Daniel Grant Smith on the barriers to legaltech adoption

Head of Engagement at Legatics Daniel Grant Smith discusses recently conducted research by Legatics into the barriers to legaltech adoption and the findings published in their behaviour change and AI microservices whitepapers.

Daniel Grant Smith trained and qualified as an associate at Hogan Lovells for 5 years, working in the Private Equity/M&A team on transactions of all sizes, from billion-dollar acquisitions to Seed financings.  

Prior to joining Legatics, he completed an MBA at Cambridge University Judge Business School, with his final research paper focusing on barriers to the practical adoption of LegalTech solutions in law firms, and is passionate about law firm innovation and change. 

Dan holds a BA (Hons) degree in History from Bristol University.

In this Transaction Management episode of Shieldcast, Dan and Geoff discuss:  

• What behavioural barriers there are to the adoption of legaltech in law firms
• Why the structure of billable hours and the challenge of 'not enough time in the day' has prevented lawyers from implementing new technologies
• How the pandemic has affected the digital transformation of the legal sector
• To what extent Partners need to be driving the uptake of legaltech and their responsibility to role model 
• How carrying out research and collecting data can influence product developments

Listen to this Transaction Management edition of Shieldcast to find out more!

You can download their whitepapers on identifying barriers to legal technology adoption here: https://events.legatics.com/barriers-to-legal-tech-adoption-lp 

Learn more about Legatics on their website: www.legatics.com

Dan contributed to our recent Transaction Management eBook. You can read his insights on the barriers to legaltech adoption by downloading the book here. 

Find other episodes in the series on our website: Shieldcast library

Podcast brought to you by Shieldpay - learn more: shieldpay.com

Transcript

Geoff: On today's episode of the Shieldcast, we welcome Daniel Grant Smith, Head of Engagement at Legatics. Welcome Daniel. 

Dan: Hi, Geoff pleasure to be here. 

Geoff: Dan is a fellow lawyer turned legal techie. Having trained at Hogan Lovells for five years in the PE and M&A teams, he saw the full breadth of transaction types, sizes and complexities from billion dollar deals to seed financings.

He then went on to do an MBA at Cambridge Judge University business school, and then embarked on a career in legaltech, which is a very good idea compared to staying in private practice, but we'll touch on that I'm sure over the course of this discussion. 

We had a chance to talk to the other Daniel, Daniel Porous of Legatics, in a previous episode and we touched on a number of issues around adoption of legaltech but this Daniel has brought some real research behind it. And I'm pleased to talk to him about this in much more detail, as well as talking about your recent report and white paper that you've just published, 'The barriers to legaltech adoption', which is going to be a large part of what we're going to talk about today. So that's super exciting. 

In this series, we are talking about how technology has impacted the transaction management lifecycle. Adoption of technology is pretty key to all of that. This should be very interesting and very insightful. Daniel again, thank you very much for joining us.

Dan: Oh, it's an absolute pleasure. And thanks very much for the comprehensive lead-in.

Geoff: I've done some homework and you gave me some insights on what's been going on, so it wasn't too difficult. For those that haven't listened to previous episodes and don't know Legatics, please give me the brief pitch of Legatics and what does being Head of Engagement at Legatics mean?

Dan: Sure. So very simply, Legatics is a transaction management platform. And essentially what it allows you to do is... lawyers live in lists, so lawyers manage their transactions within their processes in Word, in Excel, using a list format, and that is then supported by entire constellation of emails, phone calls of instant messages and it quickly becomes very hard to manage. So, it's very hard to stay on top of that the process; you're exchanging multiple versions of the updated table and when you're dealing with processes at massive size and scale it's very easy for things to get lost. 

What Legatics does is allows you to create digital versions of those lists. So, on the platform, you can update different items that need to be completed, you can upload documents, you can collaborate with the other side and everything updates in real time - so everyone gets a permanent status of the transaction at any one given point. And in doing so, increases efficiency, increases transparency and de-risks and also hopefully it makes the transaction less painful for everyone.

Geoff: Great. That sounds, as I've said before to you and to other Dan, that it would have been a godsend to have something like that when I was working in a private practice. So yeah, really pleased it solutions like yours are available now. But what does being Head of Engagement mean in that context? How does that help your interaction with law firms, et cetera? How does that sort of work? 

