Law Times

LAW TIMES 4 COVERING ONTARIO'S LEGAL SCENE | APRIL 8, 2019 www.lawtimesnews.com BY AIDAN MACNAB For Law Times WITH the steep rise in in- house legal departments, rapid- ly evolving technology, height- ened use of alternative legal providers and the explosion of new regulations as businesses continue to expand across the globe, a new report from Mc- Carthy Tétrault recommends legal service providers reinvent to adapt or die. Internationally, regulations are proliferating while busi- nesses expand across borders, says the report. Meanwhile, the authors say, in the digital realm, data is multiplying and creating liability for businesses. That means there is a huge in- crease in corporate legal depart- ments that heightens the need for other lawyers to integrate their expertise with the business world. "This is a historically unique time for lawyers," says the re- port, which is authored by three lawyers at McCarthy Tétrault: Susan Wortzman, a partner and national innovation leader; Matthew Peters, a partner and national innovation leader; and Judith McKay, the chief client and innovation officer. The report says that, between 1997 and 2017, the number of in- house lawyers tripled to 105,310 from 34,750 — growing sharply since the 2008 financial crisis. The growth of in-house lawyers was seven-and-a-half times fast- er than that of law firms, says the report. Corresponding to this up- surge of in-house lawyers is a rise in the use of alternative fee ar- rangements and other methods of reducing the external legal cost for in-house departments, says the report. It also states that alternative legal service providers are, there- fore, seeing more work with 19 per cent of legal departments outsourcing to them — a num- ber that rises to 38 per cent for large legal departments. "One of the most significant changes in the last 20 years is the insourcing of legal capabilities into companies," McKay says. Another survey cited in the paper says the majority of Ca- nadian GCs did not expect their in-house departments to grow in the next year. McKay says this raises a question. "How do you keep driving ef- ficiency and effectiveness while meeting the business needs?" she asks. One way of becoming more efficient while meeting business needs involves adapting to tech- nological innovation, becoming an expert in the tools it produc- es, says the report. Alternative service providers help, too. But most important is a greater col- laboration between legal depart- ments, law firms, alternate ser- vice providers and technology providers, says McKay. "What we truly need is to tru- ly rethink how legal services are delivered," she says. The report says that, in the digital realm over the last two years, more data has been creat- ed than in all time previous and 1.7 megabytes is being created every second for every person on Earth. The authors predict that, in five years, there will be 50 billion smart connected devices capable of collecting, sharing and ana- lyzing data. This growth in connectiv- ity and the data it leaves behind will mean growth in business for lawyers, as it leads to an "ex- ponential" expansion in con- tracts businesses "need to draft, comply with and manage," they write. "Digitization creates tremen- dous opportunities to collect, analyze and monetize data us- ing artificial intelligence but also tremendous risk if not imple- mented thoughtfully," the report states. "Doing discovery for litiga- tion is impossible to do now without machine-learning technology," McKay told Legal Feeds. "It creates tremendous value, because all of this data is extremely valuable. But making sure that you get the opportuni- ties from the data and in a legally defensible way is extremely im- portant and complex as well." The authors cite a 2017 sur- vey of more than 200 in-house lawyers — mostly GCs and heads of the legal department — which found that "innovative service delivery through tech- nology" was more important than personal relationships, cor- porate social responsibility and the size and reach of interna- tional networks when it comes to choosing external law firms with whom to work. Another survey from 2018 from Acritas showed that 69 per cent of U.S. corporate legal departments surveyed said they hadn't seen their outside law firms and other legal service providers innovate in the last year. "To be relevant, law firms need to accelerate their commit- ment to innovation and trans- formation," says McKay. LT Judith McKay says a greater collaboration is needed between legal departments, law firms, alternate service providers and technology providers. Insourcing of legal capabilities into companies Innovation for legal service providers crucial, says report NEWS Andrew Spurgeon for Bencher South Central Region VOTE 1 King Street West, 10th Floor Hamilton, ON TEL: 905.526.9800 | FAX: 905.526.0732 www.rossmcbride.com To see what Andrew stands for visit: www.spurgeonforbencher.com Untitled-4 1 2019-04-03 3:14 PM Untitled-4 1 2019-04-03 3:11 PM WINFIELD CORCORAN ELECT To learn more about me, visit my Bencher Candidate Profile on bencherelection.lawtimesnews.com CENTRAL SOUTH BENCHER CANDIDATE "I want to help and I have the time to devote to Convocation" YOUR STRONG ADVOCATE FOR: • Access to Justice • Pro Bono • The Lawyer Referral Service • CPD • Diversity Untitled-3 1 2019-04-04 11:26 AM

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