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14 November 2016
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NEW MANIFESTO FOR HOMEBUYING REFORM By Michael Cross » Streamlining
Eddie Goldsmith: ‘blue-sky thinking’
money-laundering rules, leasehold reform and a big push towards electronic conveyancing are identified as priorities in a manifesto from conveyancers to improve the homebuying process in England and Wales. In a paper to be published today, the Conveyancing Association, which represents 38 conveyancing firms, also proposes the use of ‘skinny electronic home reports’ – a cheaper and more relevant version of the home information packs introduced in 2007 and abandoned three years later. The association notes that transaction times now average 12-14 weeks from offer to completion. ‘Overall there is dissatisfaction expressed by most stakeholders as to the speed, transparency and certainty of the home-moving process.’ A comparison with three usually speedier jurisdictions, Scotland, Australia and the United States, found that the upfront provision of information was ‘endemic’. In Australia, e-conveyancing became a reality this year, with the first electronic exchange of contracts in August. First steps towards creating a ‘data sharing, collaborative, digital home moving service’ would include: O Making one stakeholder in each transaction responsible for antimoney laundering identification of all parties. This would improve secu-
rity and prevent duplication ‘which causes delay and frustration’. O Collating property and title information to identify any missing documents. A ‘skinny e-home report’ could ensure that search results are available at the point of marketing. O As in the US, requiring a legal commitment on offer, with a five-day cooling off period. O Reviewing the standard conditions of sale to require completion monies to be sent through the day before completion to provide certainty on the day. O Amending the Commonhold & Leasehold Reform Act 2002 ‘to resolve the unreasonable costs and delay associated with the leasehold sales process’. On electronic conveyancing, the report notes progress in several jurisdictions, led by Denmark. In Australia a ‘middleware’ system linking conveyancers’ case management systems with outside agencies achieved the first electronic exchange of contracts in August this year. Association chair Eddie Goldsmith said that some of the ideas may appear to be pure blue-sky thinking: ‘But we should not lose focus of the fact that 20 years ago no one would have thought in 2016 routine communication with clients would be via email.’
Rethink SDT standard – Leveson By John Hyde » The prospect of applying a lower standard of proof when prosecuting solicitors has taken a step forward with implied backing from the senior judiciary. Lord Justice Leveson, president of the Queen’s Bench Division, said last week the current criminal burden of proof at the SDT needs to be looked
at again after hearing the case of an immigration adviser. Huseyin Arslan, a non-solicitor, was originally banned from working for a regulated firm by an SRA adjudicator – a decision quashed by the Solicitors Disciplinary Tribunal. Leveson ruled that the adjudicator’s decision should be reinstated.
The High Court hearing partly hinged on whether Arslan, who was accused of creating attendance notes and altering original documents, should be prosecuted based on the criminal standard of proof. Leveson’s judgment – and indeed the adjudicator’s original decision – was Continued on page 2
14 Legal Geek: conference showcases London as hub for lawtech startups
17 Roundtable: What needs to change for solicitoradvocates to have equality of esteem High Court ruling on referendum will affect law firms and the economy p13 12 Comment 21 In Practice 23 SDT 26 Jobs 32 Obiter
TECHNOLOGY
14 FEATURE
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14 November 2016
Reaching for new horizons Our monthly column on trends in legal technology
Joanna Goodman
Legal Geek showcased London as a global hub for lawtech start-ups
T
he Legal Geek conference brought representatives from all parts of the global lawtech community to London’s Shoreditch. A strong press contingent intensified the feeling that change was in the air and this was unlike other legal and legal IT conferences. As Legal Geek founder Jimmy Vestbirk explained: ‘This is not about selling; it’s about giving and having the right mindset – and having fun,’ reiterating his mission ‘to make London a global hub for lawtech start-ups’. The programme covered five key themes: artificial intelligence (AI); the international lawtech start-up scene; blockchain; innovation and cultural change; and lawtech investment.
development of legal AI to refrigeration – making the technology accessible and affordable resulted in its wider use. Waisberg argued that rather than ‘taking lawyers’ jobs’, AI-powered legal services would create more work for lawyers as people were more likely to utilise services that are delivered in a fast and cost-effective way. He brought an ice box on stage with him to illustrate his point. It is worth underlining that not all the start-ups showcased involved AI. They covered processes and people as well as technology, and reflected the cultural change highlighted by West in his opening presentation. The innovation session included Miranda Brawn’s inspirational work in diversity, Sara Morgan of Axiom highlighting the value of a salesfocused approach, and Mary Bonsor introducing F-LEX, a start-up which facilitates placing students in temporary paralegal roles.
