Law & Coder Episode 3 – Risk vs. Reward: Innovation & AI Adoption in Law Firms

In this episode, join hosts Christina Natale and Morgan Llewellyn as they explore the risks and rewards of innovation in law firms, emphasizing the importance of careful adoption strategies.

Some of the key topics discussed: 

• Balancing Innovation with Risk in Law Firms – Law firms must assess potential risks when adopting new technologies. The challenge lies in balancing compliance, ethics, and client expectations while innovating.
• Types of Risks in Legal Tech Adoption – Data security, regulatory and compliance, to financial and operational risks can be barriers in tech adoption.
• Rewards of Innovation in Legal Practice – Increased efficiency through automation and AI-driven tools leading to better client service with improved communication and case management. Law firms gain competitive advantage by staying ahead in the evolving legal landscape.

Tune in now to our third episode to gain insights to ensure a smooth and successful tech integration in legal practice.

Morgan Llewellyn: Hello, everyone! Welcome to the third episode of Law & Coder. I am Morgan Llewellyn, and as always, I’ve got Christina Natale with me. Hey, Christina, how are you doing?

Christina Natale: Hey, Morgan, I’m doing all right. I’m a little a little hoarse today, but it’s starting to come back up into the sixties and seventies here in Atlanta so hopefully that’ll make its way right out the door.

Morgan Llewellyn: Yeah. Yeah. Well, you know, here in sunny San Diego, we’re always in that sixties seventies. So you know, it’s a tough life out here.

Christina Natale: You know, it’s so tough.

Morgan Llewellyn: So we’ve got. We’ve got an interesting episode. Today. We’ve got risk versus reward of innovation and adoption for law firms. I’m really excited to talk about this. I think we’ve got a really good kind of lineup today. We’re going to be talking about really important risks that firms have as they think about innovation, and rewards that go along with each one of those risks. When done. Well, Christina, you know, before we jump into it, you know any kind of, you know light you want to shed on the conversation we’re going to have today, or anything you want to talk about or clue people into.

Christina Natale: Yeah, thanks for that, Morgan. I always think it’s funny. I think we’ve started to do a much better job as we talk through these things, the way that we always do conversationally, of pausing to really think about, you know, okay, like, this is what’s going on. But why does it matter to lawyers and people in legal professions. And I think that’s you know the way that we talk about almost anything today when we talk about these risks versus reward. I think that’s exactly it. I think the risks apply equally across any industry. There’s always going to be risks in adopting, in taking on new technology challenges and innovating in the way that they work. We’ve talked a lot of our past episodes about workflow redesign specifically embracing agentic AI. What’s new on the horizon. But I think it’s really cool to think about the rewards. And obviously, that’s, you know, we think about value. We think about business value. But really think about rewards of innovation, you know, in the same context as risk, I think, as a lawyer, a lot about risk versus reward or benefit versus risk assessments that we make. And I think it’s really cool to take that out of the purely legal context of what are the legal risks and rewards to what are the risks and rewards of innovation for law firms. So I’m really excited to chat with you today, too, and we’ll see kind of where we go.

Morgan Llewellyn: Yeah. So as always, we’re going to try and keep this somewhat structured in a very unstructured format for those of you on the call, you know, we’ve got risks that we’re going to talk about, one to embrace, one to consider and one to avoid. And what I like about thinking through risk and innovation for law firms is, you know, ultimately well, a lot of what we’re doing in AI is new. Innovation isn’t new for law firms, right? Innovation isn’t new in technology. And so we can really, you know, kind of lean on the past of what’s worked in the past and really apply some of those lessons to what we’re seeing with some of these new technologies today when it comes to generative AI, etc. And so, you know, let’s kind of just jump right into it. And let’s talk about a risk to embrace. So you know, having implemented AI systems, and you know, algorithms and automation, for, you know, almost years. At this point I think one of the one of the things that maybe early in my career I would have shied away from is a difficult conversation. Right? You want to please people you want to. You want everyone to be happy. And so maybe you keep kicking that can down the road. That is a difficult conversation. but I think what we’ve seen, especially in the legal space, is, there’s a number of difficult conversations that need to be had when it comes to AI, and when it comes to innovation for a firm. And so I think there’s a few different groups where embracing that difficult conversation earlier in the process, can be really helpful. I think one of those st kind of difficult conversations to embrace is really, you know, is the organization set up to handle AI innovation, right? So you know. And I think there’s different answers across different law firms. But you know if we look at historically, you know some of the innovation, and where it’s come from right. We think of knowledge management as often being, you know, kind of the historical innovation hub in a law firm. And with AI, that’s no longer the case. And so the question is, with AI. Innovation is knowledge management, the right place for it? Are there other places? And I’m not saying there’s a right answer or a wrong answer here. But I think it is a difficult conversation of who do you need at the table, and who needs to be involved in some of these AI conversations? How are you thinking about that? How are you structuring it, Christina? What are your thoughts when it comes to this difficult conversation around? Who needs to be included in AI innovation conversations. What do you think? You know? What’s the right time to have it? Who should be involved? You know. What are your thoughts.

