Digital Transformation in the Legal Industry with Michael Shea, CIO, Morgan Lewis

Michael Krigsman:

Welcome to episode number 188 of CXOTalk on a sunny and hot afternoon here in Boston. I’m Michael Krigsman, and today we are talking with Michael Shea who is the CIO of Morgan Lewis which is one of the largest legal firms in the world on the face of the planet and we're going to be talking about digital transformation and innovation and the legal profession. And I would like to first express a grateful and wholehearted thank you to our sponsor Avanade and Avanade, you guys have been great partners and so thank you very much. And I also want to thank Livestream another one of our partners that has been just awesome working with CXOTalk. So Michael Shea your CIO of Morgan Lewis and welcome to CXOTalk.

Michael Shea:

Great, thank you for having me Michael.

Michael Krigsman:

Michael I tell us about Morgan Lewis.

Michael Shea:

Well we're an old law firm that was founded in 1873. We have approximately 2,000 legal professionals that's across 28 offices in 17 time zones. We've got amazing lawyers all over the world in 17 practice group, across five industry sectors and it's a great firm. We've got an amazing culture. It’s based on where collaboration is encouraged and even part of our reward system and our clients see the value and going to one firm you can address all their needs on a global basis, so a really great place to be.

Michael Krigsman:

And I know you are you are a very large firm you have about 2,000 legal professionals and I know you don't report your revenue but one can get that information publicly and it's almost $2 billion. So you are a multinational multi-billion dollar organization. So let's  talk about digital transformation in the legal industry and Michael would you set the stage for us, please share with us the state of the legal industry and where it's coming from and then that will provide a good platform for talking about innovation and where things are going.

Michael Shea:

Well the legal industry really has been operating in the same way for many years and many aspects of those core way we practice will continue, but there's a lot of change happening in the industry. We have new competitors with legal outsourced providers and large consulting companies outside the US, who are getting into the illegal market and clients are also sourcing work differently. They used to source all legal services through law firms and now there's a lot of multi-source and going on across different providers, and their vendor management offices are now involved.

Whereas before a lot of the engagement we have a client was with general counsel, which is a primary place that we actually have those relationships. But we now have management offices that are also being introduced. There’s also a lot of consolidation in the marketplace and our clients are working with way too many law firms, and we've heard for many of them that they're looking to consolidate these relationships.

Michael Krigsman:

So historically if you worked with a legal firm, especially at a large firm like yours there was in a sense lawyers were like doctors, they were the the omniscient ones and today you're saying that client expectations are changing and to a certain maybe even a large extent that's driving changes among the legal profession.

Michael Shea:

Yeah, and our our key relationships are still very deep personal relationships as we provide great value to our clients. But there are other factors there that are playing into here as well. Information security compliance is now a major concern, whereas a few years ago when it wasn't a board-level issue isn't as much of a problem. There is also greater demand for efficiency and in my area lots of new technologies that are coming onto the market that will have a significant impact for how law firms operate in the next five to 10 years. And in this timeframe firms that are investing in these new capabilities and adopting change will gain competitive advantage in my opinion. And I think that those firms that adopt and change and innovate, there will be the haves and the have-nots in the industry. Those that have that those capabilities will be seen as those firms that clients want to engage in, and I know for us this is a big focus of ours.

Michael Krigsman:

So please elaborate on that. So when you talk about haves and have-nots in the legal industry that's kind of a wild thing to say so please elaborate on  what you mean by that.

Michael Shea:

Well we look at it from a few different perspectives. One is from a client's perspective in how to drive greater efficiency. They expect and they want more with less and that means taking advantage of having better knowledge management capabilities, taking advantage of our great knowledge that we have in the organization. It means being able to engage with them digitally, unlike many law firms are doing today and getting more sophisticated with that digital client engagement.

It could be automation of documents. There's a lot of innovation around machine learning and artificial intelligence to evaluate contracts and make deals and other aspects of legal. And if you add all these things together are you looking at a very different operating environment. It still comes down to that you need great lawyers, and this technology that's being introduced really is a set of tools and capabilities around those great lawyers. And knowledge is important for the clients, but for us to attract new lawyers and for us to attract people and retain our people we also need to be viewed and have great technology.

