Hello, welcome to today's General Counsel Institute webinar series. Before I kick off today's webinar, I'd like to address a few housekeeping items. Regarding CLE credits, please be sure to fill out the survey as well as respond to the pop-up check-ins. We will apply for CLE credit to each state identified after the completion of the webinar. Unfortunately, we aren't able to offer credits for South Carolina or Pennsylvania at this time. CLE credit is only available for this live day and not on demand. The survey can be answered at any time through the survey icon at the bottom of your screen, or it will pop up at the end of the webinar. I wanted to bring to your attention the resource icon at the bottom of your screen. Here is where you'll be able to download the deck.
Now, it is my pleasure to introduce today's webinar, "The Business of Law 2020: The FTI-Relativity General Counsel Survey," presented by today's general counsel and FTI. Our distinguished speakers are David Horrigan, discovery counsel and legal education director for Relativity, Ari Kaplan, principal for Ari Kaplan Advisors, and Wendy King, senior managing director for FTI Consulting. Now I'd like to pass it off to David. David?
Thank you very much, Jennifer. I appreciate it. It is great to be with all of you today. Thank you for taking some time out of your day to join us. As Jennifer said, my name is David Horrigan. I'm Discovery Counsel and Legal Education Director at Relativity. Part of my role is to help put together programs like this. Our friends at FTI really did the heavy lifting on this one, and a special recognition to Kate Holmes, who is part of the FTI team who helps bring you these educational programs.
A little bit of my background, I was analyst and counsel at 451 Research before joining Relativity, was in-house counsel for several years in Washington, D.C. with the Magazine Publishers of America, as well as the Entertainment Software Association, and was reporter and assistant editor at "The National Law Journal," and I still serve on the board of Legaltech News and still write articles for them to this day. Enough of me, I want to turn us over to the stars of the show as we go through today's presentation. First is Ari Kaplan. He is an institution in the field of legal technology.
He is an attorney, an industry analyst, and some of his research has really been an outstanding help to law firms, corporations in the legal space, because Ari has a knack for being able to get to the crux of the issue, and more importantly, get people to guide us to the crux of the issue. He has had numerous awards, as you can see on the screen. Please join us in welcoming Ari Kaplan. Ari, thanks for being here today.
It's a privilege, David. Thanks so much.
Absolutely. We also have Wendy King with us today, Senior Managing Director at FTI Consulting. When telling you about Wendy King, I have to keep the hometown crowd happy and let you know that Wendy is an alumnus of Relativity. She used to be part of the team here. She has, several years ago, moved over to FTI Consulting, where she advises clients on the nuts and bolts of e-discovery. She's also had service at Kroll Ontrack. She has Relativity certifications, and she's an industry-recognized expert. Please join us in welcoming Wendy King. Wendy, thanks for being here.
Thank you, David. It's my pleasure.
You'll see our agenda today. We're going to go through some of the demographics and the methodology of the survey, and we're going to talk about some of the key concepts that we took away from the data, how the General Counsel's role has changed, technology adaptation, and of course, advice for law firms and law students who are just starting their careers. You also see Q&A there at the bottom, but you don't have to wait till the end. On your console, there is a vehicle for submitting a question. If there's anything you would like us to get to, please put it into your console, and we'll do our best to answer it. Before we get to Ari and a little bit of the background on the demographics and methodology, I wanted to tell you a little bit how this survey came to be.
As you know, at Relativity, we are a software company. We develop the software that lawyers use to conduct e-discovery, investigations, and data management and information governance. On the other hand, our partners at FTI Consulting, and of course, more importantly, the FTI Technology business within FTI Consulting, they are, as the name implies, consultants. They have the expertise to take the software and guide you through the discovery process. As we were sitting last year talking about what we could possibly do, we thought, "One of the things we'd like to do is be able to see how general counsel think and what general counsel want." As a software developer, we want to make our software to meet those needs.
As a group of some of the best consultants on the globe, FTI wants to make sure that they're tailoring their services offerings to what general counsel need. So then we set off. We engaged Ari Kaplan Advisors, a preeminent legal research firm. I don't mean legal research in the sense of citing case laws and doing Bluebook citation, research on the legal industry and the technology industry as well. We retained Ari Kaplan Advisors to get us not just raw numbers, like, "Okay, X number of lawyers said this." To sit down with deep in-depth interviews, and thus we have our methodology. Ari, you want to tell us a little bit about how you went about setting up our research?
Thank you, David. Let me start by saying that it's really a privilege to get to do this kind of work. I always say when people say, "What do you do?" I always say I do lucky work because. Well, first of all, the idea that any General Counsel would actually take my call is a wonderful thing. That I get to work with Relativity and FTI just adds to the gift. The goal here was to speak directly to the General Counsel, the head of the law department, to try to understand what their key issues were, what are they struggling with, where are their challenges, where are their opportunities as we head toward 2020. I reached out and spoke with 32 GCs.
