Geoff Dunnett
Where once major law firms were only as good as the stable of lawyers and talent they could attract, but now, having the best tech stack is also of vital importance. Modern law firms are looking to new technologies to improve internal efficiencies, reduce risk and to provide the best client experience. Let us also not forget that many had to overnight change ways of working because of COVID. Law firms are building specialist technology teams, starting incubators and even making investment into the most promising legal tech companies. My guest today is Nick Kirby from Mishcon de Reya. Welcome Nick.
Nick Kirby
Hello!
Geoff Dunnett
Today, Nick, we’re going to be talking about how the approach and emphasis on tech has transformed in recent years and all its hype. And how particular to your area of practice, real estate, is this change and where we’re heading, so great to have you on the show. By way of an introduction of Nick, Nick is a legal director in the real estate team at Mishcon de Reya. He specialises in commercial real estate work, dealing with investments, acquisitions, sales of institutional and private clients. Nick has a passion for technology and legal tech, and is a mentor for start-ups taking part in MDR LAB and one of Mishcon de Reya’s tech champions. I’m sure you’ll tell us a bit more about what that exactly means but welcome to the episode today. To kick things off Nick, tell us more about you, your practice and everything about MDR LABs and anything else.
Nick Kirby
Thanks very much for having me, Geoff, it’s great to be here. So a bit about me and my time at Mishcon. I’ve been at Mishcon for thirteen or so years now, about five years of those have been spent doing tech transformation, being a tech champion. It’s been a really exciting journey across the way. When I started doing transformation, I don’t know what I really thought it would involve but I think I had a relatively narrow vision of what being involved in real estate tech transformation would mean. Since then, we’ve obviously gone to do some of the really exciting things that you’ve talked about. My passion for technology, as you said, came from my dad. He had an Apple Mac reseller during the 80s and 90s, so I spent a lot of my time as a young five, six, seven, eight-year-old playing with old school Apple Macintoshes. That must be where that passion for tech came from originally. I’ve got twins and I once pedaloed 500 miles around Scotland, so that’s a little bit about me to start off.
Geoff
That is very cool. That was totally unexpected, Nick, but I’m very keen to hear more about that at some other point.
Nick Kirby
Yes, I know, this is probably not the podcast for the 500 mile pedalo, we can do that another time!
Geoff Dunnett
Absolutely!
Nick Kirby
That’s the stuff about me. As I said, I’ve been spending that time for the last five years on this transformation journey. My practice area is obviously real estate. As you said, I focus on investment, purchases, sales, development. I think one of the things I really like about my day job as I always call it, which sounds like I have a night job, but it’s not, it’s just transformation is one day a week. My day job is that it’s really varied. So we act for lots and lots of different clients, lots of it is focussed on institutional clients but we still have this great client base from back when Mishcon was an older law firm and less focussed on institutional real estate work, so it’s really varied. We haven't pigeonholed our lawyers into doing just investment or just development. I think that makes it exciting to be a lawyer in the real estate department, but I think it also makes it exciting for our lawyers that are coming up through the ranks to be involved in real estate day to day. The firm has got a couple of offices, one in London, one in Singapore. There’s about 1000 people, I think it’s about 600, 700 lawyers.
It’s been an exciting place to work over the last ten to thirteen years, it’s grown enormously. That’s come with the challenges that come with any organisation that grows that large but it’s done some amazing things, and MDR LAB is one of those really amazing things. I think I joked in a speaking session I did once that when I first started on my transformation journey you couldn’t even get an MDR LAB tshirt. That was true, you couldn’t, no one had thought about it. And it’s one of the most exciting things about that journey that I’ve been involved in. It’s enabled me to mentor start-ups, get really involved with the dynamic people that make up the really exciting start-ups that we’ve got involved in. And to watch them on their journey and to watch the firm invest in them and to watch the impact that it’s had on both the firm and those start-ups. So that’s like a quick flash through I guess me and the firm and the LAB.
