Another legal year in review or foundations for a new beginning?

I love reading articles, reports, checklists, watching webinars or listening to podcasts around this time of the year. I think my predilection has something to do with making sure I haven’t missed something – and I always have – but, it also carves out some space to reflect on the answer I pose to myself and for the Centre of Legal Innovation (CLI) at this time every year…Where do we go from here? So, let’s take a look back at the four big innovation and legaltech trends in 2021 and let me share, as we go along, how CLI has started to answer that question for 2022…

The four big innovation and legaltech trends in 2021

There were a lot of trends to choose from in 2021, but here are the ones that stood out for me:

1. Change became a verb as well as a noun

In 2021, the second (and arguably the third) year of the global pandemic, the legal ecosystem developed a different relationship with change. In 2019 and 2020 we focused on keeping our legal businesses afloat. In 2021, the need to keep adapting and moving forward became familiar. Legal businesses embraced a redefinition of work, workplaces, workspaces and a new business as usual (BAU) evolved. For most, this also entrenched a form of continuous change/improvement/innovation (even if it was not called that). In late 2021, and after the launch of our Innovation Incubator Program 2021/22, we kicked off our Legal Innovation – From Changing Mindsets to Metrics series to, like the Incubator, support legal organisations progress their innovation projects.

Why did this all of this come to fruition in 2021? Because the legal world went digital (more on that below), clients embraced the level of convenience that provided and, consequently, a number of internal barriers to innovation also changed. In 2020, the legal industry mindset, once firmly predisposed to risk aversion and being reactive (read here fear of change/defending the status quo; resistance; and the absence of proofs of concept), shifted in 2021 to starting (we’re still on the journey) to think about risk differently and being more proactive.

The depth and breadth of this change - the transformation and wide-spread tech adoption required in a short period of time – came at a price that took many by surprise. The price of change was distinctly human, demanded urgent attention, was exhausting, and it was unevenly distributed (it impacted diverse groups including LGBTQ+ employees, people of colour and women more than others).

And so, in 2021, legal businesses also FINALLY started to seriously prioritise resilience and well-being. It became visible in 2020 with the formation of the Corporate Mental Health Alliance Australia (which included law firms) and continued in 2021 with the International Bar Association report on?Mental Wellbeing in the Legal Profession: A Global Study?and locally, through initiatives (especially mental health days) rolled out by firms like Lander & Rogers, Hall & Wilcox and Colin Biggers & Paisley (amongst others). Employees were focused on this too. They also started to seriously consider whether or not workplaces that didn’t value their work or lacked purpose were really places they wanted to be…for 40+% of all employees (with legal employees at least anecdotally identified as being in this group) there was a significant “miss” rather than “match,” hence the great resignation…more on that later.

2. We got “digi wit it”…(with apologies to Will Smith)

The legal world went visibly digital in 2021! Yes, that was already happening before 2021 but “digital” was everywhere this year – digital currencies, digital contracts, digital signatures, digital forensics, digital law, digital legal services, digital strategies, and so the list goes on. There were many words but more importantly, there was action but undeniably with the need for lots more!

Four things stood out for me – we saw the needle move forward on three in 2021 and the fourth, we’ll see more of in 2022:

a.??????Digital literacy: In 2021, the legal world really did love the tech they were with. Digital literacy was no longer a nice to have, it became a must to have – you could not conduct the business or practice of law without it.