And that is one of the key factors for recruiting our more experienced partners, but also the new Millennials that are coming into the legal space every single year. So it's critical and we see that more and more as we interview new people coming to the firm. The importance of technology in these tools and even being able to do more self-service and move faster and take advantage of things we've done in the past is becoming more and more important to these Millennials.

Michael Krigsman:

So if we parse what you've just been saying a little bit it, sounds like for you technology is a core enabler of let's say efficiency. But at the same time you are spending a lot of effort aligning technology to all the business goals, you know better employee retention and attracting employees, using you mentioned using machine learning for reading contract. So it sounds like technology is playing a pivotal role at the firm in quite a number of different ways.

Michael Shea:

Well you're speaking to the CIO so of course I’m going to be saying yes that's the answer, but it absolutely is becoming more and more important. I read an article in the news this morning about how law firms are investing more in technology, and we are making a big investment in technology ourselves. But I do see it as a differentiator for our own personnel, our own lawyers, our own professional staff and absolutely that will translate into with what the client see and how the clients perceive us as well. And we're a firm that is very quickly transforming into one where I think we will have some of the best technology any law firm in the world in the very near future.

Michael Krigsman:

Given your size you are also shaping where the legal profession is going in terms of Technology and I’m really interested in focusing on the business issues and let's come back to that. But since we're talking about technology can you elaborate, tell us a little more about the types of technologies you're using and what do you see coming down the pike with technology and why, what is this doing for the firm when you're investing in these technologies.

Michael Shea:

Well let's start again with the client’s side. We focus on enhancing great client service is what we have today. And a lot of this today means better digital client engagement across all mediums. Our website and we made big investments in our website. We rebranded the firm. We've got great content on our website. We're doing a lot of work around extranet sites right now and allowing better workflow between our lawyers and our clients and capabilities that we don't think exist in other law firms, and then mobile it is clearly one of those  channels that all of that great content needs to go out through the mobile channel as well.

And then you know providing our own lawyers with tools to facilitate internal client collaboration is critical, automation capabilities and really making sure that we've got the best tools on the market that help produce a great work products. You know we're also managing our business better. We want to provide greater transparency into our lead and lag measures, easy to consume dashboards, and we've made significant investments and optimizing our user experience across all of our systems and including being more aggressive with technology deployment. We’re the first big law firm to deploy Windows 10 off 2016 with over 100 greater applications and new tablets and touchscreen computer. So we’re being pretty aggressive in putting some latest technology in legal field and in broad technology area in the hands of our lawyers and our staff.

Michael Krigsman:

You mentioned artificial intelligence and machine learning.

Michael Shea:

Yeah, in the long term some things that were working on now that we think we're going to have a pretty big payoff and long term and that really in our knowledge management area. So I managed three areas in the firm. I managed I, I'm also responsible for our knowledge management area and our information governance and records teams. And all of these are critical.

One of the area's more really interesting that’s happening right now is in our knowledge management area, where our platforms are getting much more sophisticated from the large amount of document automation projects that we have to intelligence search tools that we're rolling out. We've got a new enterprise search tool rolling out next week. The work product that we use, legal reference tools, and some of these are very proprietary to Morgan Lewis. Then some more advanced things AI machine learning platforms.

Right now we're focusing those efforts on emanate documents and emanate contracts and we also are seeing activity. We've got a very successful discovery practice and machine learning artificial intelligences is critical in the discovery and even predicting outcomes and legal strategies.

So there's a lot there and you know things that even more in the future that we’re working with in our labs all around augmented reality. And we're doing a lot of work with Microsoft HoloLens at this point and other virtual reality provides of HoloLens is our primary focus at this point and there’s some very interesting use cases for augmented reality in the legal space.

Michael Krigsman:

My impression or my sense would be that these kinds of technologies are right now pretty much only available to very large firms like yours is that correct I would assume so. I could be wrong.

Michael Shea:

I don't know other law firm using augmented reality at this point. You know we're looking and using it in IP cases where we can look at things like complex chemical formulas or chip technology but instead of in 2D we can walk around them, and see them. So imagine how that changes, how an expert witness or in the future jury may look at these objects and change the outcome of a case. E-discoveries cases that allow us to look at information relationships in 3D, and even communication in general is going to have a major impact from augmented reality and virtual reality in terms of being able to virtually see people and interactive in a virtual environment.

