, Elegrity; Curt Cunningham, CIO, Fragomen; Michael Lewis, CIO, Hogan Lovells; Ramound Umerley, CDPO, Pitney Bowes had a very engaging discussion about how firms can best protect their data.  In the beginning stages firms should prioritize their assets.  What documents, emails, IP, databases, software, and services are most important?  As new data arrives, the firm should exam the process.  How is data stored, transmitted and deleted?  The process for each aspect needs to be examined carefully.  The firm has to be mindful of both structured and unstructured data and in addition, understand and follow the rules for national and international compliance of this information.

Several of the panelist suggested that every firm should conduct its own network penetration tests.   Michael Lewis, of Hogan Lovells recommended firm’s design phishing emails to see which employees are actually clicking on those links.  Another aspect he mentioned was to review data retention policies.  Are these policies industry standard?  Michael Lewis also advocated that firms take a baseline network traffic reports from all offices.  Once established, that can be compared to any unusual traffic on your network setting off alerts to anomalies and a possible compromise.

Some other protection and prevention methods:

  • Use encryption everywhere that you can; email, documents, databases, SAN
  • Web Application Vulnerability Testing
  • Mobile Device Management – separate data on their BYOB
  • ISO certification and accreditations

Incident Response

Another critical aspect of firm culture is incident response.  The panel discussed the need to have a cross functional team in place for when the cyber-attack occurs.  This group should include many of the following groups; Communications, HR, BD, HR, Managing Partner, IT, Audit, and Info Security.  A suggestion that hit a cord with the audience was accessibility to your vendors.  That is the ability to contact a vendor no matter what time of day or night.  Get the phone number to a real person who is accountable.  They emphasized that this should be negotiated and arranged in the contract.  Lastly, once an issue is complete conduct a retrospective of the attack and defined learnings for the next event.

In an age where law firms are clearly in the sights of cyber criminals there is a need to act. Law firms are aligning their understanding of security and risks directly with the need for a sharp focus on internal talent and culture.  Protection, prevention, and incident response methods are a major component of safeguarding the firm’s assets.  The panel closed with their three most important take-aways;  prepare technologically, educate your staff, and create clear processes.