Why Is EY Willing to Invest $1 Billion to be Innovative? 

Sports Illustrated used to have a column entitled Sure Signs the Apocalypse is Upon Us which included references to often bizarre and ironic events. It was a favorite of mine since it was a satirical poke at the seriousness we take sports and a display of the humor of everyday existence.

Unfortunately (or perhaps fortunately depending on your perspective), the gradual and continual onslaught of the Big 4 accounting firms into traditional areas of legal practice and encroachment on law firm clientele seems destined to ultimately disrupt the practices of traditional law firms particularly at the mid-tier level. I have written about this before and while I and several others keep trying to suggest the Big 4 is coming, the message doesn’t seem to resonate.

Three posts in the last week perhaps reiterate this very point.

Why is an accounting firm acquiring an innovation firm unless they plan to do some serious innovating?

The first was an announcement by the Big 4 accounting firm, EY, its legal innovation subsidiary, EY RiverviewLaw, and Artificial Lawyer of a special event focused on legal operations, technology and innovation to help in house legal departments do more for less.  As the organizers put it, “A light is now being shone on risks such as selecting the right software in rapidly evolving industries, along with ethical and legal issues associated with artificial intelligence being used as the primary basis for making legal decisions.” (By the way, EY RiverviewLaw was formed when EY acquired RiverviewLaw, a legal innovation firm. This fact in and of itself should give traditional law firms pause: why is an accounting firm acquiring an innovation firm unless they plan to do some serious innovating?)

 

The Big 4 is clearly eyeing the legal market and sees an opportunity to be the go to adviser

Why is this noteworthy? Because the Big 4 is clearly eyeing the legal market and sees an opportunity to be the go to adviser on technology and innovation, artificial intelligence and innovation to in house legal. The Big 4 no doubt has noticed that most law firms are not only not offering this kind of assistance, they actively oppose any tech and innovation that creates efficiencies that would reduce billable hours. Do we really think the accounting firms with massive resources don’t see this? That they won’t help legal departments find ways to cut legal spend with these technologies? That that won’t translate ultimately in not only reducing spend but in taking work?

That’s the difference between the Big 4 and biglaw.

There’s an old joke. A group of client officers arrive at their lawyers’ offices in a high rise only to see a huge water leak at the building’s first floor reception area blocking their way in. They phone their lawyers to say they will be delayed and their lawyers say, don’t worry about it, just come on up when its cleaned up and the way is clear.

A second group of clients arrive to see their accountants in the same building. The see the same mess and make the same call. The lead accountant for the client says don’t worry about it. We will send a group of junior accountants and staff down right now to help clean it up, so your time is not wasted waiting. We know how valuable it is.

That’s the difference between the Big 4 and biglaw.

The same thinking is being applied to tech and innovation: Big 4 is providing service to their clients in whatever way they can under the theory that this will get them more work in the end. Law firms? Let’s not get our hands dirty.

The second post from this week that made me reflect on the Big 4 threat was one by Sam Skolnik that appeared in Bloomberg’s Big Law Business Publication. This post referenced the fact that more and more innovative law firms are hiring Chief Innovation Officers (CINOs) to help drive innovation and, relatedly, the use of technology in their firms. The theory is that without such a driving force, change will be slow, ineffective and difficult.

But Skonik notes there are still prominent holdouts with many, like McDermott, Will and Emery flatly stating it has no “immediate plans to create and/or recruit for such position”. And the adoption rate remains low. Skolnik quotes  David Cowen, president of The Cowen Group, a staffing and recruiting firm for the fact that, as of now, only 57 law firms have adopted the approach though its use seems to be growing; last year at this time there were only 32. This may in part be due to the efforts of people like Cowen and is sure progress.

But its important to keep this in context. As of 2000, apparently the last time the number of law firms was surveyed, the American Bar Association reported there were 47,563 law firms in the U.S. and over 1000 firms with more than 100 lawyers. Relatively speaking, there is still only a small percentage of firms with CINOs. And I would guess that the adoption rate among firms smaller than 200—the mid-tier firms—is small.