Geoff Dunnett
Well, there’s a number of different things that I think are worth spending a bit of time on. One I guess what you're talking about here is really the mindset shift between the old firm and the new firm, and this transformation piece. Now that’s something that I think a lot of firms are trying to do now and trying to do that quickly. How much time are you as a firm able to spend on this? You obviously have your billable hours that you need to maintain and then you have your innovation. I put it to you before and I’m going to use it now because I like it, it’s ‘Innovation Nick’ versus ‘Transactions Nick’. How are you able to split that time and how does the firm manage that? Because there’s not everyone want to be doing both, you still need to pay for the bills ultimately.
Nick Kirby
They do. And I think this is actually quite an interesting area and one I feel quite passionately about. Lots of people do want to do this but I think to varying degrees. Let’s start at the beginning. When I first pitched this idea of innovation Nick to the business our Chief Strategy Officer had just joined. I used it as an opportunity to try and say I think fee earners, who are at the coalface of understanding how transactions work or understanding how litigation works, should be involved in innovation. Because too many times have the IT department said, “You should do this.” We look at it into some detail and it’s just not suitable. So that was the original pitch, was that I thought lawyers should be more involved in transformation. I thought it would get us much better output. So, at the beginning I pitched it as a three month trial because I knew that no one would ever say no to a trial.
And I knew that the reality at the beginning was that I would just do my normal work and this all at the same time. I think was that difficult and did it continue to be difficult? Yes. But it was definitely worth it for me personally. I mean, the journey that I’ve been on has been awesome. I think you’ve got to be able to… I guess make a business case for stuff to happen. At the beginning it was too hard to make a business case really with any real numbers. So this trial allowed me to basically explore whether or not it was worthwhile. As luck would have it during that initial three months we managed to use some of the software, so some machine learning software and some software we built in-house to do two separate transactions. To do them and to come in under budget and to do them really efficiently, really quickly and to impress the clients.
So that sort of enabled me to build a business case around doing this permanently. From then on I’ve had 20% of my target has been cut to allow me to spend time on innovation really. So innovation Nick occupies about one fifth of the week and transaction Nick is about four fifths of the week. They still overlap a lot and they probably use up more than five fifths of my week in reality!
Geoff Dunnett
I'm sure they do!
I think also lawyers, we have targets, but our targets at Mishcon are not overly aggressive. I’ve heard of other law firms who have got targets in the sort of above 2,000 to 3.000 hours. Ours are not that full. So, I feel like despite the fact that I might use up a bit more of my week than I otherwise would do that’s okay in the context of what the expectation is. I think there is only ever one of me and I’ve always wanted to split my time between being transaction Nick and innovation Nick. Now the firm is recognising that we need to build more people around this opportunity. So we’re being challenged to find teams of people who are willing to maybe spend a little bit of their time on innovation projects, to start building a more complex model around how you can start, find, fund, whether it be internal funding or people funding, and then make profitable innovation pathways.
Geoff Dunnett
That’s I think something, if we could spend a bit of time talking about. I think that’s for me fascinating is how you build the business case internally for a law firm and the you put it into place and then what is the ultimate result? And what is the measure of success? Because in all of these types of things, because you mentioned in your experiment you managed to do everything a lot faster. Yet the way that firms bill is by hours spent.
So it’s also asking a slightly different approach to the way that the business is run. I guess it would be interesting to hear a bit about how that journey went and has that changed the general attitudes within Mishcon towards that? And the practicalities of it?
Nick Kirby
I think there’s a couple of interesting things about real estate as a model for innovation. One of those is that a lot of our work is done on fixed fee. And clients want that. Clients don’t want to be presented with a bill that’s above what they agreed, it fits into their model. And so a lot of our work is done on a scale or some fixed fee model. I think there’s an expectation for us to make those work, or there is an expectation for us to make those work for long periods of time. I think that is a good thing because it pushed innovation, I guess innovation risk or innovation acceleration onto real estate departments. So I think that’s one of the reasons why law firms with real estate have been trying to find and do things differently for some time. If you look at things like Leverton, Kira, you know, those products are used and people have been pushing for them to be used to review leases for a significant period of time. Because we know that clients push us to do things as cheaply as we can and the market out there is pretty competitive when it comes to quoting on real estate work.
