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Karen Schuler: Managing Director, BDO USA

Who are you and what is your role?

My name is Karen Schuler, and I lead BDO’s Data & Information Governance practice, which focuses on helping our clients to identify, manage, protect, and remediate sensitive data sources. I bring to the role 25 years of experience in risk management, governance, legal issues and technology.

What do you think will be the single most defining technical or operational feature of the next 1-5 years in law? And then, same question – but over the next decade?

Over the next five years, we can expect to see a big “mindset” shift in the way law firms and organizations view and use their data, moving from a cost center model to a revenue center model. Many legal teams today understand the need to preserve and collect information to respond to a discovery request. In the future, however, they will also become responsible for leveraging data to improve efficiencies in their organization. These responsibilities may range from remediating sources to reduce storage costs to helping design information governance for their organization.

Over the next decade, we will see a trend of legal teams hiring more technical personnel to facilitate greater collaboration between IT and legal in investigations or litigation. Much of this will stem from the trend of companies using more sophisticated technology in the discovery process—and the new challenges technology brings, particularly from a cybersecurity perspective. The legal team will also play a greater role in an organization’s supply chain management, as the use of data in the supply chain relates to the organization’s overall data management.

Artificial Intelligence (AI) is touted as a game-changer for law. What do you think?

Artificial intelligence has been used for many purposes for many years now–and we can expect its role in business processes and operations to increase as the technology evolves. Tools built today without some type of AI functionality will be obsolete within the next five years, as innovators will bypass traditional tools for those with more robust AI capabilities. Legal companies, especially, depend on AI to process and analyze huge amounts of data. For example, to analyze communications for an investigation, legal teams often rely on AI tools to provide faster and smarter results. AI is becoming a critical part of the industry now, and can only be expected to become more prevalent as adoption grows.

Cybersecurity is often quoted as being both the next greatest risk and also the greatest revenue opportunity for legal services providers. What are your thoughts?

I’d argue cybersecurity is already the greatest risk, but the legal industry has been a little slow to respond. At the end of December, the SEC charged its first hacking-related incident in a law firm, but it won’t be the last. Cybercriminals see law firms as easy pickings, and are increasingly aware of the treasure trove of information they keep on their clients. But a data breach isn’t the only risk law firms face; those who are “cyber negligent” will struggle to win new business, and will eventually lose the business they already have.

Cybersecurity services have been offered by technical and security experts for many years, which means it is a saturated and mature market. But the market is evolving as cyberattacks grow in frequency and sophistication. We’re seeing a shift away from traditional IT security solutions to a more service-oriented approach focused on ongoing defense and active monitoring.

Is Automation a “silver bullet” for law – or is law more complicated than other sectors?

While automation is not necessarily a “silver bullet” for law, it is certainly critical in containing costs and minimizing inefficiencies. That said, oftentimes we see organizations try to run before they can walk. You can’t automate functionalities if the underlying data is missing or incorrect. Ultimately, automated technology is only as successful as our ability to know how to use it and make sense of the results. BDO provides many automated services, but those services are augmented with human elements and real professional experience.

There is much more data available for both lawyers and their clients? Is more better – or just more?

It depends. If our team is conducting an investigation or providing litigation support, for example, it is certainly beneficial to have more data to analyze than less. However, if  we are advising a client on retention strategies related to an Office365 migration, then more data is just more data, and having less would help us cut through the noise. In some cases, companies must maintain large amounts of data due to regulatory requirements. In those cases, the data must be managed accordingly to ensure retention schedules are monitored and enforced. The “keep-all” method for document retention, however, is detrimental in many ways for an organization–not only is it risky to keep all this data (in the case of a cyber attack or data breach), but costly to maintain and manage.

We see a push for greater “value” and “innovation” in both legal products and price levels, structures? Is there more to value than the price tag these days?

There is more to value than just a price tag. Clients should always feel that they are getting value in receiving services–or else the service becomes commoditized. If you compare service providers, where service provider “A” processes data, loads and provides linear review capabilities for a fraction of the cost of service provider “B”, but “B” reduces the amount of data significantly for review (with a high level of confidence), then it does come down to more than cost.

The people behind the technology matter too. For example, if you consider a large second request, an e-discovery provider that brings specific experience with the Department of Justice or Federal Trade Commission to the table may beat out a lower-cost competitor.

In the long run, innovation is necessary to remain relevant. At BDO, one of our biggest initiatives is to continuously innovate internally and externally. Our innovation, like other companies, not only provides value for our clients because we are developing capabilities that enhance results and deliver results faster.

There’s a growing trend toward litigation funding and other forms of legal financing. What are your thoughts on that?

Like any form of alternative financing, litigation funding has its pluses and minuses. On the one hand, organizations with limited financial resources may be able to use legal financing to pursue a legal claim and remuneration they otherwise would have been unable to pursue. On the other hand, it may also increase the number of meritless cases or raise legal costs.

We see more pricing data and a push for greater transparency in legal procurement. What do you see as the implications of this?

Fee transparency is becoming a prevalent issue in many industries – and in particular, the legal and healthcare sectors, which have been facing greater scrutiny in recent years. Transparency on pricing is critical as it helps providers build trust with clients and demonstrates confidence that the value provided is equivalent to the cost of the service. Fees perceived as “hidden” or “secretive” raise client concerns as well as broader criticism (i.e. that the market is “rigged” or unfair). Fee transparency can also help mitigate “budget creep,” or an unforeseen growth in costs, during litigation or investigations. 

Last question: what’s the one shift or change you think will catch the industry un-prepared in the next decade – whether good, bad or downright ugly?

Without a doubt, the legal market will face many “gotcha” moments over the next decade—and technology will be behind most of them, from new innovations that enhance operational efficiencies to emoji analytics to crimes committed through the Internet of Things. But it’s impossible to ignore the elephant in the room: cybersecurity. The future of crime is digital, and the rulebook will change along with it.

Karen Schuler has a broad background in multidisciplinary fraud, cybersecurity and government investigations, as well as civil litigation spanning a variety of subject matters, including securities, intellectual property, and products liabilities. She is a nationally known speaker and author on information governance, GRC, cybersecurity and investigations.