However, that optimistic outlook didn’t necessarily translate into new tech adoption, as fewer small law firms adopted new technologies in 2022 than in either of the previous two years. What small firms did focus on, however, was supplementing and formalizing technologies that had been recently adopted, such as video conferencing platforms that were pushed into use during the pandemic. Further, there’s reason to believe that as small firms anticipate a business boom in 2023 and beyond, business development and marketing upgrades are firmly on their radar.

Just 41% of small law firms adopted new technologies in 2022, according to the report, which was down from 50% in 2021 and 45% in 2020. That decrease in new tech adoption may largely be a function of technology budgets that were static — 78% of small law firm leaders said their budget for legal-specific software in 2022 was unchanged from the year prior, and similarly 82% said their budget for non-legal-specific software also was unchanged. A higher proportion of firms had reported increasing budgets for both types of software in 2021.

A more status quo state of being didn’t surprise Stephen Curley, former chair of the American Bar Association’s GPSolo Division and principal at the Connecticut-based Law Offices of Stephen J. Curley. At his firm, technology spend largely focused on bolstering the use of recently adopted technologies, such as Zoom, Curley says.

“Some of the investments that I made back in 2020 that were more or less done in an ad hoc or an emergency basis, I just backed up,” Curley explains. “I didn’t branch out into something new or different come ‘21 and ‘22.”

Focusing on business development & marketing

When small firms did plan tech investments, however, the report found that business development & marketing priorities played a bigger role than ever before. For example, the percentage of firms planning on purchasing billing & invoice software rose from 6% in 2021 to 18% in 2022. The firms investing in marketing software or a firm website, meanwhile, rose from zero of the 80 respondents in 2021 to 14% of respondents in 2022. These shifting tech priorities mirrored a rising goal for small firms: To grow the size of the firm, which respondents ranked as their top firm goal for the first time.

Part of the reason for these increases could be simple: the emergence of a larger potential client base since the pandemic, Curley notes, adding that previously, as an attorney located in Stamford, Conn., he focused his business development & marketing efforts on clients in his immediate vicinity and out of his local courthouses. Now, with virtual meetings and remote court proceedings, it was possible to take on business in other areas of Connecticut, such as in the state capital of Hartford.

“The reach of a solo who has expertise in those areas isn’t necessarily confined to where you can drive or get to on a Monday morning, when it might have been five years ago,” Curley explains. “Now you can have a more statewide practice, and you can be competitive in other regions of the state that you wouldn’t have otherwise been able to thoughtfully do.”

Curley doesn’t see remote proceedings ending any time soon, indicating that he was planning on continuing to invest in video and other related technologies. Indeed, the report echoed this point: More firms than ever before (73%) said that more than 10% of their initial client meetings were done remotely. More than two-thirds also said they preferred having marketing events, product trainings, and sales & renewal conversations with outside vendors in a virtual setting. And while the proportion of firms with more than 10% of attorneys working remotely dipped slightly from 2021, the survey still reported more than half of firms (60%) with that level of attorney remote work.

Taken together, the report paints a picture of small law firms that are conscious that changing business development and legal practice strategies is necessary for the evolving legal world and are solidifying their efforts to do so.

Not surprisingly, this technology adoption is not only taking place among younger, potentially more tech-savvy attorneys, but also among more seasoned attorneys who find themselves at the frontlines of technology now that the virtual legal world has proven to not be a fad, Curley says. “I think, to a degree, those who didn’t throw in the towel and are still practicing are going to find themselves more and more wedded to it by choice or otherwise.”

And particularly among attorneys who are a decade or more into their career and may be at the peak of their revenue-generation power, it’s even more crucial to keep up with the changes. “If you’re not up to speed on that technology, you’re losing your edge and you’re losing the ability to maximize the most productive years in your career,” Curley adds.

In a May decision from the US District Court for the Southern District of New York, Upsolve, Inc. et al v. James, Upsolve, a nonprofit that helps individuals file for bankruptcy for free, challenged the state’s application of the unauthorized practice of law to other trained professionals. To help low-income individuals facing debt collection navigate and respond to their suits more readily, Upsolve launched the American Justice Movement program in January, which trains professionals to offer complimentary legal advice about whether and how to respond to debt collection lawsuits. Specifically, the volunteers sought to help New Yorkers fill out checkboxes on a one-page answer form provided by the State of New York to avoid automatic default.

In the Upsolve case, the New York Attorney General argued that such guidance was the unauthorized practice of law, but ultimately, the judge ruled that those rules did not apply to the program because the legal advice was protected as speech under the First Amendment. The court also stated that the advice mitigated the risk of harm to the consumer while addressing a significant legal problem area, further in favor of the decision.

In our new column, NextGen Justice Tech, by Kristen Sonday, we will take a look at the people, trends, and technology shaping the future of access to justice.

The ruling is monumental because it allows legal professionals to provide guidance on completing legal forms that might be applied to other areas of law, including through online tools that can reach exponentially more individuals.

“By ruling in favor of Upsolve, the Southern District of New York… established a new First Amendment right in America: the right for low-income families to receive free, vetted, and accountable legal advice from professionals who aren’t lawyers,” said Rohan Pavuluri, Upsolve’s Co-Founder and CEO.