And what's amazing is when you start looking at these technologies today that they're pretty well baked. We're not that far from having a wide-scale practical implementation. So over the next five years were going to see most businesses including legal adopt a lot of these technologies that are thought of as future. But to do that you need a pretty strong and to be honest larger IT department. You need development capabilities and we have internal development teams as well as the sponsor of this program Avanade, we have an offshore development team with Avanade and I think those development capabilities are a bit unique in our industry.

Michael Krigsman:

So you are in fact technology developers.

Michael Shea:

Absolutely. So in the legal industry you have a lot of law firms especially in the US and the UK, and traditionally the software providers with the exception of a few larger providers have service the small and medium business or small and medium law firm industry. So some of the the solutions that are used in small and large law firms are limited in terms of what you can get in the marketplace and aren't necessarily designed for a large global entity, with multiple languages, multiple currencies, different business problems.

So my opinion has been since I joined about a year and a half ago where we can't find a great piece of technology in the industry, we actually we go and build it and of course I’d much rather buy than build and in most cases. But by building some of our own technology it gives us a competitive advantage in that we can show that we can do things with our clients that no one else can. And our clients are going to be seeing more and more of this especially over the next year as some of our summer innovations start to come to light.

Michael Krigsman:

So one of the questions that people always have is when do you decide to build technology yourselves versus buy off-the-shelf. How do you determine that there is a sufficiently strong case for differentiation or process uniqueness?

Michael Shea:

Well to be honest, Gartner group for example has some great formulas on this, but you know I personally like to look at of course cost is a factor that we have to take into account with every investment. A few things that I look at though is what is the solution’s going to meet the needs of our size firm? Is it going to meet the needs of our clients? Is it adequate and does it give us a competitive advantage.

Me going and building an HR platform really doesn't make a lot of sense. It doesn't really give us a competitive advantage, even though we are a professional services firm, and there’s great solution’s in the market place.

But other areas as well that I evaluate and been very vocal in the industry especially to the vendors that we work, is around having a great user experience. And maybe this is my influences coming from the mobile industry in that in the mobile world if your mobile app didn't instantly work well, was intuitive, felt great, look great, added value you’ve got to lead it. And when I when I started at the firm and look at the portfolio systems that we had it became very clear that things that we developed, the things that we purchase off-the-shelf, user experience was was was not good. And that means there's adoption challenges there's you don't get as much value out of that platform, and we're right now overhauling as much and as fast as we can our software so that the user experience is consistent, it's great. There's things like contextual help that allow you to use the software more effectively and in the end it does the job, and we're listening to our end users as well to get feedback on whether softer is good or we're adopting or killing if it's not effective.

Michael Krigsman:

We're talking with Michael Shea, who is the CIO of Morgan Lewis which is one of the largest law firms on the planet. And we're talking about the future of the legal industry and digital transformation in the legal industry. And you are part of the show, so if you have questions tweet them. There's a tweet chat going on right now using the hashtag cxotalk. And Michael we have a question from Twitter, Arsalan Khan asks when you think about transformation and think about people, process, and technology where are the biggest challenges and what are those challenges and how do you address those challenges.

Michael Shea:

I get the question quite a bit. You know friends of mine heard that lawyers are resistant to change. And when I was interviewing to join the firm I interviewed with our new Chair her name’s Jami McKeon, and one of the things I found with her is that she is a huge proponent of technology and innovation. In fact one of our five strategic objectives is a culture of innovation, and I asked her this question you know, is there going to be resistance to change that I can help bring to the organization? And she said that there's actually pent-up demand for this change. And then when we started to roll out new capabilities over the last year and a half especially the last year, what we found was that if that technology and that capability make sense. It has great usability; it's easy to use and adds value to someone there really is very little resistance. And I would say 90+ % of the capabilities that my team has introduced to the organization has been very well received.

I'm not saying there aren't risks that need to be managed and the few people that need a little more attention as we're changing, but I've been very surprised that if we communicate effectively we make our systems easy-to-use, and we make a clear case for it adding value to someone. There really hasn't been a lot of resistance to change in an environment where traditionally law firms have been very scared of any change.

Michael Krigsman:

That's pretty amazing actually so really what you're saying is that the resistance to change evaporates if it's the right fit, if it's adding value as you said and if the UX is there. But the legal profession has this reputation for being very highly change averse, and so when you're thinking about adoption what are the steps that you take when you're going to introduce new technology which I assume also means introducing new processes into the firm.