They were mostly in the U.S., but I spoke with also GCs in Israel, Canada, the Netherlands, and Germany. Two of them were university general counsel, several were in the Fortune 500, even one in the Dow 30. Really trying to get a great cross-section. As the chart shows, about 40% were with companies that earn more than $500 million in revenue, and more than half had worked in organizations that had more than 1,000 employees. They were predominantly from technology and telecommunications, but then widespread, 13% in banking, insurance, financial services, 9% each manufacturing and energy and utilities, and then a handful from, as I said, higher education, but life sciences, retail, transportation, and a variety of others. There were very interesting sort of issues with respect to what we learned.
I'll just sort of share that one of the things that was very compelling was that someone described the role of the General Counsel as moving from gatekeeper to ship captain. Technology had a lot to do with that, but it was a very interesting visual and understanding. I know that the two of you have often connected with in-house leaders over the years, but as someone who's spoken with them and interviewed hundreds of in-house counsel, that concept of moving from, for example, the Department of No, which we'll probably catch up on, to this idea of spearheading and the transformation of the law department was really a really interesting takeaway from a lot of this research.
Ari, that's a great point. If you look at the chart on the screen, you'll see 97% of those general counsel now consider themselves to be business strategists. You see risk management is always there. It's a little over a third. Expectations are higher. Frankly, I'm surprised the number is not higher for expectations being higher, and I'm also surprised that cost was not bigger than that, because the GC's office has always been seen as a cost center. As Ari pointed out, one of our respondents came up with the great quote that we're no longer just the department of no. It's not a department where great ideas go to die because the general counsel finds some way to make sure that there's too much risk, and we can't do it. Instead, they're becoming business strategists.
Wendy King, you had an interesting experience just recently there in the trenches doing e-discovery, where the attorney's role and the general counsel's role as a business advisor, as much as a legal advisor, presents some challenges for those of you doing e-discovery. What do you think?
Yeah. One of the things I think that just impacts discovery or e-discovery in general is privilege review. It's not as black and white. They're now holding business roles. In those first level reviews, the call of privilege has changed into determining what of their communications is privileged. I'm really not surprised to see their role change. I mean, business strategy and risk are intricately related, and I think a general counsel is particularly well-suited to look at risk from several angles, not just legal, and as you said, not where it just goes and the ideas go to die, but really looking at legal, how can we get in front of those risks? How do we look at reputational and financial risk as well? The way that we do business has changed and I think really forced that change or evolution.
If we think about cyber risk or data privacy, before data breaches really became commonplace, cyber risk was a threat left to IT, and now it's something that GCs are getting in front of and involved in the conversation. With data privacy regulations such as GDPR or CCPA impacting an organization and how they do business, I think the legal ramifications and risk management and that intersection with business strategy are going to be more and more tightly intertwined. Again, I think GCs are particularly well-suited to play an integral role in those conversations and look at it from every aspect.
Great point, Wendy. You're talking about the role on who owns the data being intertwined, but you are there in a lot of corporations. What are you seeing? Is IT still owning the data, or is it a new chief information officer, a risk management function, legal? Who, if anyone, is claiming ownership of that data?
Everyone.
What I mean by that is the more I talk with clients, they are having a team approach. You have your compliance, the individuals responsible for compliance, the individuals who might be responsible for holding the data and the retention policies and how you handle litigation holds. Everyone has been impacted by the change, and the regulations, and the introduction of new regulations. I don't think one person can have a seat at the table anymore. I think you have to have IT to talk about their aspect of it, compliance to talk about theirs, and certainly that's another reason why the GC has a prominent role in those conversations as well.
Thanks, Wendy.
You know, David.
Ari Kaplan.
The other interesting thing-
Yeah.
Yeah, the other interesting thing, I think just to go back to your point about more cost scrutiny, the slide that people are looking at, more cost scrutiny, expectations are higher. What's happened within the law department is this, it's been a bit of a stratification in terms of the roles and responsibilities, such that there is an incredible array of talent that sets the foundation for what the General Counsel is doing. Everyone has to remember that we're speaking, I spoke to the General Counsel. Within that organization, there is generally a Head of Legal Operations. There are deputies and assistants and associates. The array of responsibilities has been changed. A single individual can no longer be responsible for cost scrutiny or be responsible for service design principles, right?
You're talking about someone that's managing a much bigger operation. As a result, that individual is when you see 97% is a business strategist, that individual is definitely the business strategist. That individual is reporting to the board. That individual is the direct liaison to the business units. When we're talking about some of this other granular stuff, the general counsel is relying on other pools of talent within the department. That's the key that I think is really important because what you're seeing is this, someone said there's a substantial number of data analysts and project managers in the law department, which reflects a trend and a shift in how the company views the role of the legal department. There was someone described it as being the ambassador of growth. They're bridging IT-
Wow
procurement, the business units, and even the GCs are evaluating which tasks even require the skills and increasingly what skills and increasingly realizing that lawyers' talents may not be best utilized to leverage technology to solve certain types of problems.
