The legal sandbox tipping point

You’re familiar with regulatory sandboxes in law, right? If so, feel free to skip down a few paragraphs. If not, here’s how I described them in a recent podcast:

A regulatory sandbox is essentially a safe space for innovation. Think of it as a closely monitored laboratory where experiments can be carried out — except these experiments are new types of services that are prohibited by current regulations, but that look like they could be beneficial to the public.

The regulator wants to give these experimental services a try — but it doesn’t want to immediately authorize a service that doesn’t meet the established criteria for authorization, sight unseen. So it creates a “sandbox” where the service can be tried out under close supervision, to see whether the benefits it provides outweigh the risks or harms it creates.

I’ve written about legal regulation sandboxes recently, and I’m far from the only one. Read Margaret Hagan & Jorge Gabriel Jimenez, David Curle, Jayne ReardonMonica Goyal, Yves Faguy, Amy Salyzyn, and the Center on the Legal Profession at Harvard Law School. Regulatory sandboxes are an increasingly talked-about topic in the legal sector, but at the moment, only two North American jurisdictions have actually launched one: Utah, which is off to a flying start, and British Columbia, which has also received significant interest. (In this, as in other areas of legal innovation, England & Wales are already well ahead.)

But that could be about to change. On April 13, the Law Society of Ontario’s Technology Task Force released a report calling for the establishment of a Regulatory Sandbox for Innovative Technological Legal Services (ITLS) for a five-year pilot program. The report includes a motion for approval to be brought before the law society’s governors later this month. British Columbia’s regulatory sandbox deservedly gets the credit for leading the way in Canada; but a sandbox in Ontario — home to more than one-third of this country’s lawyers — would have an even more significant impact.

Ontario’s sandbox would be open to “any person or entity that is prevented by current regulations from operating an innovative technological legal services tool or program.” In general, the trial period would be about two years (though I’d imagine entities that rapidly deliver clear benefits with little evidence of risk or harm could be approved more quickly). At the end of this trial period, the entity may be approved, with or without conditions, to continue operating freely in the open market, or the law society would amend its by-laws to allow for this exception to the rules, or it would be rejected.

Note that “innovative technology” is a required element — the sandbox is not for, say, a real estate law clerk who wants to provide legal advice over the phone about selling your house. But that’s not the barrier it might appear to be, since Ontario also licenses and regulates independent paralegals, so there’s already a framework in place for “a person, but not a lawyer” legal service options.

And Ontario is an ideal place to host a tech-based innovation sandbox, precisely because Toronto in particular is the headquarters for a large and rapidly accelerating Canadian legal technology industry. Legal tech folks have been saying for years that it’s immensely difficult to attract the kind of investment capital needed to build and scale accessible legal solutions without the confidence that’s created by regulatory authorization. A legal tech sandbox would be the first step towards making that happen in Ontario.

Above all, one key theme consistently surfaces throughout the Task Force’s report: Legal technology is accelerating fast and changing the legal market, and this is the regulator’s best (and maybe only) opportunity to play a role in its regulation.

“As with other sectors and industries, the proliferation of new market entrants and innovative technologies will continue to transform markets and gain users, with or without the regulator’s involvement. Inertia on the law society’s part risks allowing ITLS providers to proliferate in Ontario outside of an effective regulatory scheme. … The technologies will continue to develop, but the law society may lose the opportunity to have an influence if it does not act quickly.”

Now, what’s interesting and coincidental about this development is that, while Canada’s largest jurisdiction considers a legal technology sandbox, the United States’s largest jurisdiction is doing the same. Four days before Ontario released its report, the State Bar of California’s Closing the Justice Gap Working Group held its most recent meeting, with an agenda that considered recommendations on the structure, governance, scope, application process, and criteria for a regulatory sandbox in that state.

The California working group, as you probably know, has been assigned to study innovative ways in which the legal market could be reconfigured to expand access to justice for Californians. Chief among its mandates is to explore whether and how a regulatory sandbox would operate in the state. As I wrote back in the summer of 2018, significant regulatory change to the legal sector in California would be a seismic event, one that would almost certainly trigger rolling changes across the United States for years to come.

I’m not privy to the Task Force’s discussions, of course; but the supporting materials for the April 9 meeting make for interesting reading. The report of the Scope Subcommittee, for instance, reveals that there was some discussion about restricting the sandbox to “firms that offered services to the unserved and underserved,” which the subcommittee defines as including “members of the middle class and small businesses.” This raises more than one red flag for me.

