What will happen to legal service providers?

After seeing what Napster did to the music industry, what Uber did to taxis, and what social media like Youtube did to the "old media" in the early 21st century, it doesn't take an especially cautious person to wonder if significant shifts will affect the legal industry.  

Before entering law school I was fairly skeptical of what I was signing up for.  I feared dutifully investing my time in learning skills and practices that would not be useful for long.  

I've seen plentiful examples of malinvestment into an old paradigm.  When I worked as an employee of a technology investment firm in Los Angeles, we often funded people who desired to gain market share by creating things that obsoleted their predecessors.  Sometimes they succeeded.  Witnessing it happen is eye-opening.

Probably due to this rare vantage point, my pre-enrollment hunch was that a significant amount of the routine knowledge work lawyers do would soon be redundant.  After getting a sense of just how complicated law practice is during my first semester, doing a bit of reading on my own time, and comparing notes with a legal technologist, I've leveled up my thinking.  I'm now confident lawyers are nowhere near obsolescence.  What seems most likely is a pronounced barbell effect, where many lawyers perform low value work, and a sophisticated few use innovation to create disproportionate value.  

Perhaps you'd like to form a viewpoint of your own about the future of legal services.  Here are the resources that, so far, helped me develop an outlook which I hope is more sophisticated than where I started.  The beauty is that many of them contain a bounty of citations and references for you to go deeper on topics of interest.

But before you take a look, please be aware of & avoid these three prediction pitfalls if you can.

In my experience, when making predictions about technology and innovation, people often:

  1. Assume that because something is flawed it should be replaced, 
  2. Conflate possibility with feasibility, and,
  3. Expect that if we just wait changes will happen on their own.  

The truth is that fixing flawed systems should not be your priority unless the solution is 5x-10x better (Bill Gross article), that a technological possibility only starts to make a pronounced impact once it is economical (on its own or with subsidies), and that even though 'progress' seems to march on its own, people need to work to drive it.  

1) Richard Susskind

http://www.susskind.com/

-Two of his relevant books are "Tomorrow's Lawyers," which talks specifically about where he sees the legal profession [evolving to], and "The Future of the Professions," which theorizes more broadly about the mission of all professions and how that mission could respond to advances.  

-"The Future of the Professions" provides what I think is a powerful abstraction explaining why we have professions, and then desecrates the cathedral by suggesting that at some point, the "Grand Bargain" of the professions will be deprecated.  Making a sweeping observation like this (if you believe it's true) and doing something useful with that insight are entirely different matters, of course.

2) Beaton and Kaschner

Remaking Law Firms is the best quality overview I've found of changes that have been proven to work and how they've been implemented by law firms or new entrants.  

It relies on experts' quotes and perspectives.  The book focuses on ideas that have at least some track record, which is good because as I pointed out above, we should care most about what's feasible instead of what's merely possible.  Contributors include Liam Brown, a legal entrepreneur whose recommendation of the book on the ILTA podcast led me to discover and buy it, and Professor Henderson, who teaches law at IU, was recognized as the most influential person in legal education in 2014 and 2015, and is known for his perspective on problems and opportunities for American law schools.   

Here is my outline of the material, which leans upon the book's table of contents.

  • Trends that will affect the profession
  • -General Counsel (after 2008 s/he has to do more with less)
  • -Globalization 
  • -Talent/Human Capital (it is abundant)
  • -Deregulation (new business models for firms in some Jx, alternative providers)
  • -Digitization/Technology 
  • -[NewLaw] - (Beaton coined the term, it's a departure from the "large global law firm" model)
  • Law is a Mature Industry 
  • -Michael Porter of Harvard has studied what happens to industries as they mature, and his analysis probably applies to legal
  • Clients' Needs
  • Stakeholders
  • -Govt/Judiciary/Regulators
  • -Lawyers, Law Students
  • -Clients
  • -Firms
  • -Vendors
  • What does 2025 look like? It depends on:
  • -Rate of Change in Clients' needs.
  • -Rate of Change of [Law Firms]
  • --the two variables above are not to be viewed as a 2x2 (here's an example) which would oversimplify]
  • The main body chapters dive deeply into:
  • -Business Model
  • --firms behavior is highly influenced by, for example, whether partners feel they or the firm 'owns' the business they bring in
  • -Brand/Marketing/Biz Dev
  • --Narrow branding "We help X do Y" versus broad "We are great lawyers" 
  • -Pricing, Alternative Fee Arrangements
  • --Hourly vs. Value vs. Fixed-Fee and more
  • -Sourcing, Outsourcing
  • --it appears corporate clients and firms both are getting more sophisticated in what inputs they use to achieve given outputs
  • -Legal Project Management, Process Improvement
  • --Is the length and cost of any given matter really unknowable?
  • -Technology, Knowledge Management, Analytics
  • --As with most technology, the theme is improved efficiency
  • -Innovation and Change Transients
  • --What people, old firms, new firms, and other stakeholders will play a role, and what will they do?
One interesting, but I wouldn't say prominent, thread is deregulation.  Certain jurisdictions like the UK have started to deregulate the legal services industry, allowing non-lawyers to perform select tasks, while others like the USA haven't.

