What Microsoft expects from its law firms in the AI era

Welcome back to the podcast. My guest today is Rebecca Anderson, Microsoft's head of legal for Amir. Now, Microsoft is obviously pretty close to the center of the AI revolution. So I was very interested to hear how the Inhouse function at one of the world's biggest tech companies is adapting to all of the change. We talk about how Microsoft is using AI internally, what the company now expects from its external law firms, and why Rebecca thinks the role of the Inhouse lawyer is becoming ever more strategic. I hope you enjoy the conversation. Rebecca, thanks so much for joining me on the podcast, pleasure to get you on. Yes, great to be here. Thank you so much for having me. So, look, Rebecca, let's kick off. Do you want to sort of tell us about your journey to becoming head of Amir legal at Microsoft? Well, I had a, I think a typical start for lawyers. I started in private practice focusing on emerging tech companies and then decided to go in-house. And at the time I was in a law firm in Seattle. And so Microsoft was the company that I went in-house to. And that was now 15 years ago, which is really hard to believe. But I've been at Microsoft 15 years in a variety of different roles. I started off at a headquarters team supporting the advertising business and then had the wonderful opportunity to move out to our international team supporting our sales and marketing organization. And I've been in Europe now for about 12 years in a few different roles. I started off supporting Central and Eastern Europe. And then I did a role in Ireland where I also did some regulatory and government affairs work. And then now I am head of legal for Amir. Tell me about your kind of qualification. And you're kind of US-qualified lawyer, Ashim. Yes, exactly. Qualified and licensed in Washington state. But have been working with Microsoft in Europe for 12 years. So I know our European business and our Amir business now very well. And as you can imagine, it's a really diverse region for us. And it's one of the most complex in terms of regulation and geopolitics. But we also have a significant business in the Amir region. So it's a very exciting region to support. So it talks to me a little bit about what your role is the head of legal there in Amir. So it looks like. I lead a team of 40 attorneys located all across our Amir region supporting our sales and marketing business. Our team was actually formed in its current state last July. And we were doing that for a few-- we reorganized for a few reasons. And I think we're facing the challenges that probably a lot of organizations face right now, which is the pace of innovation and complexity and regulation is really at a pace that we haven't seen before. And so as we looked at our operating model, technology was not the challenge. It was the operating model itself. Our knowledge was fragmented. It was stuck in people's inboxes in different tools. And I think we were doing a lot of repeat work and probably not getting the most value out of our senior legal resources and people as we should. So we reorganized to really start thinking through how can we scale our support? And we've been thinking about this as the shift from legal as a service model to really legal as a platform. So again, just for a bit of background, the kind of business that you cover, if you like. What are the big products that the business is selling that you have a lot of exposure to? Well, it's no surprise. It's all about cloud and AI. So all of the-- I'm really on the enterprise side. And that's where my team is supporting, not as much on the consumer side. So we're really across all of our enterprise products, co-pilot, M365, Azure, all of the brand names that this audience probably knows well. Well, all of the juicy stuff, then, the good stuff, I would say. So talk to me a little bit about kind of-- you hinted at there then Rebecca, but kind of the big kind of issues than the occupier a lot of your time and your team's time, the big kind of legal issues. Yeah, in the current environment, we've really been thinking about regulatory. And Europe sets the bar and the globe for tech regulation around the world. And so we're really thinking about how can we anticipate better? How can we ingest new regulation or new and novel customer challenges? Understand them, ingest them, and then move them to scale as quickly as possible. And my team really brings that local law, local customer and regulator perspective into our overall product and go to market strategies. I guess it is quite difficult to keep up. If, unless you're kind of in it, it's difficult to keep up with all of the different bits of regulation that are actually in play now in Europe. So just sort of guide me through it, because the one that immediately comes to mind is the AI Act that came-- I'm not actually sure of the rollout phase of that just yet. But is that a big one for you that you're looking at? Absolutely. I mean, any regulation that impacts our business is something that my team is across. We partner really closely with our government affairs team as well. So we have a big government affairs function. And they are the kind of the front line for understanding new and proposed legislation helping to inform our product and engineering road map strategy. And then my team supports the sales organization in being able to sell into a complex and regulated environment. And we're trying to do all of that at scale, as I've said. So we're really thinking about how can we keep up with the pace? Because the pace is something that I think just keeps getting quicker and quicker in terms of product launches, our