In 2022, expect the need and application of digital literacy to increase especially as it relates to:

• Collaboration and communication tools: because we might be going back to the office more but we aren’t going back full-time any time soon and our clients still don’t want to drive hundreds of kilometres to see us!
• Online, on demand learning: because we still need to keep up to date and will have to virtually onboard people – we no longer need to be in the same town, remember! We will ALL (see later on who the ALL will be) need to observe and practice skills online too so, expect the legal edutech world to start moving forward in leaps and bounds in 2022 too!

b.??????Automation: This was THE year for automation and its best friend, low-code or no-code solutions used by citizen developers (the non-coders). If it could be automated, it was fair game and, given the Gartner prediction that by 2024 legal departments will automate 50% of the legal work associated with key business transactions, it likely needed to be automated too! At CLI, we recognised this and launched our Automation Mini-series in collaboration with world leaders in this space - Avvoka,?Checkbox,?Josef,?LawHawk?and?Neota Logic. The series was highly practical and too participants through the A-Z of legal automation – it was and I’m sure will remain a very popular series!

c.??????Data Literacy: This was THE quote about the use of data of 2021 – it’s from Mary Shen O’Carroll for the Financial Times in March and summed up the importance and role of data in the legal ecosystem right now:

“How do I best run the department? With data. What tech should I put in? It depends what data you need. Should I hire a legal operations person? Yes, to help you gather and interpret the data.”

While the quote related to the in-house legal function, it’s relevant to everyone in legal.

THE article of the year on data was written by Mark Cohen “The Data-Backed Legal Function: Enhancing Insight, Creating Business Impact, And Improving Customer Experience.” An outstanding read on where, why and how data must and will be placed at the core of every legal practice. If you have not read this yet, do!

The clear message from both is this…in 2022, expect legal data literacy to explode! It’s going to be THE critical skill set for running your legal business AND in managing, analysing, predicting and advising your clients how best to minimise risk. If you can’t work the data by 2022, someone else will use it to help your clients before you do!

d.??????Finally on this point, I’m also throwing legal AI into the mix. Where legaltech has largely focused on tech tools to assist, automate and augment legal practice, the exciting and challenging thing about AI is its ability to do that too but more…to substitute for human judgement. That substitution has not been perfect, especially when it comes to algorithmic bias. Regulation and standards are imminent and developing. In 2022, the use of AI promises to become more widespread and sophisticated with lawyers and the legal industry having an increasingly important role to play. ????

3. Adjacent legal businesses, NewLaw services or Law Plus – what’s in a name?

In 2021, we saw the rise of the adjacent legal business or more often now called NewLaw services or Legal/Law Plus. While not new, its prevalence and expansion, especially in BigLaw (but not limited to it) was important and noteworthy. While the name used to describe these businesses was different, the key characteristics were essentially the same everywhere i.e., an additional service/product offering to provide holistic/end-to-end solutions for clients.

These businesses usually resulted in additional/new revenue streams for their firms, were resourced by different specialists/professionals, and added to or complemented the provision of legal advice. They were sometimes integrated into and became part of the law firm or were established as independent entities. In some cases, firms grew them organically, in others, they brought or bought in talent or partnered with specialist businesses or consultancies to provide them.

The focus areas for these additional client facing services included consultancies/advisories in process improvement, choice of tech solutions, outsourcing and resourcing of talent (contract lawyers, lawyer secondments, access to allied professionals like project managers and data analysts), innovation/change and transformation, and risk management (but in several different risks e.g., cyber, ESG, DEIB). While these services were led and the talent for them drawn predominantly from allied professionals, a number also combined this talent with lawyers in these firms. The stand-out firm in NewLaw services in 2021 was Ashurst Advance – the growth in this part of their business was fascinating to watch and instructive – a case study in how law firms, especially BigLaw, can and will grow in the future.

It’s also important to note here that law firms weren’t the only ones in this picture. Consultancies like PwC NewLaw (client experience) and KPMG Law (legal ops transformation services) continued to expand their service offerings in 2021 too.

This NewLaw focus also signalled a redefinition of talent, a need for different capabilities and a new war for talent…that’s next!

