What next for General Counsel? The impact of Big Data on the role of the In-house lawyer Stella Cramer & Jeremy Tan Norton Rose Fulbright LLP Merel Schwaanhuyser - Accenture
Big Data - What this presentation covers Technology in context - what next for General Counsel? The pace of technological change What s driving change? What is Big Data? The 4 Vs of Big Data How will technology impact the office of the General Counsel?
Technology in context - what next for the General Counsel? The next five years will see a period of rapid change in the legal services markets. The three drivers of change, globalisation, liberalisation and technology will mean that the role, composition and skill-set required of, and by, the general counsel s office will need to change to keep up with the pace of evolving demands of the business and the legal workforce, as well as the changing face of the legal services market. Globalisation Liberalisation and cost pressures Technology Global pressures Generation Y More with less Unbundling of legal tasks Liberalisation of legal services Technology Knowledge as a commodity Increased competition for business will result in companies searching for new markets and developing new products Globalisation will take place against a backdrop of increasing regulation, both on a national and international level In-house teams will have to invest more resource in Asian, African and South American markets. This will bring challenges in managing cross-border teams Legal panel arrangements will focus more on global, rather than purely national, capabilities The next generation of lawyers will be far more technologically astute than even today s newest lawyers. The mobile generation will embrace mobility A culture of presenteeism will not be tolerated by tomorrow s lawyers. Home and flexible working will become the norm The next generation of lawyers will be recruited from a global workforce. Lawyers will not only demand mobility in their working patterns but also internationality It will be the norm for your day-to-day colleagues to not only come from, but also be located in, Asia, Africa and the Americas Lawyers with legal and coding skills will demand a premium in the market Access to skilled and qualified legal resources will be limited As a result of the smarter use of technology, law firms will recruit and train fewer graduates This will mean that there will be fewer lawyers in the market and this will result in upward salary pressures Pressure from the business to reduce in-house budgets will reduce inhouse counsel headcount Alternative fee arrangements including all-you-can-eat models will become the norm the hourly rate is dead Businesses will seek to outsource all or part of their legal capabilities to LPO providers and global law firms Some General Counsel may seek, with the assistance of external funding, to conduct an agreed spin-out and MBO of the internal legal function There will be a continued disaggregation of legal tasks brought about by pressure on fees and the changing structure of transactions Certain tasks currently seen as high value will, through the smart use of technology, become commoditised Legal services such as M&A, litigation and intellectual property will no longer be single sourced but provided by a supply chain of legal vendors including law firms, LPO providers, consultancies and technology vendors Vendor and project management skills will be in demand as in-house counsel need to manage a global supply chain of vendor relationships for projects LPO providers will come under pressure to invest in technologies to increase automation The liberalisation of the legal services regimes in many jurisdictions, and the unbundling of legal tasks, will result in a number of non-traditional new market entrants in the legal market Pressure on margins and capital required to keep up with globalisation and technology investment will result in a further consolidation in the legal services sector. Firms will either be global or boutique Businesses in noncompeting sectors may share internal legal resource on a shared services basis Businesses may co-source the provision of legal services in order to gain better volume arrangements Law firms (and consultancies) will offer clients savings through economies of scale by providing combined legal and consultancy services Technology will present challenges and opportunities There will be a change of emphasis from technology supporting the back office to front office technologies Technology will move up the value chain from document management to artificial intelligence decision-making systems Big Data and analytics will allow in-house counsel to take decisions based on better data sets and adopt a far more sophisticated approach to risk management In-house counsel will require larger capex budgets to invest in technology and/or leverage off their external counsel s own technology platforms. Conversely, this will result in reduced headcount budgets Only those law firms that can afford to make major investments in technology will survive Access to precise, targeted and real-time information will be key to all risk management New contracting models brought about by smarter use of technology and data analytics, such as dynamic contracting, will speed up transactions and reduce the amount of negotiation and drafting time There will be a disintermediation of external and internal lawyers from their traditional role of sitting between the business client and knowledge Smarter technologies will allow the business client to become more self-reliant, again reducing the need for large in-house teams or external teams Effective knowledge management will be a cost and quality differentiator. It will be the key to success
Technology in context - what next for the General Counsel? Global pressures Increased competition for business will result in companies searching for new markets and developing new products Globalisation will take place against a backdrop of increasing regulation, both on a national and international level In-house teams will have to invest more resource in Asian, African and South American markets. This will bring challenges in managing cross-border teams Legal panel arrangements will focus more on global, rather than purely national, capabilities Generation Y The next generation of lawyers will be far more technologically astute than even today s newest lawyers. The mobile generation will embrace mobility A culture of presenteeism will not be tolerated by tomorrow s lawyers. Home and flexible working will become the norm The next generation of lawyers will be recruited from a global workforce. Lawyers will not only demand mobility in their working patterns but also internationality It will be the norm for your day-to-day colleagues to not only come from, but also be located in, Asia, Africa and the Americas Lawyers with legal and coding skills will demand a premium in the market
