Can Ernst & Young boost legal innovation in Latam?

Daniel Acevedo
March 7, 2020

Do Big 4 accounting firms hire lawyers?

You bet they do. 

Ernst & Young (EY), PricewaterhouseCoopers (PwC), KPMG, and Deloitte have been recruiting lawyers for years. They continue to do so at a high rate. Moreover, nowadays, they also hire legal innovation leads, which speaks volumes of their ambitions for the future.

I have long been of the view that players that come outside of the legal service market will be leaders in legal innovation.

“Transforming the corporate legal function is not about buying new shiny tech every time; It is about to understand why you do the things that you do and to find better ways for it.”  - Daniel Acevedo

Who is Daniel Acevedo and how he helps the legal?

Speaking of which, just a few weeks back, Ernst & Young (EY) appointed Daniel Santiago Acevedo Sanchez as the senior manager for legal operations services.

Daniel’s duties would be to develop EY Law’s capacity in legal operations and legal tech for Latin America’s in-house legal departments.

Before joining EY Law, Daniel was the head of strategy and project management at Galicia Abogados (Mexico). He was also spearheading the business transformation team at Gómez-Pinzón Abogados, as well as the quality and projects department in Posse Herrera Ruiz Abogados (Colombia).

Overall, Daniel is a very cool guy who also has his podcast in legal technology and innovation, which is very popular among Spanish speaking populace.

After years of tagging along with Daniel on social media, I finally had the honor to meet him at the ELTA’s annual congress in Madrid. Daniel has a unique vantage point over the markets, which is why I asked him to share his views here.

Photo by paweldotio on Unsplash

What can I do to change legal services?

Q: Congratulations on your new role! What would be the one (or a few) thing(s) that you will be thinking about every morning after you wake up in the position of the Senior EY Legal Ops Manager for LatAm?

Daniel Acevedo: Thank you for this kind invitation. Mainly, I would think about the same as I did before (only more frequently nowadays). And that is, “What can I do today to change how legal services are being delivered?”

And some of the days, the answer would be to write articles or deliver conference talks. With those, I usually advise my Latam colleagues how they could be thinking or working differently. Likewise, I would point them to various resources that could help them along the way.

Additionally, I plan to develop projects with clients during which we would find ways to optimize their legal service delivery model. I am proud to say that EY Law has the capacity and experts to help our clients succeed.

Most only think about what legal tech to buy

Q: Once you said that it takes “a holistic approach that considers people, processes, data, and technology.” Would you please elaborate - what do you think is the status quo in this (inhouse) segment in the LatAm legal services market?

DA: Unfortunately, most legal departments start thinking about what piece of legal tech to buy, when they consider their business transformation. Usually, they would start from contract or matter management. Sadly, I don’t think this is present in Latam only, but all over the globe.

Now please don’t get me wrong - I am not saying legal tech tools aren’t useful. They probably would be. But what strikes me as odd is - how can you even begin to enhance something with technology, if you don’t know it well enough already? Or if you don’t have it, to begin with?

And yes, I am talking about processes.

As we heard during the ELTA’s annual congress in Madrid (ELTAcon19), many legal departments across the globe are now working with their advisers to figure out their processes. That is a logical step one, before any legaltech implementation.

So, have a process first. Know it. Understand how much resources does it take to execute, and what are the effects of said execution. Only - and ONLY THEN - will you be able to measure the effect of introducing technology. This is the only true way to know your ROI.

Photo by Lorenzo Spoleti on Unsplash

Would AI legal tech tools really help you?

I frequently hear, at least in Latam, legal departments want to buy AI tools to automate their contract review tasks. Sounds great!

My first question after that is usually - what data repositories are they going to use to train their AI. And immediately, we have an entirely different conversation. 

That is EXACTLY what is wrong right now with the legal business transformation in Latam. You just can’t think you will purchase a legal tech and call it a day.

If your approach to the problem is wrong, you WILL have a hard time. History and IT experience show this time and time again. See, for example, the VCF FBI project

Business transformation is much more than tech

Q: How do you plan to approach the status quo, and to help with moving it forward?

