The intangible law firm

Remember all those ludicrous predictions you kept hearing about how law firms were someday going to invest heavily in intelligent technology that could do legal work? Funny thing about that: someday is today.

Here’s what’s actually happening, right now, with advanced technology in law firms:

This is only a recent sample of law firms’ technological commitments: consider Ron Friedmann’s Online Legal Services list for a more complete picture. And it’s not just happening in the US, either.

  • Berwin Leighton Paisner is using “AI-type solutions to carry out standard legal processes hundreds of times faster than traditional methods that use painstaking human labour.”
  • Mishcon de Reya’s new ten-year strategy includes a plan to “drive the automation of everything that can be automated, whether it’s legal or process,” including the establishment of  “an internal laboratory to vet artificial intelligence initiatives in a bid to make the firm an ‘early adopter for new technologies.'”
  • Australia’s Gilbert & Tobin has filed several patent applications to cover new computer applications it has built: “Rather than take 20 hours, some tasks can now be done in two hours,” said a G+T partner.
"She tripled the firm's productivity." "Burn her anyway!"

“But she tripled the firm’s productivity.”
“Burn her anyway!”

Talking openly and on the record about eliminating billable hours in a law firm has traditionally been regarded either as heresy or a sign of mental instability. “Burn the witch” would also have been a standard response to a lawyer who advocated spending real money on anything that could be described as artificial intelligence. But the facts are what they are: major law firms are actually building systems to do some tasks that previously only lawyers could do, at the expense of some of the firm’s hourly-billed inventory.

But that’s not all. Law firms are also adapting to the emerging imperative of process improvement, finding ways to introduce efficiencies and enhance the quality of outcomes through better procedures and workflow systems.

  • At Seyfarth Shaw, the process improvement gospel of Seyfarth Lean has become part of the firm’s core culture.
  • Process is just as important as technology for Littler Mendelson programs such as CaseSmart and Compliance HR.
  • Clifford Chance launched its Continuous Improvement program back in 2014 in a search for “the best approach to carrying out a piece of work.”
  • Gowling WLG talks about its acquisition of expertise in “non-legal support components of service delivery” such as project management and pricing.

You can expect to hear more of this from law firms in future. “Something like 90 percent of the RFPs we receive ask us about our [legal project management] capabilities,” said one respondent to a Jomati Consulting survey. “We get RFPs that not only ask us if we do project management, but also our specific methodology, and how many matters we have under administration,” said another. This is not a temporal anomaly: law departments take process improvement seriously, and they expect outside counsel to do the same. Some law firms are outpacing their own clients in response.

These are all signs, to my way of thinking, of a fundamental shift in the nature of law firms. Specifically, law firms are changing from entities composed almost entirely of tangible assets to entities composed increasingly of intangible ones.

The conventional wisdom on law firms has always been that “all their assets walk out the door every night” — and that the firms could only hope those assets walked back in the next morning. Suppose they didn’t come back? Take the lawyers out of a law firm; what have you got left? Reams of documents, files, and transactions — but no one to read, write, or process them. Capable and professional support staff — but with no one to support. Libraries full of case law and regulation, shelves lined with texts and CLE binders, filing cabinets crammed with precedents — but nobody to apply legal skills and expertise to convert them into actionable outcomes of value to clients. The law firm machine would stand idle, because its engines had disappeared.

Just as importantly, all these non-lawyer assets differed hardly at all from firm to firm. Law libraries were mostly indistinguishable in their collections; precedents varied so little as to be virtually copies of one another; workflow and operational procedures were standard across almost every type of firm. The only features of a firm that could legitimately be said to be exceptional, standing out from other firms, were its individual lawyers. Many of them were pretty general-issue as well, to be sure, but most brought at least some unique value to the table, and a few brought an enormous amount. So in the absence of lawyers, law firms would be true commodities: offering basically the same thing to everyone in the market, bereft of any valuable distinction.

This state of affairs has contributed greatly to the individual lawyer’s longstanding dominance of law firm strategies, priorities, and practices. More than three years ago, I wrote about the existential battle inside every law firm between individual lawyers and the law firm as an enterprise — one that the enterprise has been losing since the day battle was first joined. Law firms continue their mad pursuit of lateral partner acquisition strategies, and go to absurd lengths to retain the services of highly skilled lawyers, because lawyers have always held such enormous importance to the firms’ survival and competitiveness. When your enterprise has only one type of asset of value to the market, you don’t own that asset — that asset owns you.

It seems to me that it’s precisely this state of affairs that all these foregoing efforts will change. What these law firms are building, through their investment in technology and processes and non-lawyer sources of value, are intangible assets. These assets can provide legal answers or deliver legal outcomes of value to clients in some circumstances, thereby giving firms a second type of option for serving those clients. But unlike lawyers, these assets won’t leave the office at the end of the day, and they don’t ask for raises or demand larger offices or threaten to join the firm down the street — they serve the firm, not themselves. By building these assets, firms give themselves leverage over their lawyers, and they’re going to use it. These are the new engines of the law firm machine. And they’re going to multiply with astonishing speed.

Is there an Echo in here?

Is there an Echo in here?

The role of these process and technology assets is not to replace lawyers — most of these resources require lawyers to program or monitor them on an ongoing basis — but to reduce lawyers’ indispensability to the firm. An “indispensable employee” sounds like a great idea, until you have one. I once managed an indispensable employee, and it didn’t take me long to realize that I needed to make him “dispensable” — for the good of the organization, and ultimately, for his own good as well. I trained other people in the work that he did and had them develop relationships with his key contacts. The point wasn’t to get to a place where I could fire him; it was to get to a place where, once he eventually left the organization for better things (as it was always clear he would do), the organization carried on and he could go without feeling guilty about leaving us in the lurch. Law firms need to make their lawyers more dispensable, for everyone’s good.

The other important goal that law firms accomplish by investing in intangible resources is to start building firm-specific assets. Littler’s CaseSmart system exists only at Littler, Seyfarth Lean is unique to Seyfarth, and so on. Other firms likely will create similar programs and systems in due course, but what they create won’t be exactly the same, and rightly so — these assets will be native to each firm’s culture and structure. Building firm-specific assets is about creating “a resource that will produce its highest economic value only within the specific firm,” Prof. William Henderson wrote last year. “If a lawyer leaves, the underlying resource remains, with the result that client loyalties flow primarily to the law firm, rather than the lawyer.”

This is a significant point. Partners will continue to leave law firms, perhaps taking junior lawyers and important clients with them; but they won’t be able to take these intangible assets along for the trip. And the existence of those assets, if they make lawyers’ work easier and firms more productive and their deliverables more valuable, might well prompt some of those juniors and some of those clients to stick around. The expertise that firms generate around these assets is specific to the firm and can’t be applied directly anywhere else, making retention easier and, eventually, making recruitment of talent and acquisition of clients easier as well.

The rise of the intangible law firm will be aided and abetted by more sophisticated law firm marketing and branding efforts, too. Traditionally, law firms often defaulted to lawyer-centred marketing: hire us, because we have all these great lawyers! Every time a firm promoted a star lawyer in its marketing material or trumpeted the poaching of a key partner from another firm, however, it was actually undermining its own institutional brand — it was giving clients yet another reason to say, “I hire the lawyer, not the firm.” The rise of intangible assets will strengthen firms’ efforts to market themselves as enterprises whose value and identities are independent of their lawyers. The goal is to have clients routinely say, “I hire the firm” — full stop.

I’m not saying that individual lawyers will soon be irrelevant to a law firm’s value proposition; this isn’t an either-or proposition. Firm-specific, technology-enabled, intangible assets aren’t an attack on lawyers; they’re a means to eliminate a longstanding, unhealthy imbalance in the relationship between the law firm as a commercial institution and the lawyers who deliver value inside it. The best lawyers, especially the immensely skilled ones on whose efforts clients bet their existence, will always be able to name their price and choose their platform. But that’s not the kind of work that’s going to dominate the legal market from now on. The dominant type of work will not be “bet the company,” but “run the company,” and the firms best positioned to win this work will be those with the kind of consistent, reliable, immovable, and uniquely valuable assets that clients can confidently count on.

Take a quick inventory of your own firm’s assets. How many are tangible and how many are intangible? How many walk out the door and how many stay overnight? And how prepared are you to compete for talent and business in a market where you can’t afford to let your lawyers walk, but your rivals can? Because that’s the market that’s unfolding in front of us right now.

A word in Spanish

Earlier this summer, I was asked by Mario Ferrer of Responsea, an online lawyer platform in Spain,  if I could answer a few questions for their readers, especially those who are just starting off in the law or grappling with the onslaught of technology. My brief replies sound much better and more elegant when translated into Spanish, as the resulting Responsea post demonstrates. But I thought you might be interested in reading the original English version, especially if you’re in the early stages of your legal career.