Ari Kaplan, as you so often do, you have provided me with an excellent segue going from business to our next point, technological competence. You mentioned just now that lawyers, the general counsel, are relying on many talents and big teams to bring legal services and bring the business advice they do. One of the real issues is technological competence. This concept was kicked off, really, I would argue, in earnest when the American Bar Association in 2012 made its amendments to Comment 8 to the first model rule. At the time, it was like, well, it's not a comment, it's not binding, there's no meat to it. What people didn't realize in 2012 was each state bar was going to pick up the ball and run with it on that.
Now we have, I believe, 48 out of the 50 states having some sort of ethics rule requirement, maybe in their ethics opinions, that's saying you've got to have some technological competence. If we have California lawyers with us today, you know the state of California has given lawyers three choices. You either learn the technology, you have someone to teach you the technology, hire someone who knows the technology, or you refuse the representation. Ari, when you're talking to these general counsel, what kind of feedback are you getting on how these lawyers are embracing technology?
Well, the technological competence issue is an interesting one because there are statistics that show that people, at least we found, that the general counsel didn't necessarily think that as many lawyers as you think should have technological competence had it. Certainly, there's a much greater level of confidence in the competence of litigation support professionals and paralegals. One person said, "I think that most lawyers have adequate technological competence to serve their clients as expected by the codes of conduct." That's not the same thing as saying that lawyers are the right people to be the source of innovative solutions for the legal practice. I think that's a really important point. I had the privilege of delivering the keynote address. I do a keynote at law department retreats called The Law Department as a Competitive Advantage.
When I was speaking, I was also moderating a panel of law firms, the key law firms for this company, the General Counsel, a very savvy, forward-looking General Counsel said, "Look, please go back to your firms and tell the leaders that we want more than just the billing partner in the room. We want Head of Innovation. We want pricing. We want project management. We don't want to necessarily be billed for that meeting for all those people, but we definitely want that diverse skill set." This is why Wendy and her team are so valuable because they bring this holistic approach to solving a problem.
Someone else said, "Legal is headed to the same destination at which the financial services industry has already arrived, which is one where data analytics and data science will play an increasingly important role in performance." There is this issue of technological competence, but the question is, whose technological competence is most important in whatever instance?
Wendy King, you are the technological guru on whom these lawyers rely. When you go in, and obviously we're not asking you to name your clients or anyone else, but you see a lot of people, general counsel, lawyers who are not your clients. Generally, in the past seven years since the ABA took this stand in 2012, have you seen technological competence of lawyers get better?
I have, and I recall a story, and of course, this was before 2012, where I was working with a young lawyer who said to me, "I went to law school, so I didn't have to deal with computers." We all may remember the stories of, and they were quite proud of that. When we remember the stories of the lawyer who has a computer on his desk and he wouldn't turn it on. By contrast, I recently had a conversation with a partner and the very first question she had for me, when we were talking about a matter was, "Tell me the difference between TAR 1.0 or TAR 2.0.
I have to tell you, I stood back for a second because not that I certainly could not answer the question, but it was a question I would not have expected from the lead partner on the matter. They're becoming more and more aware of their need to understand how we're using the technology and what technology to use. To Ari's point, bringing others in the room who can speak to this, I'm certainly seeing those conversations shift for them, that even if they don't know what TAR 1.0 or TAR 2.0 is, they understand it's important enough to know they need to ask the question and make sure they and their team understand the explanation and how it will craft their workflow, their review strategies on their particular matters that they're working with.
That's a very tactical one, but I think they're also looking at how technology shifts and changes impact the business when you look at corporate counsel in particular.
Sure. Well, let's take a look at how lawyers are using some of this technology. If you look up at the screen now, you'll see technology adoption. You're going to see artificial intelligence as a way of measuring this. Ari, anything stand out from you on the data we got back on lawyers using artificial intelligence?
David, I want to go back to something because I think this is a really important point. One general counsel-
Sure
suggested that lawyers obtain a basic understanding of programming. This is not common, and you know that I'm a big fan of this because I developed.
I refrain from here.
a group that codes-
Here's Ari's Python ad.
Well, it's free. It's more of a public service than an advertisement. The general counsel said there is talk about contracts being written in code, so an ability to understand code can facilitate that process and potentially help someone write an amendment to software in order to deliver the contract they want. We're entering this phase of not necessarily lawyer, there are certainly, and I've done other research on knowledge management and law firm innovation, and there's certainly a movement of lawyers or certainly at least law firms and legal institutions developing their own technology, and you're seeing more of this innovation labs within law departments. In many ways, the law department is leading a lot of this. They're bringing in an opposite direction than it used to be.