Christina Natale: I think that’s a great question and kind of the st place my brain goes to when we talk about how does how is this relevant to law firms. Specifically, I think you know, when we think about my role at HIKE2, you know why I’m here. I like to think right is that I always say I’m a translator. I really enjoy. And it’s really necessary, right that we understand the various stakeholders, whether they’re practicing lawyers, operational folks case managers, paralegals like, who are the people that are going to be using the technology as well as who are the people that are going to be implementing it, making sure that it’s secure all of those things. Those are all stakeholders whose opinions, whose you know, abilities, matter. And so I think that’s a really great, a really great place to start is you said, when I think these are conversations that we really need to have before we, you know, we’ve talked about Pocs in our past episodes before we’re even selecting technology and saying like, Here’s some licenses. Now, who do we give it to that? We’ve got to back that conversation up and say, like, what is the intended use of this? And how does it affect the people that are going to be using it and getting kind of more of that. But I’d love to bounce it back to you because I do. I think it’s almost separate conversations. Right? It’s a difficult conversation whether it’s leadership or sponsorship or technology group within a firm, or whether it’s the second conversation which is like, why are we doing this? Who is going to be impacted by it? And how do we get them involved to make sure they may not understand, you know, I think that’s it. When I said the translation part, the the law people, the lawyers, right? They may not understand the like. We’re gonna use machine learning to. You know, blah blah blah and sometimes on the tech side, we may not really understand the use cases, how these people are going to interact with whatever product or solution that we’re giving them. So I’d love to kind of like. I said, bounce it back to you and and see, I think it’s almost separate conversations, but they’re certainly intertwined.

Morgan Llewellyn: Yeah, I think you know, I like that idea of who’s most impacted by innovation. And if we think about law firms, and we think about. Really. You know, the business that is law, right? That this is an organization, you know, a for profit organization. I mean, the people who are most impacted are the attorneys, right are the shareholders. And when we’re talking about innovation, we’re talking about AI and automation, we’re talking about impacting workflows. And really, that billable hour. and where we’ve seen, you know, kind of success is, how do you have that difficult conversation with the attorney sooner around? What is this going to do to your billable? Is there an afa opportunity here? Should this be fixed, you know, how do we think about the pricing mechanism? The sooner you can pull that conversation forward the better off you’re going to be when it comes to not just being able to deliver innovation, but to deliver adoption of that innovation, because there’s a real risk where you can develop a great new workflow with great AI, and ultimately adoption fails, not because of anything that was done, you know, technically or in the workflow, but because the financial incentive to automate isn’t there. And you know there’s a loss of revenue. And so, having that difficult conversation with attorneys sooner around. How are we actually going to capture the value that we’re producing? I think that’s an absolute must. And so that’s that’s of those conversations I would encourage folks to have earlier. And let’s let’s tie that back. I think this is a great point to come to reward reward right? So what is the reward here? Well, the risk to embrace is, have that difficult conversation, but the reward is financial. If you have an understanding of what the opportunity is. And if you have an understanding of how you’re going to capture the value of what you’re created, you know it’s not just better adoption, but it is better profitability. And that’s the real reward of having these difficult conversations, particularly around pricing sooner. Christina. What do you think.