Set aside for a moment the problem of trying to screen out sandbox applicants according to who will buy their products and services (which strikes me as highly impractical in a free market), as well as the flagrance of the effort to restrict scope so as not to threaten the interests of lawyers and to put up roadblocks against the Big 4. The real problem here is singling out only “the middle class and small businesses” as unserved and underserved, which hides from the reality that everyone is unserved or underserved by the current legal system, and everyone deserves a better choice of remedies than what’s now on offer.

Nevertheless, the inarguably good news is that the Closing the Justice Gap Working Group is making real progress. Observers of the process with whom I’ve spoken appear optimistic that although the wheels of this process are grinding slow, they are grinding in a good direction. I don’t pretend that decision-makers in California are remotely swayed by what happens in Canada, but the fact that their northern neighbours in BC have approved a sandbox, and that Ontario might follow suit, could have at least some normalizing impact.

But in addition to Utah’s trailblazing effort, California and Ontario should also seriously reflect on the fact that Arizona blew right past the “sandbox” concept and opened its legal sector to all types of providers. Arizona eliminated its ethics rules barring “non-lawyers” from having an economic interest in law firms or participating in fee-sharing, thereby demonstrating what real reform of legal services regulation looks like (again, following the lead of England & Wales). Thanks to Arizona, sandboxes can no longer be viewed as radical departures from the norm — they’re now the safe, slow, middle way, the unobjectionable road to reform.

And that brings me to my final point: a friendly warning to any lawyers in legal governance in Ontario and California who might be tempted to derail this process for their own purposes. Not only would that derailment remove from the regulator any practical means of influencing new legal services providers, it would also render obvious to everyone the starkly protectionist agenda of the profession’s lawyer governors. And that, inevitably, would accelerate calls for fundamental changes to lawyer self-regulation.

The tipping point of regulatory reform in the law is drawing near. The legal profession should be throwing its considerable weight behind reaching this point sooner, in order to truly and fully advance the public interest — and thereby prove itself worthy to continue governing not only the legal market, but also its own affairs.

The rise of the lawyer

Earlier this year, I received an invitation to write the epilogue for a book called New Suits: Appetite for Disruption in the Legal World, by Michele DeStefano (founder of the groundbreaking Law Without Walls program based at the University of Miami Law School) and Guenther Dobrauz-Saldapenna (partner and leader of PwC Legal Switzerland and leader of PwC’s global legal tech efforts). New Suits is an enormously ambitious and illuminating exploration of the frontiers of technology-powered legal practice, especially for large enterprise clients and their outside counsel, and I highly recommend that you read it.

Soon to be a major motion picture. Well, no.

Of course, I’m no technology expert, and I felt supremely unqualified to say anything useful about the impact of blockchain, AI, RegTech, and so on. But I thought that lawyers who read New Suits, especially newly called lawyers or law students, might reach the end of the book feeling a little overwhelmed by the scale of change facing them, and wondering whether the legal world of the future would in any way resemble the one they had already entered — and if that world would need, want, or even welcome lawyers.

So I wrote what was essentially a message to those lawyers, to explain what all the forthcoming changes would mean for them, what the new legal world was going to demand of them, and what they should feel both empowered and required to demand in return. With the kind permission of the authors, and with a few small edits, here is that lengthy but heartfelt message. 

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As I was preparing to write this epilogue, an email alert flashed across my screen with a message from a legal technology company. It announced itself in breathless terms: “AI has once again triumphed over a human lawyer.” (The task in question was the screening of a non-disclosure agreement.)

What an appropriate starting gun for this undertaking. The book you’ve just completed has catalogued in amazing detail the changes rippling along the foundations of the legal market worldwide, the technology that’s rewriting the rulebook for practising law, and the market forces that are fundamentally changing the nature of legal demand. Enterprise legal services — that sector of the market devoted to the legal needs of large companies, corporations, institutions, and governments — will never be the same again.

Yet it’s worth pausing to think about the deeper implications of that message. Why does it say “triumphed”? Who’s rooting for the machine here, and why are they rooting against the human? What benefit is being created by the application of this new technology — and who will ultimately reap that benefit? Are we celebrating because a human lawyer will be liberated from drudge work and assigned to deliver wise counsel to sophisticated clients? Or is it perhaps more likely that that lawyer will instead be liberated from a steady paycheque, and that fewer rather than more opportunities for human judgement will result?

We live in an age when the ultimate goal of many corporate activities is to “enhance shareholder value,” a phrase that has become a mantra not just for corporate boards, but also for the equity shareholders of large law firms. But you know, not everyone out there is a shareholder, and not everyone is seeing their value enhanced.

There are some who instead characterize our era as “late capitalism,” and who suggest that we’re entering the decline phase of one system and the gradual emergence of something else, something new. Is either of these opinions correct? What mantras should we be adopting for an enterprise legal market populated by blockchain, digitization, smart contracts, and Reg/Sup/PropTech? What is the real purpose of lawyers in the intelligent machine age?