DA: Our plan in EY Law is to teach legal departments that a business transformation initiative is a lot more than thinking about tech. This is also why the team is called Legal Operations - not Legal Tech. 

Within our Legal Operations team, we have developed a service line named Legal Function Consulting. With this line, we plan to advise legal departments on how to make their legal service delivery more efficient. If this shows tech development is necessary, we are ready to offer our capacity in this regard too. 

However, we will not force legal departments into buying or implementing stuff they don’t need.

Our hope is this approach, paired with evangelizing efforts, will help break the mold sooner than later.

Photo by Gautam Krishnan on Unsplash

Stronger than law firms (because we are not one)

Q: There’s lots of talk about the Big4’s wider role in the legal services market. They went from being “imposters” (sometimes referred to as “the accountants”) to competitors; and to - IMHO - legal innovators. How do you see the Big4 role in the market - retrospectively, currently, and possibly in the future too?

DA: By definition, the Big4 were not originally intended to render legal services. At least, not in a traditional way. 

We are not a law firm. We don’t have all the upsides and downsides that come with the biglaw business model.

Law firms may still have some competitive advantages over the Big4. Namely, a close relationship between the partner and the clients is certainly one. Handling complex matters is yet another.

However, give it enough time, and I am sure this advantage will melt away. And once that happens, clients will start considering other aspects of legal services too. 

Think about the speed of delivery; new channels of communication (e.g., client portals are a good example). Imagine having all the data about your case at your fingertips, not having to call your lawyer.

Or what about the new forms of delivering legal advice? For example, implementing design thinking and changing the way a contract looks and operates? It all sounds simple, but it is a UX game changer. 

And these things add up over time. It will all be relevant for the future competitive advantage, and it will all be considered by future clients.

Part of the strength is in our diversity

I just think the Big4 are in a much better position than law firms EXACTLY because they are NOT law firms. If you have all the above in mind, you can see why we are much more equipped to cater to the new and refined needs of legal service clients. 

By way of example, I meet nearly every day with business consultants, mathematicians, and software engineers. They all sit just a few meters away from my office. 

When we have a client problem to solve, my team of lawyers (naturally) participates in finding solutions. However, we also have the input of a lot of other professionals, extremely qualified in their area.

You just can’t find such multidisciplinary teams in your every-day law firm.

What is taboo now in the legal sector?

Q: Some 5 years ago, even topics as Cloud-based Law Practice Management tools were, by and large, considered taboo among legal professionals. What issues do you nowadays see as Taboo? Could this be an indicator of what is to come over the next 5 years?

DA: I think cloud computing is still a taboo in the legal services industry - at least in Latam. People just don’t understand or accept that “cloud” means their data is in a tier 4 data center with nearly military-grade security.

It is undoubtedly far more secure than their downtown office.

Hence, I see A LOT of on-premise implementations with tons of infrastructure investments. Nowadays, I just feel that it is a waste of good money.

Why would you NEED to have (barring regulations) your DMS hosted on-site? It just doesn’t make any sense.

Moreover, I still see law firms nowadays having their office filled with paper everywhere. But I dream and think this will change, and, before long, a paperless office will be a reality.

I also feel AI solutions are a bit taboo-ish. But not because of the solutions themselves. No, it is lawyers that don’t understand that, in addition to having AI, they also need to TRAIN it. And to train it, they need to do a lot in terms of database creation and management.

Yet again, since lawyers don’t understand technology, they usually think AI is just a plug-and-play solution. In reality, AI is pretty far from that.

Photo by David Rodrigo on Unsplash

Alternative Legal models are gaining a foothold

Q: How do you see the Legal Services Market today?

DA: Globally, I feel 2020 is the year where Alternative Legal Service Providers (ALSPs, or the NewLaw) are gaining more foothold and legitimacy.

This feels like a massive shift to me. It indicates that clients consider “knowing law with excellence” is a must. They are not afraid to shop around anymore.

It is not very good for the traditional biglaw model. They pride with legal excellence - but once that becomes the floor, what else do they have to offer? How do they stand out?