So I think that’s been quite interesting and it’s made people more accepting of going off to find bits of technology to do our work. I think also it’s enabled us to win work we wouldn’t have otherwise won. So where we’re pitching for new business and we’re trying to think about how much it would cost us to actually do a piece of work, we might traditionally as a central London law firm with quite a big cost base be less competitive than other law firms. So having tools that we are able to use and we know how to use and we’ve spent some time and energy thinking about where they work and where they don’t work enables us to actually price things more competitively than we might otherwise be able to. I think, yes, those are some quite interesting things I think about just real estate more generally. I would hope that some of that feeds into how other sectors quote for work to clients. Because you're right, ultimately if your business model is I charge you based on time I guess it’s difficult for innovation to have as much impact as you might want it to. Unless pricing is really sensitive. Unless everyone is chasing down products that can help them be more competitive.
Geoff Dunnett
Ultimately, I think there’s a false economy of going for the cheapest thing every time, right? And I think there’s probably a change of mindset as to that and people are probably looking towards value rather than price, exactly. And I think providing legal tech tools that allow for the transaction to be run more smoothly for a greater level of certainty to be afforded for there potentially to be fewer carve outs in an opinion as a result of it.
You know, all of these things that end up de-risking the transactions. In a large part a lawyers job is to de-risk things for their client. So all of those things kind of fall into one another. I think it’s fascinating. As a transaction lawyer myself previously one of my areas was project finance but my frustrations were around the fact that we didn’t have tools at our disposal. Not necessarily purely for billing but just because it wasn’t considered a priority at the time. This was a number of years ago now but it is fascinating to see this rise of legal tech teams within law firms.
And that makeup I think is going to be really interesting of what is a law firm of tomorrow going to look like? Is it going to be half technology teams, legal engineering teams, process improvement teams and then the rest lawyers? And that’s a great opportunity for someone who wants to do law, but how do you learn all of the things that we might have had to do that were boring at the beginning that have probably made us know that these need to be fixed? Or do we think there’ll be a step change and then there’ll be more issues and boring things that people will need to fix and learn as a result?
Nick Kirby
Yes. So I think that’s really interesting. I think being a junior lawyer for a while, probably when we were both trainees, often I think yes, we did get involved in training in terms of looking through lots of documents and trying to see what needed to be fixed. And that gives you a great understanding of them. I think one of the things that I think is great about legal technology is actually that it enables you to spend more time being a lawyer and less time doing the sort of data extraction things, where I’m not sure you really learn anything. Some of my passion for this came from the fact that as a trainee and a junior lawyer I remember finding myself in some dark basement room at Mishcon going through 200 leases, extracting dates and party names and putting them in a spreadsheet. You don’t learn a lot from doing that I don’t think.
Don’t go to law school for that!
No, quite. Exactly, and I think yes, we need to be careful that we don’t lose something from our junior lawyers by legal technology and it being capable of doing some of what they used to do. And what I mean by that is that we need to make sure that we continue to use the time that maybe they saved or we saved to educate them and to make sure that we train them to be really good lawyers. Because I think the point is, if you can leverage technology to spend less time on administrative things, I think you can provide a much better service. We can be lawyers and we can be advisors, trusted advisors to our clients. Giving them proper advice about a transaction or a piece of litigation because we’ve got the head space and the time to think about it properly. I think that’s one of the really important things that we must get out of this is that really good lawyers are able to be really good lawyers by getting the head space that they need by using technology like this to give clients a much better service. It’s not about a race to the bottom to give them I guess advice which is just based on something that’s come as an output from a piece of technology. It’s about wrapping that in proper, decent legal services, giving them what they really want from us.
Geoff Dunnett
Looking at the types of technology that you’ve seen, you must see a lot coming past your desk and meeting lots of interesting companies. Shieldpay and Mishcon took part in the digital street project with the land registry, which is blockchain based transactions for real estate ultimately, which is fascinating. So my question is in two parts. One is, what do you see in greatest adoption? But then are some things just too far away to being adopted now? Or are they reality?