The law department is bringing in procurement and the business units and saying, "Hey, we have all this great technology," which certainly has the foundation of AI. You see on the screen a number are using AI, a number plan to do so soon. Contract review is generally the primary area. Not as many for e-discovery, although depending on how people define AI, since AI was generally first used in e-discovery as predictive coding is if you're counting predictive coding. People talked about trying to roll out machine learning and AI with respect to contract reviews to determine whether you can get a first drafts of an agreement or maybe expanding their e-discovery technology to these other areas. Many are taking advantage of it for time-sensitive, redundant tasks. For those who are not, one challenge is just identifying the use case.
That's really been the key issue is where do we use it, not necessarily will it work.
Wendy King, you've had at least one person, a lawyer who may be ahead of the curve, asking for the difference between TAR, and by the way, for some of our viewers who aren't in the weeds on e-discovery, it's Technology Assisted Review 1.0 versus Technology Assisted Review 2.0. What are you seeing on adaptation of AI? People talk about AI all the time. We are having the invasion of the robots, if one were to believe the hype. What are you seeing in the trenches? Is AI playing a much bigger role?
I think, and the one point you did make, and Ari, you mentioned something a moment ago about it started at e-discovery, but if I look at this chart, 69% are saying they're using AI of managing and reviewing business contracts, which I think is outside the context of e-discovery and has a lot of use. I do think, though, AI is still one of those terms. We throw a lot of acronyms around. You have a definition that can vary from individual to individual. Certainly there's some confusion maybe around what AI means and when to use it, but it is becoming much more of a commonplace topic about how it can help businesses outside of just, as we talked about, predictive coding and e-discovery. I actually had a conversation with someone yesterday where they were talking about the use of AI for rebates.
A lot of organizations have in their contracts, if certain things are met, that there would be a rebate issued. Those are often unrecovered because it could be unduly burdensome to go out and look at all of those and see from a business perspective, was it met? What does the contract ask for? Then be able to issue or get those back. Now with AI, it makes it much easier for them to do that or due diligence for contract reviews as a part of a merger or an acquisition. I think the technology adoption in this area has grown, and as the charts show and the survey results show, it's grown outside of just the response of a reactionary from the e-discovery perspective.
It's grown in ways that are allowing businesses to operate more efficiently, and to stay ahead, in some ways, ahead of risk as well.
Makes sense. Thanks, Wendy. Of course, AI is not the only technology issue with which lawyers are dealing. There's also the cloud. I am always amused every time I hear the story about, it apparently was at a bar association event, where the speaker asked the audience, "Okay, how many of you work on legal matters in the cloud?" There were maybe a little spattering of hands across the room, not many at all, as they sat there, you got it, editing depositions on their phones. Like nothing ever gets done on the cloud. When we see this, 75%, they're using SaaS or other cloud technologies to perform legal tasks. Frankly, I thought, now granted, we're dealing in this survey with the chief legal officers, so it's a pretty sophisticated crowd.
Ari, were you as surprised as I was to see that number at 75% saying yes so high?
No. I always laugh at this, that we're still talking about these things. I mean, the nature of technology is such that people want something that's convenient. They recognize the level of security that a cloud tool offers these days. This transformation is happening very rapidly. They need to be making this accessible to the diverse array of teams that I'm talking about in a remarkable number of locations. It's so much easier to throw up an office now. To allow your most trusted third parties to access your system, to house it yourself. I mean, there are just so many reasons why this is an important development. Although I always ask about this, I'm always fascinated that we're talking about it.
I wonder if it'll be like the conversations that I was having about the cloud years ago are similar to the conversations I am having now about AI. It'll be interesting to know if in a year or two, I don't know however rapidly we get through this period of uncertainty, whether that too will be something where people are so comfortable that it's surprising that we're having a discussion about it.
Wendy King, you and I both work for companies who have made major shifts in the cloud to SaaS platforms. Obviously still are offering on-premises software. I know from our personal experience, one of the reasons we did it is because our customers were demanding it. What are you seeing out there vis-a-vis SaaS and the cloud?
I'm a little surprised we're still having this conversation and the questions coming up as well. I do think that maybe in that 25%, there's still a small group of folks who may not understand what this means. I recall having a conversation with someone who said, "We won't put our data in the cloud." Then within the same breath it was, "Can you collect from Office 365." I think that right, those are which is the cloud. Those are becoming more rare than commonplace, so we've certainly seen that evolution. I think, to your point before, it's secure. You've got folks that are focused on the security. It's more expandable.
At least for us in particular, it takes you out of any sort of limitation of offering a solution that is tied to the constraints of software needing to be scaled before you can offer that solution, and the time that that would take. Oftentimes, these things are much faster in terms of the scalability and the security. At least for us, the adoption of SaaS for at least RelativityOne and even our on-prem, we've got an on-prem instance in another cloud, allows us to focus on just the workflows and the expertise and not have the constraints of sort of a hardened and less scalable, at least quickly, data center be a limiting factor for our recommendations. Does that make sense?