1. How can a lawyer prepare himself or herself to prepare for the future?

There are three things every lawyer must know as well as possible in order to thrive in the new legal market:

1. Your clients. Understand their concerns, walk in their shoes, look at the world through their eyes. Identify their goals and hopes, worries and ambitions, so that you can advise them as well as possible. Help them anticipate problems and opportunities before they arise.

2. Your competition. Not all your competitors will be other lawyers: online providers and non-lawyer rivals will become more common in the next several years. But among lawyers, understand clearly who else wants to serve your chosen client group in your chosen area, and what they offer in terms of service and price.

3. Your business. Too few law firms have a sufficiently clear picture of how much they spend to provide their legal services. Fewer still have installed tools and procedures to help make their businesses more efficient and productive. Run your legal business to be as cost-effective and quality-controlled as you can manage, and always be aware of your cash flow.

2. How can a law firm be competitive nowadays?

You can’t be competitive for every client in every market for every type of work. You also can’t be competitive for work that just walks in off the street. You can only be truly competitive when you identify the specific type of work you want to do, for the specific type of client you want to serve, to accomplish specific sorts of outcomes or values for those clients. If you know all of these, and if you can explain why you’re the right choice in these circumstances, you’ll have no difficulty outclassing other firms in these areas.  [do_widget id=”text-7″ title=false]

3. Which are the priorities of today’s clients? Time, money …?

Clients want different things in different contexts: the multinational corporation and the single mother are obviously completely different entities. What all clients want, however, is peace of mind. They want a worry resolved, a pain eliminated, an opportunity filled, a step forward taken. How can you give your client peace of mind? Answer that question, and you’re well on your way to meeting the client’s priorities.

4. How can a law firm encourage its workers to adapt to the online environment?

Everyone now searches for everything on the internet. Vast numbers of people buy vast quantities of products and services on the internet. Having a weak or non-existent internet presence is like moving your law office out of a prime commercial office building in a major city and into an unmarked house on the outskirts of a small town. It’s really no more complicated than that.

5. Which are the most common errors committed by the legal sector on the Internet?

The failure of lawyers to offer products and services that are created and delivered partly or entirely through the internet is the error that will cost law firms the most in the years to come. Some legal services can only be delivered face-to-face, hand-in-hand, in person. But many, if not most, can be delivered partly or wholly online. If you believe the internet is useful only for hosting your firm’s website, then you’re going to miss out on some valuable emerging opportunities in the near future.

6. What would you recommend to a lawyer who decides to open an office on his or her own? 

Never assume that the legal market owes you anything. The market asks, of every provider who enters it, “Who are you, and why should I care?” You need to have an answer ready. Create a website that tells your chosen market who you are, what you do, who you do it for, and what results your clients will get from using you. Write posts on your website showing off what you know and giving people information they can use. Speak to gatherings of and in the communities you want to serve. Hang around afterwards to answer questions.

Act like a startup. Even better, act like you’re still in law school. Keep your costs under tight control. Be frugal and innovative: do more with less. Buy nothing unless it’s truly a necessity or truly an investment. Be humble. Be grateful. Be helpful. Be trustworthy. Be the kind of lawyer you’d recommend your parents hire. Be the kind of lawyer your grandchildren will boast about someday. Serve your clients and your community with integrity, class, and grace under pressure. Everything else will fall into place.

Jordan Furlong is a lawyer, consultant, and legal industry analyst who forecasts the impact of the changing legal market on lawyers, clients, and legal organizations. He has delivered dozens of addresses to law firms, state bars, law societies, law schools, judges, and many others throughout the United States and Canada on the evolution of the legal services marketplace.

The failure of legal innovation

Okay, I admit: that was a pure linkbait headline. Not quite as bad as 17 Heartwarming Photos That Will Restore Your Faith In Humanity, but still, I couldn’t pass up the opportunity to draw in people who might be thinking (hoping?) that I’d given up on innovation in the legal market.

But the headline isn’t a complete fraud. In fact, you could consider this post as a necessary companion to An incomplete inventory of NewLaw, which generated a great deal of interest and enthusiasm last week. Scores of new law firms, businesses, and technologies are emerging in this dynamic market, generating justifiable excitement. Ron Friedmann led a discussion this week on Twitter that estimated the percentage of the corporate legal market that NewLaw is carving off — it may be quite small, but it still translates into a whole lot of money in a very short period of time.

Nonetheless, it’s precisely now, when legal innovation seems to be really taking off, that we need to remind ourselves how fragile and fraught the startup environment really is. A thousand flowers may well be planted in the legal marketplace; but hundreds will never bloom.

An excellent illustration of this idea can be found in a recent James Suroweicki column in The New Yorker. “Epic Fails of the Startup World” is a sober pail of cold water dumped onto the frenzied fires of innovation. “We live in the age of the startup,” Suroweicki writes, but this Cambrian explosion of innovative new businesses is occurring contemporaneously with a mass extinction: failed startups overwhelmingly outnumber successful ones.

The reasons behind these astonishingly high failure rates should give legal entrepreneurs pause: it appears that most startups suffer from a massive overabundance of misplaced confidence, made worse by a startup culture that has come to lionize failure as the noble condition precedent to success. There’s no question that failure is indeed a condition precedent to success in the startup world. But far more frequently, failure is just a condition precedent to more and bigger failures. Serial entrepreneurs, according to a German study, are actually more failure-prone than first-time innovators.  [do_widget id=”text-7″ title=false]

The upside of this phenomenon is that the extremely few successes that emerge from the startup world deliver disproportionate benefits in economic and social terms: one LinkedIn or Uber is worth many Pets.coms. “We’ve built a whole system on unrealistic expectations,” says Suroweicki. “Because we don’t know how to identify good companies in advance, investors end up funding lots of them in the hope that a few will hit it big. … In the delusions of entrepreneurs are the seeds of technological progress.”

Remember that line you were given on your first day of law school? “Look to your left, look to your right, only one of you will be here in five years”? Imagine you’re in an auditorium with 100 other students and the speaker says, “Only one of you in this room will make it.” That’s a decent approximation of the odds facing startups. It’s only the bullheaded optimism of the entrepreneurial spirit, as well as the outsized rewards awaiting the rare winners, that keeps the system going, to everyone’s benefit.

We should expect the same thing to happen to NewLaw. In fact, it’s already happening. England & Wales has been described as the world’s legal laboratory; well, some of that lab’s experiments have already fizzled out. Conveyancing ABS In-Deed Online gave up the ghost last summer, sold for a mere one pound after arguably hitting the markets too early. Stobarts Barristers went the way of all flesh last month, perhaps confirming that a trucking company might not have been the best platform upon which to launch a law firm. And Co-Op Legal Services, the early heavyweight contender of consumer law ABS (and my personal rooting favourite) might not be dead, but there’s reason to worry that it might simply be nailed to its perch.

More failures and disappointments will follow. Some innovations will fail because they were based on a bad idea, some will fail because of bad execution, and some will fail because of bad luck; but they’ll all come to the same end. This is not a jab against NewLaw and legal startups, or a red flag on any specific entity; it’s simply the natural outcome of a marketplace law. There are nearly 100 entries on my NewLaw list, and probably scores of others I haven’t yet come across; they can’t all be lucky exceptions to the rule against startups.

If anything, the recent tsunami of cash investments in NewLaw might be just as much a sign of concern as of confidence. Josh Kubicki, the clear thought leader in the legal startup world, reported $458 million invested in legal tech startups in 2013, adding that 2014 is ahead of last year’s pace. Funding round announcements in the tens of millions of dollars aren’t routine quite yet, but we’re getting there. Is this a sign of the tremendous promise and potential of legal startups? Almost certainly. But it might also be a sign of vast amounts of money burning holes in the pockets of angel investors and searching for the next shiny thing. It might be, in the famous words of Alan Greenspan, a certain degree of irrational exuberance.

I wanted to note these ideas for a couple of reasons. One is to slightly temper the commendable enthusiasm inside and around the legal startup world, to remind participants in this genuinely exciting market that the risks rival or outnumber the rewards — it’s a narrow path to glory, and the drop on either side is steep. But the other reason, and I think the more important one, is to counter the inevitable arguments of the skeptics and cynics that will issue, in a few months’ or a few years’ time, standing over the corpse of some high-profile NewLaw entity and proclaiming that there was never anything here but hype and snake oil. That’s simply not the case.

Failure is built into innovation. It’s a feature, not a bug. You can choose, if you like, to glorify failure as a critical rite of passage on the path of enlightenment; like any heady drink, that’s fine in moderation, though it’s fatal in stronger doses. But you can also choose to revile failure, to loathe it and shun it and attach shame to those who experience it. This is the lawyer’s approach to failure, and it’s a leading reason why so little change has occurred in the traditional business model. We’re not just risk-averse as lawyers, we’re embarrassment-averse: we fear the self-inflicted humiliation of falling short. That’s why the schadenfreude felt by many lawyers when a legal innovation fails is palpable: we believe the innovator’s fall confirms the wisdom of our own reticence.

