Law Firms, Innovation and Talent: "The big challenge is digital clients"

(This article is a republication of an interview by Nuno da Silva Vieira for the newspaper Jornal Económico, published on 16 July 2021)

Lawyer Nuno da Silva Vieira, partner at Antas da Cunha Ecija & Associados, has been one of the main proponents of the digitalisation of the sector in Portugal. In an interview, he talks about the challenges and opportunities that digitalisation poses to law firms and to the justice sector as a whole. 

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The legal sector is often seen as traditionalist and averse to change. Do you believe that Pandemic has shaken this state of affairs and accelerated the digitalisation of the sector? 

The pandemic has exposed the needs of all industries. The legal professions - which, until then, had escaped the impacts of technology - this time also had to adapt. We all wanted to be close to our clients and, if the technological means allowed it, there would be no room for hesitation. 

It was indeed a shake-up in the investment priorities of law firms, but it may also have been nothing more than that. We have to be pragmatic. It remains to be seen whether this shake-up has meant a real change in the culture of law firms and whether there will be a certain consistency in this digital transformation. A law firm does not enter the digital era just because it uses telematic mechanisms to meet with its clients. 

Lawyers have to face new challenges and one of them comes right from the clients' side, who are increasingly digital. We need to redefine the journey of these new clients, who are very sophisticated, more demanding when it comes to building loyalty, and very unavailable to manage their own time. 

Revisit the European Central Bank's announcement yesterday about the launch of the digital euro. When law firms' clients do business with this type of cryptocurrency, lawyers will already have to have an absolute command of distributed ledger technology, or DLT, understand, draft and interpret a Smart Contract, understand the concept of Software Agent or be prepared to issue a security token. 

What is the big challenge for a law firm that wants to be innovative? Adopting the right technologies? Creating a culture of innovation? Attracting and retaining the necessary human talent? 

Gartner studies confirm that digital disruption is the most important function for firms, followed immediately by the need to find talent that will discover new ways to present services to clients. So digital transformation presents itself as an opportunity for lawyers to deliver safer, more efficient and client-centric legal services - based on technology solutions that clients understand. But the promise has to be delivered. Because if you don't deliver what you promise, the digital age client will not hesitate to look for alternatives. 

A McKinsey & Co. study shows us that organisations that have undergone a digital transformation are "23 times more likely to acquire customers, 6% more likely to retain customers and 19 times more likely to be profitable". In this context, professionals should be aware of the need - and immediate adoption - of strategies related to digital transformation, otherwise they will fail. 

Law firms should be vigilant and should undertake a scenarisation exercise, where talent management, lawyer training, new skills, new tools and reskilling will be paramount. Then they must assume that the fourth industrial revolution is foundational. New ecosystems are being created - often self-regulated - and here we will be facing very quicksand. 

In the particular case of law firms the issue takes on an even greater dimension when we look at their type of business. They have to transform themselves, but they also have to understand and master the transformation of their clients. Therefore, in a world where 5G will bring new technological potentialities, where virtual reality will be part of our daily lives and where information doubles in ever shorter fractions of time, one cannot stand still.

For citizens and businesses, what are the benefits of the technological revolution underway in the world of law and advocacy? 

For citizens it is an extraordinary thing. For companies, it's an opportunity that doesn't come along every day. I often find myself thinking how lucky I am to be a lawyer in the middle of the fourth industrial revolution. It is a golden age for lawyers, and those who have not yet understood this should give me the benefit of the doubt and try to find out for themselves. Only these days I was speaking to a distinguished Portuguese professor - who JE readers know well - about ecosystems with their own constitution and rules of operation. It is fascinating how technology is moving towards giving power back to the people - the same technology we already mistrust a lot. And note the power that technology delivers to our entrepreneurs who are, by the way, the entrepreneurs of tomorrow. Following this reasoning, look at the opportunities for young lawyers who, for the first time in many decades, can aspire to high-level, highly paid positions. In London we can already see what I have just mentioned. The big firms are already agreeing to pay £100,000 a year to a trainee who - if you will allow me to define it - is a potential hybrid lawyer. We are the generation that will reach Mars. We may contemplate our 1980s law practice, but in the midst of the fourth industrial revolution, even the boardroom table won't be up to date.

How is blockchain technology expected to impact the law? And what is the timeframe for this revolution? 