If further applied to online forms and filing apps, then tech companies, court employees, and other volunteers would be able to assist people with basic questions about whether and how to respond to government requests, vastly expanding the number of people who can help. For individuals who are too afraid or uncertain of navigating such services on their own, this support would provide peace of mind and tangible next steps to assist significantly more low-income folks in managing the legal process.

The “sandbox” model

The implementation of state-run legal tech sandboxes is another opportunity to spur justice-related innovation. Utah was the first state to launch such a sandbox in August 2020, in which lawyers and legal professionals can develop and promote new legal solutions under the supervision of the state’s Supreme Court. One year in, the Utah Supreme Court had approved 30 companies, including those that created initiatives to provide individuals help completing court forms and receiving legal advice via chatbot.

The sandbox concept helps mitigate risk for justice tech founders since they’re building and testing ideas alongside a legal authority. In addition, through this model, “justice technology companies can partner with authorized legal services providers to offer consumers actual legal advice. Attorneys are the most obvious partners, but authorized document preparers, among others, are an often-overlooked partner,” says Natalie Knowlton, Founder of Access to Justice Ventures.

Finally, the Association of Professional Responsibility Lawyers (APRL) has made a powerful recommendation to update the American Bar Association’s (ABA’s) Ethics Rule 5.5 and permit lawyers who are admitted in any jurisdiction to be able to practice across others. “Our proposal advocates that a lawyer admitted in any United States jurisdiction should be able to practice law and represent willing clients without regard to the geographic location of the lawyer or the client, without regard to the forum where the services are to be provided, and without regard to which jurisdiction’s rules apply at a given moment in time,” the APRL wrote in its letter to the ABA president.

This change would be significant for justice technology companies and non-profits in that their lawyers would be able to serve individuals across jurisdictions, regardless of lawyer or client location. Justice tech companies would save time and money by being able to serve more individuals virtually, and with a leaner staff, could free up capital for other initiatives. For tech companies that currently have to hire staff who are licensed in each state in which they want to provide lower cost legal services, this reform would be game-changing.

“As a startup, an update to Rule 5.5 would allow us to move much faster in expanding our services to those in need,” says Erin Levine, the Founder and CEO of HelloDivorce. “We would be able to hire and train fewer, high-quality lawyers that provide consistency in our services across jurisdictions, as well as quickly build out subject matter expertise that can increase the number of clients served.”

Further, under this scenario, legal services organizations would be able to refer pro bono clients to attorneys across the country, making those referrals more efficient and potentially better aligned. The rule also would greatly enhance access for folks in rural areas, as they often are limited to those lawyers in nearby metro areas who might work on their matters.

By being able to access legal assistance from anywhere in the United States — via in person or online, through lawyers or other approved professionals — the magnitude by which the legal profession could greatly help those in need through better legal reforms is significant for the justice tech community and underserved citizens across the country.

At times, however, this blind focus on achieving that singular objective could actually lead to a mismanaged AI process that doesn’t take potential biases into account, researchers say, adding that these biases could have been baked in the AI all the way back at the data collection stage. As a result, the idea of instituting fairness metrics into AI development is starting to gain popularity in the tech community — not only for ethical and social reasons, but to ensure a more complete end product emerges from the AI processes.

The idea of fairness within AI comes from the idea that not all data is created equal, whether it’s measuring human populations or words in a legal document. If an AI algorithm is measuring the potential risk within a procurement contract, for example, the context matters, whether that contract is procuring coffee mugs or nuclear material. If it’s measuring whether a public economic policy is being applied equally across different races, it matters whether the population data is New York City or the rural Midwest. Fairness in AI means planning for these differences in data to make the end result representative of the goal that developers are actually trying to have the AI process tackle.

Sometimes, however, modern cost and time considerations can get in the way of fairness, says Cao (Danica) Xiao, vice president of machine learning and Natural language processing (NLP) at software company Relativity. Xiao came into the legal industry recently, but she previously spent time as an AI research leader in the healthcare and technology fields. When discussing what fairness means when it comes to legal AI development, Xiao draws a parallel to a healthcare development with which many are now familiar: the COVID-19 vaccine.

A December 2020 study from MIT revealed that despite the COVID-19 vaccine efficacy figures touted by providers Pfizer and Moderna, the true efficacy of the vaccines varied highly by race. The study measured the number of people whose cellular immune system was not predicted to robustly respond to the vaccine; and those figures varied wildly by race, from less than 0.5% of white clinical trial participants without a robust response up to nearly 10% of Asian participants.

The issue, Xiao says, is one of initial sampling. White populations tend to be overrepresented in vaccine and drug clinical trials due to a number of factors, including education and income level, proximity to news promoting the availability of trials, and sheer population size in the US. But many clinical trials, particularly for a vaccine as time-sensitive as COVID-19, tend to have one constraint that rules over all: the time it takes to recruit trial participants.

“So if we only want to minimize time, then the majority of cases, the majority of patients and people we recruit to the trial, they represent the majority group of the population,” Xiao explains. “That’s a fact that we cannot avoid.” As a result, the trial’s results will be skewed towards that overrepresented group.

