Helping clients use lawyers less
25 June 2018
Richard West, Head of Liability and Innovation at Kennedys
Global law firm Kennedys has long argued that lawyers were rather missing the point when suggesting to their clients that, as lawyers, they wished to work more closely in a partnership with them in order to solve problems. What they didn’t realise was that they were a part of the problem themselves.
The stark reality is that lawyers’ clients regard the instruction of their own lawyers as a “distress purchase” and, according to Richard West, Head of Liability and Innovation at Kennedys, it is probable that they do not want to instruct lawyers at all.
Kennedys suggest that the peddling of legal services to clients in a way that creates an unnecessary addiction to their lawyers needs to stop. As a result, Kennedys advocate that a realistic goal for clients and their lawyers would be to work together to deal efficiently with claims and any litigation arising. Doing so would then significantly reduce legal spend and, in almost every circumstance, those clients’ indemnity spend.
Kennedys has established a core principle of helping clients to use all lawyers less. To demonstrate that approach, Kennedys has created an award-winning virtual lawyer called KLAiM, which empowers clients and enables their teams to become less reliant on their lawyers. KLAiM is also complemented by the firm’s overarching Kennedys Toolkit – a range of client-facing products designed to meet that goal and to reflect the challenges faced by clients today.
Kennedys’ innovative and award-winning products are focused on improving risk management, investigation techniques and fraud detection, as well as conducting litigation without the need to instruct a lawyer. Kennedys equips clients with the means to make their own legal decisions and to do so earlier in the claims process. In addition, Kennedys provides clients with the capability to learn from and improve their own dispute resolution and litigation processes.
“If we can save our clients money and reduce their need to use lawyers so they only use one when they really need one, we build stronger, deeper relationships with them. And, importantly, our clients become more self-sufficient.” – Richard West
Over the last five years, Kennedys has developed KLAiM and rolled that virtual lawyer into some of the largest UK insurers. KLAiM is being developed in Australia, Hong Kong and the United States.
The success of KLAiM, as Richard West points out in the above video, is twofold. For clients, they achieve instant savings on indemnity spend and give access to the aggregated knowledge of 400 experts with thousands of years of legal career knowledge. For Kennedys, it increases market share, develops stronger ties with clients, and cures those clients of their unnecessary addiction to legal services.
Download the Kennedys Toolkit now to learn more.
Hello, and welcome to Business Reporter's Future of Insurance campaign. I'm Alastair Greener, and today I'm talking to Richard West from Kennedys Law.
Good morning, Alastair.
When it comes to the insurance industry, what would you say the biggest challenges today are?
Well, from a legal perspective, it's clear to me that insurers have become addicted to their own lawyers. They use them far too much. They use them when they don't need to use them. And that has been peddled by the lawyers themselves.
Now, in a broader sense, I think that you can see insurers' challenges in the industry are founded around continually growing awareness of consumer rights in their own policyholders and demands about how technology is delivered to them through their insurers. And also, a real challenge, ever more ingenious claims being presented by third parties under the policies of their own policyholders.
And also, we are seeing rapid changes in certain areas of civil litigation, particularly around tort, in areas such as MOJ changes on whiplash reform and online court systems.
It's interesting. You're talking about the Ministry of Justice. And looking at that relationship between lawyers and the insurance industry, what's fundamentally wrong with the way they've been doing it to date?
Well, come back to my addiction point. Fundamentally wrong is the fact that because those lawyers who work for insurers, I think in the attritional space, it's the volume space, they have tended to only be able to differentiate on price. That has driven the price very low in competition and has required those lawyers to insist, in some cases, create opportunity for ever greater volumes of work from their insurer clients. And that seems to me to be a nonsense. That's the addiction point.
In the non-attritional space, lawyers have tended to be very traditional, very slow to evolve, still dealing with billable hours, chargeable time. And the height of innovation, in their sense, tends to be sending an email, which strikes me as not innovative at all.
We see many industries today adopting new technologies all the time. When it comes to insurance claims, how is that advancing? How much technology is being used?
Well, the main driver of technology, I suppose quite surprisingly, really, is government. We are seeing, I mentioned, MOJ portals for personal injury claims. All personal injury claims effectively now have to start within a government-based portal. We're seeing the government, in a much broader sense for civil litigation, creating an online court system, which will be launched in 2019, is already in pilot. So the government's driving technology in a way that I think insurers and their lawyers are very slow to do.
And it's interesting. When you look at the legal system, it doesn't always look at being a system that's particularly innovative. We don't associate it with being innovative, yet here you're suggesting that that's the way forward.
