Something big just changed, but most lawyers don't know about it yet

Something important has happened which has implications for many areas of law, but particularly family law:

Machines are now better at sourcing and collating financial disclosure than humans.

That’s right, sourcing.

Although this hasn’t been true for very long, if you're still trying to do this by hand and asking your clients to do the same, you’re already on the wrong side of history and losing ground fast.

Here I’ll lay out what has changed, what it means, and what you need to do about it.  

What has changed

Financial disclosure is a messy, resource-intensive activity that precedes most family law matters. Loathed by clients and lawyers alike, it can add significant delays to even starting matters, let alone resolving them (for more insight on the pain involved - and an irreverent chuckle - see my Joy of Disclosure art project).

However, machines are now able to automatically source and collate your client’s income tax returns and assessments, superannuation accounts and reported balances, bank statements, mortgages, loans, credit cards and details and value estimates for real estate and vehicles. And where relevant, business tax returns, activity statements, bank statements, ATO account balances, ABN searches, and company director and shareholders searches.

You press a button, and the information and documents appear. They are even collated, indexed, named and organised into folders. At a stroke, the frenetic financial disclosure activity that people have been doing by hand for decades has been made redundant.

To be clear, I’m not speculating about the future here. I’m describing how firms in every state of Australia did their financial disclosure last week. In fact, Adieu were just named Innovator of Year at the Australian Accounting Awards for 1-Click Disclosure, the product that has pioneered this.

But what specifically are machines better at when it comes to financial disclosure, and how much better are they?

Sourcing information and documents

One of the biggest issues in financial disclosure is that most clients don’t actually know what they have; at least to the level of detail required for family law purposes. Do they have two superannuation funds or three? Which of the thirteen variations of Corolla is theirs? Is that old HELP debt still around? And even if the client does know these things, most don’t have a clue where to begin in gathering all of the supporting documents required.

A machine with access to the right data sources can answer all of these questions significantly faster - and more accurately - than a client who is fumbling around old files and making wild guesses as to the value of things. It can figure out which variant of Corolla the client’s is based on the number plate; and while it’s there it can look at recent sales of similar vehicles to work out an estimate of what the vehicle is currently worth. It can compile a list of bank account details and balances, and - because it has nothing more pressing to do - grab the statements for each account as well. And it can do all of this in the time it takes you to even explain to the client what they need to provide. 

Collating and sharing documents

But getting the documents is only part of the challenge. You then need to make sense of them, collate them, index them and organise them into something you can provide to the other side. Lawyers and their teams spend inordinate amounts of time on this work, but machines eat it for breakfast and are still hungry.

A machine can pull together a balance sheet, crunch the numbers and type it up into a word document in about 0.4 seconds. It can index the documents and create a full disclosure schedule in 3.5 seconds. You’ll need to be patient however if you want it to take all of the documents in a matter, organise them, name them, put them into folders and prepare them for upload to a practice management system, because that’s going to take around 8 seconds.

A machine can automatically update disclosure as a matter progresses to keep it current; and while humans are looking for their keys and forgetting that it’s bin night, it can track what has and hasn’t been shared, when it was disclosed to the other side and whether the other side received it. It can reconstruct what the other side had at any given moment in the matter and even type up a full disclosure timeline for you in a few seconds.

In short, machines are not just on par with humans - they are now much, much better at this stuff than we are.

What it means

So machines can now embarrass humans when it comes to sourcing and collating financial disclosure - but what does that mean for the world?

Ultimately it means that separating families can achieve better outcomes, in shorter timeframes, at less cost. That’s why Adieu exists, and I would hope that the number of people who aren’t aligned with that goal is small.

Lawyers’ initial reactions may be mixed however. Although the vast majority are in this area for the very reason of getting their clients better outcomes in shorter timeframes, the cost part requires pause. Running a firm is expensive, and when your primary business model is based on hours, it’s not immediately obvious that less of them will be a good thing for you. I’d like to make three points for my lawyer friends.

1. Administrative work isn’t where you want to be growing your practice.
2. There is still a role for humans in financial disclosure.
3. Your only real choice is when.

