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This article first appeared as "Legal Tech's First Recession Test" in the November editions of Corporate Counsel and The American Lawyer magazine.

With some economists forecasting a global recession is imminent, corporate legal departments and law firms may be having flashbacks to the Great Recession of 2007-2009 that slashed thousands of in-house and outside counsel jobs.

However, unlike 10 years ago, many in legal are now leveraging more advanced legal technology for their day-to-day practice. How will such modern tools change the situation this time around?

While firms and corporate legal departments say they aren't actively preparing for a recession, they agree legal technology will be an asset, but not a leading factor in surviving an economic downturn. Although a recession may create budget pressures that would make adopting more legal technology unlikely for some, most law firms and legal departments say they wouldn't drop proven tools and services that help them work more cost effectively and reach their business goals.

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Preparation for the Future, Not a Recession 

Despite growing talks of a recession, few in legal say they are bracing for an economic downturn. Rather than a recession influencing their planning, law firms are assessing what their client and business needs are to inform their legal tech purchases to succeed during any economic climate.

Peter Hitson, Carlton Fields' director of legal project and practice management, believes his firm would continue to use the same type of technology no matter what the economic situation. 

"In the current climate we have been proactive in our investment and activity, and I don't think you would encounter a recession and jump to technology as your immediate solution," Hitson says.

He notes the firm's license with Neota Logic, an artificial intelligence platform that allows users to make automation solutions without coding, is an investment that's useful for developing client solutions during economic booms and busts.

Meanwhile, corporate legal departments say their departments aren't actively preparing for a downswing in the economy, though they are always looking for any process that could be streamlined. At TE Connectivity, legal operations business performance senior manager James Michalowicz notes his legal department has deployed an artificial intelligence platform to automate some tasks. 

"Primarily it's to increase our speed so we can work at the speed of the business and free up capacity, but I also believe as we use this tool more and more, we may find some revenue leakage."

Additionally, he says, the AI platform opens up other opportunities for applying automation to more routinized legal tasks resulting in faster and cheaper delivery of legal services. As an example, he cited the drafting, review and negotiation of large volume, low risk contracts.

"There are many ways we need to be nimble as a law department. We need to be lean, and the technologies we've invested in allows us to be that way and allows for better positioning when a recession does occur," Michalowicz says.

For outside counsel, no matter the economy's outlook, they're concentrated on providing legal services their clients want, with more clients expecting technology to play a part in the delivery process. In turn, some law firms have created departments and subsidiaries specifically tasked with developing legal technology to help solve clients' challenges.

Allen & Overy's Fuse, for example, is an incubator that connects tech companies, the firm's lawyers and clients to develop legal tech solutions.

"Having been involved in legal tech innovations for some time we've certainly experienced our clients becoming more and more interested in finding more efficiencies and I see, recession or not, that will continue to be a trend with clients," says Allen & Overy partner David Lucking.

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Legal Tech, The Ally

Though not actively preparing for a recession, law firms and legal departments note their adoption of legal tech is a significant asset in the face of any potential economic downslide. 

McNees Wallace & Nurick chief information officer Stephen Sobotta, for instance, sees more law firms leveraging legal technology as cost-saving tools to give them flexibility to restructure client fees when demand shifts.

During the last recession, "many law firms were just using Microsoft Office products," he says. "Now, many law firms are using document management, time management and client portals. Those technologies, if leveraged and licensed properly, may allow a law firm to assess, if necessary, its fee structure during an economic downturn in order to maintain as much of its client base as possible."

Firms that formally promote technology development efforts like Allen & Overy also see legal technology as a way to create more budget-conscious legal services.

"I can see [Fuse] being a benefit in the context of a recession or a scenario when clients are requesting more value efficiency," Lucking says.

Carlton Fields' Hitson adds that legal technology that streamlines work can also be an asset during difficult economic times because it enhances a lawyers' ability to meet clients' varying challenges. 

"The real key is that technology, whenever you are using it, has to be aimed at being efficient, consistent and aimed at delivering high quality. If it's long term and grounded in those concepts, hopefully you won't have to make drastic changes and be able to take advantage of client needs that may arise or change during a down economy."

To be sure, some might become uneasy about clients turning to legal technology as an alternative legal service provider. But no law firm or legal department interviewed for this article said technology will replace lawyers; instead, Lucking believes technology will only improve lawyers' work, not overtake it.

"While I do not foresee the stereotype in the news of technology replacing lawyers, I certainly expect for the technology to improve and we will continue to be [in] the foreground of those developments and offer to our clients the best in class tools of the moment," he says. 

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Finding Legal Tech's 'Voice'

While legal technology may be an asset, it is still unlikely that many law firms and legal departments will deploy new legal technology during a recession when scrutiny and financial uncertainty is high.

"When you are going through a recession, you may not have the resources to invest in technology at that point," says Charandeep Kaur, Juniper Networks' senior director and head of legal operations.

Speaking generally on the industry, Kaur notes that when a company is in the throes of a recession, it's harder to take on new transformations. She explains, "There is more scrutiny on your spend, and often when going through a recession there is budget cuts and head count cuts that could happen."

Instead, Kaur advises legal departments to adopt legal technology and streamline workflows before economic downturns.

"If you don't have technology to automate your workflow or e-discovery or contract processes, doing it manually isn't ideal and that doesn't serve you during a recession," she says.

Likewise, some law firms don't see the recession as the opportune moment to invest and deploy new legal technology, even for those that regularly leverage legal tech.

"Your technology approach has to be strategic," says Hitson. "It may be more difficult in an economic downturn to make an additional investment or respond quickly enough to your client's needs that may emerge or change."

Although law firms and corporate legal departments are unlikely to add new legal technology to their workflow during a recession, they also don't expect to slash legal technology from their budgets during a downturn.

TE Connectivity's Michalowicz notes he's unlikely to cut legal technology from his budget during a recession because the platforms have already proven their efficiencies previously. "Some of the investments in technology is to free up resources and capacity, so they are not fun toys, they are actually being used," he says.

To be sure, Michalowicz has a legal operations title, a burgeoning role in the legal industry tasked with trimming inefficiencies. However, the role hasn't found its way into all law firms or corporate legal departments yet, leaving legal tech without a strong voice in some boardrooms.

"Technology doesn't have a voice because it's generally the least understood item in a law firm," McNees Wallace's Sobotta says. Still, in his role as chief information officer, Sobotta says he can advocate to management the importance of legal technology to serving clients. But as budgets tighten, Sobotta concedes that law firms may halt their adoption of new technology, and stick to proven legal tech tools. 

"I think what we will do during an economic downturn is to continue to leverage the systems we have. I think the real issue would be it could impact our ability to innovate and find new technology."