Dan: The engagement team looks after the kind of existing relationships with our customers. We tend to think of customers in two buckets, the kind of existing account management aspect of it, which is what engagement does and the kind of user focused element support and direct user feedback, which is customer success.

On the engagement side, what we're really focused on is just making sure that the law firms we work with are deriving in the most value that they can from the platform. So we really zeroed in on making sure that adoption is increasing, that there are no roadblocks, that they're getting exactly what they expected from the platform and that we've thought about all the possible use cases that they could use it for, and generally things are proceeding and how they expect. So it, it dovetails very nicely with some of the adoption research and the things that I've I was looking at before joining. 

Geoff: Sure. Let's talk about that a little bit. It'd be interesting to, for listeners to hear a bit about the research that you did prior to obviously Legatics, very briefly, but then also tell us about the report and how it came about what was the motivation for it and yeah, a review of that.

Dan: Yeah, sure. From my perspective, before joining, when I was studying I, I looked at the adoption of legal technology and I talked to really as many stakeholders in the industry as would talk to me about the present state of their use of legal technology and kind of what they saw the issues were and what they thought could be done to get past any of those issues.

 The innovate project that we've done is much, much broader than that, but continues along some of those themes. So Legatics got funding in 2019 from innovate to really look at the use of legal technology, and in some ways specifically AI, and try and understand why there's a bit of a gap between all of this fantastic technology and some of the usage of it. 

The project was split between two things. One was the side which we'll talk about in more detail today, which was looking at the behavioral aspects of that gap. So, thinking about what are the specific barriers that exist in law firms that mean technology's not being used and how can they be circumvented? And we work with a number of law firms in order to diagnose that, we worked with those firms on an individual basis, conducting workshops with lawyers and interviews with their partners and preparing reports for those firms that they could review.

The second element is looking again at that gap and thinking that part of the reason for that gap is perhaps because some of the legacy and AI tools aren't incredibly easy to use. Often they require a bit of a village to put in place, lots of infrastructure and systems, models need to be trained, people need to be proficient with the use of the software, you might need certain people employed specifically to look at the use of the software. And they can often be scary to use, a bit intimidating. 

The idea was that we would just produce straight out of the package AI solutions that can be used immediately and embed them within the Legatics software. So really trying to look at things like complete of sentences in Gmail. I remember that coming out and thinking what a brilliant feature and also how does it know all this and how can it do it so accurately? I'm not sure we'll get to that level, but that's very much the intention. Yeah.

It's the idea that it will be immediately usable by the way. Things like if you uploaded a fully signed document, it will recognise the parties will recognise the signature pages and that will link in with our signing tool and our import tool can work on a greater range of documents and can recognise them.

Geoff: Oh, interesting. think one of those to the points that you mentioned around was the adoption and then how people actually use that, the delivery of that legal technology within a law firm and who uses it. So I found that quite an interesting part of your report was around that. I think it was something like 95% of all respondents thought that adoption of legaltech was crucial to the commercial success of the firm. Yet, I think you then have the total opposite that many of the respondents also said that they didn't have time to incorporate or get involved with legal technology in their day-to-day practices. That sounds crazy, right?

On the one side, they totally know that it's needed. But then on the flip side it's, oh we don't have time to implement it. So what did the research say about the other drivers that there are and how, what, your report was about practical steps, where they address this kind of a gap.

Dan: Absolutely. Building on what I quickly said is that obviously that the reports that we did for these individual law firms were synthesised into a single report, which is where all these kinds of insights are coming from. And I think, yeah, I think it was one of the key things that I found doing the research and producing the report is that a lot of the time, the understanding is there. There's an awareness that there is a commercial need and there's an understanding that the industry needs to innovate with some of its uses of technology and some of the ways that it practiced law. But I think that the problem is the barriers come in kind of that practical element. So, if you look at things like lack of time, I think that's becoming even more of a problem now. It feels like lawyers in general are massively over capacity at the moment and if you're lacking time, it becomes very hard to think about a process that you've never used before or a tool that you may not have complete faith in, and then dedicate some time to learn that, which is again, out of your control in order to take it up on a transaction that might be incredibly valuable and there's a lot of pressure on you to deliver. So, I think we're certainly seeing that as a problem, people just don't have the kind of headspace to even think about using it. 

