Ljubljana Legal Hackers and a glance into legal tech future
November 11, 2020
Q&A with Ljubljana Legal Hackers
I've recently had a chance to join Ljubljana Legal Hackers for one of their fire chat sessions.
For those uninitiated, the Legal Hackers community gathers lawyers, researchers, academics (etc.) who jointly discuss relevant topics for the legal industry's future.
Žiga Perović, who runs this community in Slovenia, gives his best to entice guests from the sphere of law, technology, and business, to present various vantage points to his audience. He was moderating this QnA while I, for a change, took the seat of an interviewee.
(below are some of the questions we discussed with Žiga and the audience)
Legal service productization (trending)
Q: What is, in your view, the latest trend in the legal industry? Or, at least, what should we pay attention to?
Ivan Rasic: Some of the trends I mentioned earlier this year (before the pandemic) were legal service productization and no-code platforms.
If you are new to the subject, productizing a legal service simply means to package it in a way so it can be found, sold, accessed and used in a self served manner. Ideally, without any intermediaries (lawyers inclusive).
To say this is, or will become a trend, isn’t to imply a massive use of no code platforms and legal service productization. On the contrary, it just might be a very slow process, as the legal industry adapts to the new norm of (mostly) remote working.
(it certainly doesn’t mean that everyone will productize their legal services immediately, even at all)
We will (and do already) see more and more (legal) tech companies that address this issue. Yes, I am talking about no-code platform vendors and also about interoperability platforms.
(interoperability is still a huge problem, but one that gets solved rather rapidly nowadays)
Traction, however, might not be quite significant nowadays, while the potential remains vast. And to be clear, I don't refer to the potential for no-code vendors (which is certainly present). Instead, I talk about legal service vendors that could grab markets like (e.g.) b2c with their massively accessible niche solutions.
Anyone that ever had to use legal services (in either corporate or individual setting) are potential legal products' users.
What about other use cases, like compliance as a service?
Imagine developing your product as a legal advisor. For example, it could be an app (or even a whole suite of legal compliance apps) that you sell on a subscription basis to SMEs or even larger in-house teams.
(it is already happening, by the way - in a very nascent way - that is why the opportunity is enormous)
You merely take it upon yourself to maintain your app to align with the latest legislation. All the examples of how you update and communicate upcoming releases are already out there - stemming from the software development world.
You could draw a parallel between "legislation" and an "Operative System." Every time an OS vendor makes a critical update that substantially changes its framework, app vendors that operate within said OS might have to realign their applications.
So yes, this is already a trend. The only question is when will it pick up in traction.
As another comparison, we can look at the whole discussion around alternative legal fees (some tenish years ago). Just around 2008, the debate about the problems of the billable hour was seemingly quite niched.
The discussion about alternative legal fees seems to have accelerated by a few notches right after the 2008 turmoil.
I feel the same is about to happen (or is happening already) with RPA in legal teams. Yes, it already existed, but perhaps on margins only.
Right now, as law firms and in-house legal teams think about budget and operations optimization, RPA implementation will undoubtedly rise on the priority list.
The third trend I'd like to mention is a rising number of legal entrepreneurs stepping up, getting bolder, and taking risks. That was certainly not the case before.
I feel they now witness first-hand that, even if they remain in the safety of their status quo, a black swan is bound to happen sooner or later and change everything we took for granted. Yes, economic cycles bear risks and obliteration and opportunity and prominence to those who aren't afraid to step up.
At times, taking the initiative isn't only about prominence but also about bare survival.
How it all started for me
Q: You’ve been (and are still) involved in legaltech from the vendors’ side. Some of your roles were/are a founder, mentor, advisor, and so on. What initially brought you to the industry?
IR: Yes, I've been in legaltech since 2012. My background is in the legal services industry, and I have always been obsessed with optimizing processes.
And we know a significant chunk of legal services account for mundane (yet necessary) tasks. Not all is high-level intellectual strategizing; someone needs to do the legwork.
At the start of my legal career, I always thought about accomplishing these mundane tasks in a way that leaves me time for more advanced layers of work (i.e., those where the real learning happens).
However, while still a law student, I tended to break the mold with pretty much anything. After graduating, I started as a law trainee in Serbia (as is tradition). However, not long after, I got admitted for the Transnational Trade Law & Finance Erasmus Mundus Master program.
