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What I learned at CLOC 2023
This week I attended the premier legal operations conference. Here's what I heard.
I just spent the past week in Las Vegas for the annual CLOC conference and it was such an amazing experience. Not only was I able to meet up with friends, make a bunch of Tik Toks (see here, here, and here), present a session on overcoming setbacks & failures, I also had the chance to have a ton of off the record conversations with buyers and vendors on the front lines of legal innovation. I kept finding myself jotting down notes to make sure I wouldn’t forget, because I wanted to make sure to share those insights with you all here.
I’ve spent the last two days combining my notes (while recovering from the conference) and came up with 3 major themes and related predictions. You can skim them below. If you’ve been paying attention to the space, I bet none of these themes will come to you as a surprise. What I hope to do is to provide anecdotal support for all of these points and share a few predictions. With these qualifiers out of the way, let’s jump right in.
Theme 1: Generative AI isn’t going anywhere
This was a huge theme throughout the conference. Whether it was vendors announcing GPT integrations, or panels discussing how to use AI, there was just an enormous amount of attention on generative AI. I’m certainly no stranger to all this hype, but I’d always wondered if it was all from my Silicon Valley bubble. It wasn’t.
What was driving all this interest in AI? Well, the ubiquity of ChatGPT. Everyone’s talking about it and trying to figure out how to incorporate it into the business. And not just in the U.S. It’s a worldwide trend. Word on the street is that it’s a CEO-level priority. Everywhere. So naturally it trickles down to the legal department.
Attendance at Ironclad’s “super session” on AI reflected this trend. The panel included speakers from OpenAI, Citibank, and Orangetheory who joined Jason Boehmig, our CEO, and Mary O’Carroll, our Chief Community Officer, to discuss how they’re all thinking about this transformative technology.1
It was the most well attended session I had ever seen, like hundreds of people crowded into a giant room. And more than that, people were raving about it afterwards. They all wanted to hear about how industry leaders are thinking about generative AI, and to hear from Open AI directly.
Relatedly, during the week, countless vendors also announced their own integrations with GPT. I mentioned this last year but everyone seems to issue press releases during CLOC to get all this attention but they all end up crowding each other out. This year was no different, except instead of fundraising news, it was all generative AI.2
Based on what I saw on the exhibit hall, and from various conversations—I believe that this interest in generative AI will lead to a ton of new startups showing up in the space over the next 12 months. Especially for contract management (CLM). There are so many angles to attack the problem, so many point solutions that can be built on top of GPT. I believe it’s still unclear what the most “ripe” use case is exactly, but once these point solutions / startups land on something good—they’ll experience explosive growth and seem to come out of nowhere.
Theme 2: ALSPs are growing in influence
There were so many alternative legal services providers (ALSP) who had a presence at CLOC this year. It was something I started to notice last year, when I saw Big4 was everywhere while Biglaw kept mostly to themselves. At the time, my friend Ron Friedmann said: “[The law firms] should have maximized their time engaging with legal ops pros, who have an increasing role in selecting outside counsel.”
Well, this year, the firms didn’t show up in a big way either, but the ALSPs did. They were everywhere. And not just in the exhibit hall—there were many who were in attendance, doing exactly what Ron said: Meeting and networking with legal ops pros. I think it’s because many “high end” ALSPs—providers who focus on contract attorneys—are seeing a lot of growth in this area.
In fact, the big trend I noticed was on ALSPs’ focus on scaling.3 For example, Axiom appears to be leaning in hard on positioning itself as a digital platform, perhaps inspired by the rapid growth of their smaller but more tech enabled competitors.4 Many of them have self-service portals to request contract attorneys. Having said that, there’s definitely a slow adoption curve right now—one unnamed legal department told me that these portals generally go unused because many lawyers still like to use the old school way of reaching out directly via email/phone.
Another interesting data point was the emergence of platforms to provide data and analytics on the legal buying process. For example, Priori and Persuit (and others I imagine) have recently launched AI-enabled software that make outside counsel management so much more transparent. Relatedly, one enterprise leader told me that they expect to rely more heavily on ALSPs in the near future.
Part of this is driven by what’s happening to law firm hourly rates. Based on a few conversations, I learned that certain types of matters (e.g. insurance defense) are experiencing downwards pricing pressure due to a few factors. ALSPs, regional firms, and tech-enabled practices are emerging as competitors to traditional firms on pricing. And buyers with specialized staff who can effectively negotiate rates are starting to get together (at places like CLOC) to talk best practices on how to push back.5
I believe that we’ll see ALSPs continue to grow, and start to dominate the legal ops space in the next 12 months. They’ll figure out what practice areas to target and start eating into law firm market share. Relatedly, law firms that rely too heavily on these commoditized practices (without some strategy to diversify what they offer clients) will struggle in the next few years,6 as they start to compete with low cost providers. The “high end” firms will remain unaffected and might even generate more profits than ever before.7
Theme 3: Legal operations is more important than ever
There’s no doubt that the legal ops community is growing. I first noticed this last year, but there was a HUGE influx of those new to the space. Lots of anecdotes of business professionals (ie. no legal background) who were sent to CLOC to learn best practices because the company has some technology focused initiative. It felt like more than half the people I met at the networking events said “I never heard of this conference before, but my General Counsel sent me here.”
