Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
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52 LEXPERT MAGAZINE | APRIL/MAY 2017 | CONTRACT AUTOMATION | CBA's Legal Futures Initiative, which has been looking at how the Canadian legal market is changing and how the CBA can help foster successful adaptation to change among members. In 2014 it released a sig- nificant report, Futures: Transforming the Delivery of Legal Services in Canada. While Headon agrees with Kowalski that the primary push for more legal tech- nology will have to come from budget- minded in-house counsel, Headon gives credit to external firms for moving ahead with contract automation. "e push for innovation is coming from both, but certainly in-house counsel don't see their budgets grow at double-digit percentage increases on a regular basis. So there is always a pressure to achieve the proverbial 'more for less.' But we are seeing some responsiveness from firms as well, as they try to position themselves" in a more competitive environment. At Osler, Mara Nickerson doesn't see the devotion to billable hours as the prime impediment to enhancing contract auto- mation at Canadian law firms. Corporate lawyers, she says, know clients don't want to pay for inputs anymore: they care about outcomes. e billing model that's reward- ed lawyers for generations is "fundamen- tally changing. We're certainly seeing more and more alternative fee arrangements (AFAs). Over half of the responses to RFPs we put in last year had a fixed-fee compo- nent or an alternative fee arrangement." e number of AFAs has been steadily in- creasing the past five years. Now, she says, "the business case has swung to the point where it is worth invest- ing in these [contract automation] tools. And they've come a long way over the past 10 years. ey have evolved and are easier to use. It's easier to code the documents." Osler outsources the coding needed to customize its contract automation to Pan- gea3, a legal process outsourcing firm (pro- duced by Lexpert publisher omson Re- uters) with headquarters in New York City and offices in India. And last fall Osler opened Osler Works Transactional in Ot- tawa. Using Kira Systems, it offers capped- and fixed-price legal support contract analysis, due diligence, closings and other routine facets of complex transactions. at's innovation. Yet one of the main obstacles that Nickerson, as Chief Knowl- ere are a few large Canadian corpora- tions, Kowalski concedes, that have been able to flex their muscles a bit, requiring alternate fee arrangements. In-House Innovators Air Canada is one Canadian company now working to create a new "normal." Its in-house team is experimenting with external and internal solutions in contract automation that go beyond the soware of yore. ough such experimentation is costly, says Fred Headon, Assistant Gen- eral Counsel, "we are starting to see some success with systems that go one step fur- ther" than what Air Canada currently has. ese systems, for instance, can ask on screen, when a lawyer is seeking to dra documents, what he or she is trying to ac- complish? What things are important to them on this particular matter? "And based on those answers," explains Headon, "[they can] draw upon a repository of model clauses and actually build a contract from scratch automatically." Headon is past President of the Cana- dian Bar Association and still chairs the edge Officer, faces in bringing innovation to her firm has been the clock. "e chal- lenge is that the lawyers are busy. Showing them new ways of doing things is hard be- cause they are busy. It's not that they have an inherent skepticism about efficiency or a desire to be inefficient." Introducing the lawyers, especially young ones, to the tools before they use them, squeezing in some training, is criti- cal. "It is the juniors who are going to use these tools. A senior lawyer should not be generating documents out of a document automation tool. at should be in the hands of juniors. So the focus is on rolling these out to the more junior lawyers." Fortunately, adds Nickerson, once a technology system such as Contract Ex- press is coded to suit Osler's practice meth- ods, "these tools are pretty easy to use. ey're very user-friendly." Outsourcing e inherent inefficiencies that existed in Canadian corporate law firms today are propelling change and competition in a number of ways. As corporate clients de- mand lower and more certain costs, com- petition is ramping up from a variety of outsourcing venues. "Our competitors are not just other law firms," notes Robert Percival, a partner at Norton Rose Fulbright Canada LLP who was a past director of the Canadian Infor- mation Technology Law Association. "We are competing increasingly with technolo- gy companies themselves; with companies that want to automate a lot of the services law firms provide." Says Percival: "Certainly that's not the approach we are taking. We're very aggres- sively pursuing and adopting technology systems not only locally but on a global basis to improve the way in which we are managing our practice." One example of a global firm moving the needle on legal tech comes from Europe. ere, Dentons used an AI app developed by its NextLaw Labs division and UK ar- tificial intelligence company RAVN to implement a new revenue stream analyzing client exposure to regulatory changes aris- ing from Brexit. And there are other sources of compe- tition for Canadian law firms. e preva- lence of what Mitch Kowalski dubs "no- MARA NICKERSON OSLER, HOSKIN & HARCOURT LLP "There used to be just a few tools, a few big companies. … Now just about every product that is coming out in the legal industry these days has a document automation component. It is just becoming embedded in every system."