Oh, it makes perfect sense. You know what I found interesting is one of the respondents replied that they may not have made the move to the cloud, it's sort of like what I was saying earlier, but many of their customers have already made that move. They mentioned Slack as something from which companies are going to have to collect. Emerging data sources are another one. While we're on this issue of technology, we've talked a little bit about competence before. You'll see on this slide, guess who is ranking the lowest? Those of us are lawyers. This came as zero surprise with lawyers having the least degree of technology competence, paralegals having more technology competence, then of course the litigation support professionals, the people who are really in the trenches, they've got the most.
If we continue on our journey here. We found this one to be an interesting response. "I understand there are no absolutes. I just want to focus on the simplest, best answer." Ari Kaplan, when you were talking to the chief legal officers in conducting this survey, were they sensitive to the fact that lawyers are often accused of operating in non-simple terms, speaking in legalese, and not getting to a place in an easy, simple matter? Did the general counsel seem aware of this?
The general counsel are acutely aware of what is changing. They recognize that they have a range of things that they're most concerned about, and they want their outside counsel to understand that we will judge. Many of them used to be law firm partners. They have stood in the shoes. It's interesting. The general counsel has often stood in the shoes of their outside counsel. They want their outside counsel to do the reverse. They want them to stand in the shoes just as they had, so that they can appreciate the fact that every little detail does not need to be briefed and memo'd. We really just need an answer. We pay you the big bucks because we rely on the fact that you're going to give us the closest, best answer that we can then decide how to judge whatever the strategy's going to be.
They're getting things thrown at them. You have this image of the Cat in the Hat on the ball with the fish and the cup and the rake. That's what's going on. When they call and say, "Do I choose the brown rake or the red rake?" You give them 1,000 different reasons why the brown rake is not as good. I guess I'm going too far with this visual. Do you get what I'm saying?
Yeah.
We're talking about a balancing act that has become exponentially more complicated. This idea of, "Look, I just want to focus on the simplest, best answer," is a really important point that they're trying to get their outside counsel to understand. Because if outside counsel is going to start losing, as we've discussed, some of the work that it probably shouldn't be doing anyway, or at least the lawyers at the outside counsel, right? Because a lot of firms have become very savvy at this and developing these multidisciplinary teams. If they're going to lose some of this work, well, then they might as well give the highest and best use of their skill to their client for questions that will allow them to this, and so they're best suited to answer a question like that.
Yeah. Ari, that's a great point. One of the lawyers from our survey, Jessica Nolan, who is Senior Vice President and General Counsel at PLZ Aeroscience, was kind enough to join us at Relativity Fest, where we discussed some of these issues. I thought she had a great point on what matters. When she said, "Consider what's important to the company. I don't want a lawyer who's going to win every issue. It's not my goal. I want a lawyer who's going to be effective in winning the issues I care about, and not spend a minute on what I don't care about, because all I get out of that is an invoice." She said it was a big struggle, and she said, "This appears to be a communications issue." I know Jessica brought this up.
In conducting the survey, did you get a lot of feedback on communicating with outside counsel?
Sorry, are you talking to me or Wendy?
I'm sorry. If I said Wendy, I meant Ari. My apologies.
What's been interesting about this point is that General Counsel, the people that I spoke with were extraordinary. Jessica's a great example of a General Counsel that is very forward-thinking and wanting to run her law department the way that a business unit should be run. That's what's happened. The law department is no longer, as you said earlier, this department of no. It's no longer where great ideas go to die. In many ways, it's the genesis of great ideas.
It's the foundational center of where the business units or procurement or compliance is coming to really be around people who are thinking holistically about not only the risk factors, but how do we become the department of, "Yes, this way." Like, "Yes, we can do it, but if we do it this way." It's not just "Yes" willy-nilly, and it's not just "No." It's like, "Well, we have evaluated this. We have these tools. We have this talent." The General Counsel recognizes that he or she can now become a much more creative business strategist who can come up with solutions, notwithstanding the fact that those solutions have to be bound by norms that protect the organization from anything.
When people will come to the legal department, it won't be when they've taken a step that didn't work out and now they have to clean it up. They'll come and say, "You guys are great about coming up with something creative and dynamic, and we'd like to ask you this. Please sit in our meeting. Please be our ambassador. Please be the liaison so that we know for sure this will be a great opportunity.
Thanks, Ari. Wendy King, bringing some of these concepts together. We've talked about communication. We've talked about not being the department of "No," being a business center more than a legal center. One of our questions was, what advice would you give to your board on the above six areas, the areas we've discussed before, and their potential to have a legal or regulatory impact on the company? Those also include GDPR data privacy. One of the responses was, and this was addressed to the board, but in some conversations, it's also addressed to the office of the General Counsel. They have to be actively aware of these issues and stay ahead of the game. You cannot be reactive. We've talked about don't be the department of no, be a business unit, et cetera, but are they still being reactive?