“Most incumbent law firms do not innovate for measurable results like their corporate clients; they innovate for show.”

Moreover, it’s not clear how many of the 57 firms are making true use of CINOs as opposed to using them as window dressing. As a friend of mine once put it: there are firms that want to be innovative and then there are firms that want to say they are innovative. Or as Robert Saccone, former CEO of Seyfarth Show subsidiary SeyfarthLean Consulting puts it in a recent blog post, “Most incumbent law firms do not innovate for measurable results like their corporate clients; they innovate for show.”

Accountants?  EW appointed its chief innovation officer in 2015 and has pledged to invest $1 billion (yes billion) in innovation over the next 2 years. One look at the website gives you a flavor for the depth of expertise within the unit—and EY’s innovation commitment. . Can ANY law firm-CINO on board or not- say the same?

The final article of this week that caught my eye is John Kang’s post in ALM on KPMG opening a Hong Kong Law Firm and planning another in Shanghai. This follows an increasing pattern by the Big 4 of visibly encroaching on law firms in those countries where they can.

Does anyone really think these are just random acquisitions? The Big 4 has global reach: do you really think they don’t have a long-term business plan to use their global clientele and reach to make entries into the most lucrative legal market, the U.S.? (in 2017 the size of the U.S. legal market was $100.9 billion) . Why else make these acquisitions? Why else host events like that of EY and EY RiverviewLaw?

Most law firms seem blissfully unaware of the threat that sits literally on their doorsteps. The Big 4 are shrewd, relentless competitors who are implementing a global business that includes the U.S. legal market. They are in for the long haul. Law firms? Their plan seems to be just keep doing what we’re doing.

Photo Attribution:

Nathan Wright via Unsplash

Ahmed Nisaath via Unsplash

 

Jim Filipovski via Unsplash

Last year, while attending the Consumer Electronics Show, I wrote a piece on how technology  might end or substantially reduce the need for litigators. The idea was not that technology would do the job of lawyers-no robo lawyers please, although after hearing about IBM’s Project Debater, I’m not so sure-but that technology would end or reduce the number of disputes on which lawyers feed.

This year, I remain even more convinced that technology can reduce the number and the nature of disputes that exist because of its ability to record and/or flawlessly trace events. I am also starting to believe that the skill set future successful lawyers will need to have will be more technical in nature than ever before.

A couple of examples of what I mean. I attended a press announcement hosted by a company called Nextbase. Nextbase makes dashcams that can be placed in your car. Nextbase released Series 1 of these cams a year or so ago and this week announced Series 2 which is smaller, records in higher resolution and is able to automatically upload video to say your insurance company if and when an incident occurs. The camera is front facing and records at about 140 degrees. It also has a rear facing camera that can be added on. The cameras can detect side motion-such as someone bumnpong your car in a parking lot, has an emergency notification system if an incident occurs and you don’t respond to a  phone call immediately, and have both voice recognition and audio components. The camera attaches easily and unobtrusivly to the dash and is slightly smaller than a GoPro. The kicker: it will cost between $69 to $199 depend on what model you buy. Nextbase is negotiating with U. S carriers for either a discount on a premium (see my related article
on the privacy implications of that subject) or a discount on the device.

What’s This Have To Do With Lawyers?

What’s this have to do with lawyers? Vehicle crashes result in a huge amount of litigation and lawyer related work from trucking related injury accidents to fender benders to inter-insurance disputes to even commercial claims. But where everything is captured on video, what’s left to factually determine? Whether the video was doctored? Yes that’s possible but how many disputes will this really generate?

Another example: this morning I attended a keynote where Charles Redfield, Executive Vice President of Walmart with food related responsiblities spoke. Redfield says WalMart now requires all its food suppliers to record all transactions regarding food and food supply on a WalMart blockchain.

The result is real time traceability: where it used to take WalMart some 7 days to try to trace the flow of food from a supplier or farm to the shelf it now takes only 2.2 seconds to do so flawlessly.