For lawyers, these are not academic questions, and we should not act as if they are. If you’re a lawyer whose career trajectory is likely to carry you up to or past the midpoint of this century, I believe these questions are vital for you to contemplate. The answers you come up with will determine not just the sort of work you find yourself doing, but also the ultimate ends towards which your efforts will lead you, your clients, and everyone else. This epilogue is intended to help you through that contemplation.

To my way of thinking, there are three critical considerations for you, the 21st-century lawyer, to ponder during this process of discernment — three factors that merit at least as much time and bandwidth as any other. These concepts are “System,” “Service,” and “Self.” Here are my thoughts on each.

1. System

Now and for the foreseeable future, enterprise legal services will be created and delivered primarily through systems. For our purposes, we can define a “system” as an organized structure of interrelated and interdependent methods, procedures and routines, created to carry out an activity or solve a problem. If that concept interests or even thrills you, you’re going to love this line of work. If it puzzles or bores you, you might have a problem.

The reason we’re talking about systems is that we are long past the point where enterprise legal needs can be fulfilled by individual lawyers, sequentially and in single file, working in longhand and billing by the hour. As this book has made clear, both the sheer scale and the growing complexity of companies’ legal and compliance challenges require equally scaled and complex solutions. Enterprise clients compete in high-pressure environments and operate within unforgiving timeframes. They cannot be served in the same way you would serve a family business or a private client.

That’s going to have a profound impact on the types of people who will be drawn to this sector of the legal market. Systems analysts, software coders, design thinkers, and engineers of all kinds will be a natural fit for enterprise legal. People who can grasp the big picture of what the client needs, who can envision processes and flowcharts and logic statements that generate solutions to those needs, and who can build and maintain robust frameworks to contain and run those solutions rapidly, repeatedly, and reliably — those will be the architects and superstars of the enterprise legal market.

If you feel that the foregoing characteristics don’t describe you, then it’s possible that your legal destiny lies in a different direction. But don’t walk away yet! Because it’s also possible, and maybe even likely, that there is a place for you in the enterprise legal market — an important place, in fact.

Analysts and coders and engineers can capture the big-picture needs of a major enterprise client, and they can design and build astonishingly complex systems to meet those needs. But there’s still a role for human judgment here, because no matter how inspired and intricate a system might be, there are two questions that must constantly be asked about it:

  1. Is the system doing what it’s supposed to do?
  2. Is what the system is supposed to do actually the right thing to do?

To be clear, many engineers and software architects have not only the skills required to envision and build effective systems, but also the talent required to monitor, scrutinize, and judge those systems. But not all of them do. The “how” of a system is not the same as the “why” of a system, and both of these inquiries need to be made of, and met by, a legal system on a regular basis. We’ll want to have different people with different skill sets making those inquiries.

Legal systems also age and atrophy and degrade over time. Minuscule errors crawl inside and inaudibly misdirect the intended flow of data or invisibly unravel the logics underlying the processes. Since we can’t see or hear the initial errors, we need to watch the results, over and over again, and ask ourselves whether our incredible machines are delivering their intended solutions and client outcomes. That will require the attention of people who:

  • can detect patterns within a system and find emerging variations therein,
  • have built strong relationships with clients that allow them to understand their goals and priorities, and
  • can integrate these two bodies of knowledge into an effective system assessment regime.

Those are lawyer skills, and they will be needed in the enterprise legal market. But there’s more; there’s also the need to ask whether a system that’s doing what it was built to do is achieving what it ought to be doing.

A powerful and widespread misconception is that if a machine or a system is generating results, those results are necessarily good and trustworthy, because the machine or system is unbiased and objective. You’ve probably heard someone cite the results of some automated process or other as proof in an argument or to defend a political position: “It’s all math, and the numbers don’t lie.”

But it’s not all math, of course, and it never has been. There are already countless examples of how sexism and racism is baked into algorithms and processes by programmers who don’t believe they themselves are sexist or racist, but whose experiences and biases inevitably guide their “objective” decisions.

This problem will become worse as machine learning and data-driven decision-making spreads to judicial, regulatory, and administrative systems (especially for poorer individuals who can’t afford customized assistance). A system that performs exactly as it’s designed, but that keeps rejecting valid compensation claims from people with non-Anglicized surnames, is a bad system. But will anyone notice?

The future of law, especially enterprise legal services, is without any doubt systemic. But systems need people to run them, to remedy them, and to remind everyone else that we build systems to serve people’s interests. And that brings us to our next point.

