30 Apr 2018  | 
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Convergence: Understanding complex, dynamic, inter-related trends

Convergence is a core theme of this paper. It means that when one is thinking about any significant issue and how it might unfold, its drivers need to be considered in their complex, interactive entirety – not just individually. This reality is closely aligned with an area of science known as complexity theory, the concepts of which have been upending business theory for some time. Frequently avoided as being too complex and uncertain to be useful in practical terms, at least in business science, this paper shows how it is necessary to embrace complexity generally and convergence in particular, if one is to successfully transform a law firm’s business model in pressured, hypercompetitive market conditions.
Convergence involves the merging of two or more different streams or phenomena, sometimes quite different and sometimes leading to unexpected combinations. It is commonplace in technology, for instance: telephone + internet connection + music and video player + camera = mobile phone.

Schmidt (2008)’s description of convergence in ‘The Beatles’ and brain surgery joins many others, including Roco et al (2003) Garreau (2005) and Mulhall (2002) who describe how convergent technologies can produce far more dramatic and unpredictable outcomes than any of the individual drivers alone. Many disruptive digital innovations that existed only in theory in 2002-2008 are now emerging into reality and, in many cases, manifesting themselves in ways that are quite different to what was anticipated. What emerges over the next decade will almost certainly be different again, to what we anticipate now.

In this paper, we explore the principle of convergence neither as it applies to the development of specific new technologies, nor as a tool to try to forecast the future, but as it applies to the law, changing client needs, and law firm business models.

We hold deep misgivings about attempts to actually predict what emerging technologies will be capable of or used for in 2025, 2030 or beyond, or what new ways of working will have emerged as a consequence. Likewise how geo-economic and socio-political trends will play out. The ‘cone of uncertainty’ that extends from the present into the future grows exponentially over time (see figure 4) and makes such forecasting unreliable to the point of fiction, for businesses. Over more than the short term, ranges of outcomes that might emerge in systems as complex and adaptive as law firms and most other businesses are too vast for rigid planning. In a systemically uncertain world, it follows that any assumptions about the future need to be accompanied by the ability to react with agility, when assumptions prove false.

 

Figure 1

 

This paper aims to help law firms design and implement the systems and planning processes necessary to provide that balance between direction and agility, in particular as this relates to evolving the firm’s business model to one that is responsive to our emerging digital world.

 

Figure 2

 

Technologies listed in figure 2 interact with each other and with other trends, in much the same way as the technologies that led to the invention of the CAT scanner. In doing so, they change the strategic environment for large law firms, in turn driving a need for a business model that aligns with that new reality.

Figure 3

 

Part of the change can be addressed through what many call ‘digital transformation.’ While important, though, digital transformation addresses only some of the strategic issues involved. More difficult to tackle are issues around culture, the actual format of the business model, service delivery and changes in the way that the firm engages with its clients and other stakeholders, as a result of digital transformation. Rather than embarking first on exploring new technologies to adopt in the hope of enhancing efficiency and impressing clients, we propose a more client-centric approach. In essence the key message of this paper is:

To understand how to transform the current people-leveraged business law firm model to a digitally-leveraged model, one must first understand how digital disruptions are changing client legal needs. This exploration needs to be done collaboratively with clients, in a structured and systematic way, using proven methods and processes that are most likely to yield innovative insights.

 

Figure 4

 

The six disruptive digital technologies on which Chapter 3 focuses are:

  • Artificial intelligence
  • Blockchain
  • Big Data
  • Internet of Things
  • Advanced wireless networks (5G and beyond)
  • Quantum computers

Others might have selected different combinations, without changing the underlying principle. For instance, the McKinsey Global Institute (Manyika et al, 2013) identifies a dozen technologies that they see as potentially disruptive on a global scale:

  • Mobile internet
  • Automation of knowledge workers
  • IoT
  • Cloud technology
  • Advanced robotics
  • Autonomous and near-autonomous vehicles
  • Next-generation genomics
  • Energy storage
  • 3D printing
  • Advanced materials
  • Advanced oil and gas exploration and recovery
  • Renewable energy

Taking a more overarching approach, the World Economic Forum (Schwab, 2016) describes three industrial revolutions that have already transformed the world since the 18th Century and a fourth that is now in its early stages (see figure 3.)

The transition induced by the second industrial revolution at the turn of the 19th to 20th centuries triggered the current law firm business model, described in Chapter 2. The third, in the late 20th century, began to render that model obsolete. The fourth will complete that obsolescence over the next five to seven years.

We believe that most firms that fail to transform their business models will cease to exist within the next ten years.

The complexities involved in the thought framework offered in figure 2 are too difficult and complex to tackle holistically.

One can however apply it down verticals of client / industry + area of law + particular issues, to explore with clients how their specific business and legal needs might be impacted. For instance, how might these disruptors:

  • impact tax including transfer pricing for an energy company with business operations in France and the USA?
  • influence a decision about whether or not to invest in a power station in Africa?
  • change how due diligence, eDiscovery and other legal research should be conducted, to deal with the massive scale of the data sources to be analysed, efficiently and accurately?
  • drive the volume and complexity of new law being produced (figure 5?)

 

Figure 5a

Figure 5b

Figure 6

 

In the near future, perhaps the only sustainable source of competitive advantage for a large law firm will be its ability to out-compete others in anticipating these new client legal needs and adapting to meet those, faster and more profitably than competitors. To be truly sustainable, though, these capabilities need to be deeply embedded into the firm’s business model. The innovation and creativity involved cannot be relegated to the fringe of the law firm leaderships’ attention. We explore this more deeply in chapters 4, 5 and 6.

 

Sources and references:

Filler, A.G., 2009. The History, Development and Impact of Computed Imaging in Neurological Diagnosis and Neurosurgery: CT, MRI, and DTI. Department of Neurosurgery Institute for Nerve Medicine Santa Monica, California

Garreau, J., 2005. Radical Evolution: The Promise and Peril of Enhancing Our Minds, Our Bodies — and What It Means to Be Human. Doubleday.

Ilbury, C. and Sunter C., 2001. The Mind of a Fox: Scenario Planning in Action. Human & Rousseau Tafelberg, Cape Town. (Ilbury and Sunter first conceived of the ‘cone of uncertainty’ in their earlier work but it is comprehensively described in this source.)

Mulhall, D., 2002. Our Molecular Future: How Nanotechnology, Robotics, Genetics and Artificial Intelligence Will Transform Our World. Prometheus Books.

Roco, M.C., Bainbridge, W.S. , (ed’s) 2003. Converging Technologies for Improving Human Performance. Springer.

Schmidt S., 2008. The Coming Convergence: Surprising Ways Diverse Technologies Interact to Shape Our World and Change the Future. Prometheus

Schwab, K., 2016. The Fourth Industrial Revolution. World Economic Forum

Wood P., 2017. The Fall of the Priests and the Rise of the Lawyers. Hart Publishing.