Legal innovations and the insurance industry
There has been a profound shift in the provision and delivery of legal services to the insurance industry within the last ten years. The introduction of government driven, online claims portals and medical reporting criteria for the majority of personal injury cases has forced a reduction in the proportion of those claims heading into litigation.
Such a seismic shift should have seen a correspondingly dramatic change in the way that lawyers offer legal services to the insurance industry.
In spite of exciting opportunities to modernise, many lawyers still seek to differentiate product defiantly and depressingly purely on price, notwithstanding that there are a plethora of new technologies that lawyers should be investigating for their clients’ benefit. Artificial Intelligence and its application to the delivery of legal services; and insurers’ push towards solutions built on coding, such as Blockchain, are but two possibilities.
In 2009, I wrote an article focused on innovation. I argued then that clients regard the instruction of their own lawyers as ‘a distress purchase’.
Lawyers who have continued to set their pricing models based on ever-increasing claims volumes or greater levels of attritional work are, therefore, rather missing the point, and missing it by some distance. As a consequence, they face in 2017, a very significant risk in the wake of the current whiplash consultation, which promises to eradicate huge swathes of the litigation upon which the solvency of such businesses depends.
The intervening years
In 2009, external investment in law firms was coming. It’s moot whether such investment was a success for clients. Very little external investment appears to have been truly directed at innovation for the benefit of clients, rather than for the benefit of the lawyers receiving that investment.
Claims numbers have continued to rise, and litigation numbers generally seem to have stabilised, often for the wrong reasons. As one client has recently said to me, “there will always be such a thing as good litigation”. However, I understand that some lawyers require clients to guarantee litigation numbers. Such clients are compelled to become addicted to their lawyers, while those same lawyers race to the bottom on service and price.
To offer value, innovative legal solutions for the insurance industry must help claims teams to reduce their reliance on lawyers and to break the addiction.
The way forward?
Therefore, a modern law firm must offer innovative ways to cure clients of their traditional addiction on lawyers.
Insurers are now developing their thinking far more quickly than the lawyers who profess to advise them. For example, On-Demand Insurance built on AI coding and the work being carried out by insurers, based around Blockchain, should also be changing lawyers’ understanding of the insurance market.
LJ Briggs, in his report on the reform of the structure of civil courts, has proposed a world in which citizens can secure justice through innovation, technology, and a greatly reduced reliance on the legal profession. Rather than fighting that inevitability, how much better would it be for the legal profession to create the innovations that ensure access to justice for the disadvantaged?
I work with a group of visionary people who have designed a range of products to meet a 21st century insurance market that empowers clients with the means to make their own legal decisions. I have also seen the future in the form of KLAiM, a virtual lawyer that does away with insurance clients’ need to instruct a lawyer at all in many injury cases.
Such innovations support the core principle that legal innovation must help clients only to use a lawyer when they really need one.