During the Masters, at the start, I felt I was doing something that deviated from the norm. That was quite true in a way, but it was still much about traditional Uni learning methods. Unis, I realized, were shaping profiles mainly interesting for their partners and sponsor companies.
(and there is nothing strange with that - universities’ role has traditionally been to provide experts within narrow niches)
The above realization brought the old feeling back - namely that I didn't break the mold. I was still doing something that ultimately was quite common.
At that moment, I guess, my desire to do something more surfaced. I started reading about entrepreneurship from any sources I could find. My university studies didn't add anything there at all.
We did have one entrepreneurship course at the UvT where, ironically, the professor said (during the very first class) that one can't be taught entrepreneurship. "You are either born as one or not," he said.
That just made me leave the course and never look back. What good was the class if the professor claimed he couldn't teach anything of relevance?
Now when I think of it - what if that was just the reaction the professor tried to invoke with students? Did he teach me entrepreneurship by telling me implicitly that I have to get out of the room?
This realization struck me just as I wrote these lines. I guess I owe a lot to the old UvT professor, even though I only saw him once for less than an hour.
Lastly, back when I was a student, I thought problems of the legal services industry were only present in Serbia. Once I went abroad, I noticed other countries and regions of the world were in more-less the same situation. The legal industry matured, and there was no turning back.
I always thought entrepreneurs could be a catalyst for reshaping a mature industry as they find new business models. That was also one of my driving forces - being a change agent.
Q: What was your outlook on legaltech back when you started? How did it evolve so far?
IR: Legal tech wasn't a thing before, as a category at least. Yes, some companies provided software products to the legal vertical under the SaaS principles (before even SaaS was a prominent model) to law firms and legal service providers.
Back then, the legal tech was still considered a niche. E.g., a software company could have had a DMS adapted for legal professionals in a particular country and decided to target that market (in addition to other niches they served). But they wouldn't necessarily consider themselves a legal tech company as such.
Additionally, the (so-called) legal tech products and companies were mainly supporting the then-present business model. There were barely any thoughts about disrupting or even just innovating.
Dr. George Beaton labeled the model ”BigLaw,” denoting a law firm business model that operates on the billable hour’s back.
Of course, we are talking about vendors of DMS, law practice management systems, billing systems, and similar. And of course, legal publishers, which were solving one of the earliest problems that technology could solve at the time.
So what changed since?
Nowadays, the legal tech category is quite broad - it became a horizontal in its own right. It naturally includes all the aforementioned product categories and vendors. However, legal tech nowadays also challenges the status quo.
(technology is so flexible nowadays, and it is only up to lawyers in charge to decide which way they prefer to render legal services)
Take no-code platforms, for example. While they can support your business model in a law firm (by, e.g., digitizing your existing processes), their true potential lies in using them to reach a much wider audience with your legal service offering. They give you the tools to build a product that you would sell, like SaaS.
I label it "CaaS" - as in "Compliance as a Service."
Further, under the broad umbrella of legal tech, some also consider companies that don't provide software systems or platforms but rather legal services (in a different way).
It might be mere semantics, but I feel it makes more sense to put such companies within the newlaw or alternative legal service providers group.
Nowadays, I wonder if we will eventually see authors talk about DAOs being a part of legal tech. That wouldn't make too much sense, as DAOs are about innovative governance models (not about legal tech in particular).
So that's in a nutshell. Legal tech is nowadays much more than it used to be, indeed, and I am excited to observe and anticipate where it goes next.
Legal innovation - an oxymoron?
Q: Traditionally, lawyers and law firms are seen as slow to change. Is it really so in practice? And, if yes, would you feel that large law firms and big chain brands are more inclined to drive the progress vis a vis small firms and bar associations? What is your take?
IR: I feel that's a far too broad statement. And, if we are honest, the general population isn't innovative, by and large. There are many more consumers than entrepreneurs. Hence, statistically speaking, we would expect a good majority of lawyers not to be innovative. So is the case with every other profession.
I see many innovators in the legal space as well.
However, I do agree the legal industry is seen as such (not being innovative). I do wonder why that would be the case. Perhaps it is one of the last massive industries that have to catch up with innovation on a broader scale?
With statistics busting the "lawyers == laggards" myth, we should question why the legal industry still falls behind. What if the factors aren't intrinsic but come from the environment?