2. Service

The law is a service profession. Both historically and etymologically, the very notion of “profession” is grounded in service towards others for the greater good. If you’re a lawyer, your central purpose is to serve other people and make things better for them — principally your clients, but not exclusively, and not to the intentional detriment of others.

Now, if you’re engaged (or you plan to engage) in the enterprise legal market, where you’re working for corporations and institutions and governments, you might think the foregoing homily doesn’t apply to you. That kind of thing is for lawyers in family law, or wills and estates, or criminal defence — “People Law,” as it’s been described. Your job, by contrast, is to help grow shareholder value, or improve brand penetration, or eliminate unwanted efficiencies. You don’t serve people so much as you serve productivity. Right?

Well, you can answer that question for yourself. But if I might suggest something for your consideration: No matter how massive and global your clients, no matter how complex and high-value the transactions, no matter how sophisticated and AI-driven the systems you’re using, it’s all People Law. Shareholders are people. Employees are people. Individuals whose lives are irrevocably altered by enterprise legal decisions are people. And you’re not allowed to conveniently overlook them in pursuit of your legal duties.

I don’t think it’s deeply controversial to note that in many parts of the world, perhaps including the place where you’re reading this book, the quality of both private lives and public infrastructure has deteriorated throughout the last few decades. In a world where capital outperforms labour by a widening margin, the rewards of ever-greater productivity are shared by an ever-smaller number of people. Many influential individuals seem to believe that economic productivity should be society’s highest goal. They’ve forgotten that both private corporations and public institutions were created in order to make people’s lives better. They were built to serve us, not the other way around.

I have some news for you, and you can decide if it’s good or bad news: One of your functions, as a lawyer for the people who’ve forgotten this truth, is to remind them of it.

When a corporation or an institution repeatedly crosses the line of acceptable conduct and ends up ruining itself and others, a question that invariably arises in the aftermath is: “Where were the lawyers?” The answer, in most cases, is that the lawyers were either helping to facilitate the client’s actions on its road to ruin, or were studiously looking the other way, having persuaded themselves that it wasn’t their job to challenge the sustainability or wisdom or even morality of their client’s decisions. That the role of a lawyer is to make happen what the client decides should happen. That their job is to serve power, not speak truth to it.

That is the wrong conclusion to reach. It’s wrong because it flies in the face of a lawyer’s ultimate duty, which is not to his or her client but to the rule of law and the courts. It’s wrong because it surgically removes ethical and societal factors from the lawyer’s consideration, transforming the lawyer into a rote enforcer or a random subroutine in the larger system of productivity. And it’s wrong because many people, both inside and outside the corridors of power, can sense when something the client is doing isn’t quite right, and they will look to see what the lawyers are doing — and if the lawyers are simply sitting quietly with their heads down, then that’s what they’ll do as well. People follow our lead in murky ethical situations, whether we want them to or not.

I’m not talking merely about the obvious kinds of scandal and self-dealing, which make even the most battle-hardened lawyer pause and think things over. I’m talking about the unexamined assumption that if the client wants to do something in order to enhance shareholder value, that is the highest and ultimately the only goal worth considering, regardless of the human or social or environmental consequences.

This challenge is made even greater by the rise of systems in the enterprise legal space. It’s easier to call out bad behaviour by an individual than it is to call out bad programming in a system that “objectively” issues eviction notices to the most vulnerable members of the community. There is a role for the lawyer of a commercial client to flag the negative social consequences of the enterprise’s activities, to bring them to the attention of the client’s leaders and insist that they look closely at the human costs of those activities. Maybe the lawyer’s duties extend no farther than that. But they certainly do not extend any less.

Believe me when I tell you that enabling or tolerating socially corrosive activities is the most pernicious trap into which an enterprise lawyer can fall. And it is especially dangerous because it disguises itself as “service to the client,” a salve to your conscience and a False North to your moral compass.

So you need to remember, throughout your life as a 21st-century enterprise lawyer, that if you silently endorse or willingly enable a client to advance its own interests through harm to others or to the obviously greater good, you are losing your way. And as we’ll discuss in the next section, you are also in danger of losing yourself.

3. Self

Early in my career as a legal magazine editor, I wrote in an editorial that the most important person in your law practice was your client. Shortly afterwards, I received a letter from a health and wellness expert who took exception to that idea. The most important person in your law practice, he said, is you. Upon reflection, I’ve come to believe he was right.

It’s easy to overlook this fact — and at times, it can even seem noble to do so. Haven’t I just finished saying that the ultimate role of a lawyer is to serve others? Doesn’t this suggest that a lawyer should strive to diminish herself or himself, to substitute the good of others for the good of ourselves? That seems like it should be an attractive notion to a serving profession.