innovation speed, the speed of complexity and regulation coming to our business. And so really trying to figure out how can we stay ahead? How can we stay at pace? And how can we really, as a legal function, support and enable business growth? And what are some of the others? Obviously GDPR, which has been around for a while now. And then there's the digital markets act or regulation. There's loads on there. Yes. There's a whole spectrum of topics out there for our business. And that's honestly what makes my job so exciting and dynamic. There's never a boring day here for a lawyer at Microsoft. And it's really a privilege to be able to be at the cutting edge of how we define technology in our world and the regulation that supports and puts guardrails across it. So that's a big part of what my team job does. So a lot of regulatory compliance type work. And then what about on the kind of more transactional core-protease side and things like that? Yes. So we support all of the major transactions with our customers in MIA. We have a team that is focused on doing our enterprise deals. They're really our deal-making experts at scale. And they operate as a global team across our enterprise customers. My team provides the vertical industry segment expertise across FSI is one where we have deep expertise. And we also support our public sector business in a highly specialized strategic way. Because that's a business that needs a lot of specialization. It's highly local. But it's also what we consider precedent and market setting. So we do a lot of public sector transactions. But my team really focuses on customer success throughout the lifecycle of a customer. So from pre-transaction to the transaction itself to post-transaction on deployment and our customers need support every step of the way from the legal team. And we partnered deeply with our sales and marketing business to really bring that customer success. And these are very high value typically long-term enterprise kind of SaaS contracts. Exactly. And give me a flavor. What ballpark range in terms of value for some of these contracts? They're pretty chunk out there. Well, this is a really good question. We have a high volume of transactions. And we, as a legal team, because of the scale, we have a whole ecosystem around scaling our commercial transaction pipeline and our lawyers that come in and do the highly bespoke high-end type deals are operating on deals that are 300 million to multiple billion. So it's a big range of transaction sizes and complexity that we're across. A big question, when you speak to in-house lawyers these days, is how the role is becoming increasingly more commercial all the time. And the in-house legal function is less. These days, seen as a cost center, a support function, and a bit more strategic. Do you-- is that what you see? Then a Microsoft a lot? Absolutely. And I think going back to one of the reasons why we really had to change our operating model was to to shift our legal team to a strategic growth enabler and partner with the business and move us more out of repetitive type work that we could scale. And that's really where we've been exploring some new AI enablement strategies. I can share something that might be interesting to your audience. We've launched a new frontline model. We have tens of thousands of sales and marketing business clients around the globe that we are responsible for supporting. And the spectrum of requests that come into our legal team, as you can imagine, is huge. And so we deployed a frontline, which really is intended to be this first place for the business to go. And it's enabled through highly curated and high quality self-help content, also with a chatbot that they can react with. And then an email alias. I know it sounds basic. But that email alias has a CRM system behind it, an AI that helps triage. And it's constantly improving the quality of the self-help content. So the idea is, is that frontline continues to drive more scale for us. It gets better and better over time. And shifts our lawyers to the more strategic top end of the kind of support that the business is. So in other words, yeah, this is taking the place of what would have been a cool to legal or an email to legal. This is now a technology enabled. AI is sort of agent that has taken care of that. Absolutely. Yes. And I think we've seen a few wonderful points of value for this, for the legal team. I think it's increased the job satisfaction. It's enabled a lot more consistency in terms of the advice that the business is getting, but also the consistency of the experience of a lawyer. And it's helped us as lawyers be really where we can drive the most value, which is at that novel, highly strategic problem solving for the business that where we can get the most value out of our lawyers. And I may be asking an obvious question here, but I assume this is your own tech, your own product with Microsoft as Bill. Yes. Yes. Yeah, yeah. Because there are a few-- If you might-- You probably get pitched these quite a lot. I guess it's difficult selling a sort of tech tool into Microsoft. But a lot of the increasingly well-funded legal tech, legal AI companies offer this kind of tool, don't they, the service for in-house teams, where it is that kind of triage, which is supposed to be replacing that first port of call for the business to interact with legal? Yes, exactly. And I think when I talk to customers about AI deployment and law firms, we really-- I think about it in three steps. It's how are you using the tools to design a real system and operating model, starting first with the outcome? What problem are you trying to solve? The second piece