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Opinion

Pandemic, technology and the future of law

Opinion

With COVID-19 forcing the conservative legal industry to quickly adapt to new practices, Morry Bailes forecasts five areas on which to focus for future success.

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The beginning of a new year is a good time to devote thought to the big trends that are likely to impact industry in 2022 and beyond.

After a year of considerable upheaval, the social and economic impacts of the Covid pandemic, and governments’ responses to it, are beginning to manifest themselves.

For the legal profession, 2020 caused a reflection in law firms of how to face down the existential threat of Covid and remain successful. 2021 was a back to basics year, one that demonstrated that traditional law firms are anything but a spent force.

For courts of law over the same period an impressive pivot to the digital delivery of justice outcomes proved that when push came to shove, innovation in a traditionally conservative group such as the judiciary was not only possible but was achieved with a degree of success that exceeded expectations.

What then for 2022 and the future of the law? Drawing on what we are seeing play out before us and looking at what is needed to continue to succeed, I see five major trends.

The rise and rise of  technology

The end of three decades of cheap labour courtesy of the former Eastern Bloc countries and Asia, particularly China, combined with record levels of government stimulus and disrupted supply chains have led to an inevitable outcome, the return of inflation. Just how sustained that trend will be remains a live debate amongst economists; however it is reasonable to assume that we will see inflation flow through to wages at some point.

In addition to that, the taste of the work from home lifestyle cultivated during the pandemic is causing office bound workers to reassess their priorities.

With the millennial generation and likely Gen Z, we are also dealing with people who do not necessarily share all of the work attitudes of the Boomers and X Gen, that work was our life. It is a workforce that will deliver to employers in a different way.

Taken together these two factors will impact the cost, availability and willingness of labour. To counteract that it is likely we will see a greater and greater emphasis placed on smart technologies to enable better use of lawyers and support staff time, to deliver more for less. Technology is the key to increased productivity.

AI, once the province of the larger firms only, will gradually come to the fore. For mid-sized firms the focus will remain on automation, process, and outsourcing to cheaper forms of labour.

However future innovation will most likely give way to a fair dose of pragmatism. Traditional law, once supposedly challenged by ‘new law’, turned out to be a nice little earner in 2021. With the terror of Covid abating, law firms will want to hang onto their new found profitability, and rather than shoot for the stars find more basic ways to save on increasingly costly labour by best exploiting the opportunities that tech presents. A dance with death, in a business sense, has had a sobering effect on the over exuberant futurists. Firms will turn to what is known to work.

Client attitudes

Covid has changed the attitudes of everyone, and clients of law firms are no exception. Client driven expectations of how legal services will be delivered to them in the future, fine tuned by virtue of the Covid pandemic, will drive a change in the way lawyers will go about satisfying their clients. The remote way is here to stay, and law firms will need to stay client focused to meet such expectations or they will lose to other more flexible and innovative, and potentially non-lawyer providers.

It will result in clients leading the legal profession by setting their expectations rather than the reverse. We should expect the law to become ever more client focused.

Fixed price and predictive pricing

This segues into another trend we will see increasing: clarity in price setting. With the rise of in-house lawyers and the increasing cost of delivering legal services (in part due to the ever rising complexity of the law, and exacting requirements of courts and tribunals), work will go to those firms who can promise a greater level of certainty either through fixed priced jobs or very clear and predictive ways in which to measure and control spend.

There are few professions in which pricing can be so variable, because litigation is unpredictable, but as there is no lack of competition in the legal industry, satisfying client demands for certainty will mean firms will engender greater client loyalty if their prices are clear, predictable, and where possible fixed. It is entirely possible to run fixed priced and hourly rate models side by side. They are not mutually exclusive.

In an increasingly litigious society, and one where regulation is at times overwhelming, lawyers will remain in demand. However, clients get a choice – and they will not choose opaque pricing structures over clarity, simplicity and predictability. Not only will the method of the delivery of the law change, so will our approach to pricing.

Cybersecurity

If 2021 is remembered for a few things, one will be the settling realisation that cyber attack and cyber crime is here to stay. There has been no abatement, indeed the opposite has occurred. Cyber attacks have become an everyday occurrence and not only business but government and government agencies are under constant and increasing threat.