Technology in context - what next for the General Counsel? More with less Access to skilled and qualified legal resources will be limited As a result of the smarter use of technology, law firms will recruit and train fewer graduates, this will mean that there will be fewer lawyers in the market and this will result in upward salary pressures Pressure from the business to reduce in-house budgets will reduce in-house counsel headcount Alternative fee arrangements including all-you-can-eat models will become the norm the hourly rate is dead Businesses will seek to outsource all or part of their legal capabilities to LPO providers and global law firms Some General Counsel may seek, with the assistance of external funding, to conduct an agreed spin-out and MBO of the internal legal function Unbundling of legal tasks There will be a continued disaggregation of legal tasks brought about by pressure on fees and the changing structure of transactions Certain tasks currently seen as high value will, through the smart use of technology, become commoditised Legal services such as M&A, litigation and intellectual property will no longer be single sourced but provided by a supply chain of legal vendors including law firms, LPO providers, consultancies and technology vendors Vendor and project management skills will be in demand as in-house counsel need to manage a global supply chain of vendor relationships for projects LPO providers will come under pressure to invest in technologies to increase automation
Technology in context - what next for the General Counsel? Liberalisation of legal services The liberalisation of the legal services regimes in many jurisdictions, and the unbundling of legal tasks, will result in a number of non-traditional new market entrants in the legal market Pressure on margins and capital required to keep up with globalisation and technology investment will result in a further consolidation in the legal services sector. Firms will either be global or boutique Businesses in non-competing sectors may share internal legal resource on a shared services basis Businesses may co-source the provision of legal services in order to gain better volume arrangements Law firms (and consultancies) will offer clients savings through economies of scale by providing combined legal and consultancy services
Technology in context - what next for the General Counsel? Technology Technology will present challenges and opportunities there will be a change of emphasis from technology supporting the back office to front office technologies Technology will move up the value chain from document management to artificial intelligence decision-making systems Big Data and analytics will allow in-house counsel to take decisions based on better data sets and adopt a far more sophisticated approach to risk management In-house counsel will require larger budgets to invest in technology and/or leverage off their external counsel s own technology platforms. Conversely, this will result in reduced headcount budgets Only those law firms that can afford to make major investments in technology will survive Knowledge as a commodity Access to precise, targeted and real-time information will be key to all risk management New contracting models brought about by smarter use of technology and data analytics, such as dynamic contracting, will speed up transactions and reduce the amount of negotiation and drafting time There will be a disintermediation of external and internal lawyers from their traditional role of sitting between the business client and knowledge Smarter technologies will allow the business client to become more self-reliant, again reducing the need for large in-house teams or external teams Effective knowledge management will be a cost and quality differentiator. It will be the key to success
The pace of technological change Telex Fax VCs Email / Mobile BlackBerry ipad Google Glass 8
What s driving change? Moore s law The number of transistors per square inch on integrated circuits doubles every 18 months. Processing power doubles every 18 months. Gordon Moore Kryder s law The density of hard drives increases by a factor of 1,000 every 10.5 years (doubling every 13 months). Mark Kryder 9
What s driving change? 10
11 What s driving change?
What is Big Data? IBM Data sets that are too large and complex to manipulate or process using traditional relational database management methods or tools which require specialised technology and analytics to usefully interpret the data Gartner In 2001, the Gartner report predated the term Big Data proposing a three-fold definition encompassing the three Vs : Volume, Velocity and Variety. This idea now includes a fourth V : Veracity, to address data questions of trust and uncertainty Oracle Big Data is the derivation of value from traditional relational database-driven business decision-making, augmented with new sources of unstructured data Intel Opportunities are in organisations generating a weekly median of 300 terabytes of data. The most common forms of data analysed are business transactions stored in relational databases, followed by documents, e-mail, sensor data, blogs and social media Undefined By Data: A Survey of Big Data Definitions Authors: Jonathan Stuart Ward and Adam Barker (Submitted on 20 Sep 2013) IBM 12
The 4 Vs of Big Data Volume of Data Data Volumes sinking the General Counsel office Counterparty/Customer documentation Contracts Law and regulation Business data Law, Regulation, case law Contractual matrix and exposure Risk Appetite Business objectives Counterparty knowledge 18.9 billion network connections by 2015 Will cost the US $1.3 trillion per year Good Data: Contextual Value-added Relevant Timely Complete Appropriate amount Intrinsic Believable Accurate Objective Reputable Representational Interpretable Easy to understand Consistent Concise Accessibility Available Secure 13
