Mastering complexity: Current and future tools for legal process optimisation

Legal processes extend across offices and practice areas. Aligning and optimising them (to say nothing of integrating them) can be very difficult, not least because of the human element. This is perhaps why some of the recently-emerged global law firms appear to be ‘kicking the can down the road’ on this rather than tackling these issues decisively. But tackle them they must, if they are to service their clients in the seamless, global way that they claim ?they can. So, too, must other medium to large-sized law firms.

In our article ‘Optimising processes’ in the April issue of Managing Partner, we looked at how law firms could enhance their efficiency (and hence their profitability) by optimising their business service processes. In ‘Prize fight,’ published in the March issue, we discussed the increasing relevance of legal services outsourcing to law firms. In this, the third in a series of four articles, we focus on processes specifically in the practice – those that drive the development of legal work product and ?its delivery to clients.

This article is not about legal project management, although that (and sourcing) are crucial aspects of process efficiency and good matter management generally. Nor is it about ‘disruptive innovations’ (a badly misused term) that radically reinvent processes. Rather, it is about law firms developing a deep understanding of the legal processes in their practice so that they can be better managed and, where appropriate, improved.

An overview of the benefits that can be achieved through this are outlined in Figure 1. At stake, at the highest level of abstraction, is enhanced competitive advantage, more valuable client relationships and greater efficiency ?– all of which translate directly into improved economic performance.

 

Legal process workflows

Modelling legal processes is not a new idea. The concept is well known to anybody that has done any kind of legal knowledge management. Legal project management is a basic first step. It does not make much sense to talk of redesigning processes if one does not have the basic disciplines in place.

How does one go about that, though? Is it possible to model legal processes through workflow studies, in the same way that one can for business processes? Usually not. Processes involved in ?the practice of law are fundamentally different to those involved in the business of law.

Addressing legal processes through workflow techniques is fatally flawed in three ways.?

1. It attempts to apply linear thinking to an area that is adaptive and dynamic. Legal transactions are not linear and don’t obey consistent rules.

2. The number of variables involved in all but the simplest transactions quickly lead to process flow diagrams and models that are too complex to be useful.

3. The restrictions that they place on lawyers stultify them and, worse, can prevent them from delivering the most appropriate solutions to their clients.

The 18th century British philosopher and jurist Jeremy Bentham once wrote “the power of the lawyer is in the uncertainty of the law”. Even beyond ?that, each kind of matter has its own specific set of characteristics including rules, legal risks, commercial risks, types of roles, templates and statutory tasks. Many matters bridge several different types of transaction, meaning that ?multiple sets of characteristics apply. ?For instance:?

• a lawyer is instructed to purchase a commercial property in London (triggering the set of characteristics associated with commercial real ?estate in London); but

• the transaction requires funds to be raised by selling assets in Germany (triggering a second set of characteristics); and

• by issuing shares or borrowing funds in Paris (triggering a third set of characteristics).

For an experienced lawyer, this level of intellectual complexity is handled with ease. For a process modeller, reducing all of the possible permutations of this transaction to a process flow diagram is diabolical in its complexity.

Some large global law firms have wasted a great deal of time and money in trying to map out ‘standard’ transactions. These have collapsed as soon as even moderate levels of complexity were introduced – not least because the technology used has been inadequate beyond the simplest ‘vanilla’ transactions.

 

Future disruptive technology

One development that would constitute a game-changer (a ‘disruptive innovation’ in the true sense of the term) in legal process management would be the significant introduction of artificial intelligence (AI) into legal knowledge management.

Some of the global IT companies serving the legal profession are working ?on this already, although a useable product is probably still some years ?away. Two parallels from outside the ?legal profession illustrate the potential.

1. Rapid and intelligent scanning of big data for relevant content

In 2011, the IBM computer ‘Watson’ competed against and beat two former winners of the TV game show Jeopardy. Watson had access to 200 million pages of structured and unstructured content, but was not connected to the internet.

The software that powered this feat is now being advanced to, upon verbal query, examine millions of pages of medical textbooks, journals and other references, in order to diagnose and propose treatment for, theoretically, ?every known human ailment.