Michael Shea:

Well I think it's important to talk about the industry as a whole. Most law firms our partnership and in the US there are partnerships. There are other some ownership models in other countries, but you have a group of very smart people where those technology investments you know hit someone's personal bottom line. It's a more personal investment to them. So you really have to ensure especially in our industry that one, the technology makes sense, but also there's a communication on cost impact and where it makes sense.

So something as basic as we're replacing every single printer in the firm in the next few weeks but I got a lot of requests for people to say, I actually redline contracts whether it's digitally or on paper. I need to see the red line, and we don't have color printers everywhere. So the printers are all getting replaced with color printers and also scanners. What's interesting is it's actually costing less because our 10-year old printers that were there, no one bothered to look to see whether they're more expensive.

So that kind of change again makes sense to people, adds value. But we're also able to try to optimize our size and our purchasing power and try to drive good value as well.

Michael Krigsman:

But something like printers that's an infrastructure issue, what about introducing a new technology that really changes how the attorneys will conduct their business.

Michael Shea:

So one of the things interesting is let's take machine learning for example. Machine learning is something that will disrupt our industry, and it's somewhat goes against in some cases the billable hour rate. So if I can actually evaluate a contract faster, yet I've had to make that investment technology. I may be able to do things in less time, however it means I can add more value to my client. It may also impact how we staff that matter. It may impact how we price it our clients. We may go from billable hours to more of a fixed-price engagement. So technology can actually have an impact on organizational impact. I can have an impact on how we work. It can have an impact on the quality of work to our clients, and  this specific knowledge is not having a material impact on our industry today, in five years it absolutely will.

Michael Krigsman:

So one of the things that technology is enabling it sounds like is changing your business model. So it sounds like clients have different kinds of expectations of you and you are using technology to help evolve your business model in response.

Michael Shea:

Yeah, there's been many articles especially the legal space around the demise of the lawyer being replaced by the computer. And let's just say we're very far away from that happening. Our key asset in our firm is still our people. It's the expertise that they have. A lot of the innovation that I’m talking about makes them work faster, makes them work even smarter, makes them collaborate and communicate better. And again, these are expectations of our client that we're going to get really faster, smarter, better and they're really enabling capabilities.

But really we're still focused on retaining and hiring the best talent in the industry and superstars in industry, and while the technology is critical especially what’s to come in the near future you know it's all about how do we evolve our teams to take advantage that. And then look at things like our organizational structures, the leveraging of our people and even our client relationships and how we charge.

Michael Krigsman:

As CIO, what is your relationship to the business side of the firm, and how do you for example become aware of the strategic issues and what's your input in helping develop transformation agendas, goals and so forth.

Michael Shea:

So this is where I am a bit lucky in my industry in that we are a very simple management structure. We have a five-person management committee, chaired by Jami McKeon, our Chair and with four managing partners and our Chief Operating Officer in that management committee. And then we have a seven-person executive team and we all interact a lot. We talked a lot, we get a lot of direction from our management committee. We also have an advisory board in the organization that we get a lot of feedback from. But it's actually a very small group that is able to be agile, move quickly, make decisions and we get great support for management committee. And  I personally have been very encouraged by the excitement around technology and the capabilities that we’re working on and our management committee has been a great partner to me, especially our CEO on our chair to give direct feedback as to what they think is going to work and what may not work.  So we actually have a pretty easy structure to work within and allows us to move very quickly.

Michael Krigsman:

So from this standpoint as as a multibillion-dollar legal firm, in a sense you're you're no different than any other type of business. So my question therefore is how does your management committee think about the technology and how do they determine their appetite in consultation with you, their appetite for investment in transformation which includes technology, but includes lots of other things as well.

Michael Shea:

Well majority of our management committee you know they're great lawyers, but they're also power users of our technology. So our management committee they don't just have their administrative job and their leadership roles, but they're also acting lawyers. They managed clients they actually are working on active legal matters and so they actually have to have multiple jobs and sometimes I'm not sure how they do it. So they use our technology and they're constantly traveling they use our mobile technology. They do billing. They feel the pain of a bad systems just like other people in the organization, and the benefit of great systems. And again it's a little unusual for the management team of a large law firm to actually perform legal services. But I think it really helps them tie you know what they're doing and the decisions they're making back in the real world and their partnership. And we're we're very much like other companies are except that we definitely listen a lot more to our partners, so I think we're probably more receptive to feedback because our partners do on the the firm.