--> Get the book on Amazon <--

3) American Bar Association Report on the Future of Legal Services

http://abafuturesreport.com/ -- you should read the executive summary which is 4 pages (link). 

"...the Commission believes that significant change is needed to serve the public's legal needs in the 21st century"

My highlights:

  • Low income and often moderate income individuals can't access the legal help they need.
  • Lawyers, Law Firms, and GC's can innovate by leveraging, to list some of their observations, 1) legal startups 2) mobile applications 3) nonprofits 4) prepaid services plans and insurance coverage 6) unbundling of legal service (here's an example of unbundling in another industry). 
  • Complexity and the public's lack of understanding the system undermines trust and confidence.

4) Marc Andreessen - "Software is eating the world"

Andreessen is the founder of Netscape, a board member of Facebook, a leading venture capitalist in Silicon Valley, and a billionaire.

http://www.aberdeeninvestment.com/wp-content/uploads/2009/11/Why-Software-Is-Eating-The-World-8-20-111.pdf

Andreessen's thesis is ambitious, the metaphor feels accurate.  A thinker who worked with Andreesen compares software to other "soft technologies," like the written word and money, that changed civilization.  I'd probably say that Andreessen's stuff is derivate of Clayton Christiansen's idea of disruptive innovation, but if not, it's closely related. 

Another interesting quote from Andreessen - "The spread of the internet and computers will put jobs into two categories.  People who tell computers what to do, and people who are told by computers what to do." 

5) Coase's perspective

The firm's logical purpose is to ensure that inputs are obtained for a lower cost internally than they could be externally.  Ask yourself, if communications technology, for example, improves makes acquiring external inputs more cheaply, how does that affect a firm's optimal size and setup?

http://www.sjsu.edu/faculty/watkins/coase.htm

6) 3 (or 9?) classes of Legal Technology 

It's helpful to break down a nebulous concept like legal tech via classification.  CodeX at Stanford Law School seems to have done a good job here - Roland Vogl breaks Legaltech into Information retrieval (IR), legal infrastructure, and computational law.  IR seems to hinge on accessing data more quickly, finding more relevant data, or indexing larger data sets.  Legal infrastructure appears to include matching technology and marketplaces (ie. UpCounsel).  Computational law attempts to leverage computers in legal comprehension, decision making, and processes, for example Smart Contracts. 

How is this helpful?  

As I mentioned in the intro, you might, as I did, develop some familiarity with the broad trends of technological disruption, and hear rumors that legaltech specifically will obsolete certain categories of legal work.  But which?  Clearly not all legal work will become redundant.  So what'd be more useful is to understand what type of legal work is likely to be automated or otherwise.  Notice how the 3 categories above do not include tasks like trial advocacy (convincing juries and judges), to point out one example.  Aside from pure persuasive work, I'm currently thinking about how legaltech is likely to impact impact 1) analysis and 2) managing complexity, because a significant portion of legal types are interested in that type of work.  

Back to legal tech--

Interestingly, Vogl suggests that soon enough it may be possible measure the effects of a statute, court/agency decision, or transaction.  Could this lead to an evolution in lawmaking analogous to the advertising industry, which was transformed by tracking technology? (in the beginning, there were simple ads, then came Claude Hopkins who pioneered direct response; fast forward to today, Google, AdTech, et al allow a sophisticated player incredible insight into their campaigns.)

CodeX's Tech Index, which features over 500 organizations, further segments legal tech into 9 categories, including Marketplaces, Document Automation, Practice Management, Legal Research, Legal Education, Online Dispute Resolution, eDiscovery, Analytics, and Compliance.  How do these 9 relate to the 3 broad categories?  I'd probably nest eDiscovery and Legal Research under IR, Marketplaces, Document Automation, Practice Management, Legal Education under infrastructure, but I'm not sure about the stragglers, and will probably change my mind.  

7) ... more to come.