Awareness of those differences can go a long way, however, whether in developing healthcare trials or creating representative data samples to run against an AI algorithm. That’s why, while Xiao concedes that she’s heard the legal industry is largely behind the healthcare industry in its adoption of AI technologies, she’s more interested in changing how legal organizations approach artificial intelligence before ever running a single algorithm.

Tools to lessen AI bias

Drawing from AI development in other industries, there are a number of fairness metrics that those data scientists exploring legal AI can take into account up front. A simple one is identifying subgroups early on to make sure there are representative populations of each type, be it demographic-centric subgroups such as race or gender, or contextual subgroups such as various types of matters across a firm.

A slightly more complex metric that Xiao points to is known as privacy-preserving federated learning — the idea that researchers should consider data sets from multiple locations, lessening the bias that occurs in each individual data set by combining them in a federated manner. “We train a local model from each location, but we don’t use the local model to represent the total behavior,” Xiao says. “We train a global model on top of the local model, and we will adjust the parameter of the model to make sure the final global model will consider each different heterogeneous pattern, and the web will be equally good for different populations.”

Fairness in AI means planning for differences in data to make the end result representative of the goal that developers are actually trying to have the AI process tackle. Sometime, however, modern cost and time considerations can get in the way of fairness.

Using data science techniques, there are also ways to amplify rare outcomes, which are crucial to find in healthcare and law alike. Or put a different way, if the purpose of a particular AI algorithm is to find a needle in a haystack, it’s important for the needle to stick out rather than be dismissed as noise. These rarities can also identify anomalies that are important to investigate further. The goal of rarities detection is “to amplify the pattern in those rare samples to amplify their voice, to boost their patterns, to make sure our final model will be able to capture those patterns and will learn the patterns in those data,” Xiao notes.

For legal organizations dipping their toes into AI for the first time, perhaps the most straightforward way to lessen bias in AI models is to make sure data sets are up to date. For example, if you are looking at a natural language processing test that links women to their profession and the training data comes from 20 or 30 years ago, professional titles for women may look a lot more different than they do today.

This is not only a question of fairness, Xiao says, but one of correct outputs. “If we only test the model against the old data, we might see lower accuracy,” she adds. “We need to consider those new trends and consider those new advancements and all those inclusion metrics in the model, and the model will be more and more accurate moving forward on the future data.”

As AI models become relied upon for more and more legal and professional work, particularly as technology’s capabilities for analyzing data and making predictions continue to grow, it’s crucial for the legal industry to adopt fairness methodology now and develop fairness metrics into AI development early.

“When we make a prediction, we need to consider this advanced context information to make sure the prediction is more accurate, but it will be a long process,” Xiao says. “We need to continue improving the solution.”

Indeed, the two events in which I participated each offered a key, primary themes — deep security educational content offered to those in the legal technology realm for LegalSEC; and product awareness for current and prospective iManage customers at ConnectLive — as well as the usual parties and ubiquitous panels for all attendees.

However, over and above the expected content, these events featured a unique set of activities designed to motivate professionals to get out of their basements and living rooms and back in an environment that can better foster collaborative learning and skills expansion, such as workshops, focus groups, TED talks, networking sessions, and more. In short, it seem, at least to the organizers and many attendees, that it was time to get back to serious work.

Here are some highlights of some of the innovative tactics used to enhance the learning experience and engagement level at each conference.

LegalSEC Summit

SAN ANTONIO — Workshops were a key element of the LegalSEC Summit, with one full day of the conference dedicated almost solely to workshop content.

For example, one morning session, Using Your Work Behavior DISC profile to be More Influential and a Better Team Member asked participants to complete a behavioral self-assessment tool prior to the conference, with discussion of the results occurring at the workshop. The goal was to establish a performance development framework to help attendees understand their leadership styles and improve their workplace teamwork.

To summarize briefly, the DISC process was as follows: Prior to the conference, attendees self-identified, via the response to scores of questions, a ranking score in four areas: Dominance, Influence, Steadiness, and Compliance. This helped participants understand their “work styles” via comparisons like these below:

• • • Assertive vs. Reflective
    • Optimistic vs. Realistic
    • Predictable vs. Driving
    • Complaint vs. Pioneering

During the workshop, discussions and exercises provided guidance to help participants understand both their greatest strengths and developmental opportunities — crucial topics that are unfortunately rarely addressed in the day-to-day work lives of deep technical professionals.

In the afternoon, focus shifted back to core security content through a group play of Backdoors & Breaches, an incident response card game, from Black Hills Information Security and Active Countermeasures. The main goal of the game is to help security professionals conduct incident response tabletop exercises and learn attack tactics, tools, and methods in an interactive manner. Essentially, attacks within the game are triggered by an Incident Master, a combination of dice rolls and procedure cards occur, and there is an ability to use what are called Inject cards to add chaos into the game and facilitate further conversation. Ultimately, there are determinations made about actions taken by a Defender. Throughout the process, the game serves as a teaching tool about the different tactics and defensive actions one takes within the cybersecurity function.