Rather than glorifying or reviling failure, however, I suggest we simply accept it as a perfectly natural part of doing business in a turbulent market. As the legal profession is pulled deeper into that turbulence, failures will mount, and they’ll be far more common among those who tried than among those who shied away. But the rewards will also be much larger and more numerous among the innovators than among the laggards. You don’t have to love failure. But I do recommend you get a lot more comfortable around it.

Jordan Furlong is a lawyer, consultant, and legal industry analyst who forecasts the impact of the changing legal market on lawyers, clients, and legal organizations. He has delivered dozens of addresses to law firms, state bars, law societies, law schools, judges, and many others throughout the United States and Canada on the evolution of the legal services marketplace.

An incomplete inventory of NewLaw

So I was asked to give a presentation about “NewLaw.” No problem at all — aside from the minor, niggling detail of figuring out what “NewLaw” is supposed to be.

Like other terms in vogue within the legal profession (cf. “non-lawyer”), we seem to understand better what “NewLaw” isn’t than what it is. George Beaton of Australia, who has written more than anyone else on this subject, describes the NewLaw business model as the antithesis of the BigLaw model, and that’s certainly true. For my purposes, though, I was inclined to cast the net a little more widely — to encompass not just law firm models, but also new legal talent combinations, legal service managers, and technology that both changes how lawyers practice and places the power of legal service provision in clients’ hands. So I decided to use “NewLaw” to describe any model, process, or tool that represents a significantly different approach to the creation or provision of legal services than what the legal profession traditionally has employed.

With that definition and goal in mind, I set out to catalogue the genus “NewLaw” as best I could. What I wound up with was two broad categories, six sub-groups, and a whole bunch of exceptions. I thought I’d share the lot with you, partly because I thought you might be interested, and partly because I’d welcome your suggestions for supplementing the list with new entries, transferring an entry into a different category, expanding upon the disclaimers, and generally broadening and deepening the conversation. This is not meant to be a definitive inventory of “NewLaw.” It’s merely my attempt to understand the term better and identify at least some of its manifestations in the market.

First, the exceptions and disclaimers.

1. Several innovative legal companies and technologies aren’t on the list, but only because I think their primary focus is the marketing or management of law practices, rather than the creation and delivery of legal services. So I set aside the growing number of practice management support companies like ClioCaseTrek, Curo Legal and Rocket Matter, as well as marketing, management, and business development services like Avvo, DirectLawLawDingo, LawGives, FlatLawLegati Law and UpCounsel, although they’re certainly in the NewLaw neighbourhood (and if you think they should be in the NewLaw community itself, let me know why in the Comments). [do_widget id=”text-7″ title=false]

2. I also decided not to include e-discovery providers, but mostly because I’d have been here all week cataloguing all the players in this market. Also, while there’s no question it’s had a serious impact on how litigators do their job and sell their time, I might argue that e-discovery is increasingly accepted as part of litigation and isn’t all that “New” anymore. Similarly, predictive coding (or more accurately, binary classification) is a warp-drive engine for e-discovery and many other emerging legal functionalities; the whole area of legal machine learning promises to be extraordinarily disruptive. But aside from a few firms that made the list, I was hard-pressed to think of many clear leaders in this area. Again, I’d welcome your recommendations.

3. I really wasn’t sure where to put LegalZoom and Rocket Lawyer in this list. They’re clearly “NewLaw” leaders and must be included, even if they’re frequently (and wrongly) described by lawyers as legal technology companies. They provide a sort of hybrid combination of legal documents available online and networks of affiliated law firms that supplement the documents with higher-value services (Jacoby & Meyers, which is listed below, could also fit within this category). Given that LegalZoom is frequently challenged by state bars and that Rocket Lawyer presumably also gets dirty looks from legal regulators, we might also refer to these enterprises as the NewLaw strike force.

4. Also not making the cut: BigLaw online legal services (Ron Friedmann’s list is essential, but I’m not sure how many of these entries are game-changers), law school-based entities (Reinvent Law, LawSync, and Law Without Walls are still all worth your attention, though), and some true category killers that just haven’t reached a critical mass yet (say hello to accountants practicing law).

5. I repeat: this list neither pretends nor aspires to be exhaustive. You may have a fascinating legal startup that I’ve never heard of, or that (to my mind) hasn’t gained enough traction yet to merit inclusion here. But if you belong to a small or midsize firm that’s pricing everything with fixed fees or selling through online delivery, or if you’ve launched a legal technology offering that’s changing the way legal services are produced or obtained, by all means identify yourselves in the Comments section.

6. A final note to startups: in no way does this post mean I can give you useful feedback on your product or service, because I very likely can’t. I was a liberal arts major for a reason. This really is just an attempt at a “NewLaw” catalogue, not a stealth advertisement for consulting services.

With all that out of the way, we can move to the actual lists. I ended up putting all the NewLaw entities I could find into two broad categories and six sub-groups:

1. Aligning Human Talent with Legal Tasks

  • New-Model Law Firms 
  • Project/Flex/Dispersed Legal Talent Providers
  • Managed Legal Support Services

2. Applying Technology to the Performance of Legal Tasks

  • Tools To Help Lawyers Do Legal Work Differently
  • Tools To Help Clients Resolve Disputes Directly
  • Tools to Help Clients Conduct Their Own Legal Matters

Of  course, many of the tools and enterprises listed below overlap to some degree with other sub-groups and categories. There are very few NewLaw human enterprises that don’t make use of technology and very few NewLaw technologies that don’t involve human application; I tried to position each entry under the heading that made the most sense. (The one-line descriptions are taken from the entities’ own websites or materials; the parenthesised jurisdiction is where the entity is headquartered.)

1. Aligning Human Talent with Legal Tasks

A. New-Model Law Firms 

  • Brilliant Law – “Legal advice and expertise you can trust, at prices your business can afford – the fixed price legal services solution for you and your business.” (UK)
  • Clearspire – “We offer a complete, value-driven solution for outsourcing complex legal matters … a radically new and efficient law firm for the 21st century.” (US)
  • Cloudigy Law – “A cloud-based intellectual property & technology law firm.” (US)
  • Co-Op Legal Services – “Our legal team provides confidential help, exactly the level of advice and support you need with fixed fee pricing for most services.” (UK)
  • Gunner Cooke – “A boutique corporate law firm with one, clear vision: to challenge, improve and evolve the way legal services are provided.” (UK)
  • HiveLegal – “Law firm which improves the experience for our clients, our team and our network.” (Australia)
  • Hunoval Law – “A premier law firm for default servicing clients. Our dynamic leadership leverages cutting-edge proprietary technologies and Six Sigma process analysis.” (US)
  • Jacoby & Meyers – “It’s our goal to make the legal system more accessible and more affordable for everyone, and we’ll evaluate your case or legal matter for free.” (US)
  • Justice Cafe – “We are striving to bridge the justice gap by dishing up affordable legal help in our communities.” (US)
  • Keystone Law – “A dispersed business model, with senior solicitors working from satellite offices, supported by a central London office.” (UK)
  • LegalForce – “A modern progressive law firm based in Silicon Valley with over 23,000 clients worldwide.” (US)
  • Marque Lawyers – “We started our firm with the desire to practise law in a new and better manner, and in particular to do away with the business of charging for legal services on the basis of the time spent doing it.” (Australia)
  • Potomac Law – “We are able to offer clients exactly what they are seeking: sophisticated legal advice from knowledgeable attorneys at attractive rates.” (US)
  • Quality Solicitors – “A group of modern, progressive law firms spread across the UK, each one chosen because their clients tell us that they deliver great customer service.” (UK)
  • Riverview Law – “We deliver fixed-fee legal advice for businesses of all sizes. We are changing the way businesses use, measure and buy legal services.” (UK)
  • Salvos Legal – “We provide quality commercial and property law advice on a paid basis. However, all of our fees fund our ‘legal aid’ sister firm. Both are wholly owned by The Salvation Army.” (Australia)
  • Seyfarth Lean – “A distinctive client service model that provides a different way of thinking about and delivering legal services.” (US)
  • Slater & Gordon – “A leading consumer law firm in Australia with a growing presence in the UK consumer law market. We employ 1,200 people in 70 locations across Australia and 1,300 people in 18 locations in the UK. ” (Australia)
  • VLP Law Group – “We provide sophisticated legal advice in a wide range of practice areas, but our overhead is low, our staffing lean, our fees flexible and value-driven.” (US)
  • Winn Solicitors – “We are national road traffic accident specialists. With Winns, you have no excess to pay.” (UK)