Big Data is about making predictions based on an analysis of large data sets 14
How will technology impact the office of the General Counsel? Technology is moving up the value chain The AI Lawyer Replacement of certain elements of the front office Front office technology Back office technology Keeping the lights on infrastructure 15
How will technology impact the office of the General Counsel? Deconstructing the role of the lawyer - we are in the prediction game Advisory We make predictions on the likely impact of regulation based on the law and regulations, precedent, knowledge of the regulators approach, knowledge of the business Litigation We make predictions on the likely outcome of a case based on the facts, previous judgments, knowledge (perhaps anecdotal or personal) of the court or judge, the current state of the law, who the other side may be represented by Contracting We decide what to include in a contract based on the requirements of the transaction and also on our knowledge of current market practice, state of the law, awareness of the business risk appetite and assumed knowledge of the counterparty In all cases we give our advice make our predictions based on an analysis of a limited data set which we can access 16
How will technology impact the office of the General Counsel? What Big Data resides in the office of the General Counsel? Legislation Regulation Case law Precedent Risk appetite Contracts Liability Indemnity exposure External lawyers Internal lawyers The business Business objectives Litigation Training Counterparties Jurisdictional 17
How will technology impact the office of the General Counsel? Where does Big Data reside? Books Internet Emails Excel Paper Personal knowledge External materials Training / Library Other lawyers Online services Databases 18
How will technology impact the office of the General Counsel? Big Data technology will radically change the way the office of the General Counsel works. As technology moves from the back to the front office, increased processing and storage will allow for many human-based tasks to become automated. Predictions Litigation prediction Regulatory risk Commercial outcomes Pricing of risk Speed Automated contracting Intelligent searching for e-discovery and due diligence Business demand for always-on legal services Further unbundling of tasks Unbundling of tasks within litigation, M&A and commercial transactions Project management skills at a premium Commercial and legal tasks bundled LPO market under pressure from automation Accessibility Removal of the General Counsel s office from the knowledge supply chain Direct access to knowledge for the business Mobility always-on and access to realtime knowledge More with less Reduction in headcount Increase in technology spending Greater efficiencies 19
How will technology impact the office of the General Counsel? What if machines that have access to much wider data sets could make those predictions for us? Judicta 20
How will technology impact the office of the General Counsel? What if machines that have access to much wider data sets could make those predictions for us? Lex Machina, a Menlo Park-based data-sourcing company that has compiled data from 147,000 cases, 120,000 filings, 16 million docket entries, 185,000 documents, 1,400 judges and 28,000 decisions. Using data analytics, Lex Machina churns through this material to try to predict the likely outcome of current intellectual property cases. 21
How will technology impact the office of the General Counsel? What if machines that have access to much wider data sets could make those predictions for us? KMS Technology - cutting-edge Technology. Contract automation that lets you draft, audit and review faster. KMS technology uniquely provides a full analysis of the structure and language contained in your agreements. Our team can help with your contract management, drafting, and review needs - creating model forms from past deals, designing custom playbooks, auditing contract collections and reviewing incoming agreements against your standards From top to bottom, we do it all 22
How will technology impact the office of the General Counsel? What if machines that have access to much wider data sets could make those predictions for us? Watson The winner of Jeopardy. IBM is now looking for new applications including legal for its cognitive AI application. 23
How will technology impact the office of the General Counsel? What if machines that have access to much wider data sets could make those predictions for us? Judicta We re turning unstructured case law into highly structured data. Data demands analysis, and analysis illuminates how the law has been applied and how legal arguments will fare in the future. 24
How will technology impact the office of the General Counsel? What does the future hold? Risk management? Removed from supply chain? Recognised in legal sector? Threat or opportunity? If Big Data is about predictions and probability, will we be able to use Big Data technology to help us manage risk? We are part of a knowledge supply chain. We sit between knowledge and value-based judgments about that knowledge. Will Big Data technology remove us from the supply chain? Will our business clients recognise the value of Big Data in the context of legal services? Will the business invest in Big Data technologies for legal, and if so, will that investment be a threat or an opportunity? 25
26 The effect on individuals may be the biggest shock of all. Specific area expertise matters less in a world where probability and correlation are paramount Subject matter experts will not go away, but they will have to contend with what the Big Data analysis says. This will force an adjustment to traditional ideas of management, decision-making, human resources and education. Big Data Vicktor Mayer Schonberger (Professor of Internet Governance and Regulation at Oxford University) Kenneth Cukier (Data Editor of the Economist)
Panellists Stella Cramer Partner Tel. +65 6309 5349 stella.cramer@nortonrosefulbright.com Jeremy Tan Senior Associate Tel. +65 6309 5309 jeremy.tan@nortonrosefulbright.com Merel Schwaanhuyser Compliance & Ethics Counsel, APAC Data Privacy Accenture Tel: +65 6410 6216 merel.schwaanhuyser@accenture.com 27
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