Responses within the insurance industry are a clear indicator that risk will only worsen in this area. If business can even get an underwriter to write cyber and crime policies, it will come with clear limits on the scope of cover, and be priced according to the risk.

All industries are vulnerable to cyber attack, but few more so than the law. We hold our clients money in our trust accounts, we transact daily to and from those accounts, we hold privileged client data, and sensitive and competitive business information. Yet for many practising the law, it remains a relatively unsophisticated cottage industry. Thinking that because they do not operate trust accounts, barristers too remain blissfully unaware of the threat, as do many smaller firms.

A majority of lawyers have not even taken the basic steps of introducing double factor authentication and the like when interacting with clients and third parties. Counteracting the ever increasing threat to cybersecurity will become an obsession for diligent managing partners, firm owners and senior executives for the foreseeable future, or until governments and industry in Australia combine to achieve more permanent protections. Going on the erratic, confusing and at times incompetent governance responses to the Covid pandemic, one would not hold one’s breath on the latter coming any time soon.

Cybersecurity against the risk of cyber attack will remain at the forefront of law firm management in 2022 and beyond.

Disruption 

Covid was the ultimate disruptor in an industry that is difficult to disrupt. The law is highly regulated, slow to change and inherently conservative. There are reasons for that. We take oaths and affirmations to uphold the administration of justice as our highest obligation, and we protect the independence of the judiciary. We are slow to change because of the importance of the institutions and conventions that we are sworn to uphold and protect.

Faced with the extraordinary circumstances of the early iterations of the Covid pandemic, the courts in conjunction with legal associations did what many thought was inconceivable, and that was to pivot to provide online services in an abrupt breakthrough into the digital age. Not that that wasn’t where we would have ended up eventually. The High Court prior to Covid had been conducting leave to appeal hearings in an online digital format for some time, and the Federal Court had an advanced digital approach by comparison to the State Courts. It was the speed with which courts had to react to the crisis of Covid that compressed to nothing a process that otherwise would have taken years.

Having arrived so quickly at the current point, it seems unlikely we will see courts and tribunals unwind the dramatic steps that have been made into the digital world, and it is a trend that will continue and continue to be refined, as it is not without problems.

First, the principle of open justice requires that courts be open to the public and public scrutiny. The courts as they are operating now often allow access to parties and witnesses only, not the public, and that is an unacceptable state of affairs and a feature that must not be permitted to become the norm in a system of open justice such as ours.

Secondly, in reacting so quickly, courts across Australia did not adopt a uniform approach. A lack of uniformity in the long term is problematic. In the short term courts did what they had to do, and with impressive outcomes. Full credit goes to the heads of our jurisdictions, Courts Administration Authorities and the many judges and their staff who adapted in the blink of an eye. It was one of the most stunning changes of direction seen in the law for a long time, and maybe forever.

Third, whilst online digital fora lends itself to short procedural hearings and shorter arguments, longer complex matters are less suited to the digital format. Bret Walker SC recently made that point when reflecting on his recent period in practise. A witness communicates not only with speech but with a broader set of behaviours. Additionally, litigating when one is not in the same room as fellow barristers and the bench is not ideal.

The legal profession must however accept that the digital world is here to stay. The gains achieved by the courts in consultation with lawyers to create the current digital environment that has enabled the justice system to continue to function amidst the depths of global pandemic is not a genie that can be put back in the bottle. What’s more, it goes some way to addressing ever present cost and access to justice challenges. We will now forever practise law with one foot in the digital, and one foot in the in-person world.

The collision of a worldwide viral pandemic, generational changes in the workforce, an ever increasing reliance and use of technology, and the biggest government stimulus in history have combined to make 2022 a year to watch. There has been rapid innovation to counter threats, and the law like broader industry has managed admirably.

The lessons learnt and advances made are key to understanding where the legal industry will go this year and in the years to come.

Morry Bailes is Senior Lawyer and Business Advisor to Tindall Gask Bentley Lawyers, past president of the Law Council of Australia and a past president of the Law Society of South Australia.

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