Willie Pienaar, Group CE of legaltech company, NuvaLaw, reflects on his experience working with legal and insurance companies, examining what it will take for meaningful industry transformation to take place.

As the digital economy became entrenched in the outside world, 2017 saw the legal industry raise a sleepy head and peer cautiously over the parapet of the ivory tower it was securely nestled in.

Companies were now well accustomed to their service providers proving their return on investment and law firms were not escaping the scrutiny. Even in-house legal was expected to show how it was cutting costs and driving efficiencies and General Counsel were now expected to report to the COO.

By 2018 the digital transformation of the legal industry was underway and although change was sometimes glacial, it was at least showing early signs of success. This encouraging awakening attracted the interest of investors.

After what could only be described as a slow start, investment in legaltech rocketed in 2018, growing more than 700 percent year-on-year. Investors focused on repetitive, human and time intensive areas like e-discovery, where automation and even machine learning would lower the wage bill and manage costs. But the true transformation of the legal industry was still a long way off.

Looking after interests rather than rights

It’s impossible to speak about transformation of the legal industry without putting Access to Justice front and centre. While technology gives legal leadership an excellent toolset to change or automate some of their daily functions, it’s important to remember that technology is just that – a tool.

If you speak to any advocate of legal reform, they will waste no time in telling you that one of the biggest challenges is gaining access to the courts. Cases pile up waiting for trial dates and, once inside the courtroom, delay after delay contributes to the billable hours of legal firms. For an industry married to a centuries-old commercial model, expecting rapid change can feel like a lesson in futility.

One area that seems to be the most resistant to change is how the legal industry handles dispute management.

Litigation is costly and consumes vast quantities of management time and focus. Many regions have gone so far as to regulate the use of mediation before litigation and seeking swift and efficient resolution of disputes is part of a board’s fiduciary duty. Yet companies and law firms alike cling to an archaic, adversarial mindset – propping up the billable hour and killing any incentive to change.

Shaking up the legal and insurance industries

Asking for meaningful change in an industry steeped in tradition is a tall order. Expecting change at the intersection of two of the most conservative industries could be described as wishful thinking.

When NuvaLaw put forward its two offerings to the insurance industry in the UK, we quickly realised that while C-level executives were delighted with the cost saving, efficiency-driving solution, convincing departmental heads who were clearly protective of their more traditional processes would be more difficult.

The platform solution has been purpose built for high-volume, lower-value, repetitive claims, allowing for matching of data and negotiation if needed. Binding awards can be made in a fraction of the time and cost of a normal litigation process.

Making use of the Online Dispute Resolution (ODR) as well as the end-to-end platform solution requires both parties to agree upfront to the process. Since it’s a voluntary process, the chances of reaching an agreed settlement is automatically improved.

Relevant data, shared on a single digital platform, ensures that the flow of information is transparent and auditable. Because everything to do with a dispute happens in one common digital space (that is shared between parties) there is one version of the truth.

The very nature of the solution radically transforms the traditional way of settling disputes. Rather than relying on lawyers to fight for each penny, taking months or even years, ODR facilitates settlement in weeks or days.

Transparent data (the cornerstone of much of the digital economy) allows the customer to feel in control of the process, engendering trust.

For the insurance company, not only are they clearing the backlog of cases on their books and therefore managing their reserves, but the added trust speaks to good customer experience.

For the legal companies, settling cases faster means they can focus on case volume rather than billable hours, as well as managing the number of junior and admin staff.

While the benefits of using tech in dispute and claims settlement is clear, more than anything, it requires legal leadership to shift their mindset. There is no doubt that change is uncomfortable and while the digitisation of documents and e-discovery is a good step forward, true change can only come when the heart of legal services – dispute management – is truly revolutionised.

Disclosure: NuvaLaw Incubator Tech  B.V is a client of Corniche Growth Advisors Limited