Michael Krigsman:

And again is this really the province of large firms alone and maybe go back to what you said earlier about the haves and have-nots of technology in the legal profession.

Michael Shea:

I've only been in this industry for a year and a half, so I've had some exposure  of other firms, but I think in other firms it is a little more challenging to move quickly when there's more decision by committee and more decision by large groups. And it's very difficult to have to constantly sell everything you're doing. And I have the benefit of having a little bit more autonomy that I think some of my peers have, and in the end I hope it gives our firm you know a competitive advantage. And I do think that we are adopting new capabilities and technologies faster than any other firm in my opinion. Some my colleagues you know my industry peers may vary much disagree, but we are making some very quick progress and again with the goal of providing better services to our clients and in our own motors.

Michael Krigsman:

So is that always your reference point, you're obviously investing a great deal of time, money and effort in technology. So is that always your reference point, what does this do for efficiency, for clients or instead of putting words in your mouth, please share with us what are your investment criteria that you apply.

Michael Shea:

Well let's start with the basics of IT. So the CIO has to make sure that we  keep our technology running, that we manage security. So there are  basic investments that we have to make to refresh infrastructure. PCs, security capabilities. So those are the basics that the maintenance basics that we have to do that are always a challenge for all of us. But we then have the core operational systems that we have to do again, just like any other company or firm, we have our financial systems, our HR systems, our back office systems.  And then where we want to be a little bit more aggressive on technology is what's going to have an impact for our lawyers. So the infrastructure of things and those maintenance items, those are things that we have to do every year.

We have to evaluate the cost and investment for our back office capabilities and where there's value in that and how fast do we make those investments. And then to me it's a it's an easy call to invest in digital engagement technologies with our clients and capabilities for our lawyers. And again everything from artificial intelligence to new laptops, and our lawyers have seen quite a bit of focus on making sure that they have some of the best technology, and it's going to get even better in the next year.

Michael Krigsman:

Tell us about digital and when you say digital engagement technologies tell us about that.

Michael Shea:

well most law firms including us have extranet sites that clients go on to that have some decent capabilities from file-sharing to some collaboration. However, what we haven't seen is a much deeper level of engagement from complex workflows, co-document automation that we see with simple things like google docs today. In the consumer space and in the enterprise space as well, we have limited mobile capabilities for clients. We have amazing content that our lawyers write and our firm writes that we published on our website and through other mechanisms. But we can do a better job of targeting that content, of making more relevant, and really deepening that engagement with our clients by becoming more of a value to them and not just by providing great legal services which we do for our clients. But also providing all those other capabilities that to be honest we have that I think we can use more effectively through extranet sites, mobility, our internet site, and making sure that that experience is also unique.

Michael Krigsman:

We're talking with Michael Shea, who is the CEO of one of the largest law firms in the world, Morgan Lewis. So Michael, we have about 10 minutes left and I'm still struck with this idea of you being a technology company, a technology developer. Please tell us more about that. You know we hear the kind of phrase every now and then it says all companies are technology companies today. But in your case it's really true and you’re a law firm which is in a way the traditional bastion of paper.

Michael Shea:

Well that is true. Don't get me wrong I still support the records and we have a lot of paper.  And those new printers you might want to ask why we need so many printers, well people still like to print. And there are studies showing that it's more effective to review documents in print format. But in terms of technology development you know, there's two areas where we develop, one are gaps in the market, so you know I mention digital client engagement, having amazing extranet side capabilities we may use a platform to do that, but we want to have a very unique experience with us and taking advantage of our content and the work that we're doing for our clients already. And even making them more aware of the other work that we could do for them, the more we have stickiness with our clients, the more that we can provide value to them and even expand our relationship.

We develop all sorts of technology, from mobile apps; simple ones. From a directory applications to we've actually mobilized a huge portion of our internal internet which has many many web-based applications embedded on this internet. And we we've been working for quite a long time to make sure they work on iPad’s, they work on iPhone’s and on android devices. So a lot of this is just normal mobile-enablement. Some of that is making sure that we've got better workflows within our organization and with our clients. That we that we provide more transparency and better and more accurate bills for example. Some of the core things that you know a law firm does in our operations.  And again where there's gaps or there is inadequate piece of software or systems on the market we do evaluate whether we should build it or not.