Nick Kirby
Yes. I think it’s probably worth starting maybe just a little bit about the LAB and the core reason why we started it, just before we talk about adoption. The LAB was all about driving business change, driving effectively adoption of technology internally. It wasn’t really about investing in start-ups, although that is something we’ve done. And it wasn’t necessarily about finding the best technology out there, but again, that was something that was really important. It was about saying how can we change our lawyers’ behaviour and how can we make them think differently about technology? So part of I think one of the successes of our LAB is how involved we got in product. Obviously one of the things about incubators for a start-up is how does a start-up understand, really, really understand the problem they’re trying to solve? And how can they speak to users about that problem so that they can frame their product around it? I think lots of incubators do the first one really well. I think what we’re really proud of is that we get our lawyers properly involved in those product conversations and we’ve got people in the business that love product, understand product and they want to help start-ups improve that.
That involves lawyers getting in a room, drawing on walls. Orbital Witness, who were one of the first start-ups, well, they were the first real estate start-up in the first year of the LAB.
I remember walking past a sort of fishbowl meeting room on one of our floors. And there were twelve people in this room, loads of whiteboard paper up on the wall, lawyers drawing all over it. I think the ancillary benefit to all of that was that they got really excited about technology, so it did change their behaviour. Then come to adoption time when Orbital Witness come to sell us their beta product I asked for 10 volunteers, I got 45. I think that tells a bit of a story about how you change that adoption curve and how you get lawyers who are quite sceptical of technology to buy-in to adopting it.
I think Thirdfort is a classic example of something that we were using before COVID but actually as a result of COVID we had to use. So we’ve gone from doing a number of transactions before COVID to suddenly during every single client that we onboarded in the entire three months when no one could leave their house was done on this piece of digital onboarding software. I think we talked a little bit earlier, will some of these things that we’ve gained from COVID drop off a little bit? And we’ll probably see a bit of a drop off for people not wanting to digitally onboard but I don’t think we’ll ever lose the gains of something like that. I think everyone who wants to try and transform their law firm should be thinking, what’s changed as a result of all of this and how can I use that to leverage and maintain the same direction of travel that we’ve been in?
So yes, those are some of the things that we’ve onboarded, that have been adopted as a result of the LAB. There are other things like transaction management software, time recording software, so Ping again was in our first cohort. And that continues to be adopted internally and I hear really good things about them externally as well. What are the other things? So machine learning seems to be going through a big drive at the moment. There are more start-ups out there than there have ever been. I think when we first started looking four or five years ago there were perhaps one or two. Now there are many more. Yes, that becomes confusing because who do you pick? But I think some of it is about the underlying technology and how useful it is. I think again, encourage people to trial, test, have a play around, really understand what that stuff is good for. Because I think again it helps change attitudes as well.
Then on the second part of the question I think we probably all knew that a blockchain digital transfer was going to be pretty far out there when we first started doing it. In some senses we were really lucky to find a buyer and seller who were keen to be involved in something so strange. We always joked internally that one of them was probably like a big Bitcoin enthusiast or something.
I think that was a great example of a collaboration between land reg, us, you and a bunch of other people really to do something that was really forward thinking. And I think it was important that it was done, I think there are some people that are building platforms, Instant Property Network, or I think it’s now Coadjute, is building a platform off the back of some of that research. And it will be really interesting to see where that goes, what the adoption take-up is. I guess the home buying and selling market is to take part in something like that. I think the thing which goes for them and the thing which goes for the project is that so many people hate the current process. It’s meant to be one of the most stressful things to do behind getting married. So I think that will push the adoption of that technology more than it might have done otherwise. Obviously, everything that’s happened in the last six months I think we’ve seen transformation change probably three to five years in the space of six months. And again, some of that will revert, but I think it will also have a big impact on adoption of forward-looking technologies.
Geoff Dunnett
What have you seen as a result of COVID in the real estate market? Because there’s talks about everyone working from home, is there going to be commercial real estate anymore? Shops having issues, all of these things. How have things been affected and how are your clients responding to that?
Nick Kirby
I think just specifically thinking about the Mishcon real estate team. We entered lockdown really busy which allowed us to sort of keep being busy for a little bit. But there was definitely a big drop off in the number of transactions. Obviously as lockdown happened no one could go out and look at buildings. Tenants didn’t really want to take new leases. But having said that there were lots of our clients that were doing interesting things and continuing to do them during lockdown. There was lots of development work that was ongoing, there was some investment work, there were some auction purchases for example. But if you could look at activity, activity was definitely very, very much down. There is a lot of investment money out there and people have raised funds to either do speculative retail development, not speculative retail development, but regeneration of urban centres. For example, they’ve raised money to do that stuff and it now looks like a really interesting time to be buying up areas of retail that need regeneration. I think there’s some people out there that are doing that really interesting thing.