Christina Natale: Yeah, it’s almost like a cyclical thing. It’s like, okay, one risk leads into a reward risks. Right? You almost get to this point where it’s. Let’s have this conversation to explain right? It’s going to help us with adoption. But it’s also explaining what the actual business value is which will increase adoption. Right? Because as lawyers, we’re such logical people. And again, to your point, we tend to think in billable hours we tend to think in like, what is my time worth? How am I spending that time, and can I, bill for it? And so I think you do. You get into this? It helps to be able to explain it that way. And I’m like, now in my brain, I’m like, all right, we’ve got to get our design team to build us like a graphic. That shows this. It’s kind of is this like really cool cycle of by explaining that adoption will actually impact them beneficially right in a way that reduces their time spent on non billable tasks, or, you know, is, is makes it easier to bill and fixed fees, because now we understand that we can better estimate the level of effort, the level of cost to get and time to get to value. We can do better, you know. Let’s say dashboarding and reporting on, you know, budgets, and actually seeing where we’re at versus past experience. seeing those things will actually help with adoption, because now we have people that are excited about or feel like they can see value from what they’re doing instead of just oh, this is going to cannibalize my billable time.

Morgan Llewellyn: Yeah. And I think, you know, I think the the other kind of difficult conversation is, you know what we’re talking about when we’re talking about innovation. I mean, really, the way the world is starting to move is this is more consultative, right? Legal is becoming more consultative. You, you, your attorneys need to be more consultative, and they need to be working with, you know, kind of folks who can help consult on, you know. You know, client specific solutions. And so I think that is a you know, that’s a little bit of a different motion than most. It, you know, kind of organizations within law firms are able to to have today is, how do you have that consultative conversation with your attorneys and potentially even your clients? And so, as a law firm, you know, again coming back to like staffing and thinking about, you know, are they? Are they prepared for innovation? Are they prepared to have these conversations even, I think the first, st you know, kind of question. Maybe we should be asking ourselves, is, who can we put in the room to have these consultative conversations with our attorneys, with it, with knowledge, management, etc. moving on to, you know, kind of risk to embrace difficult conversations. I love that right. Don’t shy away from the hard things. Okay, let’s talk about risk to consider. So you know, in kind of prepping for this session we talked about, you know, a risk to consider being cross functional coordination. So why, what do we mean by cross functional coordination? Why is this a risk? And why should we consider, you know, kind of exposing ourselves to this risk? Why, why could this risk be a good thing? What do you think, Christina?

Christina Natale: Yeah, I think it’s funny, cause I you you brought a billing and pricing on on your last risk to embrace and I think it’s also super relevant here to cross functional collaboration. We think a lot about the old law firm model of kind of like hoarding right clients and saying like this is my billable and I think that’s as relevant as always. Don’t get me wrong. But I do think that there’s a lot more, you know. collaborating and cross selling, cross, pitching across the firm that can be done when we embrace automation. AI like, how can we actually better serve our clients by providing other services within the firm without weakening. Or, you know, splitting those relationships, all we’re doing is offering more and better services. So when we think about cross functional collaboration. even in those discussions, even in the deciding, how are we going to use automation and AI to improve our client services? There’s something to be said about cross-functional collaboration both across practice areas of the firm. But also between, as we kind of alluded to on our last risk that we discussed is collaborating between those more technological or operational functions. Even the, you know, say, the project management organization within a law firm understanding what that group needs in order to help us optimize our, you know, our resources, our services, things like that. So I feel like I’ve said different types of of collaboration here. But really, the the moral of the story, I think, is again, you know. we have all of us have skills and expertise in whatever our skills and expertise are just like how it makes me better to work with someone like you, Morgan. And I’d like to think the the vice versa is true, I think that it’s so important that we lean on and accept, you know, kind of that collaboration with our colleagues that have skills. And you know, capabilities beyond even just thoughts beyond what might be. You know what come to us? In order to really really optimize kind of our the services that we can provide.