The event’s keynote speaker, Kenya Parrish-Dixon, the General Counsel and the Chief Operating Officer for Empire Technologies Risk Management Group and an expert in information governance, cybersecurity, and e-Discovery addressed stepping into a leadership position when an organization is in chaos. In her speech, From Chaos, Opportunity, Parrish-Dixon reminded attendees about the value of continuous learning and how a combination of divergent assessments can help identify issues and reduce chaos. “The opportunities that presented themselves to me often came when organizations didn’t have the internal expertise to resolve problems,” she said. “Stepping into that chaos has led me to greater heights in my career and will lead you to better opportunities as well.  Don’t shy away from problems — be the leader that the moment needs.”

All in all, the LegalSEC Summit’s focus on soft skill development and security issues in a game theory approach within the context of multilateral workshops gave the event a unique flavor, and I believe enriched the overall experience for attendees.

ConnectLive

CHICAGO — ConnectLive 2022 is iManage’s networking and information update event for its customers, partners, product experts, and users. As such, it exists most as an opportunity to convey the product roadmap, hold discussions on company strategy, and, importantly, facilitate the collection of feedback from clients on product issues or requests.

Yet, it was within the realm of client feedback that ConnectLive used many tactics to solicit information in new ways that proved most interesting and offered useful strategy suggestions to attendees. Focus groups and opportunities to pose questions to panelists in small groups or one-on-one formats were used with the idea that by creating a variety of input types, the quality of the feedback received would be enhanced.

Sharing data with participants was also done in different ways. In addition to the traditional panels and roundtables, other formats such as TED-style talks were leveraged to pass knowledge along in formats more consistent with how we all receive information today, specifically in shorter bursts of concise, denser messages.

On a personal level, I enjoyed the sessions outlining the iManage development roadmap, and was able to participate as a panelist speaking to building a business case for moving to the cloud. Some of the compelling reasons for such migrations include a desire to outsource certain elements of technical support to experts, improved security, and move to a fixed monthly expense.

Summing up

It was illuminating to see how both ILTA and iManage executed their vision of delivering content, albeit in different ways, to enhance the conference experience and make the most of the less frequent face-to-face time many legal professionals have together. Organizers went to great lengths to expand the manner in which conference participants received content and interacted with the various presenters, making each event a more interactive and useful session than the more traditional conference experience.

It would be heartening to see this model followed going forward as more in-person events make their way back to the forefront.

The intersection of compliance with tech has created a need for expertise and essential coordination across firms while involving artificial intelligence, big data, data privacy, cybersecurity, and algorithmic trading, to name just a few.

Financial service firms must now fully integrate these technologies and demonstrate that the activities employing them meet regulatory requirements. For compliance professionals, it has become essential to understand how the technologies work as well as their limitations and vulnerabilities. It can even help to know the computer code that went into creating them.

Several recent enforcement cases and regulatory initiatives underscore the need for compliance departments to become more tech savvy by taking steps that include technical coordination across the company, embedding technologists within compliance teams, or increasing the tech skills of individual compliance professionals.

DOJ emphasis on data

Deputy Attorney General Lisa Monaco gave a speech last month outlining ambitious plans being embraced by the Department of Justice (DOJ) to fight corporate misconduct. Among the principles, there was significant emphasis placed on the need to demonstrate an overall compliance culture.

The DOJ made clear in its compliance program guidelines released in 2020 that prosecutors should evaluate whether companies have a “data-driven compliance program” to detect potential misconduct and to monitor the effectiveness of their compliance policies. Monaco expanded on that in her speech and in an accompanying memo to federal prosecutors.

In evaluating whether a compliance program is “adequately resourced and empowered,” the DOJ said in 2020, prosecutors should consider the following questions:

“Do compliance and control personnel have sufficient direct or indirect access to relevant sources of data to allow for timely and effective monitoring and/or testing of policies, controls and transactions? Do any impediments exist that limit access to relevant sources of data and, if so, what is the company doing to address the impediments?”

The emphasis on “access” to data can be viewed as a signal that the DOJ needs to see people with skills in place to analyze, monitor, and interpret such data on the part of compliance departments.

Regulators emphasis on monitoring communications

The new policies put forth in Monaco’s memo also focus on monitoring the use of personal devices and third-party messaging platforms — a demanding technology task. “The ubiquity of personal smartphones, tablets, laptops, and other devices poses significant corporate compliance risks, particularly as to the ability of companies to monitor the use of such devices for misconduct and to recover relevant data from them during a subsequent investigation,” the memo stated. “The rise in use of third-party messaging platforms, including the use of ephemeral and encrypted messaging applications, poses a similar challenge.”

Other financial regulators have pursued similar priorities. In December last year, JPMorgan Chase & Co.’s securities unit was slapped with a $200 million penalty over data retention violations related to the use of personal communications and messaging devices. The Securities and Exchange Commission (SEC) imposed a $125 million share of the fine, and the Commodity Futures Trading Commission (CFTC) claimed the remaining $75 million.

The JPMorgan case represented the largest-ever fine for record-keeping violations related to communications reviews. It was followed up last week with an announcement by the SEC and CFTC of similar case settlements involving 16 other large financial institutions, which were fined $1.1 billion and $710 million by the agencies, respectively.

In the release announcing the settlements, the SEC said employees of the penalized firms had routinely communicated about business matters using text messaging applications on their personal devices. “The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws,” the SEC stated. “The failings occurred across all of the 16 firms and involved employees at multiple levels of authority, including supervisors and senior executives.”

