In this Q&A, we’re speaking with U.K.-based Derek Southall, founder and CEO of Hyperscale Group Limited and an expert on legal tech trends. He talks with us about how technology is reshaping the delivery of corporate legal services in Europe and around the globe and the shifting relationship between law firms and corporate legal departments.
Q: Tell us a bit about your legal technology experience.
Southall: I started as a corporate finance lawyer and, in the late 1990s, moved into a role as partner and head of strategic development, looking at efficiency and how to use technology for the firm and its clients. After taking a break from corporate law, I started looking into technology developments at the time like case management, intranets, portals, and document assembly. They were crazy times. It was the dotcom boom with firms making huge claims. Law firms were starting to embrace technology and were getting themselves ready to make significant changes – some were saying they’d be supported by huge percentages of digital income within three years. A few wanted to “own the dealroom” while others claimed they would make all their know-how available to clients.
I was effectively appointed as one of the first innovation leaders at partner level in a law firm and commend my former firm for their vision and foresight. It was both a scary and hugely exciting time. You could not even hire people due to the demand from dotcoms.
However, 20 years down the road, sadly, we’re still dealing with a lot of the same issues. Many of the fears did not materialize and the momentum was slower than many expected once the dotcom bubble burst. I’ve realized that very few technologies have made a material difference in speeding up the delivery of law. Most tech is not legal tech but instead is tech – infrastructure tech and focused on storing information.
Q: Has legal technology changed drastically in the last decade?
Southall: It has, in other ways. Today you can break tech into three areas: digital basics, enabling tech and disruptive tech like AI and blockchain. Imagine it as an onion. It’s harder the closer you get to the outside. You have to get under the skin of legal and work cross-functionally with lawyers, which not all lawyers understand. These projects can’t be done for people. They need to be done with them and lawyer time is precious. Also, ROI is lower as you typically have a higher number of projects, each benefiting smaller numbers of people.
Law is a $900 billion global business, and most of the work is still delivered with manual processes. There is technology, but most of it stores information. Still, not much technology actually tackles the delivery of law. But we see a greater appetite for technology, even from lawyers who haven’t grown up with it. It is a huge opportunity.
Q: What are the top legal tech trends in the European legal community right now?
Southall: According to the latest figures, the legal tech market is worth about $15.6 billion, and $9.6 billion of that is corporate. Many new technologies, such as AI, are more beneficial to in-house teams than law firms as they have a greater corpus of similar documentation. The biggest priorities are around financial management, document and matter management and metrics. It’s about knowing who’s doing what work where. Also, there is a huge trend in terms of uptake in contract management as it goes straight to the top and bottom line.
More widely, I also see an increase in analytical tools as many countries are providing data under open licenses which can be exploited. Predictive analysis is becoming very real.
Law firms are in a difficult space. Many are full-service because they’re trying to support their clients as much as possible, but this means it is hard to really improve efficiency in every area. You might have 63 teams in 19 sectors and 18 jurisdictions. How do you prioritize that and help everyone in every market? Some firms have resorted to partnering and others are leveraging no and low code systems. Others are buying productized AI. It is a hard area though.
Q: What do you see happening in other markets?
Southall: Beyond the U.K. and U.S., you can find some great examples of innovation. Impressive things are coming out of Asia and Australia. Singapore has invested massively in driving its startup market. Legal tech is genuinely a global market. The U.S. and U.K. are only one piece of the equation.
Q: How do you see the law firm/corporate legal relationship changing in the next decade?
Southall: Law firms started putting in place best-in-breed technology before corporate did. Now corporate seems to be embracing technology at a faster rate, and that technology lends itself better to their needs. Law firms are ahead, but corporate seems to be accelerating much more quickly and will overtake law firms. The scope and ROI is often larger too.
Work given to firms by in-house legal may well diminish or at least change as their expectations for more efficient work and knowledge of technology increase. Corporations are heavily marketed to by software providers, raising the level of understanding the average in-house lawyer perhaps more so than in many private practice firms. Virtually every major corporation will have an Alternative Legal Services Providor now , which will also perhaps take more of the routine work away from firms and firms are fighting back by launching their own.
Law firms will have to increasingly leverage tech to be more efficient and to interface with their clients’ systems and the increasing number of platforms emerging in the market. COVID has also accelerated everything and technology adoption at law firms is no exception. Firms wishing to attract the best talent in a post COVID world will also need to ensure they provide their people with the very best systems.
Legal work and how it’s delivered will look very different in the future. Those firms who get this right will reap the rewards in years to come, but sadly the reverse is always true. Someone said to me a year ago, “Why would a technologist want to work in law?” Given it is a $900 billion undigitized market, I would suggest it is a huge opportunity. What is there not to like for great technologists?
One more note: If you’re interested in connecting with the greater in-house legal community to share experiences, lessons and successes, sign up to join Onit’s Lean into LegalOps program for Europe or the U.S.