B. Project/Flex/Dispersed Legal Talent Providers

  • Advent Balance – “A firm that combines the expertise of outside counsel with the best qualities of a sophisticated in-house team.” (Australia)
  • Avokka Virtual GC – “Virtual counsel. Real results. Shift your thinking about legal counsel. Change the way you do business.” (Canada)
  • Axiom – “A 1,000-person firm, serving nearly half the F100 through 12 offices and 4 centers of excellence globally.” (US)
  • Bespoke Law – “A network of experienced lawyers who are available to provide clients with tailored support without watching the clock.” (Australia)
  • Cognition – “A team of highly experienced and skilled lawyers offering first-class business legal counsel either on-site or off-site, on a flexible, as-needed basis.” (Canada)
  • Conduit – “We pride ourselves on providing knowledgeable and effective legal counsel to address your needs as they emerge within your business.” (Canada)
  • Custom Counsel – “We are a nationwide collective of over 100 experienced attorneys who provide project-based legal services to other attorneys.” (US)
  • Daily General Counsel – “We come to your place of business for a full day and help you to solve your most pressing legal-related business problems.” (US)
  • Delegatus – “We have reinvented the law firm business model for you.” (Canada)
  • Eversheds Agile – “We meet a demand by clients for temporary, high-quality legal professionals that provide peace of mind and a link to an international law firm.” (UK)
  • Fondia – “A strategy that breaks with traditional law firm culture to transform the experience of clients and staff.” (Finland)
  • Halebury Law – “Your external in-house lawyers – offering clients senior ex in-house lawyers on a flexible basis.” (UK)
  • Intermix Legal – “Experienced freelance attorneys providing project-based legal support services to law firms & solo practitioners.”
  • Lawyers On Demand – “You can flex the size and capability of your team just when you need to.” (UK)
  • Paragon – “We provide embedded attorneys on a project basis to assist with overflow work, hiring gaps, interim backfills and special projects.” (US)
  • Pinsent Masons Vario – “We are a hub of freelance legal professionals who are not just technically skilled, but have the personality and drive to ‘fit right in’, to add value from day one.” (UK)
  • The Posse List – “We post document reviews, paralegal positions, forensics positions, litigation support positions, project management positions, compliance positions, general counsel/assistant general counsel positions – pretty much everything across the legal employment field.” (US)
  • Project Counsel – “We post European, Asia Pacific and Persian Gulf based document reviews, paralegal positions, forensics positions, litigation support positions, project management positions, compliance positions, law firm associate positions, and general counsel positions.” (Belgium)
  • Proximity Legal – “A leading provider of onsite legal, procurement and work health and safety services to the government sector.” (Australia)
  • VistaLaw – “A global team of former in-house attorneys with broad experience in providing legal support and advice to international companies.” (UK)

C. Managed Legal Support Services

  • Elevate Legal Services – “A global legal service provider helping law firms and corporate legal departments operate more effectively.” (US)
  • LeClair Ryan Legal Solutions – “We provide a wide range of support services and incorporate best-in-class technology and quality control processes which will be uniquely integrated into the law firm’s litigation and transactional practice areas.” (US)
  • MiamiLex – “A revolutionary alliance of the School of Law at the University of Miami and UnitedLex, a leading global provider of legal support and technology services.” (US)
  • Novus Law – “We provide legal document management, review and analysis services for lawyers that are measurably more accurate, faster and less expensive.” (US)
  • Obelisk Legal Support  – “We provide flexible, affordable and quality support for in-house legal teams and law firms.” (UK)
  • OnRamp Apprentice – “We hire recent law grads to work on large scale ‘contract genome mapping’ projects.” (US)
  • Pangea3 – “The global leader in legal outsourcing. Our LPO provides comprehensive legal services to corporate lawyers and law firms.” (US)
  • Radiant Law – “Outsourcing, IT, commercial contracts from negotiations to disputes. We bring together legal judgement, process and technology. ” (UK)
  • United Lex – “The global leader in legal services outsourcing, provides litigation, contracts and IP services to corporations and law firms.” (US)

2. Applying Technology to the Performance of Legal Tasks

A. Tools To Help Lawyers Do Legal Work Differently

  • AAA ClauseBuilder – “‘Designed to assist individuals and organizations develop clear and effective arbitration and mediation agreements.” (US)
  • BrightLeaf – “A technology-driven service that automates the entire process of abstracting information from all your contracts for upload to your CMS or for use with our abstraction analysis tool.” (US)
  • CaseText – “Judicial opinions and statutes are annotated with analysis by prominent law professors and attorneys at leading firms, giving you unique insight. And everything is 100% free.” (US)
  • DealStage: “Enables attorneys and transactional professionals to better manage the deal process lifecycle from drafting to closing.” (US)
  • ClearAccess IP – “Serving the patent marketplace by lowering transactions and streamlining data management at the prosecution level.” (US)
  • Diligence Engine – “Technology-enhanced contract review: faster and more accurate.” (Canada)
  • Judicata – “Mapping the legal genome to help you better understand the law.” (US)
  • Jurify – “We harness the collective genius of legal titans to deliver a complete set of resources on legal topics in one quick search.” (US)
  • KM Standards – “Our patented software allows you to build model forms from your own agreements, audit entire contract sets, and quickly review incoming contracts.” (US)
  • Koncision Contract Automation – “A subscription-based service providing lawyers with document-assembly templates for business contracts.” (US)
  • Legal Systematics – “We deliver automated document drafting programs and other advanced knowledge tools for making legal work more efficient.” (US)
  • Lex Machina – “We provide legal analytics to companies and law firms, enabling them to craft successful strategies, win cases, and close business.” (US)
  • Littler CaseSmart – “A case management solution that combines a Littler-developed proprietary technology platform with rigorous quality assurance measures.” (US)
  • Mootus – “We help law students and lawyers build skills, reputation and knowledge for free through open, online legal argument.” (US)
  • Neota Logic – “We transform expertise into answers and action.” (US)
  • Ravel Law – “Data-driven legal research and analytics.” (US)
  • Sky Analytics – “Helps reduce legal spend, control legal costs and benchmark legal spend.” (US)
  • TyMetrix – “The leader in bringing advanced technologies to critical dimensions of legal transactions and analytics.” (US)

B. Tools To Help Clients Resolve Disputes Directly

  • CleanSplit – “An easy-to-use tool that allows divorcing couples to divide their property without confrontation while saving time and legal fees.” (US)
  • Fair Outcomes – “Provides parties involved in disputes or difficult negotiations with access to newly developed proprietary systems that allow fair and equitable outcomes to be achieved with remarkable efficiency.” (US)
  • Fixed – “The easiest way to fix a parking ticket.” (US)
  • Modria – “The world’s leading Online Dispute Resolution platform.” (US)
  • Picture It Settled – “Using neural networks to examine the behaviour of negotiators in thousands of cases, we can predict what an opponent will do, thereby saving time and money while optimizing settlements.” (US)
  • Rechtwijzer – “Rechtwijzer 1.0 was … an appropriate, trustable legal helping hand that would assist people throughout their conflicts. [Rechtwijzer 2.0] enhances its services from diagnosing and referral into dispute-solving.” (The Netherlands)
  • Resolve Your Dispute – “A self-help online tool for consumers to settle disputes with a business.” (Canada)
  • Road Traffic Representation – “We provide you free expert advice to help you with your motor offence, from speeding fines to driving without insurance.” (UK)
  • WeVorce – “Divorce is more than a legal problem. … You’ll come out with the necessary legal documents as well as a lifetime of tools, knowledge and agreements as you begin again.” (US)

C. Tools to Help Clients Conduct Their Own Legal Matters

  • A2J Author – “A software tool that delivers greater access to justice for self-represented litigants by enabling non-technical authors from the courts, clerk’s offices, legal services programs, and website editors to rapidly build and implement customer friendly web-based interfaces for document assembly.” (US)
  • Docracy – “The web’s only open collection of legal contracts and the best way to negotiate and sign documents online.” (US)
  • EverPlans – “We provide guides, resources and a platform to help you create a plan that contains everything your loved ones will need if something happens to you.” (US)
  • Fair Document – “You get all your necessary estate planning documents completed quickly, and our streamlined process of working with an attorney affords peace of mind.” (US)
  • Iron Tech Lawyer – “A competition held at Georgetown Law, where student teams show off apps built in our Technology Innovation and Law Practice practicum.” (US)
  • Law Help Interactive – “Helps you fill out legal forms. Answer a series of questions and print your legal form. The forms are free and have been created by nonprofit legal aid programs and courts.” (US)
  • Lexspot – “Our online platform … makes the convoluted and expensive immigration process easy and affordable. ” (US)
  • Peppercorn – “Create legal agreements, in multiple languages, in just minutes.” (Italy)
  • Probate Wizard – “Probate is daunting. We make it simple. … the most advanced DIY probate system in the UK.” (UK)
  • Shake – “We strive to combine the simplicity, convenience, and collaborative spirit of a handshake with the protection of a legal agreement.” (US)
  • Smart Legal Forms – “Designed for US consumers and small business who want to resolve their legal problems at the lowest possible cost.” (US)

Some closing observations:

1. A disproportionate number of new legal talent arrangements are found outside the US (especially in England & Wales), while a disproportionate number (nearly all of them, in fact) of technology solutions are found inside the US. I attribute the former to more liberal regulatory regimes in other jurisdictions and the latter to the enormous amounts of venture capital available within the United States. (Conceivably, the restrictions on American law firm ownership help drive more resources towards tech solutions.)