Compliance takeaways

The rapidly changing and growing compliance, risk, and audit responsibilities stemming from technology innovation require compliance departments to examine their own expertise, capabilities, and skill requirements.

The 2022 Cost of Compliance Survey, published by Thomson Reuters Regulatory Intelligence, showed frustration that, despite compliance departments’ widening responsibilities, staff numbers are unlikely to grow as staff costs increase and financial service firm budgets remain tight. Therefore, outsourcing, technology, and regulatory technology may step in to plug some of the gaps. Still, there will be a growing need for compliance professionals within firms to become more sophisticated in order to better steer the type of changes required by the new technologies.

As the Compliance Survey noted: “Of the 66% of respondents who expect the cost of senior compliance staff to increase in the next 12 months, nearly half (47%) gave the demand for skilled staff and knowledge as the top reason.”

Although the use of outsourcing and third-party management has been a popular strategy for many firms due to the complexities of software development, cloud computing, and data privacy and storage, regulators still expect compliance departments to have a thorough understanding and knowledge to oversee and “own” these outsourced functions.

(This article includes additional reporting by Reuters)

In a session titled, Approaching the Verge: Opportunity and Reward in Web 3.0 Technologies, panelist Amy ter Haar, legal counsel at Global University System and board member of Ocean Falls Blockchain Group, began by exploring the positives of the metaverse, noting that the metaverse is not just one technology, but rather “the ability to interface with technology in a whole new way.”

In a typical transaction, for example, there is one party (often an intermediary, such as a bank) in charge of recordkeeping and information. But when parties in the metaverse enter into a transaction using the blockchain, both parties can access and change information as needed, with a secure record of those changes verified by all parties. In that way, ter Haar said, the metaverse is “disempowering intermediaries and gatekeepers and empowering people.”

Still, the metaverse can be tough to define for those not engaged in the space, she added. “If you engage in the exercise of replacing the word metaverse in a sentence with the word cyberspace, you’ll find that 90% of the time the meaning doesn’t change.”

To better envision how the metaverse paradigm can change interactions, panelist Matthew Rappard, chief technology officer at security company Vaultie, said to think of how most people interact with the internet on a daily basis. Generally, he said, “there is this loss of the concept of privacy.” Every person has equipment to record video, apps that track location, easier access to secure information like bank accounts, and more. On the other end, the metaverse can provide users with another path via the ability to present as a different self. Video content creators called Vtubers present as online avatars that are wholly disassociated, where viewers never see their actual identities.

“You’re ending with this kind of switchover where in the public world you’re seeing less privacy, but in the digital world you’re seeing something different,” Rappard explained, adding that the switch comes with a virtual world that provides more control. “When we’re talking about the metaverse, it’s the ability to control your identity and how that identity interacts with smart contracts.”

Where the Metaverse and law intersect

When legal disputes arise, however, the metaverse’s nascent nature and increased focus on privacy can be a hindrance as much as a boon. While panelist Yinka Oyelowo, principal lawyer at Toronto-based Yinka Law, believes that the metaverse and associated blockchain technology “simplifies a lot of the processes that we see in real estate,” for instance, she acknowledged that resolving metaverse-related disputes remains “very hypothetical.”

Consider the case of trust and estate issues: Who would take ownership of a piece of metaverse property if the original owner passes away? While smart contracts encoded within the blockchain are very good at executing the specific terms of a contract, they may also need to take into account how a transfer of property would be executed and the rules in any jurisdiction that may apply.

“It’s quite complex, because the jurisdictional requirements for British Columbia are going to be completely different from the requirements in New Hampshire in the US,” Oyelowo noted. Law firms helping with this type of dispute would need lawyers that not only vet jurisdictional issues, but also understand the technology and are versed in the laws around trusts and estates.

Further, a regular issue when it comes to physical real estate is airspace: Who owns the three-dimensional area above or below a piece of property? However, real estate in the metaverse does not function in the same way, and determining airspace rights becomes difficult. Assumptions about the physical world “aren’t easily transferred over to the metaverse. It takes quite some time to understand the issues,” Oyelowo said, adding, however, that also means opportunity. “There’s a lot of fertile legal ground for those involved in trusts and estates, for commercial real estate.”

Indeed, all panelists pointed to the opportunity for legal professionals to provide clarity to emerging metaverse risks. The Digital ID & Authentication Council of Canada (DIACC) has been investigating ways to authenticate online identities while still maintaining confidentiality and privacy, Rappard noted. Oyelowo also pointed to startups that have been linking face IDs with cryptocurrency wallets, where a wallet holding crypto funds is opened through dual-factor authentication that includes both the facial scan and a unique code.

But even as these opportunities emerge, those in the legal world still need to look out for risks — and make sure they abide by ethical guidelines. Even those Vtubers who don’t show their offline identity present a legal and ethical challenge, Oyelowo said. “While most potential clients will be forthcoming with their identity while engaging in the metaverse setting, some clients… may prefer anonymity.” But in a province such as Ontario, this can be a problem: Before giving advice, attorneys are ethically bound to verify the client’s identity. And especially if the two parties are only conversing in a virtual world, clients may physically be in a jurisdiction with different or less stringent ethical boundaries.