But self-diminishment and self-negation have proven to be destructive in all walks of life, and especially so in service-oriented professions like medicine and the law. What we need instead is a more fully developed sense of how we should regard our selves, and where we should place our selves, within the dynamic array of needs and priorities of the 21st-century lawyer.

Technology makes this goal more important, not less. The very first promise of the machines we build has been that they will make our lives better — that they will save us time and energy, allowing us to devote these precious resources to enhancing our freedom, leisure, and personal advancement. Raise your hand if you feel like technology has gifted you abundantly with these assets. Raise your other hand if you look forward to the rollout of a new technology in your office and how much you’ll enjoy the extra time it will provide you.

The truth, of course, is that even those technologies that really do save us time and effort rarely do so to our benefit, but rather to the benefit of our employers. Think of all the amazing technologies that have arrived in the law over the last couple of decades, from document automation to contract drafting to e-discovery: Have lawyers enjoyed a windfall of unallocated hours and clear horizons with which to better ourselves and those around us, or to engage in more fulfilling and higher-value endeavours? Or have those “freed-up” hours been immediately captured by others and filled with ever more work, all in service of “greater productivity”? Especially if you work for an employer who measures your productivity in hours billed, and for whom “freed-up time for you” is the last thing they want?

Machine learning and artificial intelligence are going to amplify and accelerate these trends and concerns. Remember that email from the legal tech company I quoted at the start: “AI has once again triumphed over a human lawyer.” Guess who the human lawyer in this story is.

So long as the prevailing philosophy of the corporate world is to prioritize profits over people, it’s going to be your responsibility to look out for yourself — and to look out for your self. There are two areas in particular where you need to focus your efforts.

One is the broad category of your health and wellness. You have to safeguard and strengthen them both. Previous generations of lawyers failed to do that, and they left countless unhappy lives, broken marriages, emotional breakdowns, and substance addictions in their wake. Quite possibly you were raised in a home afflicted by these ills; if not, you almost certainly know someone who was.

Now it’s your turn to run this gauntlet — but you can do better. You can reject the proposition that your highest or only function is to be a cog in someone else’s machine, to forever be on call for those who pay your wages, or to substitute your client’s judgment for your own on a daily basis. You can instead assert that your physical health, mental wellness, and emotional stability have value, apart from and above your work. You can invest in your health the way previous generations invested in CLEs and association memberships. This will pay off throughout the course of your legal career and your life.

But there’s another way in which tending to your self will be important: In understanding and applying your own unique value proposition as a lawyer.

The ironic effect of the rise of automation and systems in the law is that lawyers’ human qualities will actually become more important to employers and clients. Job interviews in the near future are likely to feature the question, “What can you do that our machines can’t?” Previous generations of lawyers shared a common set of basic skills that are now being automated and systematized, which means that from now on, a lawyer’s personal distinctiveness will be more valuable than ever. Your unique humanity will be your best selling point.

In a sense, this challenge will also be the great opportunity for your generation of lawyers. You’ll be able to re-engineer the blueprint, or reformat the DNA, of what it means to be a lawyer. But be warned: As systems and software proliferate, you will constantly be tempted to serve the machines that were created to serve us, to prioritize productivity over people.

You’ll have to resist and reject that temptation. You’ll have to lead the evolution of the lawyer’s role back towards the enforcement of positive social norms, the enshrinement and protection of personal dignity, and the pursuit of service to the improvement of lives. That leadership might be the greatest legacy of the 21st-century legal careers that you will build.

Conclusion

One final thought as we close this book. The greatest responsibility of being a lawyer is that what you do and say matters to many people, far beyond those who pay you for your services. It also happens to be a lawyer’s greatest privilege. That’s always been true of the legal profession, but the clarity of that truth will be especially evident in the 2020s, 2030s, 2040s and 2050s — throughout your legal career.

So here’s what I’d very much like you to remember: What you do matters. Who you are matters. When you speak out, it has an impact. When you fall silent, that has an impact too. Do not let yourself get lost in the noise and complexity of the machine; do not lose sight of the primacy and power of true service; do not lose who you are, and who you could be, amid the upheaval and disruption to come. Out of this chaos, you can forge new meaning and greater purpose. Out of the end of one era in the legal profession’s history, you can launch the start of another.

Your time is nearly here. The rise of the machines is almost over. Now it’s time for the rise of the lawyer.

Thinking differently about legal AI

I think we need a new way to talk about artificial intelligence in the law.

