"New technologies will spread with lightning speed, and this should be taken into account when constructing a long-term strategy of a law firm's development" —Vladimir Sayenko, Partner at Sayenko Kharenko assures
— People say that a time of crisis is a time for opportunities. How successfully do you think Ukrainian law firms took advantage of these opportunities?
— It is difficult to disagree with this statement. We all remember how during the crisis of 2008-2009 most law firms conducted mass layoffs, allowing them to reduce costs and improve financial efficiency. The partners in our company decided to go against the market: we didn't cut staff but, on the contrary, expanded staff and gained the lead on the Ukrainian market in terms of the number of lawyers. The crisis of 2014 proved to be more difficult due to an unresolved geopolitical conflict; moreover, I can't bring myself to call the current situation a crisis. By definition, a crisis is a dramatic economic turn that cannot be eternal. If financial hardship continues for a long time, it means that the market simply changed and you need to adapt to it, and, ideally, take advantage of new opportunities. I cannot say that Ukrainian law firms benefited significantly from market changes. If you do not take into account temporary advantages of individual companies, benefiting from the employment of their partners and other employees in the public service, therefore, in general, neither large established firms, nor startup companies have found new opportunities, which would have a significant effect on the market. Attempts to bring to the market different automated systems (agreement designers), platforms to recruit freelance lawyers (in lawyers-on-demand format) and other alternative forms of legal business already known in the West, have not yet gained sufficient traction in Ukraine.
— What challenges do systemic law firms face now both on the Ukrainian and on the global market?
— The global challenges are well known. Primarily, it is the reduction in purchasing power and, simultaneously, growing customer needs, increase in the number of jobs and risks, which companies should evaluate (so-called 'more for less challenge'). If closing all these needs with the assistance of outside lawyers in traditional format, then no business will cope with these costs. The answer to this challenge is partly commoditization of certain legal services, the division of comprehensive projects into separate elements with the transfer of each of them to the most effective performer (often not a lawyer).
The second challenge is liberalization. The monopoly of lawyers over provision of legal services was revoked in many jurisdictions. This led to the introduction of competition on the part of auditing and consulting companies that can perform some legal work more effectively than law firms. This trend is not topical for Ukraine. On the contrary, complete liberalization occurred at our place long ago (legal services can actually be provided by a plumber, if he/she finds a customer), and now we are seeing an attempt to establish a certain order by means of introducing the monopoly of lawyers over representation in courts.
But scientific and technological progress is preparing a main challenge for us; however, we still do not know what exactly it will result in. Virtual court rooms have already become a reality in many countries, reducing trial costs and increasing the speed of work of courts. We are hearing more and more about using artificial intelligence in the work of law firms. While earlier it was just philosophical meditations on the theme "What if ...", then we wonder now "And who's next?". Thus, in May 2016 BakerHostetler, an American law firm, which has existed for more than 100 years, hired ROSSa, the first lawyer on the basis of artificial intelligence. The next ROSSa employers were von Briesen & Roper, SC, which is the same age as BakerHostetler, and Latham & Watkins, with more than ninety years of work experience. Some more Magic Circle firms reported their investments in individual IT projects, which would not only enable the optimizing of their own resources, but also the enlisting of artificial intelligence.
You can, of course, reply with a joke that our young market still has a long time, as most adult players have only recently celebrated their 20th anniversary. I'm more inclined to agree with the statement of William Caraher, Chief Information Officer at von Briesen & Roper SC, — "the rules of the game are changing". It is important not to skip this moment and even now consider emerging trends when constructing a long-term development strategy for a firm, as new technologies will spread with lightning speed.
— How important are the factors of "innovation" and "IT-zation" in the legal service business in terms of both the development of firms and customer service?
— Law firms like to focus on their innovativeness and even participate in special studies. For example, the Financial Times, a publisher, has recently published the results of a study of FT Innovative Lawyers, emphasizing three Ukrainian law firms. The truth is that lawyers proved to be one of the most conservative categories of professions in the issue of IT implementation and trying to offer real innovations in the provision of legal services. Today, not even all large law firms hurry to implement the latest developments that simplify their activities and improve productivity: integrated document management systems, CRM systems, billing, internal Web portals, and remote access to all office resources. Very few firms use cloud data storage. Let alone innovative approaches to providing legal services! Except for replacing a typewriter with a computer, nothing has changed significantly in the course of providing legal services to a client over the past 100 years.
Our firm works simultaneously in several areas related to the functioning of the IT field in Ukraine: it provides legal services to IT companies; acts as mentors of Ukrainian startup and technology companies, thereby supporting development of the IT market; and also holds training seminars in a more systematic manner. Thus, for example, quite recently our experts participated in the development and launch of a new certified program for IT law on a platform of the Ukrainian Catholic University with the purpose of training young lawyers and exchange of experience between the best specialists on the legal market.
— What issues currently do customers turn more often to outside lawyers with?
— Customers apply to external lawyers only when they cannot get a comparable result without their participation. These can be complex or highly specialist issues for the solving of which there is no point in keeping a separate specialist as staff members, or large-scale projects that require significant human resources. There are also delicate assignments, which for ethical reasons cannot be known to anyone from a team. In some cases, anti-corruption or another policy of the company may prescribe mandatory receipt of external opinions on issues, where the price of failure is very high. It is more favorable for customers to close routine questions without getting in external consultants.
— What strategy should law firms stick to in order not to lose out in the competitive battle?
— Each firm should have its own strategy, and there can be no universal recipe. Reduction of costs will be enough for some firms in order to build business that satisfies them at the expense of low margins and high turnover. It is important for others to be engaged in complicated tasks for professional satisfaction, and they will be paid good fees for success, but their company will remain a boutique forever. The important thing is not to be a grey mass doing all the same that others do, but only two cents cheaper. In any case, there is a need to look for one's own unique niche or even create it in those areas in which you will have some competitive advantage.