4.??????A new emerging war for different talent

For a long time now law firms and legal departments have viewed talent through a single rather than a multifocal lens. Change started to take hold in 2021 for all the reasons noted earlier. The capabilities needed to deliver contemporary legal services are now multidisciplinary, multigenerational, and multinational. These capabilities can no longer be sourced from one place or located from 9am-5pm in an office. Talent is global, on demand, in-person and/or remote. That is the labour market today. It only works when it’s fully integrated with and complemented by digital assets that bring people together who can/do use them. Most firms worked through their own proofs of concept in these areas in 2019 and 2020, it took some work, and not everyone came out at the same place. The ones that did the work will continue to thrive beyond 2021, differently. For them, the work was not just about adopting or using technology but rather understanding and leveraging their newly developed capabilities in lean and agile working, creativity, diversity, inclusion, client centricity, adaptability and more. ?In 2021, there emerged a deeper understanding of doing things differently with different people and, learning from each other.

Those firms who entered or expanded their NewLaw offerings in 2021 also identified an emerging skills gap and capability shortage. Job advertisements and significant salaries for professionals in this space were more prevalent in 2021, available talent was not! What became clear is that many of the allied professionals working in NewLaw moved into these roles from a previous professional life e.g., as a lawyer or professional in another industry. They were the role creators, defined them, and grew into them. The need for a career path – from junior to senior – became VERY apparent in 2021 as did the need for a dedicated, stage/experience level specific, standardised learning program. In a previous post this year I discussed how one law firm consortium plugged this gap in 2021 – as these opportunities expand, more will need to be done. In 2022, we’ll be doing our part to understand, explain and discuss these roles and support them in our NewLaw Careers series.??????

Where to in 2022?

In 2021, we’ve started to see a discernible change in the culture in legal businesses – it impacted EVERYTHING!

In the face of increased digitisation and at a time when we were required to be physically distant from each other, we relied more on our humanity, empathy and curiosity! It got us thinking at CLI that rather than surrendering to the great resignation, maybe we could help turn it into the great attraction? We think that’s a new foundation worth building on so, in 2022 we’ll be launching our Future Focused Labs series to explore the new and different legal world we are living in and how that might ebb and flow in the next few years. We'll work on discrete areas in each Lab so we can identify issues and solutions.

In launching the Future Focused Labs series, we recognise that not all the conversations will be easy. But, we also know they are important, timely and critical. We’ll create an environment where every idea is respected, everyone is encouraged to participate, and where we hope participants will want to explore ideas outside their comfort zones. It’s time for the legal industry to think and act differently, more proactively and helpfully. We want to see if we can create a space and the opportunity to move beyond reengineering legal practice and, in collaboration with you, build back different and better!

We are intending to hold these Labs in hybrid mode – some virtual and some in-person - if you would like to participate, and we hope you will, please email us: [email protected] and use the subject line “Future Focused Labs 2022.”

Finally, thank you all sooooo much for supporting CLI in 2021 – we can’t wait to see you back in 2022 - happy, happy holidays!

P.S. If you’ve been following CLI’s The Legalpreneurs Sandbox Year in Review podcasts since 2019, you’ll find the third in that series for this year here with?Caryn Sandler, Partner and Chief Knowledge and Innovation Officer at?Gilbert & Tobin;?Warrick McLean, CEO at?Colman Grieg Lawyers; and?Graeme Grovum, Head of Technology and Client Solutions at?Allens? – it was another fabulous conversation where we discussed the themes in this post and more!

About the Author

Terri Mottershead?is the Executive Director of the?Centre for Legal Innovation?(Australia, New Zealand and Asia-Pacific) (CLI) at?The College of Law. Terri works internationally with leaders of legal businesses supporting them in identifying trends, developing strategies, and transforming their capabilities and practices to deliver legal services/products in the new legal ecosystem. She is the “instigator, designer and developer in chief” of CLI’s global initiatives, networks and programs including the?Legalpreneurs Lab, the?Innovation Incubator Program, and its podcast series,?The Legalpreneurs Sandbox. Prior to joining CLI, Terri was a practising lawyer, founded start-ups on three different continents, and established or led the in-house talent management departments for global firms and associations in Asia and the US including Lex Mundi, the Inter-Pacific Bar Association (IPBA) and DLA Piper LLP (US).