I think also it's not been a priority. I think there was a we had someone second, a lawyers get paid for time not ideas. And having thinking about that, the legal tech is something you can charge for. So, people tend to just skipped past it. And I think that also comes down to it. I think it's not just time. This was thinking of the priority of it. 

Geoff: I think that's really interesting, what is the role of the lawyer? It's the incentive structures that live around. Then you've touched on it, there is it, although law firms want to be as efficient and as great as possible, there is a flip side to it that they're also paid for time and for thinking and…so how do those two things wrestle with one another? In the best will in the world when the incentive structures are placed in a certain way, how can you say if you use this, we've improved your time by 95%. That what do I do with myself if you've just taken 95% of my job and then, and what are we going to be able to bill the clients? And I think that must be such a big limitation and driver, particularly in these larger firms, particularly the ones that you were interviewing.

Dan: Yeah, a hundred percent. And I think, another thing that we highlighted and it came through in lots of the workshops that we conducted was that there can be a lack of role modeling among senior stakeholders. They may not model that use of technology and I think, as you've touched on, that kind of billing focus will come down to it. I think he focus can be quite binary - am I getting charge, but this is just going to bring in money and it can be difficult to think of technology in that way. 

But I think, on the other side, when we talk to lawyers at firms where they think of it as, just a general improvement to the service that they're offering. Blending these technology solutions means that they run their deals better, there's less risk, they're able to do things to a higher standard. And that then means that they get more instructions, clients, you get to see that kind of thing being done, or certain clients that you get to see that kind of thing being done. And so it, it can have a massive benefit, but I think exactly right. If you're focused, purely on, is this going to allow me to bill, it becomes very hard. 

And then also, billing is changing and there's a lot more fixed fee work. And if you're working towards an agreed fee, then anything that you can remove is just going to be money that you gain within that fee cap.

Geoff: I think it's quite interesting now because I seem to remember also, and what this series about transaction management was quite interesting, not only because of what we do, but generally from experiences. That part of the transaction, which is so highly considered being like the admin side of things is often the bit that billable hours are shaped off from or written off because it's trainee's or associate's time, that is actually all paralegal's time, that is then written off or the first thing that's written off. And, that's for law firms removing that wastage is it's it's gotta be good. And having people doing more meaningful billable work must have commercial incentive for law firms too. 

Dan: Exactly. You know, just because it's billable doesn't mean it's recoverable. And then also there's the element, we're both recovering ex lawyers and I'm sure you've had experience of working into the early hours of the night on that just didn't feel necessary. So if you can remove that, it also increases the satisfaction of a junior lawyer who's able to instead focus on you know drafting their first ever go at a shareholders agreement or, putting something together where they can use the skills that they've learned at law school, rather than perhaps just doing that high pressure admin that's really stressful, and also doesn't feel very useful.

Geoff: Dare I say, helping business development activities and things that is increasingly a requirements of more junior lawyers. But you don't get the experience of doing that until you get thrown into the deep end when you're trying to make partner. But it's yeah, that's a topic for another conversation another day, I'm sure. 

A lot has changed over the last 18 months, two years. And what extent do you think that the outcomes of your report might've been different had COVID not happened? Commentators have said that we probably have seen a digital transformation in the legal sector that has fast forwarded everything 5-10 years. So given the research was, I'm guessing, part of it conducted prior to and some post COVID, it would be interesting, was there like a difference in those meetings that you had with people and obviously some were in person some were on Zoom calls probably, but was there definitely a step change of who was engaged on this?

Dan: Yeah, I think it was definitely noticeable. And shout out to Bethany Sharrock, who's an associate in my team who had to completely redesign the way we did workshops to push everything on Zoom. Which meant that we had to embrace technology to it to a greater extent. 

But I think, yeah, a lot of respondents talked about, a culture shift that occurred as a result of the pandemic. People pointed out that they were forced to start to get to grips with certain technology that they might not have had to use if it hadn't been for the pandemic.