How might this concept be applied to the practice of law? Imagine a resource that could quickly scan millions of pages of legal references, across multiple languages, in response to simple verbal cues, and quickly deliver intelligent responses that comprehensively address the matter.

2. Unstructured prompts and ‘pushing’ knowledge to lawyers

In current knowledge management systems, lawyers must search for the knowledge they need. Imagine if that knowledge could be ‘pushed’ to ?them instead.

Examples that already exist in other industries include iTunes and Amazon (“you have previously purchased ‘X’ so perhaps you would be interested in ‘Y’” or “others who bought ‘X’ were also interested in ‘Y’”).

A system that ‘pushed’ information ?to lawyers might suggest the following.?

• “You are purchasing a company, so you might want to use ‘X’ and ‘Y’ templates.”?

• “You are financing the purchase by raising bonds in France and Brazil, ?so you might like to review how we did that before. Also, ‘X’ and ‘Y’ are the lawyers that we have previously used in Paris and Sao Paulo.”?

• “50 per cent of the bonds you are issuing will be sold in Madagascar, so you might like to know the risks associated with that, which are ‘X’, ?‘Y’ and ‘Z’.”?

Lawyers would be presented not ?with directions but rather options as ?they constructed transactions. They ?would then be able to use their own ?skill and judgement to decide how ?best to proceed.

Such a system would also ?evolve and grow as it adapted to ?every decision that each lawyer took, ?constantly improving its ability to ?push out ever-more relevant options.

Tools for the present

For now, we don’t have such tools. However, one can better understand ?legal processes and how to improve ?them by segregating them into ?three types: ?

1. collaboration processes – these facilitate lawyers collaborating ?together on a matter. They are especially important if the firm ?has multiple offices or operates ?a virtual business model (even partially, such as with a significant ‘work from home’ component);?

2. work product processes – these actually create work product and deliver it to clients, from matter opening to closure; and

3. knowledge management processes – these collect knowledge, codify it and deliver it back to lawyers when it is needed on subsequent matters. ?

Of course, these three categories are not mutually exclusive, but in them lie several things that law firms can do, here and now, to make a start towards improving their legal processes (see box).

 

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Improving legal processes

1.Collaboration processes

• Root out behaviour that encourages predatory behaviour amongst lawyers. This may require revisiting the firm’s performance measurement and compensation systems.

• Find ways to improve IT and other systems, especially across geographies, to drive collaboration (not just referrals) on matters.

• Develop cross-office teams that meet regularly, either face-to-face or virtually, to discuss better ways to collaborate and serve clients together.

2. Work product processes

• Develop dialogues about disaggregating different kinds of legal services into their component tasks and about what kinds of variations typically emerge. It is futile to try to map these out generically into standardised workflow diagrams, but do plan and map out individual matters (i.e. implement legal project management). Matter by matter, make proactive decisions about the best way to source and approach the work.

• Explore billing models that do not involve churning out time for money. Fixed fees create incentives for lawyers to find efficiencies that reduce the transactional cost of a service because the additional margin translates directly into profit. Churning out billable hours is a real and significant disincentive to this.

• Engage with clients’ legal teams to get their views on how the processes involved in serving them could be made more efficient.

• Embrace the inherent complexity of legal services. Do not try to make things simpler than they are. Rather, understand what the key drivers of a matter are and what the key rules are that define a successful outcome – then focus on those.

3. Knowledge management processes

• Keep abreast of the latest developments in knowledge management, especially emerging technologies driven by social media and, in time, artificial intelligence.

• Improve channels of communication between those with experience and those who are learning the ropes. Until ‘push’ technologies become a reality, this is a far more efficient way of accelerating a transaction than wasting hours looking for knowledge. A recent Forrester study found that 45 per cent of lawyers spend four hours a week or more searching for content. It also found that a single division of a large UK-based global manufacturer determined that a one per cent efficiency increase in their knowledge workers finding information would lead to annual saving of £1.5m.

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Tim Hanson, Rob Millard and ?Simon Thompson are partners in ?Venturis Consulting Group LLP ?(www.venturisconsulting.com). ?Tim and Rob were formerly members of Linklaters’ strategy team and Simon was formerly Linklaters’ global COO.