I’m seeing a lot of frustration and cross-talk lately in the legal innovation community around what does and doesn’t constitute legal AI, and whether it will or won’t deliver any real value. The term “legal AI” isn’t helping much: it’s vague and wooly enough to mean almost anything, and its sci-fi connotations raise expectations beyond what any technology can realistically deliver at this point. I think we need to go back to basics and deconstruct what we’re trying to achieve with this technology, and why.

While I was thinking about this subject, the May 2018 edition of the ABA’s Law Practice Today arrived in my inbox, featuring a remarkably on-point article by Michael Mills of Neota Logic. Michael answers the question “What is AI?” with this retort: “First, AI isn’t really ‘artificial’—it’s all created by humans through very, very hard work — and it isn’t really ‘intelligent’ either — the software doesn’t know what it’s doing or why. Second, AI is not a ‘what.’ We can’t point to anything and say, ‘Yup, that’s an AI, right over there by the door.’” (Advance thanks to Michael, who’s provided thoughts on this post in draft form.)

So, what are we really talking about when we talk about legal AI? “A large and growing collection of mathematical methods embodied in software for doing narrowly defined but very useful [legal] tasks,” is Michael’s apt description. This suggests to me that we ought to look more closely at the tasks in question, in order to find out why we’re applying these methods to accomplish them. Michael classifies these tasks into five categories:

  • Electronic Discovery
  • Legal Research
  • Analytics & Prediction
  • Expertise Automation
  • Contract Analysis

Why use “legal AI” to carry out these tasks? Michael suggests that these applications of AI can enable lawyers to:

  • Serve more clients more effectively at lower cost.
  • Create new revenue streams not dependent on hours worked.
  • Focus time and expertise on work that requires the uniquely human and professional skills of empathy, judgment, creativity, and advocacy.
  • Increase access to justice by meeting the legal needs of the poor and middle class.

This all seems accurate to me. I’d like to take the inquiry a step farther and ask: What are the benefits to clients of applying these methods to these tasks?  I wrote last year that lawyers should evaluate any potential AI investment in terms of whether and to what extent clients will benefit. In that spirit, I’d like to suggest a client-centred framework for viewing legal AI.

It seems to me that the five sets of tasks Michael has enumerated can themselves be broken down into two general categories.

1. Volume and Costs

One category contains all those tasks that “legal AI” can accomplish in less time and at lower cost than human lawyers can. Put differently, these are the tasks that human lawyers could carry out — indeed, in the not-too-distant past, routinely carried out — but that would exact an enormous cost if they were left to humans today. You might think of these as “volume” tasks: If you put a million lawyers to work on these tasks, and gave them plenty of time, they could do a fine job.

  • Electronic discovery is the ideal example here. Theoretically, sure, lawyers alone could identify all the relevant documents hidden in terabytes of e-data, and the results they achieved likely would not differ substantially from what e-discovery software could accomplish. But of course, the costs of this approach are mind-boggling: no judge would authorize it and no client would pay for it if there were any other way to carry it out.
  • Or take contract analysis. Multinational A buys Multinational B, and the resulting Himalayan pile of contracts needs to be identified, reviewed, analyzed, and rationalized for various purposes. Give me a million lawyers with a million hours each, and I’ll render just as good a result as a cognitive-reasoning software program — so long as the merger can wait 40 years and the value of the new corporate behemoth can somehow afford the lawyers’ fees.
  • For the most part, I think you could also add legal research to this category. A million lawyers, each armed with a million-hour quota, could review every case in existence and gradually work their way down to identify the most salient decisions for a judge’s consideration. Mathematical-model methods can do the job at a sliver of a fraction of the cost, and while that’s not the entirety of legal research by any means, this aspect of it fits the bill here.

These three types of legal tasks are susceptible to the application of legal AI, not because the AI produces better results, necessarily — though if you want to argue that machines are less error-prone and inconsistent than overworked lawyers with aching eyes and mental fatigue, go right ahead — but because it produces substantially similar results at an enormously lower cost of effort, money and time. That’s what matters to clients. So the client-centred rationale for using these methods is “Reduce costs.”

2. Expertise and Scarcity

But then there’s the second category of tasks, and this one is much more interesting. This category contains all those tasks that “legal AI” can accomplish by imitating or replicating lawyers’ logical, analytical, and advisory skills. If the first category of tasks was about “volume,” this one is about “expertise,” and the value propositions here are very different.

Take the group of tasks that Michael refers to as “expertise automation.” This is a fascinating area in which Michael’s own company, Neota Logic, has been a pioneer: he describes it as “the automation of substantive legal guidance and processes … [that] combines expert systems and other artificial intelligence techniques, including on-demand machine learning, to deliver answers to legal, compliance, and policy questions.”

