Getting a Grip on the Legal Revolution
Understanding the legal revolution is crucial to grasp how the landscape of the legal profession is changing and what it means for clients, lawyers, law firms, law schools and society in general. It’s essential to understand the who’s and how’s of the revolution.
A couple of years ago I did an analysis of big law firm innovations at an annual meeting for large law firms. My analysis concluded that the firms driving change, the ones innovating the most had in-house tech leadership and often C-suite tech leadership. That’s not to say they have a chief innovation officer. But they have a technologist at the senior management level.
A subsequent post looking at law firm hiring found that legal expertise matters more for smaller firm attorneys than larger ones. The larger the firm, the more the firm is placing a premium on entrepreneurism, organizational savvy and networking skills.
My conclusion in both of these posts; drive change from the top with real authority.
On this point we are seeing real movement in the startup community. Investors are becoming more thoughtful in looking at the management teams of the companies in which they invest. And it is not just investors on Sand Hill Road. Angels, accelerators and leading incubators are developing processes for helping founders round out their team. If you are a legal startup visiting Silicon Valley or New York to raise funds be ready to address your management team.
Social media, in particular LinkedIn has enabled lawyers whether they be legal technology startup founders, lawyers or developers to expand their networks rapidly. On LinkedIn, people like me feel pressure to connect with people we don’t know. I’ve personally tripled my network (over 2,700 connections).
This past summer lawyer, Louis Carbonneau who participates in a networking group moderated by Brian Cuban, one of the most prolific legal technology startup founders in the country, developed a powerful legal tech social network of half a million lawyers in less than six months. Louis’ program, LegalTech.Club, is at the nexus of several dozen organizations. They are innovating in part for the benefit of the community of legal professionals.
As companies and we lawyers look to exploit a powerful trend in customer engagement, community, we are seeing a surge in growth of legal technology startup communities. For the first time in the history of the profession, we are networking towards growth and ideas. What’s great about this development is that it is empowering lawyers all over the place .
Some of these groups started in the last six months or year are truly global. They are connecting lawyers globally, enabling lawyers to collaborate across borders. Some of these groups could bring legal services globally in a way never seen before.
Take for instance Lawwithoutwalls, a unique law firm and law school collaborative, professors, students and some of the leading business organization of the world. They are working together to solve real problems and meaningfully address access to justice. The relationships ongoing in the world that is Lawwithoutwalls are amazing.
Meanwhile, in legal practice, the sociogram is replacing the org. chart. For those of you who regularly read our blog, you saw our posts on the history of the law firm and the sociogram. When I wrote this post in April of 2014, firms were driving at the sociogram then. But now, five years later and sustainable growth being so elusive for many firms, the sociogram is defaulting to the legal org. chart. Today, the sociogram is more a reflection of how big firms are set up than a viable alternative to the law firm associate partnership.
From the client side, we see sophistication among clients booming. Corporate counsel are not just listening to law firms and their stories about the value they provide. They are increasingly questioning law firms about their value and how they are different. In a few years coming, clients will be making their own decisions on which lawyers to use and bringing counsel in without outside counsel consultation.
The most aggressive corporate counsel are not with amlaw 100 firms. They are with sole practitioners and small firms which are incredibly inefficient but equipped with technology. Small firm lawyers who take the time to get to know the client and their business are getting business, clients at the birth right of their business.
Locally, here in Austin, you see the proliferation of solo and small firm lawyers. Additionally, it is also a hot bed of lawyers on platforms. Legal tech startups, to lawyers using social media to promote their practices to small firms on platforms like Atrium, JustRight.Lawyer, Minga, LawDroid, Harvey, many law schools, and many new lawyers we are seeing legal practitioners exploring new horizons.
Disruption lagged in the legal profession behind its impact in many other industries. For example, in the banking industry, the only change in 20+ years is online banking. But that is all changing.
The legal revolution is powerful and, for me, exhilarating because it is impacting every aspect of the practice of law and the investments in the profession.
How Technology is Catalyzing the Legal Revolution
Leverage of technology, such as artificial intelligence (AI), blockchain, and cloud computing, are continuously driving the legal revolution. These innovations have dramatically changed how lawyers practice and how we interact with our clients.
Little more than a decade ago, many law firms were using piles of paper files. But advances in cloud computing technology have replaced the need for cable connections to the Internet and personal computers. In addition to ease of storage and general use, cloud computing has also revolutionized mobile access to legal files from any corner of the world. The cloud is an invaluable storage tool for even the most ridiculously overscheduled lawyer.
The idea that computers would be able to communicate with one another, with or without human intervention, was thought to be impossible. However, more than four decades ago, computers began communicating with each other, primarily through computer networks. Today, the modern computer can serve as a conduit through which massive amounts of information can be inputted, accessed and processed.
