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12.15.20: Council of Luminaries CLIENT-SIDE

The LVN Council of Luminaries is comprised of veteran thought leaders and pioneers in the business of law community. The objective behind assembling this group is to establish a brain trust of recognized, experienced and progressive leaders who can help interpret developments in the market, provide advice on how to successfully approach and navigate challenges, predict future trends and changes to prepare for, and to participate in targeted special projects to benefit the legal industry as a whole.

The below meeting was conducted primarily with the Council Of Luminaries CLIENT-SIDE group.

This week’s Luminaries’ Call centered around a long discussion about automation tool LegalMation, which a number of the Luminaries use.

Luminary 1 – The tool allows you to view a co and draft an initial response.

Luminary 2 – we’ve got 3 workstreams for it: 1) The tech will provide an initial answer to interrogatories and request for production 2) Using the AI to produce an initial set of objections to discovery coming in and 3) (and we are really excited to see where this goes) leveraging data to make decisions.

The cliched data-driven decisions we all hear about haven’t been fully leveraged. The big questions are: 1) can we cull through all the data and 2) is it accurate, clean and current? But the bigger problem is collecting it all. Ultimately, we’d like to be able to use data to help us in certain categories: e.g., in employment, who has handled particular types of cases, what was the outcome and what were fees? So, we can make targeted decisions on selecting counsel, budgeting and AFAs. The goal is so we can better price legal service.

Luminary 3 – If you’ve already got counsel working on a fixed fee, introduction of this tool can help them improve the margins on that work. They can redeploy assets to do other work, and have the AI do what it does, so it can help decrease the cost of delivery. That also keeps the flat fees in check.

Luminary 2 – This is a good question for the Law Firm Luminaries – how can they embrace technology to be more creative in their pricing? The ones that are willing to be innovative, can redeploy assets to be more competitive

Luminary 3 – We will have to see more project-based work. More flat fee work, too. Disaggregation of work is happening. Those that react will win. You can only ride that specialization horse for so long. It will have to change.

Luminary 4 – The clients are driving a lot of it, but real innovation is an internal realization the firms have to come to if they want a better smarter business model. Even in diversity, for example, if you can fix the way firms build models, price work, use tech, it will solve some of the problems firms face. If you are a firm that is advanced in how you work, that is a huge recruiting sell. It’s not just pressure from clients. It is also from partners in how they reinvent themselves into a new modern workplace.

Luminary 2 – A big question is whether we at the tipping point where tech will recognize that there will have to be some true commoditization. I have a portfolio that lends itself to this very thing. And we have firms on our panels that can adopt tools like this. Use as a tool to pass to the next generation of lawyer: We’re going to let the tech do the commodity work, we’ll do a separate thing.

Luminary 5 – For me, the thing that interested me about LegalMation is you hear AI, AI, AI, but when I saw this, I was like ‘holy crap’ this works. Getting firms to adopt this – not do the rote work, the blocking and tackling and doing higher-level work at an earlier career stage. Should be attractive to clients and recruits both.

Luminary 1 – Did you identify a firm to work with on this?

Luminary 2 – We started by identifying where to apply the text to get the biggest bang for the buck. When we piloted it in 2017, we used it for repetitive allegations like single-plaintiff employment. Then we went to firms we trust who can give good feedback.

The tool is good, but you need to be high volume, not too complex matters. I’m not going to say it’s in a place where it can take over all work. But it will get better.

Luminary 5 – How was it working with the law firm? Were they reluctant? Were you pushing them? Or did they embrace it?

Luminary 2 – A few firms we used for the pilot are long-time firms, we knew we could trust. But once they got in, they loved it, it freed up time. There were hiccups as we expanded into different states, some have specific pleading requirements – the tech can only do so much. We got some pushback from firms. That’s where LegalMation helped – they went out to firms and trained them. Some firms did, however, see it as taking over an income stream.

Luminary 5 - I know that clients that have used the tool have seen improved consistency, e.g. making sure you always ask for a jury trial if that’s your policy to do that.

