Predictions 2011 – Third Course

December 14, 2010

{b}From Bill Jones, SCL Trustee, Of Counsel, Wragge & Co LLP{/b}

{i}All change please, all change – cloud, costs, and commoditisation{/i}

Ever since the American election it has seemed that President Obama has the monopoly on the word ‘change’, albeit anchored in the very positive context of the phrase ‘Yes, we can!’. The IT sector has never been averse to change but every so often an inflexion point arrives which changes the landscape in a very dramatic way. The most recent example has been in the arrival of cloud computing.
While cloud offerings have been the story of 2010, it seems certain that it is a story that will continue next year too. In 2011 we will see the cloud offerings of major IT vendors continue to grow and mature, but of greater interest is the quiet revolution that has already started in the adoption of cloud products by major corporates. At first a product that seemed of interest mainly to consumer and SME markets, discreet enquiry and observation already demonstrates an increasing willingness amongst major corporates to reject legacy e-mail and other systems and adopt cloud-based products. The main driver is the continuing need and opportunity to achieve significant cost savings in markets and economies where top line growth is still hard to achieve.
Such costs saving opportunities come in many forms and in 2011 we will also witness legal markets responding to intense competition and the appetite of corporate clients to cut costs. This will continue to drive an appetite for new business models including legal process outsourcing, particularly overseas to gain the advantage of labour cost arbitrage. It will also fuel a continued increase in the number of boutique legal practices with low overheads and a flat rather than hierarchical structure.
Environments such as this favour commoditisation as yet another lever to squeeze cost out of as many processes as possible. Clients will be less willing to pay for tasks that they see as part and parcel of a lawyer’s stock in trade. By way of example, a big fee for first draft agreements is likely to become increasingly unwelcome, to be replaced by a willingness to pay a smaller amount for the R&D that has gone into the production of a standard form first draft.
All the tradition and values at the heart of our profession such as ‘certainty under the law’ and ‘precedent’ itself make the change word seem counter-cultural in the legal services market. But our clients need to work smarter not harder, and our challenge will be to help them achieve this. Can we do it? Yes we can!

{b}From Jane Seager, Counsel, Hogan Lovells:{/b}

The proposed launch of potentially hundreds of new generic Top Level Domains (gTLDs) has been under discussion since June 2008 and ICANN has now published the fifth version of the draft applicant guidebook setting out the procedures which should allow this to happen, including the proposed Rights Protection Mechanisms (RPMs) for brand owners. One would think then that 2011 would finally be the year that the launch takes place and that we finally see a seismic shift in the way the internet works, with .GENERIC (shop, sport, green, the list is endless), .BRAND or .CITY proliferating instead of the current dominance of .COM. However, I predictably predict that the launch will be postponed again and the planned opening of applications in May 2011 will be pushed back until the end of the year or possibly even 2012, not least because of the continuing debate on whether the current list of proposed RPMs is sufficient. What may cause more of a stir in the domain name world in 2011 is the current roll out of internationalised country code Top Level Domains (for example .??, for the Russian Federation), meaning that internet users may now write domain names entirely in their own script, both before {i}and{/i} after the dot. Whether this will make the Internet less anglo-centric and accessible to a wider audience remains to be seen.
Moving away from domain names, I also predict that more and more Internet content providers will start erecting paywalls and that 2011 will perhaps be the year when paying for content becomes the norm rather than the exception. Unlike generation X, present at the dawn of the Internet and seemingly wedded to the idea that everything should be free, generation Y has grown up with the Internet and is generally more open to the idea that content costs money, whether obtained offline or online. It is perhaps only a matter of time before more of the traditional media start to charge users for access, albeit a modest sum, as well as certain online social networking sites.
As far as accessing such content is concerned, in 2011 tablets such as the iPad will increase their market share and law firms in particular will have to address issues of data security as it becomes the norm to carry a single device destined for both work and leisure.

{b}From Peter Birley, Director of IT and Business Operations, Browne Jacobson LLP{/b}

2011 will be the start of a (further) period of challenges and opportunities as we see the possibility of Alternate Business Structures coming into play late in the year, plus the impact of the coalition government’s budget on the UK economy.
This will mean that the drive for efficiency will continue particularly as clients will continue to seek value for money.
In IT terms we will see a balance between keeping costs down and making investments that meet the efficiency process or add value to clients.
With that background in mind I can see:
• voice recognition coming back into play particularly as the technology has moved on a pace and can now bring some real benefits
• investments in unified communications, which again has seen further enhancements, and which will enable a more flexible and client responsive workforce
• automation of processes (workflow) probably on the back of Business transformation projects
• cloud computing continuing to knock on doors but not making any significant inroads until 2012 at the earliest
• tablets and smartphones making significant inroads into legal with the battle of the iPad versus the Playbook, and with the serious side-effect of making lawyers more mobile with rapid access to readable information.

{b}From Andrew Tibber, Senior Associate in the Intellectual Property and Technology Team at Burges Salmon:{/b}

In the October 2010 Strategic Defence and Security Review, the Government announced a new £650 million National Cyber Security Programme. Details of where this money will be spent are yet to be finalised, but we can expect significant investment in the raising of awareness among the public and businesses, and the announcement of strategic partnerships between Government and computer security companies. Elsewhere the Government’s plans to tackle online file-sharing will be thrown into disarray following a successful judicial review of the Digital Economy Act by BT and Talk Talk.

{b}From Tracey Stretton, Legal Consultant, Kroll Ontrack{/b}

In 2011, compliance will be a top priority. As the Bribery Act comes into force in April, the focus will be on internal policing to detect corrupt practices. Legal technologies will be used to support proactive red flag reviews by companies of their electronically stored data and internal investigations. The new rules of court on e-disclosure introduce mandatory requirements and the risk of significant court-imposed sanctions for non-compliance is real. As ESI continues to grow at an alarming rate, companies will rely more on technology in litigation to automate document review and reduce human input and cost. Expect to see new cutting-edge technologies such as prioritisation technology to focus lawyers on important documents and predictive coding to automatically classify documents.

2011 will be the year for innovation and the use of cutting edge technology in the delivery of legal services. The Legal Services Act is set to usher in a new era in service delivery, and with it more competition in the sector but also new opportunities for forward thinking lawyers and others to offer traditional services in different ways. Technologies that introduce automation into the legal process will increasingly be used to reduce costs. E-disclosure technologies able to learn from human reviewers and automatically prioritise or classify documents for review are already being used and they have the ability to reduce costs substantially. Expect to see more use of these technologies in practice, the inevitable skirmishes between opposing parties about the reliability of new technology and guidance from the judiciary and technical experts on how to use them.

2011 will also be the year of strategic resourcing. With business conditions still tough, and legal budgets even more constrained, General Counsel and law firms will be re-thinking the way they resource legal work and making the most of low-cost centres or jurisdictions and Legal Process Outsourcing to deliver more for less.

Smartphones, social networking, cloud computing and virtualisation will continue to be adopted due to the business agility, market penetration and cost-savings they offer. The very real threat of piracy, public leaks and increasingly sophisticated cyber-attacks mean that companies will face great challenges and need to beef up security to guard their intellectual assets and their data and protect themselves from financial and reputational damage. As e-mail is bypassed by informal discussion threads, postings and tweets, tech-savvy lawyers and investigators will be thinking about how to tap into these newer sources of evidence.