Artificial intelligence continues to lead the legal revolution. The concept of artificial intelligence is to identify patterns among data. This ability to identify patterns is what allows computers to execute tasks previously performed by humans. Tasks such as speaking, planning, reasoning, learning, problem solving, determining how to manipulate things, or taking action are the abilities that distinguish a computer from other electronics devices. While there are various forms of AI, including rule-based, natural language processing (NLP), machine learning, and neuro-linguistic programming (NLP), the common purpose among them all is the same: to perform tasks ordinarily requiring human-like functionality. For example, ChatGPT uses programmatic NLP to communicate with humans. While there are many benefits to AI, there are also concerns about data privacy and security. We must always be cautious about protecting confidential information and the attorney-client privilege.
Machine learning is a form of AI where an algorithm is trained so that it can learn and adapt itself to new attacks or data without explicit programming. Machine learning is viewed by some as a combination of computer algorithms and statistical (i.e., mathematical) models that a computer uses to complete its task. Machine learning has been described as a difference engine that learns from past data: "In the 21st century, we’ve put machine learning at the helm of self-driving cars, in the back office of risk assessment, in the front office of chatbots, in our smartphones, in our streaming playlists, and in the front of our minds about the promise of AI."
Blockchain, a term originally coined in 1991, continued to evolve and lay the groundwork for the first ever cryptocurrency, Bitcoin, in 2008. And while many blockchain applications have a general familiarity with aficionados, we are just beginning to see what blockchain can do. Blockchain is a decentralized, digital ledger that cuts out the middleman while improving transaction speed, reliability, and security. There are many advantages to blockchain technology. It is immutable. Once an entry is made, it cannot be altered or removed. As a result, you can trust what is stored on the blockchain. It also has a limited number of administrators (often referred to as "leaders") who maintain the blockchain. They ensure the blockchain is secure, only allowing what they deem appropriate to be stored on the blockchain.
There are other relatively newer technologies that have led to the legal revolution. Chatbots are being used by corporations, law firms, and courts. "A chatbot is a service powered by rules and sometimes artificial intelligence that you interact with via chat interface." Chatbots are now being used for early case assessment in litigation, client issue spotting, and tracking billable hours.
Automation is at the forefront of the legal revolution. With the advent of artificial intelligence—especially machine learning—many routine tasks that were once performed by humans are now being performed by computers, such as document review and e-Discovery, document generation, cognitive analysis, and data analytics. Automated systems can analyze client-related data, such as billing information, complaints, and cases. Artificial intelligence (AI), robotic process automation (RPA), and machine learning (ML) are considered the three foundational technologies of automation that are driving the "LawTech" revolution.
Shifting to Online Law Firms
The last ten years have been characterized by a rapid, online-driven proliferation of law services and platforms, enabling more prospective clients to shop around for affordable lawyers. This year, for example, as rapidly rising prices for traditional legal services have turned many people from clients into consumers, dozens of organizations have sprung up, offering online services at significantly reduced costs: comprehensive questionnaires on every legal situation imaginable – from pre-nuptial agreements to real estate closings – are livened by online chats with specialists, automated and immediate feedback, and pay-as-you-go billing.
Paralegals and certified public accountants (CPAs) are now able to provide virtually all legal services in limited instances, as the United States Supreme Court ruled in 1975, in Light v. Davis. Under the District of Columbia Court Rules, pars are allowed to accept all court service and related work as long as it doesn’t involve litigation. CPAs, for their part, are now able to offer limited services when representing clients before the Internal Revenue Service.
The new era of virtual lawyering has also evolved into a global phenomenon, with companies like Alistate now offering bulletproof, low-cost legal protection plans for expatriates and immigrants, aimed at those who now live and work abroad.
Regulatory Changes and the Legal Shake-Up
The art of law is subject to the laws that regulate them.
– John T. Nockleby, The Art of Law.
At the heart of a revolutionary change are changes to regulatory systems that make it possible for the change to happen. Laws change slowly but can displace the powerful through a cycle of reduced inertia and feedback. Laws that have been seen as obstacles become foundations for remarkable legal revolution.
Regulations which guided the activities of traditional law companies were seldom reviewed under new technological developments. The amplifying effect of legal technology on the practice of law, often unforeseen by the law administrators, was hitherto neglected by the regulators. As a result, the way in which lawyers generate income and how lawyers develop their practices may be impacted by a well-designed regulation. On the other hand, badly designed regulations can stifle the growth of legal technology.
It is clear that regulators all over the world recognize the need to adapt to the new technologies. Governments have developed regulations that promote and examine the latest innovative products across all industries. In Hong Kong, Singapore, and London, special task forces have been created by government bodies to prioritize the future of artificial intelligence in finance, blockchain in trade, and IT incentives. This pushes the adoption of legal technology as part of the process of innovation.
The major problem that regulators face is the fact that the current regulatory system is based on human behaviour. Algorithms create a conflict with existing laws that were meant to control human behaviour. It should be understood that there is no "human controller" over autonomous robots. Instead, there would be a distributed decision system which enables robots to connect and interact with each other.
The EU’s GPDR is one of European Union’s key digital policies. It aims to protect citizens’ rights and allow them to have more control over the personal data that companies have on them. For example, transparency is a fundamental principle of the GDPR, which requires a higher level of accountability from businesses. Algorithms must be able to explain themselves if an EU citizen asks how their data is being used. The GDPR also envisions a role for people in the design of technologies and organizational practices for data protection. These requirements pose challenges for the implementation of AI today as most self-driving cars, for example, do not yet have the ability to give a meaningful explanation to people.