Take regulations, for example. The framework has to protect both legal service vendors and consumers alike, but could it have some side effects? Like creating wrong incentives?
Namely, if regulations, out of the best intentions (protecting consumers) grant you, the lawyer, the monopoly over legal services, would you have to innovate?
Regarding your comment that big law firms or chains of firms are more inclined to innovate - I am not sure I could fully agree there. Sure, they likely have all the prerequisites (capital; know-how).
However, I've seen small law firms and solo lawyers in nearly any corner of the world doing stuff straight out of the "Silicon Valley" show. The incentive and drive to innovate often matter more than all resources combined.
Regulations - inhibition or catalyst for innovation?
Q: On the same topic, some countries seem to have lifted certain restrictions (e.g., non-lawyers holding a stake in law firms). Do you think that the legal services regulations should reinvent the whole ecosystem?
IR: I don't feel regulators have the power to reinvent anything. Moreover, that isn't the nature of their role.
It is up to entrepreneurs in the legal space to drive real changes. If there is enough entrepreneurial pressure, the changes will come. With enough push and traction, new solutions and new business models will receive regulatory scrutiny (take crypto markets and digital assets as one example).
I do agree some things would be more straightforward with a different regulatory framework. Some lawyers and law firms I spoke to agree as well. Lawyers and law firms also face certain limitations due to dated regulations.
(we've reached the point where even traditional law firms wish for regulations to change - think about that for a second)
Everything changes, so will regulations. It is only a matter of community pressure at the end of the day.
Why we have to educate more
Q: If you had unlimited resources, how would you change or reinvent the legal industry, and why?
Seriously - not one person can have all the answers. So why should we? The fact that we started earlier in legal tech doesn't mean anything.
Instead of offering ready-made answers, we should encourage and expose young lawyers to entrepreneurship. Law school hardly stimulates entrepreneurial traits. And we need this exposure as early as possible, in law schools even.
Some people feel that lawyers have to learn to code. If that is your cup of tea, by all means, do so. But an entrepreneurial mindset and outlook are at least as equally valuable.
Now, I am not saying everyone has to have their legal tech startup. However, even if tomorrow they would only want to run their own law office, they should understand the core entrepreneurial principles.
Entrepreneurs are agents of change. The more we have them, the faster this whole thing called "evolution" will happen in the legal space. Just remember, it is not about legal tech. It is about business models - it has always been that way.
Market size, no-code tech, eCommerce as innovators
Q: Who has a better head-start to innovate the legal sector? Is it law firms? And what about eCommerce giants, like Amazon, for example? Why wouldn't they be the ones to instigate the change?
IR: Funny that you mentioned Amazon since they already do innovate the legal space. Their IP Accelerator initiative has selected a few trusted law firm brands and made their IP related services available through an eCommerce interface.
I agree - eCommerce giants have all the resources, know-how, and experience (in the eCommerce model). They have an unfair advantage, hence are more likely to do it.
The only question is if law firms and other legal service vendors will sit idly meanwhile.
Q: Imagine making a fantastic tool that relies on some public data, and then you find sources of such data to be quite limited (e.g., Courts not making them available due to privacy concerns). And also, even if you had data, how scalable are these solutions to other countries? At least still, the EU doesn't have a unified market when it comes to legal services.
IR: Think about it differently - you shouldn't be building an app only to discover there isn't any data available. I believe such a scenario wouldn't be very likely as long as you'd do your homework before starting to build.
Regarding the market size issue, yes, it should be a factor in your decision-making process. Consider all, including potential risks vs. rewards, opportunity costs, etc.
Scaling from one market to another is a separate set of entrepreneurial problems to solve. I.e., what worked in one market might not work in the other. However, it would be best if you didn't concern yourself with scaling outside your home market unless you've already conquered it.
Q: Have you got any advice for those looking to get some no-code platforms? Anything they should pay attention to?
IR: It boils down to what you need internally. However, generally, I would advise paying attention if you don't need any coding to put them into practice. Some platforms are better labeled as "low-code" rather than otherwise.
Additionally, make sure the platforms you observe can integrate with as many 3rd party applications as possible. I would strongly suggest having that in mind (to the extent you need interoperability, of course).
Other than these general remarks, I would need to know your goals before being able to suggest any solutions.
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.
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