AI and beyond
New beginnings
This year’s hot topic – artificial intelligence – was presented by Nick West from Mishcon de Reya and Anna Ronkainen from TrademarkNow. West focused on creating the right market conditions and law firm culture for wholesale AI adoption. Ronkainen, who combines running a successful start-up with teaching a university course in legal technology, showed us the progression of legal AI from research to practical application by TrademarkNow. We then heard short presentations from legal AI vendors that have gained a stronghold in the UK market: RAVN, Leverton and Kira Systems, whose founder Noah Waisberg compared the
Although the Legal Geek conference was designed to support lawtech start-ups, it signifies new beginnings for the legal industry. This was demonBig law has strated by the fact a lot to learn from the start- that it was sponsored by three key pillars up community of the legal establishin terms of ideas ment: the Law Sociand energy, and ety; magic circle firm we also have a lot Freshfields Bruckof knowledge to haus Deringer; and contribute – Isabel global legal publisher Parker, Freshfields and software supplier Thomson Reuters. The programme featured Richard Goold from global consultancy and legal services provider EY and Eleanor O’Neill from legal technology supplier Workshare. David Curle, director of market intelligence at Thomson Reuters Legal, provided an overview of
THOUGHTRIVER Taylor Vinters, a mid-market firm based in the Cambridge tech-cluster, acted as incubator for ThoughtRiver, a home-grown start-up which applies risk evaluation contract management in a way that supports compliance and decision-making. It was founded by Taylor Vinters partner Tim Pullan. Taylor Vinters has a minority stake and provides financial, strategic and practical support. ThoughtRiver is run independently and has the freedom to contract to other law firms and corporate legal departments that
are not clients of the firm, and therefore the potential for significant growth. Taylor Vinters’ chief executive Matt Meyer sits on the ThoughtRiver board: ‘Collaboration is the best way for a mid-market firm like ours to tap into innovation and the incubation model gives us the best of both worlds. We have access to innovative thinking and technology, and by embedding it in our organisation, our lawyers get to apply it on a daily basis and help to transform the legal services delivery model.’
14 November 2016
the lawtech start-up movement which he described as ‘a global horizontal phenomenon’. We then heard from lawtech community leaders from France, the Netherlands, Canada and Australia. These were a mixture of entrepreneurs – Fréderic Pelouze of start-up WeClaim also founded the Paris Bar Incubator – and innovators from established firms who are patrons of change – notably Jeroen Zweers from Kennedy Van Der Laan, the first non-lawyer to be shortlisted in the FT Innovative Lawyers Awards, who set up the Dutch Legal Tech meetups and awards. This was not about start-ups as an alternative to the legal establishment; rather it was about bringing together different elements for their mutual advantage. Aron Solomon from Law Made in Toronto referred to the interplay between the ‘digital Davids’ and the ‘enterprise Goliaths’. ‘It’s not a conflict, it’s a dance,’ he explained. As Curle put it, law firm leadership gets it – particularly in the big, international firms. And so does the new generation of law students whose educational programmes are starting to adjust. It is the generation in the middle that is the problem. Curle’s comment was reflected by the Legal Geek demographic. Most attendees were not from law firms and there were just a few representatives of firms outside the UK top 50. One mid-market firm that bucks this trend is Taylor Vinters, which incubated AI start-up ThoughtRiver. However, there were plenty of attendees from start-ups at various stages of development, as well as existing and prospective investors. And there was a big queue at Freshfields’ Dragons’ Den installation, where people had the chance to pitch their ideas to two of the firm’s partners. Law for good