So? Over my career, I was involved in several food safety related cases and I can tell you the amount of lawyer and expert time spent in trying to determine where contaminated food came from and a then convincing a jury who was right with the trace was immense and was practically the whole case. Now there can be no question.

Technology capable of resolving disputes is all around us.

Think technology is only eliminated disputes in car wrecks and food safety? Think again. Technology capable of resolving disputes is all around us. Cell phone cameras are ubquitious and people aren’t afraid to capture and post the videos they take. Think about security cameras and how both the number and resolution of them is relentlessly increasing. And what about all the data being captured every day by the IoT devices-what a story this data could tell. How many disputes are fueled by a breach of actual and anticipated trust that the blockchain can eliminate.

So litigation and lawyering as we know it is changing. Yes, there will be other disputes that can arise to take the place of tradional ones. But these will be more based on the adequacy and reliability of the technology. Whether the data has been somehow skewed. Whether the analytics and algorhythems applied to the tech are sound. And technology and data will require lawyers to marshall, evaluate and present facts and data in new and more robust ways.

We need to start where the puck is going.

 

Does this sound like perhaps lawyers will need different and perhaps more technical skills? Probably. But one things for sure: to paraphrase Wayne Gretesky, we need to start skating where the puck is going, not where its been. The glory days of secrets and hidden facts and information that fuel disputes are going, going, gone.

 

 

One of the benefits from being a blogger and writer is opportunities to attend media events and look at products sooner than perhaps  others get to. One prime example of this is the Consumer Electronics Show that is going on this week. CES, as it likes to be called, is one of the biggest trade shows and occupies almost all of Las Vegas for the better part of a week. It boasts 4500 exhibitors and some 185,000 attendees. So it can be kind of daunting.

I’ve been coming now for several years and one reason I like it is that it’s outside the LegalTech realm. Different ways of thinking and talking about tech from legal that is refreshing and thought provoking. Continue Reading CES 2019 Day 1: Unveiled, Catalyst and, Yes, LexisNexis

I was so much older then, I’m younger than that now. Bob Dylan

It’s certainly commonplace to do an end of the year post reflecting on what happened during the year and the highlights and lowlights. But in my case, 2018 was anything but commonplace. It was a year in which my world–professional and personal–was turned inside out and upside down.  A year when the impossible, the improbable and the unthinkable occurred. A year I learned acceptance. Continue Reading My Year of Acceptance

Should You Consider the Surface Go?

Earlier this year, Microsoft came out with a miniature version of its workhorse Surface Pro. The smaller version, called the Surface Go has a 10 inch display with a 1800 x 1200 display ratio and comes in various configurations and memory. Just like the Pro, you have to pay extra for the keyboard and pen that goes with it. Continue Reading Looking For a Last Minute Gift for a Lawyer?

I’m in the process of reading Tim Harford’s 2017 book Fifty Inventions That Shaped the World. The book seeks to identify and discuss the impact of various “inventions” including not only things but processes as well. Tim not only talks about the inventions themselves but the ripple effect of them to society as a whole. Of course, that’s a bit of an obvious tact (that Tim does well) which others have done. But Tim also talks at length about one other good point that particularly resonated with me: some inventions don’t take hold when they are created but only later when conditions become right and obstacles inherent in the old method of doing things pre-invention are overcome. I thought about this theory in light of the slow take of the legal field of technology and innovation. Continue Reading Stream Dynamos. Wooden Pallets. Cash Registers. And Law?

I recently almost didn’t attend a Conference in my hometown. I almost didn’t go because a) it was not necessarily in my field (lawyer) and b) it was in my hometown (no one is a prophet in their own land, right?). (The Conferance was actually put on by the Louisville Digital Association, a local organization that’s more or less about all things digital and the Conference was really more about digital marketing and media than anything else).

 

But I did go and something remarkable happened…I learned things. New things. And my head immediately started applying the things I was learning to my field. It was magical. Even one of the speakers who I introduced myself too afterwards said “I saw you sitting there. Your head was going a hundred miles an hour. What energy you brought!”