is technology. And as you've just called out, I mean, technology options in the legal vertical are absolutely exploding right now, which is really exciting. And I think a testament to where how AI can be so impactful for the legal industry. And the third piece is people. It's having the right culture, the right mindset, helping people grow the skills and actually implement that those daily habits that we all have to adopt to really get the most out of AI. So do you still get a lot of emails from salespeople at Legal AI companies saying, hey, Rebecca, I'd love to come and demo you our product and things like that? So we are out talking to all sorts of different players in the legal vertical. And we're all learning together. And I think we are a platform company. So we have a lot of different players hosted on our platform. We've just recently announced Harvey. And we think as co-pilot as the workspace that Harvey is your legal specialist helping you in. And we'll continue to offer more and more on legal and legal space as well as our own first party innovations. So recently we just launched an agent and word for contract roughly. Well, this was a big deal, wasn't it? This was a couple of months ago. And it was a really big deal. Let's get into that 100%. I guess first question though, obviously, you mentioned Harvey then. So I'm going to ask you then, Rebecca, what does your kind of tech stack look like in house legal then at Microsoft? So our foundation is co-pilot. And as I said before, that really is a platform. And we will continue to bring in different pieces of legal tech because our aim is to make sure that our customers have the tools that they want to deploy. And then we are doing our own innovation as well. And I think it's really up to, I think, an individual user to find the productivity tools that suit them best. But when I'm talking with customers about really building the systems to deploy AI, I think about that in really three phases. One is that personal productivity piece, which is what we've been talking about now. And that is really table stakes now. The second piece is, I think, really where you start to unlock some new potential, which is really around content engineering. So how do you translate that kind of institutional knowledge? You know how your data, your curation of data into agents to operate on. And then the third piece is really where you start to get frontier as we like to use that term. And that's really around intent engineering. So how do you design the governance, the decision points for agents to be able to operate autonomously? And we see a lot of opportunity for that in legal support. So you've got the kind of triage bit in place that you spoke about. Can you give us any other examples of how your in-house team are using AI day to day? Where do you see that it's adding the most value? Well, I'll give a recent example. I own a strategy for our legal team. And it's a global strategy. And part of what I do is to escalation management. So very specific escalations that come up to me, and I have to assess this and make recommendations to the business decision makers that we have. And I started to realize we were losing so much time on the back and forth, on the information that's needed to really enable decision making. So together with a person on my team, we started to develop an escalation agent, where the agent would actually helps to coach a lawyer through, hey, have you thought, here's a question that we need to answer. Have you done the diligence on this? And then it starts to build a data pool behind that. And it's been incredible because it streamlines that process that helps us move quicker. It also helps us make decisions a lot quicker to have that consistent set of criterion information that we're looking at. And so that's just one small example of how we're thinking about that. And what's the kind of technology behind that, then? Have you built that with through what? Using what? Co-pilot. That's, again, through Co-pilot. OK, interesting. Interesting. So yeah, talk to me then a little bit about this contract review agent. So for most listeners, I think, you probably would have seen this a couple of months back. And this was a big story because Microsoft launched within Word. It's own review agent, didn't it, which is sort of a bit of a game changer seemingly because obviously, most lawyers still spend their time definitely within Word. And there seemed to be a lot of overlap with some of the tools that some of the legal AI companies were offering. So talk to me about that. How are you guys using it as well? Yeah, so we have an overall legal department of over 2000 legal professionals. So we are a great place to experiment and innovate. And we're doing that across the organization. I think the recent launch of our contracting and drafting agent is a great example of that. Actually, Brad Smith, who is the president of Microsoft and leads our legal team, was the one who rolled it out. And so that's just a great example of some of the innovation that's happening in our department. But we do work very closely with customers to innovate together. Everybody is on a journey here. And so we get a lot of value out of talking to different customers, legal teams to see where they are and we're exchanging best practices and great ideas. And that kind of environment is really great for innovation. Cool. So one thing I wanted to ask then, Rebecca, was in relation to how you work with external counsel, I assume you do work quite regularly with external law firms as well. Yes, it is a huge part of our legal team's support. We have a very big network of outside counsel that we work at