This likely means we will see law firms struggling more and more to reach new clients. Maybe in only 5 years ahead.

Moreover (again, globally), I see an explosion of solutions that boost access to justice.

This was something that probably LegalZoom started nearly 20 years ago. But only in 2020, I see people coming to terms that they REALLY DON’T NEED TO see a lawyer every time they need legal help.

The above is both exciting and an indicator that, even in developed countries, access to justice is still very much an issue.

Eventually, even if only gradually, even business clients will get used to using ready-made legal products rather than calling their trusted lawyers.

Photo by Jason Wong on Unsplash

In terms of Latam, I believe that we may just be a bit earlier in the overall cycle. So everything I mentioned above will likely take longer.

However, I am already starting to see traditional law firms struggling with the generational shift of founders. Most of the top tier law firms in Latam are still headed by their first-generation.

And this could influence if they will stay relevant in the future. Or will they open themselves vulnerable to newcomers? 

In Colombia, for example, you can see that law firms that are in their 2nd or 3rd generations are far from what they used to be some 30 - 40 years ago. If the leading firms don’t learn from past mistakes, they will probably have to repeat them.

Future of Law - beyond 2020

Q: One of personal “predictions” for the 2020/2021 is that Legal Services Productization will gain momentum (either through ALSPs/NewLaw; Big4; or law firms - as more and more no-code platforms come on and about).

What is your feeling on the subject?

Are we warming up towards the Legal Products and the CaaS (Compliance as a Service) business/charge model? Which of the mentioned category of players is best positioned to make a breakthrough in that field?

DA: I feel I covered most of these in my previous answer. However, I would add the following: 

I think the Big4 and large ALSPs (e.g., Axiom) are in a better position to grab future opportunities. This mainly since Big4 have financial resources which they could invest in solving enterprise-grade issues.

When we speak about general consumers, I feel current market gaps will be filled by legaltech and ALSPs with a clear B2C product targeting.

Photo by Ross Sokolovski on Unsplash

Law firms must do one thing (ain’t legaltech)

Q: How will a law firm of the future look/feel like?

DA: If law firms want to succeed in the future (and I guess they do), I feel they need to address their internal functions and roles. 

As long as law firm partners are, at the same time, service team leaders, shareholders, AND heads of their business development, they will keep facing problems. 

Diversity is key. 

You just can’t run a company successfully if you are in charge of sales, as well as production, tech implementation (and much more). And all that with no accountability on the side, given how you also own the company. 

So, for me, the number one thing law firms need to address for the future is to develop a transparent and accountable corporate governance structure. 

There should be one guy or girl who should only think about how to optimize day-to-day operations. That girl (or guy) should also have sufficient power to be able to enforce their decisions, policies, and (legal) tech choices. There should be no exceptions (not even to partners).

The same could be said for sales. There must be a separation between legal service production (i.e., doing the work) and selling services.

And again, we are coming to my starting point:-

All I said above sounds extremely non-techy. But as mentioned before - the future is not about buying every new shiny legal tech trinket that comes out. 

The future of the legal services lies in our ability to understand that we are here to serve clients. Legal tech is only a small part of that story. There are other - much larger pieces to consider first. 

And, once you have all the above figured out - buy some tech - if you have to.

Ivan Rasic holds the Transnational Trade Law and Finance LLM, a program by Universidad de Deusto (Bilbao, ES), Universiteit van Tilburg (Tilburg, NL), and Goethe Universität (Frankfurt, DE). After his work in law firms and inhouse, he started a legal tech company.

Nowadays, Ivan leads STP Informationstechnologie GmbH's Sofia RnD center with project/development management, culture, strategy, and special project initiatives.

Ivan is an Ambassador at European Legal Tech Association (ELTA). He closely follows and writes on future of law, legal tech, ALSPs, and new ways of delivering legal services.

Daniel Santiago Acevedo Sanchez is a renowned expert in legal operations. Some of his past roles include Head of the strategy, business transformation, and service delivery quality control in some of the top-tier law firms in Latin America.

Daniel also speaks about the future of law at various themed conferences and writes on related topics. You can find his podcast on LegalTech here.

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