I think the vendors are recognizing this trend too. So many of them have launched their own legal ops communities, and are bringing people together. They recognize how valuable it is to capture the attention of legal ops as a way to gain traction, build their brands, etc. As these vendors host more events, we’ll see a huge amount of networking and best practices sharing among this group of people.
In fact, there are even some third-party legal operations conferences that have sprouted up over the past few years. When CLOC first emerged, it was the only show in town—but this year it seemed apparent that there will be more events coming soon. In addition to Legal Operators, who hosted a well-received “summit by the sea” last year—you’ve got “LegalOps.com” that’s hosting a major conference in Las Vegas this fall, and a small enterprise legal ops community that’s starting to see a lot of traction.8
There’s going to be more legal ops conferences sprouting up in the next year. We’re also going to see more vendors lean in on community and start to host their own events. This is a good thing. Because it’ll increase transparency on how corporate legal departments work. Not just with legal tech, but also how they work effectively with law firms and ALSPs. It will also make tech adoption smoother, especially around generative AI.
Legal tech is super crowded now. One unnamed buyer told me they went around to the booths and asked each CLM vendor to explain, in a short message, what makes them different than their competitors. Most of them couldn’t do it. To me, this serves as confirmation that this “land grab” is continuing to play out in legal tech. And with AI being so hyped right now—expect to see even more players crowd into this space.
There were a surprisingly large number of e-discovery vendors at this year’s conference. I didn’t expect them to show up in big numbers at CLOC, since the conference is focused on corporate legal departments and not law firms, who they usually sell to. However, a source told me that the conventional e-discovery/law firm market is too saturated, so vendors have been trying to break into corp legal by acquiring or building legal hold products, and trying to sell them to in-house lawyers.
The legal ops community is full of women and minorities. Years ago, I worked for a legal tech company that sent a large group of white men to the conference. I wondered why they chose to do that (especially since there were many of us at the company who were not) but then I realized that many legal tech companies have a long history of selling to law firms, where the decision makers are overwhelmingly white men. But CLOC is different. If you want to focus on selling to this audience, to legal ops, and your sales team & execs are all white men—I would reconsider that approach.9
That’s all I’ve got. It’ll be interesting to see how things play out in the coming months, especially around these 3 themes. I’ll be coming back to some of these predictions as time goes on, to see if there’s more nuance, or if something unexpected happens. It’s such an interesting time for legal innovation, and I’m glad you’re all following along as I try to figure things out.
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It was interesting to compare how each organization planned to use generative AI. OrangeTheory, a fitness company, is already using it. Citi, on the other hand, is taking a cautious approach.
Bob Ambrogi had a great roundup of the announcements on his website.
This is notable because you don’t generally don’t scale until you have enough traction. If you’re thinking about scaling it means you’ve got enough revenue to have the confidence to start figuring out ways to make money more efficiently. That to me is a clear sign that ALSPs already have traction.
Axiom is also taking advantage of Arizona’s experimentation with non-lawyer ownership. I didn’t hear much about this at the conference, but had a few off the record conversations about it—it’s definitely an area to watch.
That doesn’t mean they’ll be able to push back on all matters. Certain types of non-commoditized practices (like corporate & securities, government relations, etc) will always experience low supply of effective counsel and high demand. So the changes that come will be very much practice dependent.
Word on the street was that the major attorney departures at Lewis Brisbois was because most of the firm’s work involves insurance, which is commoditized. The lawyers who spun out a new firm were reportedly mostly in the relatively high in demand labor & employment practice.
As the market starts to shift away from “GCs calling their old law school buddies to retain a firm” and more towards professionalized RFP type ways to select outside counsel, there will be some interesting second order effects. I believe one of those effects is that rainmakers for high end practices will be even more valuable. These are complicated matters that only come up once in a while, and if you’re a law firm partner with relationships and known expertise in these areas—your value to your firm will skyrocket.
How well these conferences will do remains to be seen. CLOC emerged by protecting its core community of legal ops professionals, and generated a lot of engagement within this narrow group before expanding out to welcome other constituents, like law firms, vendors, etc. That generates a lot of goodwill that lasts for years. If these new third party conferences can be patient, and not rush into monetizing the community—they might see similar success.
Relatedly, I have found that the loudest voices on legal tech twitter to be mostly white men. And many of them seem to take pleasure in shooting down what emerging legal tech voices—made up of women and minorities—have to say. I saw it happen this week and for now I’m going to just ignore. But I’m not sure I feel ok with continuing to do that. Some people definitely need to be called out.