The revolution has already started and the impact will be felt for the next 3 years onwards. A few months ago the European parliament presented a legislative proposal, towards the regulation of blockchain technology at the level of financial markets. By 2022 an EU regulatory sandbox for this type of technology is expected and the digital euro looks set to reach our "digital pockets" as early as 2024. Last December, the JE held a webinar where the first execution, in Portugal, of a mortgage through a Smart Contract was demonstrated, and we have many Portuguese companies adopting and thinking about this type of ecosystem. This impact is also already being felt in universities and business schools, where the topic is gaining relevance. At this moment, I consider that Portuguese business schools already offer great training in this area and I am lucky enough to coordinate the Blockchain & Smart Contracts Programme at Nova School of Business & Economics.

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Will the lawyer of the future have a more preventative role? Will the dispute resolution aspect lose importance? 

In the future, the lawyer will increase his range of action. He will have to be a professional with a very solid training in the area of law, but he will have to be capable of working, himself, in a new legal ecosystem. He has to be preventive at the moment he creates the conditions of a self-executable contract for his client, but he must be prepared to resolve disputes in virtual courts - see the English example, where this reality has been tested for over 5 years - or through decentralised arbitration, where the juries are invisible and the facts, those with value for the cause, have been previously defined by an algorithm. Incredible as it may seem, this is not fiction. I even challenge the Portuguese government to look at these legal ecosystems as opportunities for Portugal to shine internationally in the conception and design of justice for the 21st century.

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Multidisciplinary law firms are coming. Are Portuguese law firms going to face increasing competition from consultancy firms and big tech companies, with "legal tech" solutions that are growing all over the world? 

Multidisciplinary law firms already exist in other countries and will also arrive in Portugal very soon. It is undeniable and our legislator knows it well. I am a partner in a law firm that allows me to have a greater sensitivity to this issue. Because, in Portugal, we are not multidisciplinary, but if I enter the office in Madrid, I will already come across many engineers. I admit that I don't see any limitations in the way clients' interests are defended, nor do I know of any dissatisfaction in the implementation of that model. On competition from the big consulting firms, I may have got it a bit wrong. In 2017, when I saw Ernst & Young acquire Riverview Law - the best lawyer startup in the world at the time - I often used that example to prove how big that competition could get in relation to law firms. Today I think a little bit differently and I'm sure that, the consulting firms, they face a tremendous challenge, to the extent that, they also have to reinvent themselves, in the coming years. The fourth industrial revolution is, for the first time, calling lawyers to its epicentre. There is no digital transformation without regulation and no digital euro without the creation of new legal concepts such as, for example, the notion of "crypto thing". It's not going to be easy for multinational consulting firms to acquire teams of lawyers prepared for these impacts, because those teams and those lawyers don't yet exist on that scale. Lawyers - at least, to the most attentive ones - are only now starting to train and prepare for this new type of reality and for understanding the new ecosystems. Therefore, when these lawyers are in the market, they will be so in demand that they will not fail to have their own business, in a legal industry, full of opportunities and flourishing.

Is the justice system and the Portuguese judiciary in particular receptive to technological change? 

I have great admiration for the Portuguese judiciary and I must say that lawyers will have a lot of responsibility in the digital transformation of our courts. We, lawyers, must have the capacity to bring the best state of the art to the courts. If I, a lawyer, do not confront the judge with a new piece of evidence - for example, a document digitally signed and authenticated in a blockchain - that judge will never be able to think about it, admit it or not. Otherwise, I think it will be as fascinating for judges as it is for lawyers. Not least because the legal professions exist to solve people's problems. The more digital those people are, the more digital the courts have to be. It is a reality that the judiciary will have to face and, I have no doubt, will know how to face. 

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And the Bar Association? 

Professional associations will have to be leaders in the preparation of their professionals. They will have an increased responsibility, otherwise they will be deprived of some of their competences. In the case of aspiring lawyers, it is the Bar Association that is responsible for their training, through an internship, subject to theoretical and practical assessment. If these young people are not prepared for the fourth industrial revolution, they will not have the same opportunities in the labour market. Take the example of Google, which announced a few days ago that it would no longer require higher education in order to hire young people. We certainly don't want a self-taught youngster, better prepared than a trainee lawyer to fulfil all the ministries of his technical evolution. I believe that the President of the Bar Association has already foreseen challenges and opportunities for the coming years and this will certainly be an issue that deserves your full attention.

(This article is a republication of an interview by Nuno da Silva Vieira for the newspaper Jornal Económico, published on 16 July 2021)