 

So often we do a benefit cost analysis on things we don’t know enough about to fairly assess

And it was true. So often we do a benefit cost analysis on things we don’t know enough about to fairly assess. We think: well that might be interesting but then again it might not be. Or that would be interesting but I really don’t necessarily see how it applies to me or my profession. The ROI is not clear. It’s a boondoggle and a waste. Quickly we revert to risk aversion and decide its not worth it. And organizations and bureaucracies are particularly adept at learn killing.But the strange thing is we can’t know the future value of something when we make the assessment. As Steve Jobs put it, you can only connect the dots looking backward. If Jobs had said to himself, you know that calligraphy course looks really interesting but I’m now sure it will help me with my major and it might be boring so I won’t go, we might never have had Apple. If Mark Zuckerberg had said it would really be fun and interesting to do the Facebook but I can’t really see the ROI, we might not have Facebook.

Learning is a funny thing. We have it in our heads it is something we do when we are young and in school. We mouth cliches like “life long learner” but then dismiss the value by in practice downplaying that espoused value. But its through learning that energy and passion come, from energy and passion come ideas and application, from ideas and application come innovation. I think this may be why the so called young digital natives seem more adapt at things like technology. It’s not that they know more necessarily, its that they are willing, excited learners. They take risks.

Learning, particularly life long learning, involves taking a risk with our time and treasure

 

And make no mistake, by its very nature, learning, particularly life long learning, involves taking a risk with our time and treasure. We don’t want to take the risk that learning something new will create no value and waste our time. But I don’t think that’s every really totally true. All learning is good—and risky. But if my life experience has thought me one thing it is that while learning new things may not pay off now, it will someday and often in ways we often can’t even imagine. Some of the best ideas I ever had came from unexpected sources while being exposed to new things. Not to mention the fact that learning new things is exciting, inspiring and often just plain fun.

So go to conferences. Stretch. Get out of your field and comfort zone. Learn something new. Apply and innovate. Get excited. I almost didn’t go…. but I did. I can’t wait to see what happens next.

Photo Attribution: Denise Krebs via Flickr

 

 

Last month I attended the annual New York Advisen Cyber Security Conference. The event which this year had over 900 attendees is frequented by insurance representatives, brokers, risk managers and, yes, a handful of lawyers, all of whom work in the cyber and cyber insurance space. Its probably the premier conference of its kind.

It’s funny. I’ve been attending this conference for about 5 years. When I first started coming, the conferance was all about sales, marketing and underwriting. I remember sitting at a table my first year having lunch with a handful of 20 something underwriters who were gushing over their new insurance product called cyber insurance. They trumpeted the freedoms the lack of forms provided and how they could even make up policy language as they went along. When I spoke up and said what about future claims, it was as if I was speaking in a foreign language: they were completely baffled. Continue Reading Advisen Cyber Conference 2018: Privacy and Insurance On A Collision Course?

The Best Lawyer You Can Be. A Guide to Physical, Mental, Emotional and Spiritual Wellness By Stewart Levine

 

Stewart Levine’s new book reminds of the Whole Earth Catalogue written a number of years ago by another Stewart-Stewart Brand. For those too young to remember, the Whole Earth Catalogue  was magazine and product catalog published several times a year between 1968 and 1972, and occasionally thereafter, until 1998. While it was directed mainly to a non mainstream, sort of countercultural audience, it did contain all sorts of product information, how to instructions and  other valuable information. The goal of the Catalogue was to introduce those who were interested to some unique tools and information on topics not well addressed other places. Its theme was “access to tools” and that’s by and large what it delivered. Continue Reading A Whole Earth Catalogue for Lawyer Wellness

Today was yet another big Apple Event to announce new products. This one was held interesting enough in Brooklyn at the Brooklyn Academy of Music instead of in California which is where Apple typically holds it announcements. The show opened with a short video ironically extolling New York (“ I happen to like New York”) instead of Brooklyn; I assume Apple does know the difference. In any event, the video was pretty well made and definitely one of the cooler things Apple has done recently.

Continue Reading Today’s Apple New Product Announcements: What’s In It For Us Lawyers?