Morgan Llewellyn: Yeah, that’s a, that’s a really, that’s a nice point. Right? So when we think about cross functional collaboration, it’s not just working with, you know, kind of people within your department who have different skills. It’s working with people, you know, maybe in different departments that have different skills that are necessary to be successful at Innovation project management being one communications potentially being another. I think the other thing that you know kind of as we expand on that concept, you know, really, what you’re getting at is, let’s lean on experience where experience exists. And so when we’re talking about AI, when we’re talking about innovation in a law firm, you know. Does your organization have that? And if not, go, seek it out. go! You don’t have to figure this out on your own anymore. There’s a lot of organizations out there that can help you figure some of this out. And so cross functional, you know, collaboration. Really, you know, kind of at its heart. We’re saying you need a a number of different experiences and specialties. Make sure all those people have a seat at the table, and if you don’t have them, go find them right. Don’t! Don’t shy away from that like. Go and seek it out. Go and seek out, you know, kind of those gaps, you know. Work with your general counsel, work with, you know your data, access people, your it group infrastructure, attorneys, etc. Make sure all those people are. Have a seat at the table. To help you be able to. Really, you know. innovate right? Because that’s ultimately what we’re trying to do. And we’re not going to be successful if we’re trying to innovate in these tiny little silos.

Christina Natale: I think that’s exactly right. I’m my vote for the title of my new. The new title of this episode is like, it takes a village. But it really does right. I feel like that’s kind of even thinking back to those difficult conversations like you said. I think that’s I think I couldn’t have said it any better than you just did, really, leaning on, you know, and not being afraid to go out and and get the right types of knowledge expertise to. to just elevate. It’s it’s not about like, oh, you don’t have what we need. It’s not about. You’re not intelligent. It’s how do we really bring these together for the best result?

Morgan Llewellyn: Yeah, I mean, yeah, I mean, I’m thinking about, even from my own personal experiences here, right? You know, by being able to leverage other people’s experience. I’ve you know I’ve traditionally been able to treat that as an accelerator for whatever we’re working on. And so, you know, think about being able to accelerate whatever your goal is by making sure that you’re bringing in people with the experience to help do it. It’s just going to give you a faster result than trying to learn on the job and run into the same mistakes. You know that someone else has already learned. So you know, kind of, you know, stand on the shoulder of others. Maybe that’s the other, you know. Maybe that’s the other thing we could say. But I think that that does make sense right when we talk about a risk to consider, and the reward really is acceleration to value. I mean, that is the the reward here. If if you bring in some cross functional expertise, you’re going to accelerate, to value a lot sooner, and we’ve just seen that time and time again in legal and in industry in general. So you know, moving to our last kind of risk. There is always kind of my favorite one risk to avoid. You know there’s a lot of risks when it comes to innovation. I always love the phrase. You know, we want to be leading edge, not bleeding edge. Now, I’m not sure anyone in legal is ever in danger of being bleeding edge. I think you know, legal is actually in in a good way. You know, they avoid that bleeding edge. You know. in thoughtfully, responsibly. So I don’t think that really applies often in legal, where folks are doing something wild and crazy. There’s so many guardrails in place to kind of stay the hand before they make that cut. But leading edge, you know, that’s a that’s an interesting. It’s an interesting idea, because there’s still a lot of learnings that have to happen when you are leading edge. When we talk about risks to avoid. If you think about leading edge, if you think about, you know, early adoption, innovation, one of the big risks that we keep tripping over right, as we kind of look out across legal and you know, kind of what law firms are doing and not just, you know, not just law firms. I think this goes out across big Techs, you know, in particular, with generative AI, like one of those big risks, is adoption. Adoption challenges is a huge thing, and I’m not. I don’t think the adoption challenges are necessarily the fault of law firms or anything like that. I think it’s really the tech vendors who they’re not sure how to sell. They’re not sure you know how to penetrate or how to train. Yet this is so new. It came about so quickly that adoption was kind of an afterthought. Right? The chat, Gpt thing just happened and people started using it. Wow! This is amazing. And you know the development cycle was so quick quick that we didn’t really think about adoption when you think about, you know, risks to avoid and adoption. What have you seen, Christina? Where, where do you think the challenges are? How do you avoid this risk? What are your thoughts.

