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Lawyers vs Artificial Intelligence

Lawyers vs Artificial Intelligence

episode 9

How lawyers are using their creativity to deliver better outcomes, despite the rise of artificial intelligence.

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Show notes

How lawyers are using their creativity to deliver better outcomes, despite the rise of artificial intelligence. With John Denton and Jodie Baker.

Episode transcript

JOHN DENTON: What I’m looking for, frankly, is the capacity to be creative, to be externally focused. And problem solving is important, but actually to have quite strong human skills. But I do think creativity is at the heart of it.

ALI MOORE: From the University of Melbourne, this is Expert Hack, a show about the changing world of work and how industry experts are finding clever solutions to tricky problems. I’m Ali Moore.

Today, despite the rise of artificial intelligence, you’ll hear how lawyers are using their human skills to deliver better outcomes.

Gay Alcorn is speaking with John Denton, the CEO of law firm Corrs, Chambers Westgarth at the time of the interview.. and now the Secretary General of the International Chamber of Commerce. He was joined by Jodie Baker from Xakia Technologies, who was in San Francisco.

Gay began by asking John what impact technology is having on law.

JOHN DENTON: I actually think that what is most evidently disrupting law is the changing demands of clients and of the people who work in the law. Technology is actually an enabler of that change. But the actual change has been driven quite clearly, by the changing demands of our clients and, in particular, their expectations.

And also, the changing needs of the people who work in the law as well. And technology enables it. But technology is actually not the driver. It’s actually changed expectations.

My firm has been in its continuous existence for over 170 years. Why we’re able to continue to exist and sustain ourselves and be successful, is because we are capable of transforming ourselves to reflect the new reality, which is that clients are the actual holders of the balance of power.

GAY ALCORN: Jodie, what do you think?

JODIE BAKER: I agree entirely that a lot of the change is being driven by the clients and that there has been an enormous structural shift towards the decline, particularly on the corporate side. And there is a reaction by the firms to that. And as John rightly points out, some firms are reacting more proactively than others in coming to the party.

I do think though that technology is enabling some of that structural shift. Technology is significantly less expensive now than it was, even five years ago. And cloud computing plays a big role in that.  So, allowing smaller teams or smaller corporate teams to access quite sophisticated technology at quite a low price means that they can be empowered to operate like mini law firms. Which really changes the engagement of those corporate legal teams with their law firms, in terms of the type of work that they ask their law firms to do.

And I think that when it comes to the shift, structural shifts in industries are often led by those early adopters, and there can be a lot of dissatisfaction. And the early adopters are the first ones to really jump on new things. But for the latent majority particularly, sometimes, they don’t see the gap until its put in front of them.

And so, we’ve got the old Henry Ford and Steve Jobs who say “you’ve got to actually show people what they need, rather than asking them what they want,” who go out and create these things and once it’s there, then people jump on board. I suspect that there are gaps in the market that other people are filling or law firms or technologies or what have you. But I also think that there is a good part of the market that doesn’t actually know what they want, until it’s put in front of them.

JOHN DENTON: We look at a lot of data which says that when you look at the relationship between law firms and their clients, clients continually say that the gap is that law firms don’t understand what it is we are trying to do, our legal service providers. What that tells me, is that the idea of client focus is important, but not enough. Client service is important, but not enough.

Because, if you look at the other data points, there has been an incredible increase in the amount of client focus and client service standards have actually risen. And yet you still talk to clients and they say but the law service providers don’t understand what our needs are. What that tells me, is there’s a big difference between client focus, client service and actually being driven by the client. And that’s actually the big challenge for law firms – is to become client driven. Frankly it’s a big challenge for professional service firms generally and frankly for technology providers as well.

Because there’s a lot of technology which is provided which is unused. In fact, if you look at the cachet of a lot of technological frameworks that are put in place with clients. Sometimes something like 80 percent of the actual value that’s supposed to be created is never realised.

GAY ALCORN: And also to you, Jodie? I mean you’ve spoken a little bit about this. I mean how will artificial intelligence impact the law and it is it already doing so?

JODIE BAKER: So, I was lucky enough to host the fifth legal innovation roundtable on Monday in Melbourne on this very question and the first part of the conversation was actually how you define AI. What changes every year. But I do quite like the definition that one of the attendees gave which is, that at the moment AI can probably just be defined as something really clever.