And I think, if you're, particularly if you're, a senior stakeholder and you're very able to use all the tools that you've had available to you and you've been using for tens of years, suddenly you're thrust into an environment where you can't carry out your business as usual activities without looking at Zoom, without looking at DocuSign, without looking at Teams, that then forces you to start to get to grips with more general legacy technology. And then I think what we found is that meant that people were they're more open to other forms of technology. I think maybe we saw more people taking more of an interest in the more specific legal focused technologies that the report was concerned with. And I think it created a virtuous cycle. So, people said I've got to grips with Zoom. I'm used to seeing myself on the screen. I've started to execute my agreements with DocuSign. Why not look at an AI tool for the contract review? Why not look at something for transaction management? Why not look at contract lifecycle management? I think you could definitely track an increase as a result of those kinds of questions. 

Geoff: One of the thing is that, you obviously were able to conduct this with some amazing law firms, Herbert Smith, DLA Piper, Pinsent Masons, Osborne Clark, Reed Smith, Eversheds, those are top law firms that you were able to deal with, but being a top law firm, you also have large teams and resources, a healthy balance sheet and there's a certain type of business that is able to potentially really invest in these types of things yet, still the adoption isn't great. But your report obviously focuses around that and UK centric. So, I guess my question really is two parts. Obviously, there will be a difference, but what kind of difference do you think would really be a meaningful if you'd taken a six firms that had been a different spectrum of the industry one and two potentially how, how that might've been different or the responses from respondents might've been different if they'd been in other jurisdictions, for example. 

Dan: Yeah. I think it's really interesting question. And in an ideal world, I could have devoted myself to talking to all the law firms and just, produce a lengthy book on it...

Geoff: That is something that I don't wish upon anyone, but yes.

Dan: But I think, yeah, I think you would definitely see differences. I think an interesting area, which you could look at is looking at firms who are focused on smaller work at higher volume where the margin on the work they're doing is smaller. And that includes firms that have sprung up in the last couple of years, like these challenger firms, things like, Radiant Law and Stevenson Law, where they're very keen to maximize that margin on the work that they're doing and very eager to use blends of tech in order to be able to produce that, that product offering. I think if you were to talk to them, I think you would see a much greater acceptance of tech, of a view that all kinds of legal technology are just business as usual competitive advantage and commitment amongst people at all levels to roll it out as much as they can. I think yeah, I think it would be interesting to talk to them. 

Again, on the flip side, I think you often need some kind of burning plan form in order to use the technology would be imperative from senior stakeholders, be imperative from the lawyers at the firm because they think that it drives such value.

But I think, a key one is are clients demanding it? Are your bills getting paid? As you said, are you having to write off things? Are you not? And I think perhaps if you talk to particularly transatlantic firms or, legacy, massive US firms, I think they will see less of a burning platform. I think they will be able to carry out the process they've been carrying out, they're still getting paid vast amounts, they're immensely profitable. So if someone tells to them, it's that classic thing of telling millionaires that they need to change their business  models, they're probably thinking really do I, because it's going pretty well for me at the moment.

So I think, yeah, I think looking at either end it would be very interesting. And I think that the firms that we talked to were a brilliant collection cause I think they have those elements in them- they do massive work, but also they start to also look at some of the more commoditised areas and looking at things in volume. So, it gave a good representation. 

Geoff: Oh, I totally agree. All of those firms are very progressive in their thinking for the size of that they are. A really good cross section of firms to be talking to. 

So, one of the things that you've touched on in the report is, one of the resolutions or steps forward for them, is developing a digital strategy for a law firm. And I guess what's interesting is I see that parallel to, when you talk more broadly around everyone having environmental strategies. You have a strategy in place, but what does it actually mean? Who's actually going to be responsible for it? And is it, how is it seen through and how's it kept accountable?

And I just thought, with the firms that you've interacted with or talked about how faithful to their strategy are they being? And how do you know to what extent that they're keeping themselves accountable for that?

Dan: It's interesting because I think there's a spectrum. And I think, I'd include not just the firms in the report, but just generally the firms that I talk to as a result of working with Legatics, because I think there are lots of examples of firms where it is a key agenda item, but it's something which they back up with defined action. Everyone's appraisal has an area where they have to talk about how they've innovated or how they've used the tools available to them. It's seen as like a key criteria for assessing partners, how much innovation is being used. And they feel generally committed, genuinely committed to thinking about ways in which they can transform their service for the good of their clients. And I think that, that is definitely in existence. 