Christina Natale: I really liked the way you framed it around. Kind of like past, you know, past technological advancements in any industry, and especially thinking about in legal like to your point about like, okay, it’s chat, gpt, and like. Now, people are just like nobody told us what to expect or what we could do with it. So again, right? Like people just start feeding stuff into it. And then you’re learning a that number one, right? Like, I say a, and then number one. You learn that number one. Right? You’ve got the issue that maybe, like lawyers are going to get frustrated if they are told like, ask it anything. And then they ask a question, and they don’t get the output that they want. So that’s you know, that’s just an example you think about use cases that lawyers might be of real value to lawyers, and it’s like, well, if the product is not built for that, if it’s not specific to that. And then we’re like, Oh, this is what I want to do with it. And then we learn, oh, you can’t do that with this technology. Those are all risks of not again, not either having those difficult conversations with the vendor, or internally, about what product to choose to select, and also not communicating, not messaging, what the lawyers should expect and what they can and cannot do with that technology. And so where I, where I think about it is again, like we have to kind of toe that line, find the balance. But what is so important is both messaging and early hands on, you know. Don’t be afraid to that. You can’t do anything wrong. Don’t worry like we’ve chosen a product we’ve built in the security that, like you’re not going to break anything. You’re not going to give away client secrets like we built this right play with it and tell us what’s not working for. You. Tell us what’s working for you. So there’s so much there. But I really do like framing it around like, where are we in technological advancement? Are we choosing kind of like a, you know, just an open, not open, like the way that we think about an open model where it really is very like, just ask a question and see what happens? Or is it a very specific use case that this technology is built for, and really early on encouraging lawyers, encouraging the end users. This is what this is for and how it works broadly, Give it a shot, just try like, just do some stuff, and then right with the right kind of instruction. And seeing where that goes rather than just choosing a product, saying, All right, it’s here. And then kind of saying, like, All right, have at it. You’re going to fail because people are going to immediately not get what they expect.

Morgan Llewellyn: Yeah. So when when I think about how to avoid adoption challenges right? And you know again, thinking about this of you know where, where we’ve seen adoption be very successful, you know, over the past couple of decades the thing that the thing that strikes me is, and and I think you touched on it. Right? Expectations is really important. Being able to set expectations of this is this is what’s gonna happen right? This is kind of, you know, inbounds out of bounds, etc. But then the the other thing. And I think this does come back to expectations because it helps set the expectations is, what does good look like? Right? A good. What does a good use of this new tool of this innovation look like? What does success look like? What does good look like if you don’t have that answer when you’re providing this tool to to end users You actually aren’t prepared to roll it out yet. Right? If you don’t know what a successful adoption looks is gonna look like if you don’t know what good looks like. I think it really puts you behind the ball in being able to encourage adoption, because there is no frame of reference about what the output should look like, and you know what the end result should be. So I guess, yeah, go ahead.

Christina Natale: No, I was just gonna say, I I really do. I love that. And putting it that way, I think about some of you know the implementations that I’ve seen. You know your team, and that we’ve implemented over the last year. So with our clients, I think about the ones that have been so successful are the ones where they’ve figured out what a what a good use is, and then they’re using that to show and encourage. And then people are like so excited because now they understand what a good use is, and they’re coming up with ideas like crazy within those parameters.

Morgan Llewellyn: Yeah, alright. Well, I think that brings us about to a close, for you know our third episode here of Law & Coder. This was a special on risk versus reward and innovation adoption for law firms, you know, as always, I would like to say, I love you, mom. You know. Hope you’re having a great day, Christina. You want to take us out.

Christina Natale: Yeah, it’s been lovely as always talking with you, and it’s so funny. It’s like you said we’re closing out every time I look down at the time, and I can’t believe that it’s been. You know, we could talk about any one of these risks for  min, let alone all So I’m really excited as we keep going. And I just think we’ve received so much valuable feedback about what what is exciting people to hear about what they want to hear about. and where we can really provide more. You know, industry, guidance, experiential guidance, anecdotes, things like that. And so, as always, we encourage all of our listeners, especially Morgan’s mom, to to let us know what you know, what you’re wondering about, what’s going on, that you could use more context on, because we just love being able to respond to those questions and and talk about things that are important to you.

Morgan Llewellyn: Feedback is always welcome. Thank you, everyone, and have a great rest of your day.

Christina Natale: Bye, Morgan, bye, Morgan’s mom.