The legal and construction sectors are each undergoing a profound period of innovation with clear parallels between the two and an equally clear marker as to the point at which the balance changed – this was the financial crash of 2008. Since then operators in both industries have been forced to look at how processes and procedures can be changed to improve efficiency and profitability.
In a highly competitive legal sector, evolving to meet the requirements of sophisticated clients and demonstrating value has become critical for law firms in order to grow, remain relevant and be competitive. In advising clients on navigating market changes and business risk, law firms themselves must also adapt to new technologies and methods of working. If undertaken well the data analytics and trends produced, coupled with a collaborative approach, should produce a closer and more integrated business relationship between client and legal advisor.
To address this, law firms are exploring the use of:
- Artificial Intelligence (AI) powered tools that provide machine learning capabilities. These are being widely adopted by the legal profession and over the next few decades software systems such as that provided by Kira Systems will apply machine-learning techniques to many of the routine tasks presently undertaken by lawyers, in a way which improves accuracy and limits risk. Recent tests involving IBM's 'Watson' system in connection with Non-Disclosure Agreements have proven a high accuracy rate when compared with human operators in identifying risks - once the system has been properly trained. Although adoption rates are high there remain unanswered questions regarding the regulatory and professional indemnity impact of law firm's adopting these tools and exerting more reliance on them with the possibility that eventually clients might take advice direct from AI tools without lawyer "supervision" of the output
- Digital algorithms allow machine learning to process far more data than their human counterparts, in a fraction of the time, highlighting provisions for lawyers to check on a second line review. It is still too early to tell but commentators suggest that the amount of time spent on document review by lawyers might fall by up to 80% over the decades to come. In recent projects our lawyers have confirmed time reduction rates of 30% - 50% although it is worth noting that presently these systems are simply being used as a tool to aid accuracy. Performance rates are likely to improve both with further system training and technological advancement
- The emerging technology is impressive but this will not provide the whole solution in isolation, so legal firms are also exploring new legal service delivery models. At Womble Bond Dickinson we have a Legal Solutions Centre (LSC) based in Plymouth which comprises a team of over 80 paralegals and legal executives, project managers, data analysts and client co-ordinators, who use flexible resourcing and time-saving technology to deliver a high-quality, cost-effective service for large scale projects. The LSC undertakes work both directly for clients in its own right but also work commissioned by Womble Bond Dickinson colleagues who retain responsibility for the client relationship. Using the insight gained through working with different clients, and knowledge of our own working practices, we are able to design optimised processes, ensuring that work is done at the right level, leveraging the right technology and ensuring maximum efficiency, which correlates with profitability for the law firm, and cost-effectiveness for the client.
In the construction sector new home construction rates in England have shown improvement since 2008 but the number of new homes constructed still falls short of the volume needed to meet the UK’s housing shortage. The UK government (which is responsible for new home construction in England) has projected that England requires 210,000 new homes annually between 2014 and 2039 to meet the rate of population increase. In the 1 April 2017 – 31 March 2018 period Homes England report 217,000 homes, which goes some way towards meeting the annual need but does not help much to make up the historic shortfall. The UK government considers that 300,000 new homes per annum are required by the mid 2020's in order to re-balance demand and supply.
Housebuilders and construction firms have recovered from the financial crisis but they remain constrained by a restrictive financial environment (there has been a steady decline in lending to construction firms over the past 6 months following the collapse of Carillion – during the period from March to August total lending to construction companies fell from £34.5bn to £32.6bn) and a difficult labour market. In the 2017 financial year the cost of construction related employment rose by 3.7% to a record high. The uncertain implications of Brexit and the possibility of EU nationals returning to their home nations means that the UK construction industry is likely to experience labour shortages and/or increased costs in the foreseeable future.
Kit Malthouse, the UK Housing Minister, has warned housebuilders that unless there is more innovation in the sector then firms could risk becoming obsolete. Speaking at a Housing Market Intelligence conference in London recently he highlighted that construction in the UK had 'not much changed since 1985' and warned housebuilders not to become the 'Kodaks' of the industry. Speaking at the same event Barratt CEO David Thomas highlighted the need for more off-site construction and innovation.