2. When I started this inventory, I expected the tech entries to outnumber the talent entries, and I was surprised to see the opposite result. That might be purely a function of what I found, rather than what’s actually there. But I do take it as evidence that many more lawyers have seen and responded to the changes in how clients are buying legal services and engaging legal professionals than we generally credit. If anyone within your organization wants to reject change on the basis that ” no one else is doing it,” show them this post.

3. A lot of these companies and products might want to reconsider the fad in branding that creates a name by joining two related terms together to make one word. (Says the guy with a blog called “Law21.”)

So there you have it: my incomplete inventory of this indeterminate thing called “NewLaw.” It’s good enough for my presentation; hopefully, with your contributions and observations, you can make it even better.

Jordan Furlong is a lawyer, consultant, and legal industry analyst who forecasts the impact of the changing legal market on lawyers, clients, and legal organizations. He has delivered dozens of addresses to law firms, state bars, law societies, law schools, judges, and many others throughout the United States and Canada on the evolution of the legal services marketplace.

Reinventing the right things

Warning: Lengthy Moral Philosophy Discussion Ahead. Worse luck for you, it’s from an English major who took exactly two Philosophy courses in undergrad and was entirely unsuccessful in trying to penetrate Kant’s Critique of Pure Reason, so govern yourselves accordingly. But it’ll take us a few paragraphs before we get there. First, we talk technology.

In Silicon Valley earlier this month, there transpired a conference that crystallized many of the current trends and topics regarding the rapid re-engineering of the legal marketplace. Reinvent Law is a laboratory based at the Michigan State School of Law and sponsored by the Kaufmann Foundation that seeks to combine innovations in law, technology, design and delivery to create a new and better legal system. The primary Reinventors are MSU law professors Daniel Martin Katz and Renee Knake, and if you’re not following them on Twitter, you should be.

ReInvent conferences had already been held in Dubai and London (the latter under the Law Tech Camp banner), but the Silicon Valley meeting was a breakout event that deeply connected with many people in the legal market and is still generating conversations. Here’s a roundup of commentary on the event: I especially recommend Ron Friedmann’s live-blog posts for your review, while the report by The American Lawyer’s Aric Press demonstrates that the issues #reinventlaw is exploring are of interest to some of the largest legal enterprises in the world.

I was seriously sorry to miss ReInvent Silicon Valley, and I hope to make it to a future iteration of the event closer to home. I’m a fan of what ReInvent Law is aiming to do and the methods by which it’s doing it (Dan Katz’s work with data and the law is particularly noteworthy). Technology offers us tremendous potential to improve the quality, delivery and accessibility of legal services, partly because technological disruptions are being applied from the bottom up and from the outside in (rather than top-down from within the legal profession, as previous reform efforts have been), and because the application of internet-based technology can provide benefits well beyond its costs.

This is not a unanimous view, of course, and Reinvent Silicon Valley had its share of critics, including Scott Greenfield of Simple Justice. Scott’s post on the subject expresses a deep skepticism about the conference’s focus on technology, especially as it relates to the criminal justice system. Scott’s take on these issues will be familiar to readers of his blog, but I’d like to single out one part of his post for further consideration:

The fear is that much of what is being promoted as the future of law will actually come to pass. We will have those paperless offices where we sell virtual legal services unbundled like the widgets they can be. And the prisons will still be filled with people whose computer programs told them they should be free.

It’s not that the people involved in all of this aren’t smart. Indeed, these are some very smart, very dedicated people, but they don’t see the law. Dreams of technological change may be very exciting, but to what end?

That last question is an interesting one, and it will do all of us in the legal marketplace reform movement some good to think it over for a while. What are we aiming to achieve with the growing integration of technology into the legal system? I think Scott may underestimate both the purpose and the impact of these new legal technologies: to reduce costly inefficiencies and improve effectiveness throughout the legal service process; to provide more avenues for people to access legal services; to break the monopolistic tendencies of the legal profession that have served the market so poorly.

But when Scott talks about “making the law actually work better for the sake of human beings, rather than make it point and click,” he reminds us that the end, rather than the means, is what we need to focus on here. And although I don’t think this is a mistake that the ReInvent people are making, nonetheless we are vulnerable to the risk that our newest tools — and some of them promise to be very powerful indeed — may cause us to value the tool more than the task. Automation is meant to serve a purpose, not to be a purpose in and of itself.

This brings me to the central issue I want to examine, and to the philosophical part of our program. Peter Thiel recently delivered a guest lecture at Stanford Law School’s Legal Technology course. You might know Thiel as the co-founder of PayPal, the first outside investor in Facebook, and a generally brilliant fellow worth roughly $1.5 billion. Blake Masters took notes on Thiel’s lecture and the Q-and-A that followed, resulting in an extremely thought-provoking and (for me) unsettling read, because Thiel essentially advocates a greater role for automation and technology in the justice system.

You should read the whole article, but it’s quite long, so here are some key excerpts for present purposes.

Computerizing the legal system could make it much less arbitrary while still avoiding totalitarianism. There is no reason to think that automization is inherently draconian. 

Of course, automating systems has consequences. Perhaps the biggest impact that computer tech and the information revolution have had over last few decades has been increased transparency. More things today are brought to the surface than ever before in history. A fully transparent world is one where everyone gets arrested for the same crimes. As a purely descriptive matter, our trajectory certainly points in that direction. Normatively, there’s always the question of whether this trajectory is good or bad. …

In some sense, computers are inherently transparent. Almost invariably, codifying and automating things makes them more transparent. … Things become more transparent in a deeper, structural sense if and when code determines how they must happen. One considerable benefit of this kind of transparency is that it can bring to light the injustices of existing legal or quasi-legal systems. …. If you’re skeptical, ask yourself which is safer: being a prisoner at Guantanamo or being a suspected cop killer in New York City. Authorities in the latter case are pretty careful not to formalize rules of procedure. …

The overarching, more philosophical question is how well a more transparent legal system would work. Transparency makes some systems work better, but it can also make some systems worse. So which kind of system is the legal system? … [Is it] pretty just already, and perfectible like a market? Or is it more arbitrary and unjust, like a psychosocial phenomenon that breaks down when illuminated? 

The standard view is the former, but the better view is the latter. Our legal system is probably more parts crazed psychosocial phenomenon. The naïve rationalistic view of transparency is the market view; small changes move things toward perfectibility. But transparency can be stronger and more destructive than that. …  Truly understanding our legal system probably has this same effect; once you throw more light on it, you’re able to fully appreciate just how bad things are underneath the surface.

Once you start to suspect that the status quo is quite bad, you can ask all sorts of interesting questions. Are judges and juries rational deliberating bodies? Are they weighing things in a careful, nuanced way? Or are they behaving irrationally, issuing judgments and verdicts that are more or less random? Are judges supernaturally smart people? The voice of the people? The voice of God? Exemplars of perfect justice? Or is the legal system really just a set of crazy processes?

Looking forward, we can speculate about how things will turn out. The trend is toward automization, and things will probably look very different 20, 50, and 1000 years from now. We could end up with a much better or much worse system. But realizing that our baseline may not be as good as we tend to assume it is opens up new avenues for progress.

On the surface, there’s much to like here. It’s difficult to argue that the legal system is not, at least in part, a crazed psychosocial phenomenon, inconsistent and frequently irrational in its operation. There is no shortage of error and bias in the law: Scott Greenfield might point to prosecutorial malfeasance and systemic discrimination, whereas I might point to the rampant inefficiency of law practice, the turf-guarding monopolism of lawyer market regulation, and the fundamental conflicts between the traditional law firm business model and the best interests of clients. Why not introduce into this highly imperfect system the discipline, objectivity and predictability of the algorithm?

And yet … something about Thiel’s narrative bothered me. Just the fact that the word “totalitarianism” came up in this discussion is enough to raise red flags about the possible risks we run here. Humans have a long-held apprehension about developing technologies that will eventually destroy them: I wrote about this in Blawg Review #252 back in 2010, when I tracked science-fiction tropes about technophobia from Frankenstein to The Matrix. Literature abounds with nightmarish future states in which our machines, given the power to execute the law, eventually become the law unto themselves. If we have a generalized dislike of bureaucracy, it’s because we fear the spectre of a faceless, mindless, autonomous system that knows who, what, where, when, and how, without ever knowing or caring why. And history supplies us with good reason to feel that way.