Note that the tasks given to expert systems are not “volume tasks.” You could assign a million lawyers to answer a client’s question, but you’re not necessarily going to get the right answer, because maybe none of these lawyers has the expertise required to give the right answer. What you need is an expert lawyer who knows this area of law and will ask clients the right questions, tap into the appropriate set of facts and experiences, follow the correct reasoning path, and render an accurate response.

Here’s the client’s problem: this kind of expertise is scarce. Only a relative handful of lawyers possess the knowledge, experience, and skill to answer specific kinds of client questions, and the narrower the field of expertise, the smaller the number. The scarcity of this resource raises its price, restricts its accessibility, and renders it prone to charging by the hour.

But suppose the client could distill this expertise into a complex database of probabilistic reasoning and computational decision trees that could provide substantially the same answers that the lawyer would give. This program would be invaluable to the client because it would increase the supply — and reduce the scarcity — of legal expertise.

This is, in fact, exactly the situation that Profs. Richard and Daniel Susskind describe in their recent book The Future of the Professions. In the Susskinds’ view, the historical influence and dominance of the professions is substantially grounded in the exclusivity that professionals maintain over access to expert knowledge and the ability to dispense it. Richard has stated that the book really seeks to answer the question: “How do we produce and distribute practical expertise as a society?” This is not a new topic: as far back as 2000, he defined an expert system as “the use of computer technology to make scarce … expertise and knowledge more widely available and more easily accessible.”

We might even be standing on that threshold today. Here’s what Ben Hancock of The Recorder reported from the LegalWeek 2018 legal technology conference earlier this year:

Brian Kuhn, the global leader and co-founder of IBM Watson Legal, envisions — and it sounds like IBM is implementing — the creation of “cartridges” of specialized legal information that can be deployed for various legal tasks. That’s a mouthful, I know.

But imagine this: A firm that specializes in antitrust law “trains” an AI algorithm to interpret documents relevant to that practice area. Then, the firm sells that piece of trained software, allowing a firm weak in antitrust to gain capacity (and removing the need, perhaps, to bring on a bunch of antitrust partners).

Now IBM, it’s true, perpetually seems to be “a few years away” from releasing a game-changing legal technology breakthrough. But an “expertise cartridge” is exactly what we’re talking about here: distilled legal know-how, transferrable from user to user, distributed widely — the “democratization” of legal expertise, if you want to get political about it. And the primary buyer for a product like that wouldn’t be “a law firm weak in antitrust,” but the GC of a large corporation, who would be very interested in a 24/7, mobile, and scalable source of antitrust expertise.

The same analysis would apply to our fifth category of legal AI tasks, “analytics and prediction.” I’m being persuaded to the view, recently enunciated by Sarah Sutherland and Sam Witherspoon among others, that we’re not going to achieve effective litigation prediction from the distillation of court decisions alone — the data points are too few and insufficiently robust. But in broad terms, “outcome prediction” is really the archetypal, fundamental lawyer functionality: To answer the recursive client question, “What’s going to happen in my situation?” Again, from the client perspective, this isn’t a problem of volume, but of the scarcity of resources available to answer a legal question.

Now, let’s pull back for a moment and write ourselves a reality check. We don’t have the means today to build programs that can render detailed legal analyses of complex problems or advise with statistical confidence where clients’ current legal circumstances are likely to lead them. Nor are we remotely on track to get there. But if you want to know what the Holy Grail of Automated Legal Services looks like, that’s it. And considering the potential payoff for anyone who finds it, you know that a lot of smart people are trying to find the right combination of jurisprudential data, trial lawyer experience, arbitration outcomes, negotiation principles, tribunal decisions, and human game theory that will unlock this prize.

A New Framework

So, let’s return to the goal I set for myself at the start of this post: Figuring out a better framework for talking about AI in legal services.  I would suggest we classify legal AI offerings according to the type of market problem they aim to solve. I’ve proposed two categories of these problems:

  1. The volume costs of lawyer effort
  2. The scarcity costs of lawyer expertise

There are probably others, or you could break these categories down into finer classifications, but it should do for a start. Here’s a basic matrix of these problems, their proposed AI solutions, and the likely impact of those solutions on lawyers and law firms.

Finally, because everyone loves fighting over nomenclature, here’s a potential naming protocol.

  1. I’d suggest the term “Volume AI” for those applications that accomplish high-volume legal tasks far more quickly and efficiently than human lawyers do, to generate great cost and time savings for clients.
  2. I’d suggest the term “Expertise AI” for those applications that make scarce legal expertise widely available in computerized form, to generate greater accessibility for clients to the legal answers they need.