Luminary 2 – One of the firms we used realized they had 2 people pleading differently on the same types of cases. So, it does improve consistency. And that expands out to discovery etc. We’ve struggled to always remain consistent on responding to discovery in different states has been a struggle as we’ve grown. The tech has helped add consistency

Luminary 6 – How are your firms billing you for the work they are doing with the tool?

Luminary 3 – My philosophy is that we should foot the bill for and use the technology ourselves. Firms are asking us if they have to get their own licenses, or can do the work under our contract with LegalMation. Thus far out thinking has been we will do the work and deliver the proposed work product to the firm and deliver that to the firm with the complaint.

We can also use the law of large numbers in terms of our deal with LegalMation and also have consistency nationally.

Luminary 1 – What are you calculating as the savings? In time or money?

Luminary 3 – At least a 50% savings on that portion of the work. Basically, all the time allocated to drafting.

Luminary 1 – How are you pricing with the firms?

Luminary 3 – We would previously have allowed - say 4 hours for writing a response, and now we only allow 1 hour. Note that we have good pre and post-pay auditors, so we can check.

Luminary 6 – So a 3-hour haircut?

Luminary 3 – Yes, but they can redeploy that time?

Luminary 1 – We have fixed fees on a lot of our matters.

Luminary 3 – The firms can’t get their mind around what these people are going to do. They don’t want to think about reducing associate headcount.

Luminary 6 – They can go to market because they can offer under-market pricing

Luminary 5 – Is that where we’re heading? Smart firms going to market on doing it cheaper?

Luminary 3 – It’s easier for firms to develop this from the ground up, rather than adjust an existing process. Then they can price it right from the beginning.

If a company wants to build a new law firm model, they may start with this as a starting point.

Luminary 4 – I’m thinking about where you have chosen to focus this effort. Do you think this provides an opportunity for minority-owned firms, or solos, or smaller firms? It helps train them.

Luminary 5 – It can be hard for smaller firms to play. Can this help us push the diversity lever more than we could in the past?

Luminary 3 – Can we put minority firms on a level playing field? Yes. Have we had a concerted effort with this tool? No, but I’m taking that back.

In terms of differentiating between large/superregional firms vs. a firm that is in only a single jurisdiction, those smaller ones are more interested in order to learn how to compete. They don’t have R&D dollars and are looking for a way to differentiate

Luminary 1 – If we are talking about single-plaintiff employment, etc. we should be looking at these smaller firms and diverse firms.

Luminary 2 – A lot of our diversity spend has historically gone into the kinds of buckets we are now using LegalMation for. But many of those firms are struggling with capacity. It’s not just a capacity issue, but it’s such that you can handle a massive data set. The AI can help you do work that 10 associates would do.

Luminary 6 – Can this improve access to justice?

Luminary 3 – That’s the exponential lawyer. Marc Lauritsen has the second edition of his book coming out on this topic.

Luminary 5 - Who fits that bill?

Luminary 3 – Who will be better at implementing? Getting it up and running. You or your firm?

Luminary 5 – The client, obviously.

Luminary 3 – So it makes sense for the client to bring on the technology.

Luminary 5 – Especially if we are using this to get smaller, diverse firms in the door, then it’s incumbent on us to bring it in and ask them to use it.

Luminary 4 – If smaller firms are the supplier base, then it makes sense. But even for larger firms, the techs should be ours to own.

Luminary 2 – We are using the same model, reducing the time we are paying for. There are some places where you have to put more into the review. We were modeling 60-80% savings in the pilot, but as we’ve expanded, it’s more like 50%. We have a third-party auditor helping.

Luminary 3 – You not only have to look at time elements but also total cost of matter. You don’t want them making up the hours somewhere else. So, you have to give the sentinel effect. And you have to be transparent about it and give feedback when they do things they like but that you don’t like.

And to be clear, we learned all this by making tons of mistakes. We can be good at measuring, but if you don’t tell the firms, how can you expect them to change behavior? You have to tell them. Or the opposite: “You’re doing a great job, here’s more money.”

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