In the e-discovery world, we talk about the reactive last-minute fire drill to get everything in a row as opposed to proactive information governance. Wendy, when you are working with these corporations, do you find them still being pretty reactive, or are we seeing more proactive IG, proactive business consulting, et cetera?
I'll give the lawyer answer and say it depends. I think we're seeing some very sophisticated GCs and legal departments and corporations that understand the importance of being proactive, and they're taking those measures. Then there may be some who are still being much more reactive. Overall, I would say that it's a much healthier balance now, and you're seeing that shift to being proactive. Again, and you mentioned GDPR and CCPA and whatever else will come tomorrow, those are driving a lot of that. I think the one key takeaway for anyone in the legal industry, I call myself a legal technologist, is that you cannot afford to become complacent. It is always about learning and staying ahead of the impacts of the change in technology and how that impacts your business, both from an operational perspective and a strategic perspective.
Nowhere else do I think that's more important than for a law department in a corporation. If I were going to say to a law firm how can they help their clients, it's know my business. You guys have talked about the finer points of winning the right points. It's knowing my business and helping us where we need the help, and guiding and informing about the types of implications that some of the technology changes bear. Whatever we're talking about today, rest assured tomorrow there will be something else new that we're going to start talking about, emerging data sources or regulations. People almost have to become what I'll coin as expert generalists and constantly learning and developing an expertise in the intersection of technology and business, because they're not separate anymore. The legal technology and business is not separate anymore.
It's all very interrelated.
Thanks, Wendy. Ari, moving on to advice, once again, you've given us one great segue, and Wendy's given us the second great segue of the day because you can see here at 66%, the biggest piece of advice was know my business better. Then alternative billing arrangements and focusing on the practical. Addressing these first two points, knowing my business better, then alternative business arrangements, two-part questions. How's it going on that getting to know my business better? I assume not too well, if that's the number one issue that people, the general counsel, are giving advice on. Then number two, are they thinking outside of the box, task-based billing instead of the billable hour?
The in-house lawyers are. Whether their outside counsel are doing that. I mean, someone said, "If I could change one thing in the world, I would have law firms charge the way other businesses charge." Someone else said, "I want my outside counsel to offer fee arrangements that don't measure time but are based on value." A third, "Treat me like a customer, not a client." If you don't think of clients, you will think of how you want to be treated. Again, stand in my shoes. It's not just know my business. Know my business is table stakes. The idea that people are still asking for their outside counsel to understand the nuances of their business is unfortunate. It really needs to be much more of stand in my shoes, right?
Look at it from my perspective, and look through my eyes at what I'm really trying to deal with. Someone else said, "The best outside counsel that I deal with and those that I prefer thoroughly understand my business, but they charge by the hour, yet the best ones don't make me feel like they charge by the hour." Some practical advice. Communicate better. Not telling me what's going on is really annoying. I think That's a huge problem for anyone, I think it's fair to say. From a business standpoint, the outside counsel, sorry, the in-house leaders are relying, and because there are various layers, they're all relying on this information.
There's got to be a harmonization of what the people in the firm know and what the people in the firm are sharing with their clients, that is a really interesting issue. The other thing is just about some of the methodologies for doing the work. I was at an event years ago. I was moderating a panel discussion on legal project management, one of the people on the panel was a head of a ginormous organization's legal operations team. I asked a law firm partner on the team who was the head of project management, I said, "Do you bill for the time that your team spends on project management?" Are those individuals who are not lawyers, are those individuals, I didn't say not lawyers, are those individuals on the invoice?
Before I could actually finish my discussion, the head of legal operations said, "Whatever that, I would pay that bill." Basically, he was like, "That shows me efficiency right away. You don't have to tell me about efficiency. I can see it right in front of me." There's so much wonderful low-hanging fruit that gives the opportunity to law firm lawyers who are trying to develop a competitive advantage, that this report, I hope, and I know that you guys hope, will be really helpful to them as much as it's helpful to the in-house bar.
Ari and Wendy, I have always been amazed why on the billing issue we don't take the taxicab approach, because some lawyers will argue the weakness with task-based billing is you don't know how time-consuming a case will be and how much work will be involved until you get in there. Task-based billing is not fair because one merger and acquisition may be far different than another one, or one deposition may be far different from another one. The taxicab model is, it's a combination. It's a hybrid model. If you are sitting there in bumper-to-bumper traffic, that meter is going tick, tick, tick. Now, I'm not addressing Uber and Lyft in this scenario, but there are hybrid approaches available. Wendy King, when you're in there, what are people telling you about billing and how it should go?
Oh. Here's an interesting topic, which is never black and white, right?
Yeah.
