Note: This transcript has been adjusted to improve readability. Transcripts are generated using speech recognition software and human transcribers. The context and more than 95% of the actual transcript have been preserved.  We strongly encourage our listeners to listen to the audio.

Nicole: Hello, this is Nicole Giantonio, the Head of Global Marketing at Elevate. I recently met with Brian Kuhn, Vice President and General Manager of Elevate’s Digital Strategy and Solutions Business. Our conversation focused on Digital Design Thinking, Digital Transformation, which represents one-third of all IT spend globally, and that today’s organizations are using Digital to get closer to end-users by accessing know-me insights.

Your role at Elevate is leading Digital Strategy and Solutions. How would you describe the impact the proper execution of Digital has on a business, specifically, the Law Department of an organization or a Law Firm?

Brian: The biggest driving force behind Digital and Digital Transformation is the accelerated rate  of change in the Legal industry, in society in general, caused by advances in technology. And as law firms and law departments become more software-driven, as companies generally have, and the rate of the change increases, so does the complexity. And many law firms and law departments are optimized to execute and solve a stated problem, their client’s problem whether the client is the business, or the client is the clients of the law firm.

The creativity is about finding a problem worth solving and one that you can afford to solve. And Design Thinking and Digital Strategy focus on identifying not just the problem but the ‘Why’ so that you can solve the problem in a way that you can afford to solve, you’re likely to succeed, and you can understand what will look like before making an investment in technology.

Nicole: Intellectually, we understand that explanation, but can you describe an experience to help build that bridge of where you’ve worked with a customer to achieve measurable advancement when it comes to Digital and what that looked like?

Brian: Sure. I should also say, by the way, I know we’ll get to Design Thinking, but when it comes to Digital, I would also add, and I think it’s important to add that the cost of technology is falling. So, you see all these start-ups, and in 2017, we had $280 million spent in US legal tech investment in venture capital. In 2018, that was $1.1 billion, and in 2019, $1.2 billion. So, the legal tech space has been discovered. And as the cost of technology falls, it becomes easier and cheaper to experiment, which creates risk for those who don’t.

And that means that it becomes cheap to explore ideas and test them in the marketplace. It’s not about having Technology, It’s about choosing the right ideas, and that’s what we focus on and help our customers focus on. To give you a concrete example, if you look at the Altman Weil Survey, and other industry surveys going back 10 years, one of the key problems is systemically, that law departments, the GCs mention over again, over and over again, is outside counsel spend management and control. And there are a number of solutions that have been developed, there are some great E-billing platforms, but yet, this is still a problem. It’s still listed almost every year as the No. 1 problem, despite the solutions. When I was with IBM, I invented a capability that used artificial intelligence to understand legal language; legal language within legal invoices. And a lawyer can explain something in a thousand different ways, mapping it back to a common meaning, really was the way to identify value.

We’re doing something different here at Elevate by focusing on identifying the root causes of legal spent. What are the activities that produce the cost-effective outcomes that you want? One customer that I worked with had a $1.3 billion per year outside council spent. They were a large PNC auto carrier, and so, about 60% of their spend was clustered in automobile bodily injury negligence as a matter type. And we were able to show them a benefit, $362 million.

We were able to show them that benefit, which realized over time, over a period of years, we were able to show them that benefit by using artificial intelligence to understand the language associated with automobile bodily injury negligence. In other words, we could’ve cast a broad net and looked at keywords; We looked instead at legal concepts specific to the matter types that this customer spent the most amount of money in when they hired outside counsel. So, it was strategic in that sense.

And we also trained it to understand their interpretation of reasonable spend. It was one thing just to understand what words mean and what weight they have, but it’s quite another to understand what they mean in the context of you, the customer. There’s another key element of Digital Transformation –  is making these insights more actionable and trustworthy because they’re based upon your data, and they’re based upon what, in this case, outside counsel did for you that worked, not for a customer like you. And you’re not going to make strategic decisions about council selection and budget based upon generic data. It was really the fact that, yes, we used AI, but it was the business case around choosing what to apply the technology to – that really drove the value.

Nicole: $362 million, it’s quite a benefit, and then also the fact that it was a custom solution, very specific to their need. That said, as you pursued that project with that customer, what was surprising? What there something that came out, results that you weren’t expecting, or a result that the customer wasn’t expecting from that initiative?

Brian: So, what came out was that we could only get so far with technology. A lot of customers in the legal industry, and I say with this with great respect, are used to but have been abused by the concept of plug-and-play; Plug-and-play will give you generic insights. Now, there’s a lot you can do with those insights if they represent industry information that’s important because common legal concepts are discussed. But it’s not strategic; it’s not about you. It’s not going to use machine learning to learn and improve based upon your data, and the decisions that you make as a more custom or inward-focused solution will. So, there’s definitely a dichotomy there.

Now, Data Science using statistical analytics, without getting too technical, to surface insights, but there’s a limit to that. If a subject matter expert has an understanding about the way that a company does something and the way that a company interprets data, the machine’s never going to apply that. The machine will be a blunt instrument unless it incorporates the understanding of human beings who know those processes the best. And a lot of start-ups, a lot of Legal Tech companies, they struggle to get data; It’s a famous problem. They struggle to get data to bring their tools to market, and the data that they get may not be representative of the customer’s data. So, why not use the customer’s own data?