around the globe. And I guess this would be a sort of big panel type arrangement. And there's all sorts of different work, specialisms that different firms will be picked for and things that. Yes, exactly. And you know, we work and I can give you one example of how we're working in the AMIA team. So we have established an outside council network and it is technology enabled. And it was really to solve a couple of things. One was that the administration of a lawyer on my team instructing outside council, it's to help us move with a little bit more speed. The second was of course on knowledge management. And then the third was removing duplication and really helping us to be able to scale, you know, the expertise that we were getting from law firms. And that's something that we're continuing to innovate. We're also trying to figure out how to use AI more in this outside council network. And then big plans to scale it globally, which is exciting. So in terms of using AI in what sense, when you're choosing which firm is best place to work on something, is that what you mean? We are really thinking about AI enablement across all aspects of working with outside council. And I think part of your question is, you know, how have our expectations shifted as Microsoft of working with outside council considering, you know, the shift in AI in the industry. And there's a few things of how we're thinking about that. One is just, you know, AI fluency is really the baseline. So we expect all of our outside council to come to a project or a piece of work with Microsoft using AI and being fluent in AI and helping us to develop a strategy with that fluency. The second piece is transparency on value. So having open and transparent conversations about the use of AI on the project and how that is going to, you know, impact the value and the billing around that. And we want to just have really open conversations about that. The second piece is, you know, we want our outside council law firms to help us scale, help us build the knowledge, pools and the curated data for agents to operate from. Which is a whole new, you know, way, I think of getting support and expertise from our outside council. The fourth thing I would say is we really want to work with outside council that are building the next generation of lawyers. So really investing in the new skills that lawyers need to build for the future of our industry, as well as building the foundational skills that we all need to be excellent lawyers and really a focus on building that talent pipeline. And then the last piece is really about partnership. Our law firms we work with are incredible influencers over the market. They're helping to define responsible AI governance. They're helping to define new regulation and they're helping to define, you know, the future of legal. So it's really about the partnership to help drive all of that forward. So in other words, AI when it comes to you working with law firms, it's not a nice to have. It's a must have. Absolutely. And, you know, so, and I guess it's not, it can't be enough where a law firm comes to you and goes, oh, hi, Rebecca, we've just onboarded this legal AI platform. So that qualifies us. It's more than that. Exactly. I think it's really about, you know, the strategic value of how we use AI and helping us think through how we can deploy AI in our own work for that scale. So, you know, maybe beyond purely AI when you're working with external law firms then, what do you kind of look for in a really great advisor and what do you think differentiates the firms that consistently do really good work for you? Yeah, I think it's a really, it's a good question. Maybe I'll start with how I've seen things shift this just even this year with our Outtake Council law firms. And I've had the chance to connect with several of our key law firms recently and they've seen a shift in kind of the quality of the work that we're asking them to do. It is more dependent on, you know, that high end strategic engagement and less on, you know, the repetitive work. So I think that's that's a success on how how the engagement is shifting. And we've always come to our law firms for that expertise and we need it even more now and faster. So I think that's something that is going to continue to be important. I was maybe to share one story. I was connecting with a prominent law firm in the Netherlands not too long ago. And they were telling me about their AI strategy and I was fascinated by their approach on really monetizing the things that law firms have always monetized. Expertise of their people, expertise they build from their clients and really the data on their advisory support. And that's how they were thinking about creating a unique differentiator for themselves in their market. And that's the kind of innovative thinking that I think we need to see more and more of in the legal industry. Do you think then as a team at Microsoft you're keeping more work in house because of the technology? I don't think it's about that. I think that the work the nature of the work is just shifting. I mean we're getting more scale across our work but we're also getting a lot more work. So as we, you know, push more of our work into a scale model, we're able to do a lot more strategic and business partnership. And that's where I feel like our work is growing. For your external counsel as well. Exactly. Yeah, because this is the interesting question, isn't that? And a lot of people think that this is where it's sort of headed, where law firms will, will, you know, they'll add tons of value on that bigger picture kind of real strategic, you know, in-depth stuff. And in-house teams