Michael Krigsman:

And you work with Avanade, who is the sponsor of this show for which we are very grateful. So you have a development team with them in India or tell us about the kind of development again the actual technology development that you're working on.

Michael Shea:

So our core capabilities, our application teams consist of a few different areas .We have a group that focus on our off-the-shelf applications. We've got a group that focuses solely on mobility. We've got a group that focuses on knowledge management systems and our documenting system, and then we have a team that focuses on our custom applications.

We have a decent-sized internal development team and  what we do is we extend our internal team with our offshore development resources that for Avanade that we have is actually in the Philippines. And we have quite a few product. So in IT right now we have a little over a 100 active projects and I  would say out of those 100 about a third of those are involving some sort of systems  development efforts, and in some cases custom configuration of off the shelf systems, so a huge amount of activity going on the firm right now.

Michael Krigsman:

So you have a a 100 projects again, I’m still so focused on this idea of you as a law firm developing your own technology and partnering with Avanade to do that.

Michael Shea:

Yeah I mean to me it makes sense. We’re like many other industries, but our industry in some cases there's some amazing solutions on the market. And we either investigated them or purchase them or are looking at them. But there are also other areas that have just been very weak and some of these are not as you know sexy as augmented reality, but some of them are basic transactional systems, workflow systems. But one of the things were very much focusing on as we built a user experience and design team which I think is also a bit unique and that team is having a massive impact. In that they're touching all these systems to make sure that we're not just developing systems, we’re developing systems that work great, that function well and serve our business well.

Michael Krigsman:

So that's that's really interesting, so you've got a centralized user experience team which is touching all of these different projects you have going on.

Michael Shea:

We do and that's something I'm very passionate about and we brought in some pretty great people who really had a big impact. And what's interesting is that our development teams, our project manager, our business analyst, they actually they get it now. They get why those user experience people and those designers are critical to what they do because they take you know that the great concepts of the business analyst come up with. They take the great software that the teams develop and just make it so much better.

Michael Krigsman:

We have just a few minutes left and what advice do you have for others in the legal industry who are looking at your firm looking at Morgan Lewis and saying you know we're smaller, we can't do this but we also need to change. How would you recommend that they go forward into the future with their own transformation?

Michael Shea:

Well I think one of the things that I would say is to ensure that there is a clear communication with the the leadership of the law firm and in some cases from what I’ve heard of other firms there is a bit of a communication wall gap between the executive team that is helping to run the firm and the managing partners of the firm that are really the key leadership of the firm. And I that communication gap is and even more so will be detrimental. I think that you know the need for changes is critical, but many law firms are still doing pretty well and you know if it ain't broke don't fix they say and that is a big mistake.

This is an area where technology and knowledge management and information governance and these areas actually need investment, and these investments don't have an impact on day one. It is a multi-year journey that any company or law firm must take and the longer a firm waits to start making these investments, to start to address some of that technical debt that has built up over the years. The things that weren't addressed because that also have to be done at the same time, the more of a disadvantage they are going to find themselves in the future.  So I think that a CIS job and everybody's job in IT is to really try to communicate where the most effective technologies and impacts are going to be. And for law firms really may depend on the types of practices they have you know where we're different technologies are going to have an impact. So I think that communication, and I’ve been very lucky in that I've had very good exposure to our leadership and great support, and they've had the you know the foresight to  support these initiatives. And I think there's I think they're seeing the benefit  today and they were absolutely see more benefit going forward.

Michael Krigsman:

Well fantastic. We have been talking with Michael Shea, who is the Chief Information Officer of Morgan Lewis a large multinational law firm. Michael Shea thank you so much for for being with us today.

Michael Shea:

Thank you for having me.

Michael Krigsman:

Thank you everybody for watching episode number 188 of CXOTalk and thank you again so much too Avanade for sponsoring this episode, and also to Livestream for being or video partner and video distribution partner you guys are all great and we're very grateful for it. Next week we have two shows tune in for the first one on Wednesday where we will be talking with the Chief Digital Officer of Rachael Ray. Thanks so much everybody bye bye.