I think lawyers have to evolve and be innovative, but they have to understand what innovation means to start with. Too many, I think, feel innovation should be internally focused at their own process in order to protect margin. And that, I think, is wrong. That's an operational efficiency. It's laudable, but it's not innovative.
Innovation should be, I feel, aimed at clients. It should be client-facing. It should be a product for the client, which either saves them money or makes them money. That is innovation.
And at Kennedys Law, I'm sure you would suggest that you are innovative and you are coming up with new ideas and using technology. So tell us how you do that.
Let me ask you to imagine this scenario. Instead of having one lawyer giving advice, traditionally, a bit tired at the end of the day, a bit worn out maybe, [INAUDIBLE] the experience that you have 400 experts in the room with you, providing 24/7 legal advice, 365 days a year, whenever you want it. That's what Kennedys has done by creating a virtual lawyer. And we've called it KLAiM. Like most things we create, it starts with a K, KLAiM. And it's part of our innovations toolkit.
Now, KLAiM channels, aggregates the experience of those 400 experts within our firm into one product for a client. It's high quality. It's innovative. And it's available to the clients whenever they need it.
It makes sense. But talk us through the process, how it actually works step by step.
The basic core principle that we developed was helping our clients to use their lawyers less, helping our clients to use a lawyer only when they needed to. Now, that process began with a client five years ago. And we embedded lawyers into their organisation and they embedded claims handlers into our firm. And we worked together to build a product that they would use.
And we have then slowly, over the last five years, developed that product. We've rolled it into some of the largest UK insurers. We're developing it in Hong Kong and Sydney, on the East Coast of the US. It's a global product. And those insurers are now on version 4. KLAiM 4 is being rolled through. KLAiM 5 is in [INAUDIBLE] already.
Some would suggest that this removal of a revenue stream would seem almost counterintuitive. How would you respond to that?
If we can save our clients money and reduce their need to use lawyers, so they only use a lawyer when they really need one, they're far happier. We build stronger, deeper relationships with them. We're seen truly to be partnering with them.
We generate a revenue stream of our own. This is a different type of revenue. But it's still a good revenue stream for us.
Importantly, our clients become more self-sufficient. We've seen that their claims teams feel empowered by us giving them the ability to deal with parts of the litigation process themselves.
Again, many would suggest that if you are being really cost-effective in your operation that often alongside that comes service which isn't quite the same as the service you would expect. Again, how would you react to that?
I think it's quite the opposite. Quite the opposite. So the traditional legacy model of pile it high, sell it cheap, high-volume, warehouse somewhere of unqualified lawyers working with one lawyer supervising 60 people, churning workflows through, that creates a substandard product as far as I'm concerned. Barely adequate.
Now, you compare that with, as I've explained, the aggregation of thousands of years of career experience from 400 lawyers into a high-quality virtual lawyer, the quality is far higher than the alternative legacy model. Far higher.
And what about the success? How do you measure that? And for that matter, how can you be sure that you can quantify the return of investment of this?
Well, there are two measures of success, one for our clients, and one for us. For our clients, instant savings on defendant legal spend. They save millions a year in avoiding the need to instruct a lawyer when otherwise they have been persuaded by those lawyers they needed to use them. We see, also, because they can deal with the claims more quickly, the shelf life reduces and the cost of the claim itself reduces. So there's an extra benefit to the client there.
For us, we build additional relationships. We win new clients, because we can demonstrate the success of this product. And whilst at the end of a three-year contract for a client, we will be instructed half as much as we were at the beginning, for all of the right reasons, because they're using our innovation products, we can explain that to potential clients, and we win those potential clients as well. So we are growing market share while saving each of our clients money along the way.
It's really interesting to hear you talk about technology and how you're incorporating it into your model. And we see that more and more, as I've mentioned already, with other industries using AI and machine learning. So this is now. Where do you see this all going, say, in the next five, 10 years?
I think anybody who tries to predict what the legal profession will look like in five or 10 years' time is going to struggle and will probably get it wrong. But there are some brave souls out there who do try to.
I'd like to actually refer to two of the leading thinkers in this area, Daniel and Richard Siskind, who've written extensively around the future of all professions. Professionals have, for a long time, been the places that the public will go to in order to gain knowledge and for the experience of those professionals to then apply that knowledge and to provide advice. And that has worked for a long time.
But how will lawyers deal with a world in which that knowledge can be accessed all of the time online on the internet and when AI and machine learning will very quickly be able to exercise human levels of judgement? That's the big question. I don't have the answer for that.
Well, one thing we do know is that machine learning, AI, all of those elements in technology is going to be used more and more. And it's really interesting to see how it's going to be used in the litigation industry and how that then connects with insurance.
It's been great finding out more. Richard West from Kennedys. And thank you very much indeed.
Thank you very much, Alastair.