But I was also disturbed by what I felt was a deeper problem: that while this approach was clearly intended as a moral good that would improve fairness and correct injustices, nonetheless there was something vaguely wrong about the whole thing. So I did what anyone would do in these circumstances: I consulted a moral philosopher; in my case, Dr. Richard Matthews of King’s University College at the University of Western Ontario (who also happens to be an old and great high school friend) for his assistance. With his permission, here are excerpts from his illuminating response:

The article is deeply uneasy with human subjectivity. … The discussion of AI and improvements in legal computation suggests the possibility of improving on this, of making the legal system more rational. To be fair, he acknowledges that things could get better or worse with the introduction of AI. But what he does not notice is that the drive is to eliminate human fallibility as such from the process of legal reasoning — to render human judgment irrelevant.

Suppose that the trend towards legal computation is “successful,” whatever that would mean…. The consequence will be reduced human involvement in the most important aspects of the legal system, and thus increasing irrelevance of human beings as subjects in the process. This is, no matter what the ultimate results of the process are, the further objectification of human beings. Humans become the objects of judgments, not subjects.

What are some of the practical implications of this? Well, you have been mapping many of them in your blog already — the elimination of highly skilled and highly trained lawyers and judges from participation in a meaningful human activity; the organization and maintenance of law through mechanization of the kind that this article identifies; and by taking the labour that you cannot be bothered to mechanize and finding the least-well paid and most desperate people to do it. Obviously there are many others, but I find none of them attractive.

This is a mapping and reshaping of human life and its possibilities which has, at its root, the controlling and reshaping of human populations. The controlling will not produce better human beings or increased obedience to law. Instead, it always generates resistance. …

Such technologies also concentrate power in the hands of an increasingly small group of people, since they own and thus control access to the AIs. The issue of transparency is dodgy, in any event. We have to ask: To whom are computers transparent, since 99.9% of the world doesn’t have a clue what a computer is, even as we use them. Also, the computer does not function in a politically neutral environment.  I would be highly surprised to find transparency applied to powerful individuals in the same way that it will be applied to the vulnerable. 

I think Richard has struck several nails on the head here, which is why I’ve gone to such lengths to address this subject: because although the size of the risk that an increasingly automated justice system presents is very small, the potential impact of that risk is not. I’m fond of saying that lawyers were invented to serve the law, not the other way around. Well, the law was developed to serve people, not the other way around, and one of the services it’s meant to deliver is to support and extend the realm of human dignity. Humans aren’t always great at sustaining our own and others’ dignity; but we do try, here in the law, to accomplish that, and sometimes we succeed. Machines aren’t good at it at all.

Rest assured, I remain a strong proponent of improving and expanding the role of systems, processes and technology in the business of law and, to a more limited degree, in the justice system itself. The problem arises when we give in to the temptation to let these systems run loosely supervised, or not supervised at all — and that temptation is real, because every mechanized process is always telling us, “Go on, take a break, leave it to me, I’ve got this handled” — and, hard-pressed for time or money, we often acquiesce. Not everything requires watchful human guidance, but some things do, and the law is one.

The word “autonomy” comes from the Greek autonomos, which means “independent, living by one’s own laws.” (Emphasis added.) The implications of that definition for this discussion are too strong for me to pass up: these are our laws, meant for our good, and Peter Thiel notwithstanding, I recommend that we remain highly vigilant about and directly involved with their application.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.             


Back when we used lawyers

My father was born in 1922. When he was 7, and the stock market crash triggered the Great Depression, cars were still an unusual sight in his hometown. Forty years later, he watched a live broadcast of Neil Armstrong walking on the surface of the moon. Less than 40 years after that, he used Skype to speak with his grandchildren halfway across the country for free.

It’s easy to forget just how astonishing the last century of scientific and mechanical progress has been. And the younger you are, the easier it is to forget it, or to not even recognize it in the first place. My own children are now 7 and 5, respectively, and they’ve never known a time when you couldn’t get the answer to any question by typing a few words into a portable device with a touch-activated screen. My stories about doing research with bound encyclopedias might as well be tales from the Stone Age.

This says something about our ability to become accustomed to the previously miraculous. But it also speaks to our sociological amnesia. The nature of things, when we first notice them, is the way we assume they’ve always been and how they always ought to be. We mistake “familiar” for “normal,” “the latest” for “the last,” right up to the very moment of revolutionary change.

But once change happens, it then becomes difficult to remember that we ever did things differently, or why we ever would. You’ve probably seen TV shows like The Worst Jobs in History and thought, “People actually used to do these things?” But at the time, that was just the way things were. It was normal. Imagine what our descendants, decades or centuries from now, will think of us when they look back at what we assume is normal today.

The most recent edition of The Economist‘s Technology Quarterly offers three excellent illustrations of  how easily “the way we’ve always done things” could vanish. Take a few minutes to read about (a) the Gates Foundation’s support of three new types of toilets that require neither clean water nor sewer infrastructure, (b) a plethora of affordable solar-powered portable lights that require neither transmission grids nor flammable fuel, and (c) most amazing of all, the rapid progress towards cars that don’t require drivers.  These are innovations that might be able to prevent one million driving deaths from human error every year, prevent 1.5 million children’s deaths from diarrhea every year, and provide light to 1.4 billion people worldwide without access to grid electricity.

Once you’ve finished these articles, stop and take a moment to think about what constitutes “normal” in the legal marketplace today. Then think about what your law firm will look like in 10 to 15 years, based even on the technology we’ve already developed. Will the future legal marketplace still require lawyers? If so, for what purposes? Within the next few decades, we will very likely have light without fuel, sanitation without water, and growing numbers of cars without drivers. Is it really a stretch, in that context, to imagine law without lawyers? Is it realistic to believe that “the way it used to be” is also “the way it’s always going to be”?

People have always used lawyers for legal services, and everyone has always thought that was normal. But when new options emerge, and as they’re adopted, we see the idea of “normal” change almost overnight. I implore you to open your mind, today, to what will constitute “normal” in the future legal marketplace.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.

Fixing the failings of new lawyer training

Last week, I contended that when it comes to the current lawyer admission process, law schools are part of the problem and show little interest in being part of the solution. Two articles published since then do give me some hope for the academy, both from Canadian law school deans: “Five new developments to reshape Canadian legal education,” by Lorne Sossin at Osgoode Hall Law School in Toronto, and “The Canadian Lawyer in the 21st Century,” by Ian Holloway at the University of Calgary Faculty of Law.

But that’s as much as I want to say about the schools, because what we’re really talking about in these conversations, when you get right down to it, is the competence of practicing lawyers. The legal profession is concerned with competence in two ways: at the start of a lawyer’s career (what I’d call Initial Professional Development, or IPD) and then throughout the course of the lawyer’s career (what we already call Continuing Professional Development, or CPD). Let’s begin with the first one and tackle the second one next week.

The bar has a self-evident interest in ensuring that new lawyers enter the profession with enough knowledge, skills and experience to provide reliable legal services at a purely functional level. It’s the responsibility of lawyers, as self-regulating professionals, to set and enforce these basic, minimum standards — to oversee this Initial Professional Development — in order to fulfill our mandate to protect the public in the provision of legal services. So far, so good.

Here’s the problem: Initial Professional Development for new lawyers is a mess. It’s been cobbled together from a mishmash of activities, some mandatory and some optional: a law school education, a summer stint in a law firm, a bar admission course, a bar exam, an articling or trainee contract, and so forth. These measures overlap in some areas and leave other areas completely unaddressed: a new lawyer might have sat through three primers on real property law, for example, but never have the opportunity to run a simulated mediation.

All these activities, moreover, are administered by a range of providers that rarely consult with each other to coordinate their efforts and that are, to a great extent, free to set whatever standards they like in planning and administering these activities. No jurisdiction that I’m aware of sets and enforces a comprehensive strategy and structure for new lawyer training. The bar has effectively outsourced Initial Professional Development to a series of for-profit providers without specifying the equivalent of an acceptable and enforceable Service Level Agreement to govern it.

We frequently complain that “law school doesn’t prepare students for practice.” But we’re missing the point. The point is that our sloppy, jury-rigged approach to new lawyer training is broken. It’s a glaring failure of self-regulation, and it’s what Initial Professional Development reform needs to address.

Consider three emerging alternatives to the status quo, and you can start to see the forces that will guide this reform process.

1. The training brokerage. In the UK, a contract lawyer agency called Acculaw has set off a minor earthquake with its entry into the solicitor training sphere (new solicitors are required to spend two years as “trainees” and pass a professional qualification course before recognition as full-fledged lawyers). Before now, firms would recruit and hire the trainees themselves, much as Canadian firms recruit articling students and American firms hire first-year lawyers. The difference is that UK firms are making commitments well over two years in advance of the day they’ll actually bring these trainees on board as solicitors, at which point the firm’s and the market’s circumstances may have changed dramatically.