To address this, construction firms are exploring the use of:
- Prefabrication & modular:prefabrication has been used in various formats for decades but new technologies are making prefabricated sections easier to produce and integrate. Off-site manufacture is becoming more commonplace and there is now technology in large constructions, like schools, hospitals and hotels where either temporary factories are built on site which produce essential components or pods are built in an off-site location which are then simply installed into the building in one process with all necessary wiring, plumbing, etc. already located within 'smart walls'. This has huge advantages in terms of both time and cost as it reduces the time spent on site and but also from a health & safety perspective as, for example, it can eliminate any need to work at height. Equally, the quality of modular construction has improved greatly in recent times and many products, for example the modules engineered and built by Totally Modular, have been pre-approved by many of the mainstream UK lenders and carry a 12 year Premier new home warranty. Units of this type can be produced in a fraction of the time construction crews would usually be on site and can be installed and connected within 24 hours of delivery. This may represent a partial solution to the affordable housing crisis in the UK
- Augmented reality: BIM (Building Information Modeling) is a process for creating and managing information on a construction project across the entire project lifecycle. A significant part of the process is the intelligent 3D modelling and imagery process that gives the client and its professional construction team (e.g. architects, structural engineers, mechanical & electrical engineers, quantity surveyors, building operators, etc.) the insight and tools to more efficiently plan, design, construct, and manage buildings and infrastructure. Modern BIM systems will make it possible for linked professionals to view information in one workflow from beginning to end of the design and build process but as with the AI tools used in the legal sector there are possible legal liability issues arising from relying on other parties' BIM models for the basis of decision-making and this is something which is likely to be tested through the courts over forthcoming years, particularly in relation to ongoing maintenance. However, projects utilising the more advanced levels of BIM show significant cost and time efficiencies during the construction phase
- Connectivity & collaboration: connectivity on building sites is becoming easier to manage and a 'connected job site' allows everyone connected with the project, particularly those on site, to have access to up-to-the-minute drawings and documents in 'real time' via hand-held devices. By providing this information to the entire site workforce, in addition to the professionals, it is hoped that mistakes due to miscommunication can be completely eliminated
- 3D printing: this is the process of creating a physical object from a digital design. These are often used to create site models and the technology is pushing forward to give a potential home owner a feel of what the home might look like. Typically the printers are used to create small models and although the number of materials and colours available (and the types of printers) has been quite limited this is increasing. Incredibly, 3D printers can now fabricate entire buildings out of non-plastic materials (e.g. sandstone, metals).
- Robotics: automation in the construction sector is not that far away. Just as tractors are ploughing to millimeter accurate field margins in the farming industry, bulldozers can be fitted with GPS trackers and sent off to do their work. The US and UK construction industry is facing a severe labour shortage (this may be exacerbated in the UK by Brexit implications) and so automotive solutions are being sought. For example, several construction firms in the US are using the SAM 100, or "Semi-Automated Mason", produced by Construction Robotics. 'Sam' is able to lay up to 3,000 bricks per day, at a margin of error now measured in millimetres, whereas a human would likely only reach 600. The data relating to Sam's performance can be recalled on a phone or other hand held device, including for example the data relating to temperature and humidity when the brick or block was laid.
To summarise, the unifying features here are labour and risk.
In the construction industry in the UK we have a shortage of skilled employed UK nationals and so it is hoped that the adoption of new technologies and automation will provide the answer. The methods of construction in the UK have not really changed since the 1950's, possibly with the exception of timber frame forms of construction, and a glimpse of a future building site might require limited human involvement, being largely robotic, with drones flying continuously to scan and monitor progress so that issues can be rectified at minimal cost. Drones are in fact already being routinely used across UK building sites.
In the legal sector there is a need to reduce the industry's reliance on labour to meet the cost expectations of sophisticated clients. AI will be employed to allow humans to avoid repeat tasks which can be undertaken by robotic or machine learning tools. Once such procedures become commonplace this may have a distortion on labour markets but commentators suggest that a similar number of roles will be created to support these new innovation features.
It is worth bearing in mind that in both sectors the use of technology gives rise in its own right to some interesting legal liability issues and questions that both industries are still working through.