I think that my view on artificial intelligence in the law is that it’s still got some way to go. I think that it is changing things up quite considerably and we are seeing some really interesting work around e-discovery and around contract reviews and what have you. Certainly, the expert systems that we see it and their logic there are some really interesting projects being done. But the notion that lawyers are about to be replaced by artificial intelligence is still some way down the track.

JOHN DENTON: One thing that I find intriguing about the discussions on artificial intelligence and lawyers is a misplaced assumption by lawyers that lawyers are actually exempt from this movement, and the potentiality of it, because what they bring to the matter is their judgment.

And it’s kind of curious to me that there’s a lot of self-importance that’s sort of wrapped up in that statement because what people don’t realise is that a lot of their judgment is actually valuable, only to the extent that there’s uncertainty.

But what if that uncertainty is able to be limited by the application of algorithms used on data which actually enables prediction? Then, there’s a lot of areas where people think their judgment is critical, which on the balance of probabilities is actually eradicated by the application of effective algorithms.

So, unless you’re able to position yourself where I like to position my firm – at the really complex problem-solving end – You will find yourself asleep at the wheel as someone does actually erode, what you think is your judgment sphere, by applying – I think – some pretty good data analytics.

GAY ALCORN: Speaking of the rise of technology and AI, Jodie’s firm Xakia is an example of a non-traditional legal firm. Can you tell us a bit more about this?

JODIE BAKER: So, Xakia is really a result of a research project that I did when I was still at Hive [Legal], talking to as many in-house and general counsel as we could to understand what was missing from their suite of technology products. And off the back of that research project, where the answers were fairly consistent, we built a small prototype.

And the clients liked it, there was good feedback, but it did not belong inside a law firm. And, so we spun it out on the 1st of July last year and it’s a completely independent organisation. But, it’s technology for corporate legal teams – corporate legal operation platform is the way that we describe it. And really, it’s about just providing a very simple management tool – the equivalent of a practice management system for law firms.  And it’s had quite a lot of take up. I’m in the US at the moment speaking to you from San Francisco where we’re doing our official launch next week at the ACC conference in Washington D.C. Because there’s not a similar product really globally I don’t think.

GAY ALCORN: And are there digital opportunities to change the law in other ways? In terms of our access to the law, you know, bringing down costs for some simple procedures that people want to have and are not able to afford a traditional legal firm or traditional legal advice. What are the opportunities there in terms of access to the law?

JODIE BAKER: I think the opportunities are enormous. I think that some of the statistics that are around –  I don’t have them to hand at the moment – but the statistics suggest that there are a very large number of people who are not being serviced at all at the moment who, with the digitisation of law, will be able to access the equivalent of Doctor Google, I guess.

They’ll be able to go online and be able to search up for tools that will help them to identify what their problems are, where they might find a solution, even what some of their alternatives might be for self-implementation. I think that that opportunity is very large and I don’t think that we’ve even scratched the surface of it yet.

I have to say that I applaud the University of Melbourne and their law apps subject which certainly looks at creating opportunities to create applications for not-for-profit organisations to improve the access of the law to people who otherwise don’t have the resources to do it. But I think that it’s a huge opportunity.

JOHN DENTON: There’s a lot more work being done outside Australia than in Australia in this area though. But, it is interesting because people talk about the legal industry as an inward profession and the profession of course, when you think about our priorities, the first one is to the administration of justice.

And this whole issue about ensuring the continued support for the rule of law. A lot of that is actually about accessibility of justice. And so, a lot of work is going on now; more in the UK, I’d have to say; than in Australia about how you can facilitate access to justice through the digital platform.

And I think it’s a really useful piece of focus and one thing I’d like to do is encourage more of that thinking in Australia. I’d like us to be best practice at it, we’ve got a way to go. But there’s the opportunity that comes with the digital platform to do more about this.

GAY ALCORN: And Jodie, you’re speaking to us from San Francisco today. Tell us what’s happening overseas and in in other countries. Do you agree with John that some of the trends are ahead of us here in Australia?

JODIE BAKER: There are probably two things that I see going on. One is that structural shift that we talked about earlier, in terms of the corporate legal teams really taking a lot more work in house and being empowered with new and technologically advanced tools to do things themselves and changing the way they interact with their external law firms.