I think otherwise our clients are off continuing to do the stuff they did before. We’re lucky, as I said at the beginning we’ve got a really varied client base. Things like long income shopping centres, because they’ve done really well during this last period, those are doing really well. That’s sort of the real estate department specifically at Mishcon. And activity seems to be picking up as the world picks up at the moment or certainly over the last, if we look a month ago and two months before that then the world was picking up a bit. And certainly this real estate world seems to be doing the same.
Geoff Dunnett
In the negotiations and in fact in the drafting of deals and so on, are you taking into account the lessons learnt of this period in any way? Are you having to put pandemic clauses in your force majeure that the clause is now?
Nick Kirby
Yes, sometimes. Certainly in the retail world, which was obviously sadly most dramatically hit by all of this, I think there’s definitely a big push in that market, less so in the rest of it. I think it will always probably be on people’s minds going forward, certainly for a bit. The question of whether or not we’ll ever go back to an office again, I was always a massive fan of working from home and will continue to be. I think some of that fandom was eroded by being forced to work from home for so long and I’ve been going back into the office probably more.
Geoff Dunnett
I think you're not alone in that one!
Yes. Personally what I hope happens is that people use this as an opportunity to redesign their spaces. I think that working as a group together collaboratively in person is really, really invaluable. I think it’s how new ideas are generated and there’s only so much of that that you can do in a virtual environment. I’d like it to be an opportunity for people to design their space around things like that happening. You could see that, you know, Facebooks, Googles, their offices are partially designed around creating those sorts of environments. I think the rest of the world has been really slow to catch up. I would very much hope places like law firms continue to re-think how their offices might be used. We’re not getting out of our long leases anytime soon so I hope we use it.
Some of our plans will be to have that sort of like what I would call project space, which is a bit more dynamic, a bit more interesting, to get people together to really think about how they’re working. Also in combination with quiet space, because part of the great thing about working from home is that you get eight hours of concentrated time where you often don’t get interrupted. Obviously during lockdown you got interrupted by kids or whatever the whole time but now it’s good for that concentrated time when you get to really think about what you're doing.
Geoff Dunnett
That’s interesting. We’re not yet back into our offices but that people are coming together for collaboration points and then going away again to concentrate on actually doing the work. I think it’s something that will become far more prevalent.
And fascinating to see how those ways of working will change. One of the things that I like to ask people on the show is what their most formative experience has been or what has moulded them to get to where they’ve got to now. What is yours, Nick? Your most formative experience?
Nick Kirby
Probably this push to change transaction Nick to innovation Nick. It really, really stretched me at the beginning. I was going from being a lawyer where you work on a set of tasks and you can fill your day with bits of work that have to be done. You’ve got timelines, you know when something needs to be finished by. To this sort of strange world of I guess projects, thinking slightly more broadly around where we might want to go as a business or as a department. How we might innovate, what time we should dedicate to smaller projects that were good for what we were doing right now or more forward-thinking projects which might build our brand or might be things that change the way we work in three to five years. So I think that was for me a massive push in terms of changing how I thought about my career, about what I could do, and just was really interesting to be surrounded by slightly different people suddenly as well. You know, all of these dynamic leaders of start-ups, our Chief Strategy Officer, all of that took me down a completely different path which I guess prior to changing I hadn’t really thought would happen?
Geoff Dunnett
Well, it’s an amazing situation to be in to be able to have done that internally within Mishcon and one that I’m sure many people will be very envious of and also very impressed by. So it certainly shows the quality of some of the start-ups that you’ve mentioned today that have been part of MDR LABs and that you continue to engage with I know well too. I think you guys have done a great job, yourself and also the rest of your team, to be able to get there.
It’s been a real pleasure to be able to talk to you about all of the ways that you guys have been putting into practice a lot of the things that most people are just dipping their toe in. So very exciting to see how all that goes. Nick, thank you very much for your time and I look forward to catching up again soon.
Nick Kirby
Thanks Geoff, really great to be here.