That means that although the virtual world is emerging, physical considerations are still necessary. Therefore, attorneys should take care to “obtain identity documents that you are satisfied are valid” from the person behind the avatar, not just the metaverse avatar itself, Oyelowo explained.

Ultimately, the experts agreed that the metaverse will continue to evolve, with new opportunities and potential pitfalls both emerging in the coming weeks and months. Regardless of how it develops, what remains certain is that the metaverse will be an engaging space to watch going forward.

Yet, what is considered an impediment and barrier to KM is often the result of confusing KM with information management (IM).

Instead, KM and IM should be considered more alike in their value systems rather than a competing priority in which an organization must choose between securing information and data versus sharing information and data. In accepting that there are both enablers and barriers to any organizational priority, a strong KM culture includes many of the same enablers that zero trust is tasked with supporting. KM, when it is aligned with zero trust, creates an even stronger KM value in the organization. And zero trust, like KM, succeeds best when working from the position of the four KM enablers: people, process, technology, and governance — as well as a strong organizational policy, which is critical for zero trust.

The successful implantation of KM and zero trust should be:

• • • business focused;
    • supported by senior management;
    • embedded with the strategic vision and principles of the organization;
    • focused on higher value knowledge and higher value data;
    • able to demonstrate measurable benefits, such as competitive advantage and process improvement in tandem with risk mitigation and security; and
    • employed as a full organizational change.

Despite the decades-held belief that most security threats are external, it is inside threats that have risen to become a serious cause for concern, most recently this is due to the extension of network access across mobile devices, cloud users, and employees working in hybrid or fully remote environments.

Behind the emergence of zero trust is a broad concept that applies to technologies, networks, IT architectures, and security policies. This concept holds that users within a network should be treated as if they could pose a threat. Therefore, enterprise resources and data are to be protected individually and access to these resources should be evaluated and analyzed continuously.

The zero trust future

Zero trust is not a particularly unique approach. IT professionals would consider the principles of this model to be a good housekeeping practice for any healthy secure enterprise. Most IT professionals have long taken great pains to design systems that consider inside risk as dangerous as any other risk. Therefore, zero trust systems have been developed to behave as an integrated platform that contextualizes information based on identity and security that has shifted risk measures from traditional perimeter models (e.g. firewalls) to one that is identity-centric. Through this process, key questions emerge, such as who has access to what information? When do they have access? How much access is given, and what business purpose does their access support?

This identity-centric approach is consistent with KM mapping. KM mapping outlines the business challenge of what we know with strategic goals that can then be supported with KM interventions, such as a knowledge base, intranet, sales wikis, and CRM platforms. Additionally, to be successful, both KM and zero trust require agreed-to measurable outcomes.

This simplified explanation of zero trust in a KM world is consistent with KM values that improve business agility which brings with it the priority of protecting internal data and internal assets.

Strategies to overcome perceived KM barriers brought on by a commitment to zero trust overlay with the implementation of zero trust models. These strategies include:

• • • mapping “need to know” information (KM) alongside “need to secure” (zero trust);
    • finding common alignment with strategic goals;
    • outlining business objectives and agility with business security; and
    • agreeing upon measurable benchmarks and outcomes, remembering that i) not all measures are monetary values; ii) not all measures should be targets; and that iii) common solutions can be identified to overcome “imposed” targets.

Much like KM, zero trust is a new mindset that requires sweeping changes to be implemented effectively. On the surface this seems daunting, but after evaluating KM and zero trust, both can be implemented to improve organizational value and effectiveness.

In 2018, $1.2 billion poured into the legal tech industry. In 2021, just three years later, a new record was set at $2.5 billion. Between 2016 and 2022, it’s estimated that there were more than 1,800 legal tech funding rounds totaling more than $13 billion in raised capital. If that doesn’t justify a rocket ship emoji or three, then what will?

However, that was the old market cycle. New, we’ve just entered a new one, and it looks a lot grimmer for tech companies worldwide.

The latest tech boom — like some in the past — was primarily funded by venture capital. Low interest made money cheap, and most asset managers we’re ready to allocate capital to risky investments. And a tech startup is one such risky investment.

While the pay-off is potentially massive, the likelihood of losing all your money is high. In past years, money poured into tech like there was no end to it, especially during the beginning of the pandemic when people had money to spare, and the situation favored digital technologies.

Since then, the tides have turned. Inflation is sky-high and the interest rates are rising, which means that money has become more expensive. Now, investors are more likely to beat inflation in the least risky fashion by allocating capital to something like public equity instead of VC firms. Smaller pools of capital for venture capitalists mean that startups and scale-ups that are dependent on venture capital have a hard time raising new capital in the current market cycle. And those who can raise new funds must accept lower valuations.

How can legal tech best adapt?

So what does this macro-economic development mean for the legal tech industry?

First of all, it’s clear that the legal tech industry will not go unaffected by this. We will see layoffs and a general hiring freeze. Like other VC-backed startups, legal tech companies are looking to cut costs and increase their runway. Further, we can expect some legal tech companies to die off, and even those with money enough to operate over the next eight quarters will have to be conservative with their spending.