Pro bono is an important part of the Legal Geek community and philosophy, and the conference was preceded by the second Law for Good hackathon. This looked at creating solutions for legal advice ‘deserts’ – the fact that in more remote parts of the country, people have problems accessing legal advice. Many start-ups showcased at the event (particularly the newer ones) have adopted a hackathon-style approach to legal service delivery. The fundamental challenge is time – hackathon teams have 48 hours to brainstorm a great idea and a way of delivering it. A successful strategy for achieving this is to identify a common pain point and a new way to tackle it that will make a significant difference to the business outcome. RAVN, Kira Systems and Leverton are just three of many start-ups bringing AI to due diligence, and contract creation and comparison. Others are applying legal engineering and legal service design to law firms’ perennial challenge of managing high volumes of documents. Show us the money
Funding is a key element of the start-up challenge. This was tackled head on, with Vestbirk’s announcement of a Legal Geek incubator and working space for start-ups, and Law Made’s intention of raising a $20m start-up fund that will also offer hands-on support and advice. Law Society director of innovation Pete Nussey spoke of the Society’s important role in promoting legal innovation and helping members access the latest legal tech developments. And Thomson Reuters has a long history of acquiring promising legal technology offerings. The final discussion turned to the investors that are making change happen. Investment activity in the legal sector generally and legal technology specifically has been increasing steadily for a few years, but its impact was been relatively low-key
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TECHNOLOGY 15
TRADEMARK NOW PHOTOS: LEGAL GEEK
TrademarkNow was launched in Helsinki by Anna Ronkainen (pictured) and three co-founders. In just four years it has grown into a successful international business. ‘TrademarkNow was one of the first lawtech start-ups in Europe to raise external funding – only Peppermint has more,’ says Ronkainen. ‘Our seed investor was in Finland and angel investors Balderton Capital enabled us to expand.’ CEO Mikael Kolehmainen was a trade mark attorney who was frustrated by the slow, painstaking trade mark clearance process. Ronkainen’s background in linguistic software development and her research into AI and law was a perfect fit to create a system that takes the ‘heavy cognitive lifting’ out of trade mark review and clearance. It calculates how close trade marks are to each other and presents the user with a percentage figure. Her presentation explaining how it works can be found at: tinyurl.com/pedlj5q. TrademarkNow cuts research time in half for global clients, which include Carlsberg and Roche, as well as branding agencies and company naming consultants. The user interface is deliberately straightforward: ‘Our design goal was to hide the complexity, as it is not relevant to the users and we were able to do this because trade mark searches have specific parameters. The only variables are the trade mark, the product and jurisdiction. The rest of the data we analyse is open and shared.’ TrademarkNow operates a cloud-based subscription model – it is looking at introducing a pay-per-search model which suits some law firms better. Ronkainen has some tips for start-ups seeking VC funding: ● Make sure your idea is solving a real problem. ‘I advise law students to gain work experience in a law firm or a start-up and learn from other people’s mistakes.’ ● Once you have an idea, connections are very important, particularly for seed funding, so keep networking. ● Ideas are overrated and execution is what counts. If the idea isn’t perfect you can always tweak it later. ● Focus on creating a viable prototype, rather than a perfect pitch. Don’t expect to get funding based on a PowerPoint.
until the recent explosion of global lawtech start-up communities. ‘Law looks like a large pile of money where not a lot has changed,’ observed Suranga Chandratillake, a partner at Balderton Capital, which was an early investor in lawtech, supporting the international expansion of TrademarkNow in 2012. Balderton is looking for more opportunities in legal and is particularly interested in teams that include lawyers as well as technologists – people with firsthand experience of the issues they are looking to address. Chandratillake is founder of blinkx and former US chief technology officer at Autonomy, whose alumni are particularly prominent in the lawtech start-up space and include the founders of RAVN, and Invoke Capital which is behind Luminance. The investment session finished with an impres-
sive all-female panel – Anna Hyde of Bethnal Green Ventures, Vanessa Cowling of VentureFounders and Marie Bernard of Dentons Nextlaw Labs – which funded ROSS Intelligence, creator of the first legal virtual assistant. A new consultancy model?