Now, Acculaw will hire these trainees straight out of post-graduate law school and then “second” them to law firms as requested. The secondments (a maximum of three per trainee) will last between three and eight months. The premise is that the trainees will serve as a “just in time” resource for firms that want to hire potential new lawyers more sparingly and judiciously.

Acculaw says it will oversee the secondment and ensure that the trainees are, you know, trained. But how this will work in practice is anyone’s guess: we’ve never tried something like this before, so we don’t know how well, if it all, this will advance the goal of acceptably competent new lawyers. Most large and prestigious firms will continue to recruit straight from the schools and have their pick of the graduating litter, so Acculaw’s trainees probably will be viewed as the leftovers. Will this increase their attractiveness on the market? Probably not. But the UK is much farther ahead than other jurisdictions in sending work to LPOs and contract workers: trainee offers of all kinds have dropped nearly a quarter in the last two years. Many trainees will be happy to take whatever they can get.

Make no mistake: this is not a graduate-oriented initiative. Acculaw couldn’t be clearer that its customers are law firms and that its goal is to streamline the trainee recruitment process for efficiency and effectiveness. But this all came about because the previous system wasn’t serving the firms’ needs. That’s the lesson to draw from the early days of the Acculaw experiment: if law firms don’t like the lawyer training process, they will come up a risky and potentially problematic alternative. A centralized brokerage for Initial Professional Development, one where the company takes the trainees in hand and accepts ultimate responsibility for their competence, could work very well in theory, and I hope that’s where this goes. But it’s not hard to envision a less happy outcome.

2. The teaching law firm. Law professors Brad Borden and Robert J. Rhee attracted a lot of attention earlier this month with the suggestion that law schools own and operate their own law firms. In Prof. Rhee’s words, “graduating students [would] get trained in the practice of law for a fixed duration, similar to a judicial clerkship or analogously a residency for new doctors. The law firm would be run by senior attorneys who develop books of business, and it would be economically sustainable.Response from the legal community was widespread — that last link contains an excellent analysis by John Hodnicki — and mixed interest with skepticism. My own reaction was that I’d be more interested to see law firms get into the legal education business. But there is definitely something here.

What the professors are suggesting is essentially the legal equivalent of a teaching hospital. (Surely you’ve watched House?) A teaching hospital, like all hospitals, is primarily concerned with treating the sick and injured; but a strong secondary purpose is to give med school graduates and interns an opportunity to experience and learn from actual medical practice on real patients, something that no amount of instruction or simulation can achieve. Senior physicians and staff supervise their work, of course, but the patient experience is undeniably different than it would be in a standard hospital. The expectations are also different, on both sides of the bed: patients of teaching hospitals are frequently low-income or uninsured. Teaching hospitals work by filling a number of gaps in the markets for both medical services and medical training.

In theory (and at Chicago-Kent Law School, in practice), a “teaching law firm” could work equally well: senior law school students and recent graduates, under the supervision of experienced lawyers, engage with clients, research issues, try to resolve problems and generally learn the ropes of being a lawyer while getting the hang of billing and collecting for legal services. Given the likely clientele, the legal work would likely focus on criminal cases, custody and support disputes, immigration and refugee matters, landlord and tenant conflicts, and so forth. That sounds like a law school legal clinic, but those operations are underfunded and are not, so far as I know, operated like businesses. To succeed, a teaching law firm would have to train lawyers not just to practise law but also to run a profitable business. The profits would probably be minuscule, but the point is that the graduates would learn that a law office is not a charity.

It’s worth wondering, however, whether law schools are the best institutions to operate these teaching law firms. Mitchell Rubinstein points out an important acknowledgment by the professors themselves: “this law school law firm would have to be staffed by attorneys, not by the professors. The major problem with law school professors today is that many, if not most of them, are simply incapable of practicing law and many never had. But this is what we have, for the most part, training the lawyers of the future.” If a law school opens a law firm and has to bring in outside lawyers to run it, we have to ask why the law school is involved at all. Teaching hospitals are often associated with universities, but universities and med schools have a better reputation within the medical profession than law schools enjoy in theirs. And there are very few med school professors who’ve never treated a live patient. This may be a good idea in search of the right home.

3. The expert application. A third possible route for ensuring the competence of new lawyers is a technological one: the use of expert applications. Earlier this month, I received a demonstration of a fascinating new application by a company called Neota Logic, founded by respected knowledge management pioneer Michael Mills. Neota Logic is essentially an applied knowledge management system: it automates lawyers’ knowledge and expertise to create step-by-step processes for solving low- and medium-grade regulatory, compliance and advisory problems. Michael sometimes refers to it as “Microsoft Excel for compliance.”

Neota Logic users log in and enter the relevant data on the regulatory or compliance issue facing them; the system prompts them to answer a sequence of questions based on the data it’s receiving. The system guides the user through the process of entering the data, choosing the paths dictated by the responses, and arrives at the same result that an expert lawyer would have reached. It’s not only a cost-saving system that reduces the need for lawyers — it’s also a quality-control system, through the creation and application of a legal database that’s informed by, and collectively better informed than, all the lawyers whose expertise underpins it.

Neota and other expert applications to come will have a massive impact on legal workflow generally, and I’ll look at that in more detail later this fall. But what really struck me was that in the firms where it’s bring used, Neota has emerged as an associate training tool. The lawyers who’ve used it refer to it as the “partner at your shoulder” system, or more colourfully, the “Guardian Angel.” It performs essentially the same function as having a partner sitting in a chair next to the associate, asking her all the right questions, checking on her responses, and guiding her towards the right conclusion. This type of mentoring is something we wish every law firm partner would devote the time and energy to provide; we also know that extremely few ever do. So an expert system that trains lawyers as they perform could be a fine alternative.

It’s worth noting that none of these three innovations — training brokerages, teaching law firms, and expert applications — has come from the practicing bar or professional regulators. That’s not really surprising, considering lawyers’ track record when it comes to developing innovations; but I do think we’re pretty decent at adopting innovations once they’re available. Olswang has already signed on to the Acculaw system, some law firms are already using Neota, and lawyers of all kinds found the “law school law firm” to be worth a close look. I’d like to see bar associations and lawyer regulators consider these and other emerging options for Initial Professional Development as possible external solutions to the new lawyer training fiasco we’ve foisted on ourselves thus far.

If we’ve learned anything from our current situation, it’s that Initial Professional Development has to be taken seriously as the first and fundamental competence responsibility that comes with self-regulatory status. This will probably sound very familiar to you, but: just because we’ve always ushered lawyers into the profession this way doesn’t mean it’s good enough, or that we should keep on doing it this way. Multiple players have something to contribute to new lawyer training, including law schools, law firms and private-sector providers; but at the end of the day, the organized bar has to pull it all together, decide on a new approach, and enforce it. And “the end of the day” had better arrive very soon.

Goodbye to all that

Last week, having written about the rise of online disruptors and the emergence of super-boutiques, I promised that the final entry in this de facto trilogy would identify how lawyers and law firms can ensure their profitability in this new environment. But then I spent three days at ILTA’s Rev-elation, the 2011 annual meeting of the International Legal Technology Association, and it seems to me that that ship is already sailing out of the port.

What I saw and heard at ILTA, about document assembly and contract standardization and reverse auctions and KM advances and outsourcing services and a host of other developments, is that the storm we’ve been warning about for the past few years has finally broken (read the linked articles for more details). Tired of waiting for law firms to lead change, the market has itself developed tools and processes to provide the certainty, efficiency, transparency and cost-effectiveness that legal services have long needed. Clients love these innovations and are telling law firms to use them, even (and especially) where they conflict with firms’ traditional ways of working and making money. And firms are obeying, with the vague but dawning realization that they’re now being told how to do their jobs.

What’s happening is this: law firms are finally losing control of the legal marketplace.

Law firms used to dictate the terms upon which legal services were performed — work assignment, work flow, scheduling, timeliness, format, delivery, billing, pricing, and many others — because buyers had no other options. Those options have now emerged, powered by technology and driven forward by market demand.

  • They promise legal documents not just faster and cheaper but also, incredibly, better, in terms of quality and reliability.
  • They promise greater efficiency and transparency in the previously laborious RFP-driven process of choosing and pricing law firms.
  • They promise real-time integration of world-class legal knowledge into the legal work production process.
  • They promise alignment of a legal task’s value with its performer’s skills, qualification and location.
  • And at ILTA, they demonstrated delivery on all these promises and more.

