ILTA 2013 Part 1 – Technology Darwinism

International Legal Technology Association (ILTA)’s Annual Education Conferencehas gathered over 3,000 attendees for a four-day mega event in Las Vegas. VQ is attending as the only Swedish representative and we aim at making continuous reports during the conference, to share our impressions and what we learn about new trends, new tools and where the legal world is heading. The theme for this year’s conference is “catalyst” as in change and actions to change. The key note session with Scott Klososky kicking of the conference certainly fitted the theme with the extensive topic “Technology, Trends and the Catalytic Impacts on Law Firms”.

Scott Klososky is a former CEO of three successful tech startups and has over 25 years experience as a technology entrepreneur and international consultant, focusing on emerging technology trends to help organizations move forward and thrive.

The session was a true eye-opener for many of the attendees, inventing the (rather harsh) notions of Technology Darwinism, Technology Inflection Points and Dead Leaders Walking.

According to Scott Klososky, Technology Darwinism or Digital Darwinism occurs when the pace of technology innovation is faster than the speed people adapt to new tools and methods, creating a technology risk gap. This gap might lead to a complete restructure of the market – and the survival of the fittest, i.e. firms who manage to adapt to the new market conditions. When the speed of change in a law firm is lower than the speed of change in the industry, a technology risk arises, which impacts the firm’s service relevancy, client connections, brand reputation and talent acquisition.

“The need to adapt to technology is no longer a technology thing – it’s about survival.”

Every industry has a Technology Inflection Point where the technology so dramatically changes the industry that there are winners and losers. Winners thrive and prosper whereas losers enter into the “death spiral”. Scott Klososky also provided some real life examples from different industries to illustrate how quick the death spiral hits when an industry reaches the Inflection Point and the players not able to make the changes lose their formerly so prosperous business and go bankrupt in less than a year. A well-known example is the photography market, with Apple as the thriving player (in 2011 Apple was the most popular camera used for photos on Flickr) and Kodak as the losing player. Even though Kodak could foresee the digital changes and even had patents on digital inventions, they were not able to let go of their analog films that had provided such robust revenues for so many years, and went bankrupt in less than a year after the death spiral hit. Other examples are the music industry and the book industry, where digitalisation has completely re-structured the market after the Technology Inflection Point hit.

Scott Klososky pointed to the importance of leadership for organisations to survive the Technology Darwinism. The leaders of for example Kodak and other losing players have failed to embrace and act on the changing market. Scott Klososky calls them Dead Leaders Walking, who fail to act even if their company is almost dying. Like the Kodak leadership, they are reluctant to change how they do business because they are making money.

“But just because you have made money for a long time, there is no guarantee that you will continue to make money. Kodak, for example, made money up until the year before it went bankrupt.”

Currently that seems to be the issue with many law firm leaders, who according to Scott Klososky, refuse to fully understand and act on the fact that the firm is almost dying. As long as the firm makes money, many law firm leaders seem to think that everything is fine and that they are so successful that there is no need to apply new technologies.

These Dead Leaders Walking also tend to focus on prior investments, making them reluctant to go for new business opportunities in new directions. Being in the middle of the pack in the industry also seems to be good enough (“if we are doing what everyone else is doing it should be fine”), but that makes the firm very passive and is definitely not a safe approach. If you just wait and copy your competitors you are all just competing on the exact same – and shrinking – market and miss out on the new emerging business opportunities and the new market entrants who will completely restructure the market. To survive and prosper law firms need to innovate by using the full technology palette, to be creative and see things the competitors do not see, to get two years lead on the competitors . Scott Klososky says that business leaders have a responsibility to their organizations to understand the true value of technology. Surviving law firms need to develop a Technology Mastery, which Scott Klososky describes as the development of a personal, or collective, ability to apply technology to make the firm world class. This ability needs to be distributed through the whole firm to be successful. When you have Technology Mastery in your organization, every member of staff understands how world-class technology affects their business. If you cannot ensure an adaptive culture and make all people at the firm adapt to the technology changes, use any implemented system and new processes s the Technology Mastery ambition will with no exception fail. Therefore it’s best to focus on 3-5 technology guidepoints where the firm will be better than the competitors and to analyse the industry to get a two year lead on your competitors and make sure that you can measure the outcome. With such a Technology Mastery, an environment is created where technology flourish, which always has proved successful in any changing market.

An actual practical change law firms have to adapt to is the New Client Profile, which Scott Klososky describes as

  • Search savvy;
  • Motivated by online recommendations;
  • Using social tools to rate or review service;
  • Want to connect with law firms they believe care about them personally; and
  • Happy to provide information to their firms, if the firms can provide a more customised service.

Today, many clients feel like “meat with wallets”, i.e. that the firms only care about them when they can make money on them. When the clients are writing the checks, the firm is engaged. However, at other times, the firm is absent or remote. The way forward for law firms is to create a humane level of engagement that helps their clients “feel the love”.

As closing thoughts, Scott Klososky provided the following questions for law firms to as themselves if they wish to prosper and survive the coming Technology Inflection Point:

  • We are in a Knowledge Economy right now – client data is like blood through the veins of a law firm. But do you have the right data? Can you make decisions based on facts or do you rely on your partners’ opinions merely based on “their long experience”?
  • How can you apply the right balance of “humalogy” (the scale between technology on the one hand and humans on the other) to amplify profits? To what extent can you use technology to increase revenue and decrease cost by working more LEAN?
  • How can you make the organisation understand what is changing over the next years? How can you paint the picture to make the organisation better utilize technology?
  • What do you need to improve or learn better to be world class in technology?

“It’s a Knowledge Economy and only the smart people win … Make sure that your law firm adapts to the changes and becomes a winner when the Technology Inflection Point hits.”