and lawyers themselves will be able to do more of the kind of day-to-day of themselves. So there'll be less of that. I mean, maybe, but I think that the work, you know, the nature of the work is just shifting. And you know, I think at the start of this, I was talking about how we were facing just increasing complexity, increasing pace, increase of innovation. The need for lawyers and legal work is only becoming more and more. So I don't think it's a matter about more work or less work, but about the work itself just changing. And what about the kind of soft skills, you know, Rebecca, when it comes to working with law firms, what do you like in terms of really building those deep climate relationships from the firms that you work with? It's a really great question. I was thinking about this a bit. And, you know, judgment and curiosity have always been the things that I think make a lawyer excellent. And that has not changed. And it's actually becoming even more important with AI. And so I think, you know, really being a partner to us, a strategic partner who can, who understands our business and building that, that kind of acumen, the commercial acumen about understanding our business and helping us translate, you know, legal requirements or legal strategy into into a business strategy. Is really what I think, you know, makes that that partnership, that partnership really flourish. And the other thing I'll say is being proactive. The best outside council we work with know our business so well that they can help us spot emerging signals in the market, help us get proactive and bring all of that outside in perspective that we need to make, you know, our, the challenges that we're solving even better. And, you know, when you look at your panel of firms or the market more generally, do you feel that firms are becoming more sort of differentiated? Is it obvious to you what, you know, X firm does better than Y or are they often consolidating and all seem to be a different kind of tone of the same? It's a really good question. You know, I think every law firm has their unique differentiator. And one thing that is not changing about the legal business is relationships. And I would say, you know, relationships continue to be and will only continue to be more important as, you know, AI becomes more prevalent in legal. I see that for myself, you know, myself in an in-house role. So those relationships are still so much of what drives the legal industry forward makes our work unique and, you know, enables us to be, you know, human in an AI world. So in other words, someone that you can just, you know, a law firm partner, he or she, that you can just kind of pick up the phone to and have a good conversation with about whatever the problem is. That seems like it's always going to be very important, doesn't it? I don't think that's going away anytime soon. Cool. So like, talk to me a little bit more about the role of the in-house lawyer than Rebecca and, and how, you know, how do you think it's changed during during your career? We touched on it a little bit earlier. How it's becoming even more sort of strategic all the time. Is that is that how you've seen it develop over your, your, your stint? Yeah. So, you know, in my time at Microsoft, I've been able to, you know, I was there through mobile. I was there through the launch of cloud. And now I'm, you know, here through the launch of AI. And in each one of these, you know, paradigm shifts, legal has such an important role to play. In terms of understanding, you know, the regulatory environment, so our, you know, our products can go to market in a way that enables our customers to meet their goals. So I think that that's something that has been a constant. I do think the pace has changed. I think we're going faster now. As I said before, it's becoming even more important for AI to help us keep pace with the business. We've always been focused on really business growth and business partnership. I think a key thing that my team does is act as that translator between legal strategy and to commercial strategy. Some of what we do is really enable and help our sellers to be able to sell in a highly regulated or complex environment. And that's where I think that business partnership is so critical. What do you think the skill set then of a really good in-house lawyer looks like versus a private practice lawyer? You've been on both sides, obviously. Yeah. Well, I think this is one shift that I have seen is the shift from being reactive to issues and the need for us to be a lot more proactive. We have to stay on the front foot. We have to get better and anticipating issues. Being able to identify those early signals in the market. Something that might be a soft signal that grows into a strong signal that we need to help our business with. So I think that's one of the big shifts that I've seen is one where you're responding to an issue or a challenge or the business comes to you needing support. We still don't get me wrong. We still have a ton of that to do. But we're trying to shift more of our value into that proactive business partnership so we can help anticipate the issues and solve for any friction before it becomes a challenge. Because it feels like you have to be a real kind of student of your business and the sector that it is operating in. More than anything, right? Yes, absolutely. We have to, and this is not an easy thing to do because our business is changing so rapidly. But having really strong business and product acumen is incredibly important and relationships in the business. There's trusted advisors to our business clients. And so having that trusted relationship is