Mini Series: Business of Law Firms​

Contextualising LegalTech​

By Jake Rickman​

What do you need to know this week?

Welcome to our thirteenth article in TCLA’s series on the Business of Law firms.

Last week, we analysed Herbert Smith Freehills and Allen & Overy’s foray into the provision of alternative legal services as a case study on the merits of in-housing alternative legal service providers (ALPSs).

This week, we will consider how certain firms use their in-house ALSPs as a staging area for the development, incubation, and implementation of legal technology solutions for clients. The purpose is to provide a fresh perspective on “LegalTech” because it is a topic that generates significant interest even though the value of legal technologies is often obscured.

What is Legal Tech?

Applicants and qualified lawyers have in common the fact that a comprehensive definition of legal tech often eludes them. The widest definitions are helplessly self-evident, for instance, “the use of technology and software to provide legal services”. A survey of use cases is unhelpfully diverse: the entire spectrum of the legal sector: from using in-house document management systems to manage files to artificial intelligence used to automate contract review processes.

Rather than deducing a single definition of LegalTech by trying to make sense of it in the abstract, you may find it helpful to tether the conversation around “LegalTech” to its business uses. In other words, how do different firms use legal technologies in their business model?

Legal Tech and Alternative Legal Services

When looking at certain firms, a pattern emerges. Namely, the development and implementation of legal technologies are often tied with the firm’s use of alternative legal services. This is broadly the case for HSF, Allen & Overy, and Ashurst, where various technologies are used as part of a wider offering focused on providing clients cost-effective and streamlined legal delivery.

Looking at Ashurst in particular, the firm launched Ashurst Advanced a few years after HSF and Allen & Overy north-shored their legal support services and pioneered the in-housing of alternative legal services with the opening of their Belfast offices.

Like HSF and Allen & Overy, Ashurst initiated the project in response to the aftermath of the 2007-08 Global Financial Crisis which saw clients cutting costs associated with non-core operational expenses including legal services. While Ashurst Advanced provides other legal-adjacent services like flexible legal staffing and consulting, a core part of the venture is providing cost-effective delivery of high-volume, low-value legal services.

To this end, incorporating advanced technologies makes the delivery of these services more efficient. In an interview with Artificial Lawyer last year, co-head of Ashurst Advance, Tara Waters, observed that the best use cases for legal technologies are those that can assemble relevant data in a seamless way that improves the client experience.

Ashurst Advanced’s “ESG Ready” is one such example: following the effective implementation of the EU’s Regulation on sustainability-related disclosures in the financial services in 2021, the law required certain financial institutions like banks and pension funds to disclose to consumers and investors the factors they use to evaluate the impact of their activities on the environment. The effect of the Regulation is that affected institutions must sift through mountains of data to comply with this. ESG Ready uses machine learning to parse through the data and produces bespoke reports on how clients can comply with the Regulation.

If we consider ESG Ready in the context of other alternative legal services — the streamlined delivery of a particular legal service — from the client’s perspective, the fact that it relies on machine learning is almost incidental to the service itself. By evaluating legal technologies as means to a particular business end (the in-house provision of high-volume, low-value work), we have a more contextual understanding of “LegalTech”.