I think also on the flip side, there are perhaps areas where, although it's seen as a key element or there's that perception piece, so people understand that it's key for their commercial success. The support might be less developed. So, it might be harder to achieve that cause, if you talk about, as you said, the kind of ESG agenda, they might not have things put in place in order to achieve the targets. So, there might not be a fully resourced innovation team. So, it means that associates have to fill the gap on top of their work and try and coordinate the use of a tool.

There may not be incentives that allow people to explore the use of technology. There may not be a culture of role modeling, you know touched on that already, but that certainly is a big thing. And the idea that partners should feel like they have a role to play in making sure this is carried out and if that message isn't delivered, then things can drop off and there isn't that accountability. I think, yeah, all those things come into play, but there's definitely lots of examples of people doing really good work and being really committed to it.

Geoff: So you've done all this research now, and you've touched on it a little bit already, but I think it'd be really interesting, not just for law firms who might want to participate in this kind of research exercise in the future for you, or anyone else, but also for other legal tech companies as to how they might go about executing similarly insightful work.

Could you give some examples of how the work that's happened over two years has directly influenced, you've mentioned a bit, but directly influenced what Legatics now have as a platform and how quickly the impact of the research was felt by you guys internally? 

Dan: Yeah, absolutely. I think one part of it is just you've got a massive dataset of things that people find challenging about the use of technology or things that people think could be done better which you're in the business of trying to get law firms to adopt technology is obviously a goldmine. And so, in terms of an engagement perspective, we certainly rethought and are rethinking the way that we do things like carry out training because one of the points that we said was a barrier in the report is that lawyers often are frustrated by the training that they're given on tools. It can be too didactic, it can be too far away from the point of use, and so when they actually are wanting to get something up and running, they can often forget how to use it and then that support and easy access refresher materials isn't there. Yeah. That is something that we've absolutely focused on. We're rolling out training that acknowledges that and trying to make sure that our support resources also provide as much support in getting people up and running and really focusing on practical adoption as possible. So, it's been a huge benefit. 

And I think also it allows us to really understand the challenges that law firms have. So, when we are talking to innovation teams and stakeholders and that side of the business, we can understand that the challenges that they're facing and really help or try to help them move past them. 

The other side of it is, we touched on at the beginning, the other half of the project, which is actually looking at producing practical technological solutions to some of these things; producing tech that is immediately usable. And Anthony Seale, our CEO, is very involved in that side of in that side of the project and there was a virtuous cycle in relation to that. We'd find things out on the research- should we talk to the developers looking to build these microservices and make sure that the microservices that were being produced looked at these barriers and tried to move past them. So it was of immense benefit on the engineering side. And I think hopefully people will see that when things are released on the technical side, over the course of the next year. 

Geoff: Oh, I'm sure they will.  Dan, it's been a real pleasure really to talk about this report and I've found it incredibly useful to be able to question you about it because it's rare that you get to do that, especially so soon after it's been released. I feel very honored. But it's been really fascinating. I think, what's nice about it is it really gives us a good coverage over some of the assumptions that you have as a person working in this field is like what's going on and, and clear, insightful actionable items that you can take on, any business that's looking to sell to law firms or any business selling to any large organizations, a lot of this rings true.

The adoption of technology, I think is always going to be a barrier in a, in an industry that prides itself into who they are and what they think. And, technology is not going to replace the lawyer.  I'm definitely sure about that, but it's it's going to go somewhere to make the life of lawyers slightly better and maybe make people like you or nice stay in the profession, or at least practicing the profession for longer than they might've done. So again, thank you very much for your time and we'll share it in the links  for other people to read. And I'm sure Dan would love to hear from anyone who would who'd like to talk to him in more detail about it.

Dan: I will indeed. I'm available on LinkedIn. We'd love it. If you read the report and then feel free to fire any questions that Jeff hasn't covered, I'm sure there aren't many about it offline. 

Geoff: Great. Thanks very much Dan.

Dan: Perfect. Thanks Geoff, it was a pleasure