continues to be incredibly important and is one of the foundations and will continue to be one of the foundations of our legal team. I imagine you fairly regularly will hire people in from private practice to join you as part of the team. What are the kind of things that you see in them that they, you know, you try to help them improve on once they join? Oh, that's a great question. Well, I do think it's about that context switching because we have to do a lot of that. And also, you know, the pace, being able to take all of that context and really connect it together into, you know, driving a legal strategy forward. I think that's something that we always, you know, see as part of the development of bringing lawyers from a law firm. And, you know, just to say, I think, you know, joining the legal industry right now, it's one of the most exciting times because we're shaping the future of it. And so it's been great to invest in, you know, developing and young talent for our team and look forward to continuing to see how, you know, how it evolves. When I was a junior lawyer, wasn't that long ago actually Rebecca, but I spent time I was nearly a year in house at a bank. And I have to say it was one of the best experiences of my career. I thought, this is essential. I thought for any kind of budding corporate, private practice lawyer to go and spend some time in house with the clients, right? Because you used to, you know, so many different things would come across your desk. And, you know, at the start, you'd be completely overwhelmed thinking, I don't know anything about this or this. But over time, you suddenly become this really well-rounded kind of commercial lawyer. And it just felt to me like such an obvious thing that everyone should do. Yes. Yeah, we have, I completely agree. And I had my own, you know, journey when I went from law firm to in house. And one program and thing that we do on my team in immediately, go affairs is we have a second ease that come in from law firms for a year's time. They're totally with the team. I really believe in this model. It's so helpful. They gain new skills. They really become part of our organization for the time that they're with us. And then they go back to their law firm and we get, you know, amazing high quality, you know, advisory support from them when they're when they're the law firm because they know us so well. So let's pretend that you have a vacancy for a position within your team. And you know, I'm a private practice lawyer kind of looking at the role and thinking, hey, that could be super interesting. What was your kind of advice, B, to me, to get it, to, you know, to win the role? Well, I definitely think demonstrating that ability to be a strategic thinker and connect context from a lot of different places is really important. Knowing that we value culturally at Microsoft is a growth mindset. So somebody who can is just hungry to learn stays really curious and can also reflect on, you know, what things could have gone better and how to how to do that, you know, differently going forward. So I still, you know, I said earlier, I think curiosity and judgment continue to be, you know, what makes a lawyer excellent. And so developing those skills will set up a lawyer for success for sure at Microsoft. So okay, where do you think things are headed then Rebecca? Let's, I mean, specifically in relation to kind of AI's impact on the legal profession. People have varying different views on this and how it will disrupt the industry. What's your overall take? Will it mean sort of fewer lawyers, fewer law firms or not because as you said, and it suddenly feels this way, you know, there's never been so much legal work right now. I think this is a great question. We are reimagining the, you know, the industry right now. And I think it's just a really exciting time and a time when all of us, you know, can come together to shape what that future looks like. I do think we're going to see an emergence of new types of lawyers. People design thinkers, legal knowledge engineers, legal process analysts, you know, AI will only be as good as the humans that manage it, right? And so I think learning those skills are going to be, we'll see an emergence of those skills. And we already are. And one thing I'll share with you, the example about the frontline, we have a team of amazing paralegals behind that frontline, managing the AI, managing the triage on the CRM system, making sure the content is curated. That is one of the roles of the future is really, you know, legal professionals that oversee the performance of the AI system, defining the boundaries, defining the decision-making points. So I think those are kind of the new skills that we're going to see in the future. So it's these types of jobs, isn't it? The ones that we didn't even think of. We couldn't even think of two or three years ago, which will emerge. I feel pretty bullish about that as well, you know. I think that's what will happen. I totally agree. And maybe one other example I'll share with you from Harvey. Harvey has legal engineers. And you know, their role is to connect all of that business context into the AI. And I think we're just going to see more and more of that. And across my team, every individual and every strategic priority that we have, we have to think through how are we going to enable AI across this, you know, strategic pillar and really have a plan around that. We're all having to learn new skills to be able to do that well. So we're definitely on the journey with everybody else there too. Okay. Well, good luck on that journey. Rebecca, thanks for joining me. Thank you so much. Oliver, great to be here.