You asked me, and I just answered the question. You said you don't know until you get in there. If these things were cookie cutter and all data was the same and all issues were the same, and it was black and white, and you could have that predictability, I think this topic, which I've been a part of, I say I was a legal technologist for two decades now, for about two decades, would have been solved. The challenge is it's not cookie cutter, and you don't know until you get in there. I think your analogy, though, of the taxicab and the hybrid approach may be spot on. I don't know that we can solve this problem by trying to make it an assembly line approach with assembly line pricing, when it's not an assembly line.
You certainly have your best practices and the way that you would recommend doing workflows, but those all differ too, based on the nature of the case, the geography of the case, and I think it's a conversation that won't end anytime soon. Not a direct answer, but I think it's a we don't have the answer today because it's not an assembly line approach, nor do I think it ever will be. I mean, look at how much things change, right? It's constantly evolving. It's hard to have predictability when tomorrow you don't know what tomorrow's going to bring in terms of the next legal issue or challenge that the newest technology presents for an organization, either proactive or reactionary.
Thanks, Wendy. Ari, one of the quotes that I liked that I saw in the responses as they came in was one General Counsel who said, "Compliance is revenue." You usually think of compliance as a cost center, something that costs you money. You don't make money off it. I think, and you were there live and in person, my take on this was that this Chief Legal Officer was making the point reputational damage can often exceed the operational expenses and fines. Demonstrating compliance, especially around data privacy, can earn customer loyalty, and thus compliance is revenue. Did you see this theme reoccurring when you were talking to people? What did these GCs tell you about compliance? Because it is an important part of the job.
As issues of security, privacy, even patent protection, are becoming drivers of volatility in company valuations, this is what someone said, executive teams and boards are making the role of the General Counsel more central to the leadership. It's about understanding the risk and how the business functions. For some, compliance is part of the effort to materially contribute to the business, and as you said, that issue was just being compliant will generate revenue. It assures that you can be trusted. If you're trying to create a competitive advantage, well then, like security, non-compliance will prompt customers to shy away. That's one of the other reasons that there's this greater movement of embedding legal into the various departments rather than keeping it as this siloed organization. Legal is now value added. It's versatile. It's client service oriented, and it's business enabling.
It's connecting rather than breaking those connections and taking them piecemeal. Compliance is at the core of that because of all of these issues and because of the complexity of this new regulatory environment.
Thanks, Ari. Wendy, what are you seeing? I mean, obviously you do a lot of requests for proposal, and I assume that there's the box there to check for compliance, and that when you go in and you talk to clients, that compliance, data protection, data privacy are a real thing. Two-part question. Number one, are you in fact seeing that compliance is becoming a much bigger issue? The second part of the question is the General Data Protection Regulation from the EU or California's upcoming California Consumer Privacy Act, are these legal and legislative initiatives driving this if it is going up? What are you seeing?
We're having a lot of conversations in a lot of different ways on compliance, from a proactive measure with the regulatory requirements and compliance around how you maintain individuals' data and their rights to the data. It's certainly become more important. Not again, just from the e-discovery and making sure that that data is handled in the right way, but from the proactive measure as well. I think it's going to become an increasing topic for individuals and focus for organizations. I think there's a study that was out that showed the average fine for an organization is $25 million. Certainly not a small number, which forces the conversation to really be at the forefront for those individuals looking at the compliance and how we handle data, both proactive and reactive.
You look at corporate integrity agreements or compliance monitoring and what folks are doing, that plays a factor in business as well. I don't think compliance is in any one area. I think it's across the board for an organization, will just continue to be a very hot topic and a pointed part of the conversation.
Thanks, Wendy. Ari, when you were talking to the GCs, one thing that caught my eye was there was one general counsel who said, "On the GDPR, they're really going to be going after the big guys. They're not going after the little guys, it really is not an impetus for us to do anything." Now, this general counsel was saying, "Hey, we're not going to be slackers here. We're not just throwing hard drives out the window or what have you, and acting willy-nilly." Nonetheless, this general counsel said the GDPR was not the driver of it. Do you find, especially in the U.S., that some of the general counsel are thinking, "The Europeans aren't coming after me, ergo GDPR is not really important on my radar?
If compliance with the GDPR was lax, or if people felt like, well, it's a problem over there, then the CCPA will fill in any of those gaps.
Yeah.
Really, as you start to see other states pass legislation that also provides for some of this, and as there are examples made, given the private right of action and given any of the enforcement opportunities in the CCPA, once people start down this road, they will just end up adopting the highest level of privacy protection, and it will create this sea change. It's just that's what's going to happen. These provisions will be built in. You see websites all the time now giving notice of collecting different bits of information. It will become commonplace. Designers will just design in opportunities to protect information. While right now we're in this transitional period, once we come out of it, I think that a lot of organizations will be addressing this.