One observation from Legal Geek was the vertical nature of lawtech start-ups in that they typically address narrow pain points. As Pelouze of WeClaim observed, ‘AI is unbundling legal services’. This is not new; Richard Susskind predicted it in The End of Lawyers? But as AI unravels more processes, the latest developments in the space indicate what could be termed ‘rebundling’, which recognises the value of combining different resources in new ways with the potential to create new offerings. Continued on page 16
16 FEATURE Continued from page 15 Clifford Chance, which introduced Kira Systems into its mergers and acquisitions (M&A) practice, recently announced that it was also collaborating with Neota Logic to develop an internal tool for assessing the impact on regulatory rule changes on financial institutions. Unlike an automated decision tree, the Neota system can process nuances and exceptions beyond a yes or no answer. ‘It allows you to codify complex thought processes,’ explains CIO Paul Greenwood. ‘The tool asks a series of questions, but the answer to legal questions is often “it depends”. The Neota system can deal with this and provide a clear answer. For example, it will tell you whether you comply with certain regulations, and if you don’t what adjustments you need to make in order to achieve compliance.’ Clifford Chance is the first law firm – or certainly among the first – to invest in multiple AI tools. This indicates that firms are moving towards combining human lawyers and intelligent tools. Greenwood and his team are assembling a delivery toolkit which will include multiple intelligent offerings. He is working with Oliver Campbell and the firm’s continuous improvement team to introduce these into practice groups and processes across the business. Greenwood believes that AI and other innovative technology resources require a different kind of integrator. ‘The two key skills are machine learning and data science, and law firms tend to employ data analysts rather than data scientists,’ he says. This may well shift the legal IT consultancy model. For example, there is a gap in the market for consultants that have genuine AI expertise. Drew Winlaw, legal engineer at Wavelength Law, which was showcased at Legal Geek, highlights the need for people who are familiar with advanced technologies to develop legal service design that combines cutting-edge offerings in different ways. ‘It’s about applying an engineering culture to legal service,’ he says. Friendly conversational commerce
In the footsteps of Joshua Browder’s DoNotPay series of robot lawyers, challenging parking tickets and dealing with housing issues, 13 November saw the official launch of LawBot, the brainchild of four Cambridge students. LawBot is an AIML-based (artificial intelligence markup language) chatbot that provides free advice to victims of crime. LawBot tackles a broader range of legal issues than DoNotPay, as it covers 26 criminal offences and has a slightly different focus. As it states on its website, it does not replace a lawyer. Rather, it helps people find out how the law applies to them (for example whether what they are concerned about is actually a crime) and provides guidance on what to do next, from locating the nearest police station to seeking professional advice. The fact that LawBot is receiving a lot of media coverage at this early stage is an indication of the legal sector’s appetite for change and its requirement for straightforward, user-friendly technology. ‘LawBot is as empathetic as humanly possible’, says the press release, adding that ‘no two conversations are the same’. One lesson from the rise of conversational commerce in the form of chatbots and virtual assistants, is that however complicated the underlying technology (neural networks, machine learning, natural language processing and more) and however complex and ambiguous the subject matter, userfriendliness remains a critical success factor. And Legal Geek, which successfully brought together many diverse elements of the legal market, was the friendliest legal conference ever.
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14 November 2016
FRESHFIELDS’ DRAGONS’ DEN
Freshfields’ Dragons’ Den-style installation offered an opportunity to pitch start-up ideas to two of the firm’s partners. It was organised by Isabel Parker, director of legal services innovation and innovation architect Milos Kresojevic, who led the Fresh Innovate team that won the first Legal Geek Hackathon. ‘Big law has a lot to learn from the start-up community in terms of ideas and energy, and we also have a lot of knowledge to contribute. That symbiosis is important to our innovation efforts,’ says Parker, echoing the David and Goliath collaboration analogy from Law Made’s Aaron Solomon. There was no shortage of enthusiasm, with ideas ranging from gamification to costs management. The partners were particularly impressed by an impromptu pitch from LSE student Siqi Chong, who had an idea for enabling law firms to recruit from a more diverse trainee base. Another interesting pitch was for a supply chain app to check whether procurement complied with anti-slavery regulations. Kresojevic explained that this was not just about technology, but the partnership potential to offer legal advice when the app identified compliance-related issues. The Dragons’ Den installation enthused the partners and boosted engagement among associates, two of whom presented on blockchain. ‘Law is changing and technology is moving away from the IT function, and associates want to get involved in the business,’ Parker observes. ‘So we have established an associate forum to generate ideas and we buy or build technology that supports their business cases.’
F-LEX When F-LEX founder Mary Bonsor (pictured) was studying law, temporary paralegal work that helped pay her way through law school also enabled her to get the experience she needed to win a training contract. Later, as a property litigator working next door to a law school, she realised that law students represented a tremendously undercapitalised resource. F-LEX (f-lex.co.uk) is an online portal that connects law students with law firms to enable them to get the same valuable experience that Bonsor used to springboard her career. Bonsor and her technical co-founder got together with Legal Geek’s Jimmy Vestbirk, who wanted to walk the talk by getting involved with a practical start-up. Vestbirk explains that F-LEX represents a win-win for all parties. ‘There’s an over-supply of students, who represent a valuable – and flexible – paralegal workforce that needs to respond to fluctuating demand.’ F-LEX will be based in Legal Geek’s new incubator space in London. There are also plans to set up in Manchester, Belfast and Glasgow, where many firms conduct their paralegal work.