This is a crisis. It’s going to be painful. Yet, it’s also important to remember that the legal tech movement is still in a good position overall. It didn’t become a bad idea to digitize and automate mundane legal processes just because the market may be cooling. The legal tech market continues to mature, and people are becoming more aware of legal technologies’ benefits.

In fact, and a bit counterintuitively, there might also be some positive side effects for the legal tech movement during this downturn. Some of those benefits may include:

• • • We will see more realism — In this market, numbers beat narrative. Only real products adding real benefits to real clients will make it through. Slideware, crypto projects with no use case, and immature AI solutions all will suffer. That might make us less fixated on emerging technologies and fancy flash-ware; but with a new, more realistic perspective, we can finally go back to basics. Talk less, innovate more, please!
    • There will be consolidation — A few companies won’t make it; however, those that do, will come out stronger. You cannot overtake 15 cars in sunny weather, as Ayrton Senna once said, but you can when it’s raining. This crisis is also an opportunity for some companies to win market share.
    • Companies may be able to buy some time — When you’re on the VC treadmill, you’re under heavy pressure to perform. In some way, performance will be even more important as the competition for funding increases. At the same time, those companies raising money on step targets or those still struggling to find their product-market fit will get a quarter or two more of additional time to figure things out. Such companies can cut costs, focus on their foundation, and build something that scales better.
    • This is an opportunity for legal tech — A legal tech company doesn’t just compete with other legal tech companies in regard to raising new funds — it competes with all kinds of tech companies. Cynically speaking, many legal tech companies are fit for this kind of environment. Legal is not expendable when things go sideways; on the contrary, legal tech products quickly become business critical during a recession. For example, taking the opportunity to find out what’s in your contracts and how to get out of them is incredibly useful in times like these.

There is no doubt that this is a difficult time for venture-backed legal tech companies. The record-breaking days are probably not coming back anytime soon, however, it is equally true to see that there is nothing to gain from panicking. The legal tech movement must adjust expectations, be a bit more disciplined, and then start looking for opportunities.

Going digital refers to the move away from analog systems. Digitization in the tax & accounting profession has been happening for decades. The move to document management software, engagement solutions, and online tax organizers are just a few examples.

According to Salesforce, digital transformation refers to the “process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements.”

While a portion of the tax & accounting profession transformed their practices while they were digitizing them, the pandemic spotlighted areas of the practice that were still dependent on the old analog system. Clients paying with paper checks and dropping off physical files are just a couple of examples. Where firms had digitized many internal operations, their interactions with clients and talent were still greatly based on physical presence and in-person connecting. This physical dependence made a move to remote work much more challenging for those organizations.

Not surprisingly, digital transformation was kicked into high gear while the world was social distancing. People had to experiment with new, virtual ways to collaborate, conduct business, and interact. As the world gets more comfortable with its preference for virtual engagements, and talent expresses the desire to maintain remote work arrangements, organizations will need to focus on their digital transformation strategies. But how?

The tools

To begin, look into the available technology. Cloud technology is perhaps the foundational tool for digitizing work processes. By running operations through the Cloud, clients and accounting professionals can interact virtually and in real-time using the same data. This process also allows people to work when and where they want to, changing the whole paradigm of how we work by enabling this flexibility.

Artificial intelligence, robotic process automation (RPA), the Internet of Things (IoT), mobile devices, and more have all augmented accounting teams’ abilities. For years, staffing capacity has been a challenge for the tax & accounting profession; the pandemic and the increasing number of professionals choosing other jobs or work environments have only exasperated this issue. Implementing these technologies can lessen staff workloads and enable them to perform at their highest and best use. What results from this, of course, is greater job satisfaction by allowing better work/life balance for employees while also enabling them to feel professionally fulfilled by delivering higher value and impact to their clients.

Identifying the focus area

Given all the technology options, the number of opportunities accounting firms have to digitally transform their processes may feel overwhelming. Instead of being paralyzed by the possibilities, firms should first perform a SWOT Analysis (assessing the firm’s Strengths, Weaknesses, Opportunities, and Threats) to determine its current state and that of the business. Having multiple people contribute to the SWOT will help ensure that all parts of the business are taken into consideration.

After completing the SWOT, look at what weaknesses could make your organization more susceptible to threats or prevent it from capitalizing on opportunities. Is the organization fully leveraging identified strengths? If not, what needs to change? The key is to develop action items from the information gathered in the SWOT.

Once you identify the actions, prioritize them. What is the most significant opportunity or threat that needs to be addressed? Again, for many professionals in tax & accounting, anything related to talent is a high priority.

Does the organization need to facilitate a digital transformation to make it the most appealing and accessible for top talent? Remember that compensation alone is not the only draw for talent; surveys have found that staff are willing to leave a job if they are not allowed to work remotely or have a flexible schedule. To make such offerings to new recruits tenable and effective, digital transformation is required.

Getting started

As you prioritize these actions, be mindful of the scope of the transformation. There are likely interdependencies between multiple actions or ideas to address, so avoid boiling the ocean. Identify where the starting point might be by asking yourself questions such as:

• • • • What will be most impactful?
      • Where are the most significant pain points being felt?
      • What can be addressed in the next project?