But the emergence of these options isn’t the real story. The real story is that firms are buying these new products and services, not selling them. They’re taking marching orders about their use, not issuing them. They’re accepting the new realities of the marketplace, not inventing them. Law firms are now drifting to the periphery of the marketplace, trading places with technology-driven outsiders whose own importance increases daily. Law firms, whether they realize it or not, are settling into a new role: sources of valued specialists called upon to perform certain tasks within a larger legal system that they did not create and that they do not control.

New providers and new technologies are not going to replace lawyers. But they are going to marginalize lawyers and render law firms mostly irrelevant.

Lawyers are smart, knowledgeable, creative and trustworthy professionals who, unfortunately, suffer from poor business acumen, terrible management skills, wildly disproportionate aversion to risk, outsized revenue expectations, and a business model about 25 years out of date. The market won’t abandon them — they have unique and sometimes extraordinarily valuable skills and characteristics — but it will find the best use for them: expert specialists with limited influence over the larger process.

Law firms are widely decentralized partnerships that charge on a cost-plus basis, retain no earnings from year to year, and pray every morning that their best assets will walk back through the same doors they exited the previous night. That’s not good enough. The new legal market demands systematization, collaboration, transparency, alignment, efficiency and cost-effectiveness within and among its providers. A few law firms have already adapted these traits, and some more will follow. Some law firms are so powerful they won’t have to change. The rest are in grave danger.

Here’s a revealing thought experiment to illustrate these points. Consider the flurry of investments and acquisitions that have taken place in the legal technology area recently. I’ve already written about Google Ventures’ $18 million investment in Rocket Lawyer and LegalZoom’s acquisition of $66 million in venture funding. During ILTA, Aderant acquired Client Services and CompuLaw for an undisclosed but certainly massive sum. And in the biggest news of the week, Hewlett-Packard purchased Autonomy, which among other things is a leading e-discovery provider, for no less than $10 billion.

With those figures in mind, ask yourself: what would you pay for a law firm? What price would you meet for any of the world’s ten largest law firms? Some very smart people discussed that question during a conversation at ILTA, and we reached this likely conclusion: nothing. Not a cent. Because really, what do law firms have to sell? They have no patents. They have no unique business methods. They have little unique knowledge. They have few long-term client commitments under contract. They have limited goodwill. Their only real assets are a handful of partners with great technical expertise or amazing rainmaking skills, and these assets can leave anytime with no penalty. What, precisely, would you be buying?

I said at the outset of these posts that lawyers and law firms need to decide carefully what they do and how they do it if they want to remain profitable and valuable. Let me instead suggest more questions for lawyers and law firms to ask themselves in order to even remain in the conversation.

What: Identify your inventory — what you sell to clients — and determine how much of it involves the application of lawyers’ high-value performance or analytical skills. Assume that the price for everything else you sell will plummet, and that you’ll be able to stay in these markets only if you adopt various high-efficiency systems. Absorb the reality that you will need many fewer people within your law firm to be competitive in these areas.

How: Study the means by which you accomplish the work you sell to clients and determine whether and to what extent you can adopt new technologies and processes to be not just more efficient, but also more effective in terms of quality, relevance and responsiveness. Don’t think in terms of adapting your current approaches; think in terms of starting from scratch. Use your creativity and ask: How should we go about doing what we do?

Who: Identify every person who receives a salary or a draw from your firm and ask: what is their primary contribution to the firm? Good answers will include proven business development skills, outstanding professional expertise, and amazing management abilities. These are your irreplaceables, and you’re probably underpaying them. Everyone else will require a clear demonstration of why they occupy a place in your office.

Where: In association with the previous entry, determine the best physical location for the services you provide. We are past the time in which a law firm’s four walls house all or almost all of its functionality. Some services might best be performed in a suburban location, others in a home office, others in a low-cost center elsewhere in the country or in the world, and others from a server farm.

Why: This might be the most important question of all, and I posed it in an article last month: what is the point of your law firm? I don’t mean generating profits for partners; I mean your marketplace purpose. Why do you exist? What specific need for what specific audience do you meet? If you disappeared tomorrow, who would find the loss irreplaceable? Believe me when I say: The market is asking you that question right now.

We’ve begun crossing over from the old legal marketplace to the new one. Lawyers still have outstanding value to offer in certain quarters, but we need to concentrate our market offerings around that value, and we need better platforms for our services than traditional law firms provide. We need to understand what technology is doing to legal services and either adopt that technology, adapt to the client expectations it’s creating, or leave. We need to understand our role in this new market and appreciate that it does not lie at the center of the legal universe. We’ve missed our chance to lead the new market, but we can still flourish inside it. It’s up to us.

Welcome to the crucible.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.


Here come the disruptors

Lawyers used to have the Midas Touch: whatever we did, however we did it, we were profitable, because no one else could do it (and no one else was allowed to try). From now on, lawyers’ and law firms’ profitability hinges completely on what we choose to do and how we choose to do it. That’s what I want to spend the next two days talking about.

Tomorrow, I’ll look at what’s happening inside the legal profession. Today, I want to talk about what’s happening outside it, starting with last week’s most dramatic news: $18.5 million in venture capital announced by online legal service Rocket Lawyer.

Rocket Lawyer, if you’re not familiar with it, provides legal forms that online users can fill out, store and share on the Web. For $20 a month, reports Forbes, consumers can also have their documents reviewed by a real lawyer and even get legal advice at no additional cost. It boasts $10M in annual revenue and 70,000 visitors a day. The $18.5M figure, by itself, is less significant — rival LegalZoom recently announced a $66 million VC infusion — than the identity of the secondary investor in Rocket Lawyer, Google Ventures.

It’s important to note that this is not Google Inc. we’re talking about — Google Ventures invests in (it does not acquire) companies independent of Google, and it supports a range of startups that develop things like carbon-neutral fuels and yeast-based antibody discovery platforms. No one is suggesting that Google Inc. will take over Rocket Lawyer, make its forms free and sell ads on the content — although you know what, that’s more than merely plausible. But note what Google Ventures’ Wesley Chan says in Rocket Lawyer’s press release:

We see a large market opportunity for legal solutions that are easily accessible and affordable to users. Rocket Lawyer’s combination of an intuitive user-driven front-end with a strong technology-based platform uniquely positions the company to scale and deliver the type of “wow” user experience that online customers love.

Note the drawing cards for GV: ease, accessibility, affordability, user-driven, user experience. They have nothing to do with the intelligence of the lawyer or the quality of the legal offering and everything to do with the manner in which clients find and access legal services. As I’ve said before, convenience is the new battleground, a fight for which law firms still haven’t even shown up.

Those same features are what drew Google Ventures to its first foray into the legal sphere: Law Pivot, a legal Q&A website that allows companies (especially startups) to confidentially (or, as of yesterday, publicly) receive low-priced, crowd-sourced legal answers from a roster of private lawyers. Similar to Rocket Lawyer, LawPivot gives lawyers a platform to market their legal services by sharing advice and engaging in discussions (the company’s personalized search algorithm provide users with relevant lawyers to provide answers to their specific legal questions). Again, note the words of Wesley Chan in the announcement:

There are inefficiencies in the delivery of legal services, and there is a huge opportunity for a technology-driven disruption in the legal industry. The LawPivot team has created an intelligent online solution that connects companies to the legal answers they need.

Those are the two key terms we need to focus on: inefficiencies and disruption. Those of us who scan this marketplace have been warning for years that the legal profession’s backward business model is in the gunsights of aggressive entrepreneurs that want to exploit those inefficiencies and push lawyers out of the driver’s seat. Well, Les voila.

Because here’s the thing: neither Rocket Lawyer nor Law Pivot are doing anything that even an average law firm couldn’t have done already. The former has created a client-facing document assembly system that provides channels to licensed lawyers who can review the completed documents and answer more complex questions. The latter offers lawyers the opportunity to engage directly with potential clients and demonstrate their expertise through the dissemination of their real-world knowledge. Law firms have had the capacity to create these services for years, but they’ve been unwilling or unable to risk changing the nature of their business.

Both Rocket Lawyer and Law Pivot (and LegalZoom and Epoq and many others both present and future) have recognized that the production of legal documents and the provision of legal insight have become so systematized, routinized or borderline-commoditized that their market value has fallen below law firms’ profitability thresholds. So they have converted the legal advice process and legal document assembly system into marketing and business development opportunities for lawyers. And they have one simple goal in mind: to replace the law firm as the primary platform by which clients find and engage with lawyers. That is a realistic goal, and both their ideas and their execution have been good enough to interest Google Ventures and other investors.

I guarantee you will see more of these deals financing more of these operations in future, and when the UK finally launches Alternative Business Structures, watch the stream turn into a flood. But the fundamental trend to understand here is the legal marketplace finally recognizing and responding to the inefficiencies lawyers have created in the delivery of legal services. The result will be disruption for lawyers and upheaval for law firms. Tomorrow, I’ll talk about what that’s going to look like.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.