They will have technology in place, and in fact, a number have been adapting e-discovery technology or other existing legal tech tools to use as an opportunity for when they are receiving data access requests, or when they are getting other kinds of notifications. This will quickly become a much more commonly addressed issue.
Ari, you mentioned the adaptability there, that is, I think, a really important point. Talking about that adaptability, as well as how technology is just changing so much of what we do, one of the respondents noted that: I'm just going to read a verbatim quote because I think this GC said it best. "I think the internet has changed and is changing the profession. You can find answers to many legal questions online for free. As a result, lawyers need to really scrutinize and identify their value add.
Lawyers need to highlight what they are adding and figure out what others need that they cannot get themselves." I thought that was a beautiful point because as someone who has been an industry analyst and a lawyer, before the days of the internet, you really needed a learned professional to guide you through the process because the information wasn't available. Now, heck, you can probably even get the rule against perpetuities off the internet. That doesn't mean the legal profession is dead, because just because you have the information doesn't mean you know how to use it. There's that meme you've probably seen with the mug, "Please don't confuse your Google search with my law degree." This really is an issue on adaptability and how technology is changing that. I thought this response was great.
Ari, Well, first of all, number 1, are you seeing them change? Number 2, how are they going about doing it?
Look, we're in a period of perpetual pivot. There's this change that's occurring. I mean, some really interesting things are the trade environment, right? Driving a lot of disruption in a very confusing way, where people are trying to make choices. Certainly, at the end of the year, they're trying to plan for the year to come. There are some issues that change is just not necessarily working out in their favor in terms of how we can plan, and people are struggling. The best thing that people are talking about is just being nimble, being adaptable, having the law department be able to adjust as things come. One of the things I will say that I thought was fantastic, and I'm actually building a whole training series around this for next year because I thought it was such a great idea.
One of the general counsel I spoke to, when I asked about his key to success, he said, "I attribute my success to talent stacking." I said, "Oh, I'd never heard of that before. What does that mean?" He said, "Well, I've accumulated an array of skills over the course of my career, and in each in themselves, haven't been that great, or have all been valuable, but when you compile them in the aggregate, I'm really much more capable and qualified." I think that anybody that adopts that. I've created this talent stacking 2020 kind of series, and I think that that's such an important element. That was a really important takeaway for me personally from this entire project.
Thanks, Ari. Wendy, what are you seeing on this issue of adaptability? Number one, what do you see the general counsel demanding? Number two, are you finding that their lawyers are becoming nimble and adapting? I'd like you both to congratulate me on not using the word innovation, because we've had innovation thrown down our throats the past 12 to 24 months, and everyone's talking about it. This is adaptability. Are you seeing it.
I am. I think what we've talked about in the common theme here was staying in front of these topics and not becoming complacent. Innovation, I think, is absolutely the wrong word. A lot of this is becoming table stakes now. I think adaptability is table stakes. Again, things change so rapidly that impact an organization from a legal, reputational, financial perspective, that it's no place for the non-adaptable or the complacent. I just think that it's going to be a critical characteristic of any successful lawyer and, in particular, the one that is going to have a business role in their organization.
Thanks, Wendy. I think some of the things we can take, there are a couple of quotes that really sum it up. These are lawyers and executives, and the executives who happen to be lawyers. One of the closing thoughts is, "Generally, in the past, in-house counsel were passive advisors waiting for our customers to come. Today, we are strategic advisors designing processes." Ari Kaplan, your 30-second takeaway on what you got out of conducting this survey and any advice you could give going forward.
I'm just so grateful to all of the General Counsel who took time out of their schedules to speak with me. I think it's really important for people just to go through it. There's just a tremendous amount of qualitative data, advice for in-house counsel, advice for law students, advice for outside counsel, advice for service providers. I mean, there's just so many different pieces that will help dictate strategy. I hope that this report gives people an opportunity to adjust their view as they begin and continue planning for 2020. I just want to end by saying how grateful I am. Thank you to you both and to all the people who spoke with me.
Thank you, Ari. The final word from Wendy King, your 30-second takeaway.
I would echo what Ari said. I think it's been really interesting to see the responses, to see how far we've come from a legal perspective and adoption perspective and how far we have to go. I look forward to the continued conversations with clients about the way that we can use technology to help them both proactive and reactionary on the litigation and investigation sides. It's been a pleasure, thank you both.
Absolutely, rest assured, we will in fact be continuing that conversation. On behalf of the whole team at FTI, as I mentioned, Kate Holmes had a lot to do with this. Jeff Brazlin was involved. Of course, our speaker, Wendy King, Ari Kaplan to you. Of course, our team at Relativity, Angie Ocasek, my colleague, had a lot to do with putting this together. We'd like to thank you for spending part of the day with us. On the screen, you can see a link where you can download the whole survey, get the entire result. On behalf of FTI, Relativity, and of course, Ari Kaplan, thanks for being with us, for spending part of your day with us, and enjoy the rest of your day.