Given the existing workload, many within the tax & accounting profession may feel they don’t have time to do this level of planning — and this is one reason professional service organizations are hiring project managers. The firm leader can set the direction, then a project manager can then gather the data, pull the team together, maintain the communication, monitor the risks, and ensure the project stays within scope. These non-traditional hires alleviate pressure on experienced tax & accounting professionals while also gaining efficiency and building future-ready organizations.

Like many large-scale business evolutions, digital transformation is a journey, not a destination. Just like computers and mobile devices have become commonplace, so too will working and living within digital processes. As technology continues to develop, our processes and expectations will continue to change; some will evolve, and some will completely transform.

Tax & accounting firm leaders should stay aware of what is changing around them, including within other industries, and continue prioritizing what is needed to keep their organization competitive and viable.

However disparate legal professionals and legal technologists might be, these two groups do have one common thread, which is the importance of communication and collaboration, especially considering the current tight labor market in general and the technology sector specifically.

Foster alternative avenues of communication and engagement

Different types of individuals are comfortable with eyes on them in the courtroom versus those who train their eyes on a computer screen for hours on end. By nature, many technologists are introverts at heart.

Engineers responsible for the security of a law firm network, those in programming or support roles, or others responsible for the technical operations in areas such as e-discovery aren’t usually spending a lot of time on the phone or in meetings with their co-workers. Even the time around the coffee machine for casual conversations has ceased to exist in a world in which the typical employee now rolls out of bed and hops on their computer to work on system implementation tasks without a scintilla of human interaction.

So, what can law firm leaders do to better integrate technical resources and keep their legal tech crews engaged? One tactic I’ve observed that seems to work well in the software industry is literally encouraging daytime ongoing chats on technologies like Teams or Zoom. While chatting might sound like time-wasting to many traditional managers, in today’s unique work environments, it really is not. It seems to be a great boost for morale and, like the water cooler before it, allows for the exchange of verbal ideas relating to the problems of the day.

Additionally, if your firm has not already done so, creating funding pools for things like docking stations, ergonomic equipment, multiple monitors, high-quality headsets, and the like might be even more appreciated in the technology domain than for those with legal-oriented careers — not that everyone would not enjoy a morale lift with offerings of that nature. On that note, don’t leave your tech staff out of the loop for appreciation swag or shipments of other items like home care products to personally show interest and care in your team members. The seemingly small gesture is a great idea to keep technology folks engaged.

What can law firm leaders do to better integrate technical resources and keep their legal tech crews engaged?

Finally, in my opinion, there is an even greater need to be flexible in work arrangements for technology professionals than with others in the legal domain. Many of the workers are younger and early in their careers, so this is a model they have grown accustomed to. And, importantly, there is a wide disparity in skill sets even within the range of a defined job, so anything a law firm or corporate law department can do to meet employee’s desired work arrangements almost certainly will result in an uptick in performance. In my view, flexibility is good business.

Employee development

Firms should also not overlook factors that have traditionally been key points for legal technologist as well. Training, for example, can be a huge differentiator in helping to recruit and retain top-tier technical talent within a law firm.

The challenge here might be the mindset. Within legal, training is an often considered a requirement for lawyers — think the need to amass CLE hours to maintain one’s license. For technologists, however, it is often a joy to learn and expand one’s practical skills. Indeed, for legal tech professionals such training is really a necessity due to the rapidly changing dynamics of the tools of the trade.

Carving out time for training, frequent discussions with team members on the skills and certifications they wish to pursue and partnering with your folks to get their development train rolling are all excellent ways to continue close working partnerships with your legal tech team, regardless of whether you are physically all together.

Encouraging other technologists to connect via LinkedIn Learning, leverage free training offered by companies like Oracle or Microsoft, or avail themselves of all the excellent content and programs offered by the International Legal Technology Association (ILTA) are all useful specific suggestions to help employees get their own ball rolling.

Compensation & work/life balance

There is a strong tendency for technologists, like any employee, to blur the lines between work and home when they are, physically at least, one and the same. This is a challenging area to address because, by nature, many technologists have support-oriented roles. Simply saying “don’t work weekends or evenings” sounds good, but often is not practical or sometimes even unfair if not everyone takes heed.

Better approaches include deep integration of external support-oriented entities (like a Help Desk or Managed Services Provider), ensuring your employees that they can do their job off-hours, and working with service providers to try to raise the bar when they return seemingly basic issues “back over the wall” rather than the service provider handling the issues themselves.

Other ideas — which may or may not work, depending on the size of your teams — could be ideas like having an engineer-on-call where others are specifically not on call and thus truly “off-duty” during these periods; or negotiating service legal agreements with internal staff for off-hours issues so not every issue encountered at 3 pm on a Sunday afternoon is considered a “fire drill” with an understanding of course that some issues are, in fact, urgent.

Conclusion

Firm leaders should understand the need for specific strategies for how to support, promote, and partner with legal technologists during times of changing and challenging workplace dynamics. What works well for attorneys, paralegals, or legal operations professionals, not surprisingly, probably benefits from a touch of tweaking for technologists. And those firms that follow some of these suggestions might help those professionals who are overseeing firms’ legal technology efforts.