Let’s unpack each of these.

1 - Administrative work isn’t where you want to be growing your practice

If you found the Joy of Disclosure amusing in any way, you can probably skip straight to point 2. Disclosure work is the empty calories of the family law world. Your team don’t want to do it, your clients want to do it even less than your team - and they certainly don’t want to pay for it. I’m not sure how much lawyers talk about this amongst themselves, but the number of lawyers who have confessed to me how regularly they write down disclosure work is depressing. A firm who is trying to make any significant amount of their revenue out of administrative trivia is in a precarious position; and one that is going to deteriorate significantly in the next few years. Just don’t.

2 - There is still a role for humans in financial disclosure

While I may have made somewhat of a brutal point above, financial disclosure isn’t all administrative trivia. Human judgement and advice is always required. What does and does not need to be disclosed in the circumstances? Which items should be considered as part of the shared pool? How do we deal with different types of superannuation? This is valuable work that should be done by humans. It isn’t going anywhere soon. Perhaps even more important is getting the initial engagement with the client right at a human level. Rapport. Empathy. As I pointed out in my interview with Lawyers Weekly, regardless of what happens in tech, what makes a good lawyer in 2030 isn’t going to look a whole lot different from what makes a good lawyer in 2020. Technology is only going to highlight the importance of these human qualities more.

3 - Your only real choice is when

Whatever your thoughts may be on the above, the simple fact is that this kind of innovation changes the market. Because it's not just a question of back office efficiency but client experience - it is your clients who ultimately get to choose whether you use it. That leaves you with only the choice of when you start using it.

What makes this innovation particularly sudden and disruptive is the business model. Technical innovation typically follows an adoption curve, starting with innovators and early adopters and then eventually spreading out to the masses as costs come down. This isn’t the case for 1-Click Disclosure however, because Adieu is one of an emerging breed of organisation known as a social impact startup. Social impact startups are mission-first ventures that - like regular startups - are based on scalable technology, but deliver it through a business model that is geared to solving a social problem while generating self-sustaining revenue. Rather than maximising profits, we provide 1-Click Disclosure at no cost to lawyers, and an accessible flat fee for clients (currently $300). We’re optimising for impact, and making a bet that this can be self-sustaining with volume. 

This warps the adoption curve because it removes the period of time usually required for costs to come down before mainstream adoption is possible - 1-Click Disclosure is already cheaper than what it is replacing. The economics are such that those who don't adopt it simply can’t compete with those who do. And those who hold out suffer a double whammy of having higher operating costs and providing a poorer experience.

The bottom line? If you’re still preparing financial disclosure by hand, you’re wasting your time. And worse, if you’re still asking your clients to manually gather their documents, you’re wasting their time and money, and providing them with a poor experience.

What you need to do about it

Clearly, you need to stop trying to source and collate your clients’ disclosure by hand. So what’s that going to take?

Surprisingly little as it turns out. 1-Click Disclosure has no cost for lawyers so there is no contract or credit card required. It is cloud-based so doesn’t need to be installed or configured. We provide the service in the capacity of a public accounting firm, so are governed by our own professional regulation and covered by our own insurance.

That leaves you with only 2 things you need to do:

1. Take 60 seconds to set up 1-Click Disclosure: Just sign up, click your activation link and set a password. 
2. Press the ‘Request Disclosure’ button for your first client. Type in the client’s basic details. Everything else just happens automagically.

For more details on how it works, check out our frequently asked questions. You might also find it helpful to book a demo to get your head around how you can use 1-Click Disclosure with your own clients; I'd love to hear your feedback and talk through any questions you may have.

1-Click Disclosure exists to enable better outcomes, in shorter timeframes, at less cost. Using it supercharges your practice and supports our social mission at the same time. We’re counting on volume to make it sustainable, so - if you want lawyers to continue to have free access to this kind of technology - tell those in your network about it, and use it for all the clients you can.

Our design mantra is “magically simple”. I hope you enjoy using it as much as we enjoyed building it!