We’ve seen the rise of the CLOC consortium for corporate legal operations, which is very large here in the US and only a few years old but really gathering steam. And the whole notion of corporate legal operations as a separate function, even from the law firms, is not something that we see a lot of in Australia. But it is also growing here. I mean, Telstra has initiated the CLOC chapter in Australia and it’s gathering steam. So, I think that that trend is likely to continue in Australia. But it’s not the same size market, so it’s slightly different there, but very significant here and certainly growing in importance.

That’s probably the first one and the second one for me is really, we’re spending a lot of time in San Francisco and around the ecosystems of innovation and technology throughout 2017. For me, it has really shown me that there’s a long way to go in Australia around building those sorts of ecosystems and really supporting that legal tech industry.

I’ve been one of the initiators of a group called Australian Legal Technology Association this year.

We have 19 members. Who would have thought that there were 19 legal tech startups in Australia? And that’s been an eye opener for me, just in terms of building an ecosystem from the ground up. It’s been quite a challenge in some ways, but also very satisfying. But I do see that it’s far more progressed here in the US than it is in Australia.

GAY ALCORN: Can I ask you both about universities? What do you think their role is in this change that’s going on? What sort of skills should graduates be coming out with now?

JODIE BAKER: Universities must understand what the new professions are going to look like. Seeing the shift in the market power, understanding new career paths available to the graduates, arming them with the skills that they’re going to need and being very forward thinking about it.

So, not just reactive, but actually in some ways shaping the future. So, legal technology is obviously one of them, but also understanding that you need to say well – if there is a shift towards corporate legal, then maybe we should be training up our graduates to go straight into corporate legal. Maybe it’s not the responsibility of Corrs and other major firms to train up all these grads and then watch them go out to the clients.

But actually, you know, we need to think about whether there is a role for the universities to arm them with different skills. And there are some differences in terms of the level practice being done in a law firm, compared to the legal practice being done inside a corporate legal team. So, I think that that visionary aspect of universities understanding where those career paths might be and arming them for those sorts of things is really important.

I think the second thing is then creating opportunities for those students to explore themselves. So, hackathons are an easy thing to point to here, in terms of the legal technology and creating opportunities for them to learn and understand and explore and create ideas. But I think it’s actually more basic than that. It comes down to brainstorming, creating opportunities to come up with new ideas. Maybe even setting some boundaries around what those paths – those career paths might look like for themselves, and then allowing them to explore it and articulate it.

But you know, it just needs to be a curious world at the moment. And it needs to be that the ideas are all explored and there’s a great deal of flexibility around where the skills that they’re taught in university can take them.

JOHN DENTON:  I like to sort of speak to all the summer clerks as they come through and I also get the opportunity to speak at a lot of campuses and part of it is to understand a lot of people who are there and what they’re interested in as well. Can we align our law firm to what they’re interested in?

But the more I talk to them, the more I realise how challenged they are, because the institutions that they’re working at aren’t really thinking about the future. They’re thinking about how to get them a job. But they don’t really understand how to build a career in the law.

And I think some of things Jodie said are incredibly powerful. What I’m looking for – frankly – is the capacity to be creative, to be externally focused. And problem solving is important, but actually to have quite strong human skills. The reason is – you think about my comments before about the potential rise of machine thinking, cognitive applications, I mean – you know – unless you’re capable of operating at a particular level, your capability might be redundant over a period of time. And that’s OK. But, if you can reinvent yourself from then on, that’s great as well. So that requires quite human strengths. All sorts of things. So, I look for a lot of things. Absolutely, I look for strong and outstanding technical legal skills. But, I think it’s fair to say that’s not enough. That is just not enough anymore. And yes, these are the sorts of things that I look for – different organisations will look for different things.

But I do think creativity at the heart of it. Problem solving is going to be a huge potential opportunity for lawyers in the future, particularly given the changing frameworks in which we’re operating on a global basis. There is going to a whole lot of new thinking required to how we operate. A whole lot of creative problem solving required. A whole lot of new rules and regulations thought about, which are much more flexible for this new context.

I suppose I’m being a little bit ambiguous about it all, but there will require quite creative lawyers. They’ll be people of real value in the future.

ALI MOORE: If you found this discussion valuable, you’ll also enjoy the very first episode in the series. Were you’ll hear why some of the best entrepreneurs say no to opportunities and how being selective can help you focus on what matters.

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