The announcement by the Royal Bank of Scotland that it was planning another series of branch closures was met with the expected furious backlash about ignoring customer’s needs and putting profits before service.
But beyond all the sabre-rattling, a simple truth lies behind RBS’s decision – it is closing branches because fewer and fewer people are using them, preferring instead to use online banking and mobile banking apps.
It is one example of the way that technology is reshaping behaviours and a pertinent reminder of the costs of progress.
Over the past decade, the world of financial services has been significantly transformed by what is now known ‘FinTech’. From contactless and, now, cardless payment systems to smartphone-only banking start-ups that are challenging the high street institutions for custom, technology has significantly disrupted the way that money is used, moved and managed.
We have even seen the emergence of a brand new type of currency, so-called cryptocurrencies, based on a new approach to recording transactions called a distributed ledger. Blockchain is the most well-known example.
All of this serves as a preface to say that, what we have seen happen in the financial services sector, we can now expect to see in the legal profession. LegalTech has been around for a number of years. But as with financial technology a decade or so ago, it is starting to build momentum and drive significant, lasting changes in how the legal industry operates.
There are not just useful comparisons to be made between LegalTech and FinTech. There are clear examples of where the technologies used crossover and interact. Distributed ledger is one. While Blockchain will forever be associated in the popular imagination with the rise of Bitcoin, it has many, many different uses, the majority of which are only just being explored.
One of the more established is the use of distributed ledgers to run smart contracts. Smart contracts turn transactional agreements between parties into computer code. Shared between parties on a distributed ledger, smart contracts don’t just sit there as a record of an agreement, but have the ability to automatically execute actions – such as trigger payments – in response to certain conditions being met – such as a piece of work being completed.
Once created, the code for a smart contract can be replicated many times over, customised to apply to all sorts of scenarios. Think of how quickly websites can be built nowadays using pre-coded content management systems. End users simply have to input a few personal details, tweak the content fields, and away they go. The same principle applies to smart contract platforms.
Smart contracts demonstrate just how LegalTech is changing the legal profession, and why its use will only grow. Automation has been a fact of modern life since long before the current digital revolution we are living through took hold, but has reached new levels of sophistication with the development of advanced computer technologies.
The key point about automation is that it makes lives easier and saves money. Rather than having someone type up contracts by hand, have them signed, and then have two parties remember to stick to the actions they agreed on, smart contracts manage the whole process with a few clicks of a button.
Aiding not replacing
The fear with automation is that it makes people obsolete. There is little doubt that this has been true in manufacturing industries, where mass labour has been replaced by machines. Some fear we are on a path leading to Artificial Intelligence (AI) replacing the legal expert, where software is able to process case files and come up with a decision in seconds.
We are nowhere near that. Yet. What is often misunderstood about AI as it is now appearing in mainstream applications is that it is not focused on replicating the deductive reasoning processes of the human brain. That remains the stuff of science fiction. For now.
What AI systems are extremely good at is processing huge volumes of data very quickly and identifying patterns. Rather than imitate deductive reasoning in making opinions and judgments, LegalTech AI platforms are being employed to data mine case histories, process, log and analyse transcriptions and so on.
The focus is not on replacing the lawyer, but rather making their lives and their work easier. With smart data analytics, lawyers can save huge amounts of time performing due diligence on case histories and contracts – the software comes up with the relevant information, the legal professionals make the decisions. JP Morgan has already reported cutting 360,000 hours from its lawyers’ workloads by employing such technologies.
So in short, technology is driving a revolution in the legal profession. But it is a revolution all lawyers should welcome – less time on tedious administration, more time to exercise their expertise. That is why we can expect to see things take off pretty quickly.