“Volume AI” would refer to any technology that reduces the time and effort of lawyers; “Expertise AI” would refer to any technology that increases the accessibility to clients of valuable but scarce legal expertise. (Maybe we can eventually do away with “AI” altogether in this area, but let’s start small.)

That’s my proposed framework for thinking and talking a little differently about legal AI. The comments section is open for your thoughts.

 

Getting over technology

Since the start of the year, I’ve received three different media calls asking me about the role of artificial intelligence in the law. Partly to make good use of the notes I prepared for these calls, and partly so that I’ve got something written down to which I can send reporters with future inquiries of this type, here are some of my thoughts on the topic of technology in law practice.

The truest observation ever made about technology remains this one from American computer scientist Alan Kay: “Technology is anything that wasn’t around when you were born.” British author and technophile Douglas Adams famously expanded on Kay’s comment: “Anything that’s in the world when you’re born is normal and ordinary and just a natural part of the way the world works. Anything that’s invented when you’re between 15 and 35 is new and exciting and revolutionary and you can probably get a career in it. Anything invented after you’re 35 is against the natural order of things.”

These two quotations should be borne in mind anytime you start talking about technology in law firms. Law firms are stuffed to the rafters with technology, and always have been. There’s the photocopier, for example — an extraordinary device, if you stop and think about it, and who talks anymore about how many monks it replaced? Email blew me away the first time I used it — you can send a written message to someone in the building next door, immediately! The telephone, for crying out loud — maybe the most revolutionary invention of the last 500 years, and now we let almost every incoming call go to voicemail. Since the time feathered quills and inkwells were first replaced by fountain pens, lawyers might have complained about every new technology, probably resisted it, but inevitably they accepted and assimilated it.

So it will be, soon enough, with artificial intelligence. I’m as amazed as you are by what can already be accomplished in legal services by machines equipped with cognitive reasoning, and how much more those machines certainly will accomplish in future. But right now, somewhere in your community, someone in her late teens is thinking about maybe applying to law school someday, and by the time she’s called to the Bar in 2027, AI-powered legal services will be normal. They’ll be routine. They’ll be boring. And our future lawyer will be less than 10 years away from grumbling about genetically engineered judges.

By all means, maintain a childlike sense of wonder about the evergreen miracles of technology as long as you can. Keep postponing and rescheduling your appointment with curmudgeonhood (I missed that train awhile back.) But at the same time, maybe the best thing we can all do to really absorb and apply the astonishing power of technology is to just get over it.

Let AI become normal. Wait for it to become routine — it probably won’t take as long as you think. But the longer we talk about the exciting but virtually indefinable term “artificial intelligence,” and the longer we tolerate the repeated use of “robot lawyers” with anything but self-aware irony, the longer it’s going to take us to make the necessary adjustments to our worldview and just get on with things.

If I could offer one reliable way to help speed along this adjustment, it would be this: Stop asking whether “AI will take away lawyers’ jobs.” Stop asking what AI will do to, or for, the legal profession. Stop thinking about AI from the perspective of the lawyer altogether and start thinking about it from the perspective of the client.

How will AI help clients? Will employing AI, or any burgeoning technology, help a client to get what it needs faster, less expensively, or at a higher degree of quality? Will the client get a better result — measured in outcome, experience, or resource allocation — using a new technology than would have been possible or probable with pre-existing tools and methods? If I’m at a legal tech trade show and I’m talking with an AI vendor, this is what I want to know, and I want numbers and case studies to back up the answers.

Because if there are AI tools out there that can deliver those foregoing outcomes to my clients, then I want them in my law practice, today, while I can still derive a competitive advantage from using them — before they’re widely available, before they’re commonplace, before they’re boring.

Ten to fifteen years from now, by the time our late-teens prospective lawyer is well into her career, many law firms could offer a branded, mobile, user-friendly application to which their clients subscribe, on a paid or even a complimentary basis. Clients would ask this application — out loud, with their voices — questions about how the law applies to a situation they’re facing, or what they should do in a circumstance in which they find themselves. They’d receive immediate, practical, and accurate answers from the application, close it up, and get on with what they’re doing.

Today, we’d consider that to be a significant, even sci-fi-level advancement (and make no mistake, we have a significant distance to go to get there). But by the time we do get there, it will be considered normal. “Yeah, that’s just the Answer App; all the firms have one now.” The great gift (and curse) of technology in the 21st century is how quickly it renders the magical commonplace. Law, which is so far behind technologically and has so much ground to make up, is going to experience that gift in an especially rapid-fire and visceral fashion.

So quit worrying about what technology will do to you and your firm. Start thinking instead about what it can do for your clients. Figuring out the second point will, in due course, take care of the first.

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.

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.

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).  

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.