Given this, regulators are encouraging the use of responsible AIs to avoid negative societal consequences. In France, ‘AI for Humanity’ was presented by the French Presidency at the 2019 G7 Summit. The Moonshot Factory recently released an opinion on the technology of artificial intelligence highlighting key principles of AI. Australia also launched a discussion paper in 2019 on national AI strategy.
As the development of legal technologies evolve, regulators adapt and modernize. Unlike other industries, the legal industry cannot be regulated on a national level because the laws are different depending on the country. The United Nations (UN) seeks to develop global standards for AI. Earlier this year, the UN dialogue on Artificial Intelligence for Good was held to bring together the technical and policy communities. During the inaugural meeting, it was noted that every country has an interest in the AI revolution, since most countries are interconnected. The UN aims to strike a balance between increasing digital technology and protecting the driven principles enshrined in the Universal Declaration of Human Rights. Furthermore, the International Bar Association (IBA) recently published a report that seeks to provide guidance on ethics of AI and present the fundamental impact of AI on the way we live and work.
In addition, leading organizations across the globe are working together to provide detailed guidance on how to use AI to bolster and enhance the rule of law. Some global companies have also published their own recommendations. Fidelity Insights published its own report and the World Economic Forum released a set of trustworthy guidelines on Artificial Intelligence.
As legal industries continue to benefit from regulatory impacts, those who wish to join the legal revolution should stay abreast of the regulatory landscape.
Legal Education’s Future
The emergence of technology companies and alternative legal service providers is changing the landscape of the legal profession at the fundamental level. In a departure from the 19th century model of legal education that emphasized rote learning and the recitation of established principles, the education curriculum is focusing on the integration of technology and the law. An essential part of the new transdisciplinary approach to legal education is teaching students how to critically evaluate legal processes, technology-based solutions and new business models. There is more law than ever, and it is growing rapidly due to globalization, digitalization and regulatory complexity. Clients demand that their professionals be fluent in complex systems and able to understand and navigate the law as well as other disciplines.
Technology companies, law firms, in-house legal departments and alternative service providers are looking for new lawyers who know how to bridge the gap between law and technology. Over the next several years, hundreds of thousands of workers, including lawyers and associate graduate students, are expected to be replaced by the exponential advancement of technology such as artificial intelligence, machine learning and analytics. This has prompted law schools and law professors to rethink what it means to be a lawyer. The curriculum now includes training in data visualization, performance management tracking, legal process improvement, legal project management, human-centered design, and client experience management. Students are also learning advanced project management, and how to manage emotional intelligence and behavioral psychology strategies. There have been increases in partnerships between law schools and private technology companies. Additionally, many law schools have created innovation labs and centers, which provide team-based learning opportunities . Some of these schools adopt and encourage interdisciplinary approaches to legal education, such as Master of Laws degrees, joint degree programs and the development of systematic approaches to legal problem-solving and decision-making.
With law school faculty increasingly focused on interdisciplinary research and innovation and with the American Bar Association encouraging change via its best-practice recommendations, changes are happening fast. However, recent surveys have shown that law schools have not innovated on the scale necessary in order to meet the future demands of the profession. Some law schools offer very few technology-related or interdisciplinary courses. Law schools also face obstacles in their ability to implement curricular innovations and foster a more collaborative learning environment. Professor ORBe advises that law schools must innovate faster or risk becoming obsolete. Professor Michael Madison, who teaches law at the University of Pittsburgh, has argued that the rise of nonlaw firms in the legal profession comes as no surprise. It was only a matter of time before businesses and nonlaw firms understood how to deliver patterns of legal work more efficiently. As a result, Professor Madison has argued that lawyers must be able to think and act like business people. The legal profession requires lawyers who, early on in their careers and through continuing professional education, must enhance traditional competencies of writing, reading, reasoning and understanding large quantities of material. They must embrace nontraditional skills, such as methodical, strategic planning, structured processes, logical reasoning, organizational skills and leadership abilities. Law schools have not fully recognized the importance of this phenomenon. As a result, the traditional law school approach to curriculum, pedagogy and information is debilitating. The legal profession is being disrupted and the law schools that move faster and adapt more quickly to the functional requirements of law practice will prevail.
Obstacles to the Legal Revolution
The Revolution that is radically reforming how we think of and deliver legal services is necessarily facing challenges, but none more difficult than the battle against inertia and tradition. When you look at how long the legal industry has been in its current configuration, and how it has done things, it is easy to understand why there is such resistance by many in the industry to change. Legal service delivery has been framed around the billable hour for decades. It is the currency of the industry, and those who earn their livelihoods as counselors to the litigation prone have no real incentive to advocate changing the way business is done. To do so would essentially bite the hand that feeds them. If it were not for millennials and generation X, who will eventually be in control of spending, this could remain largely an academic discussion. However, although there has been significant pushback from the Old Guard in the industry, there are forces working toward bringing Law into the 21st century and eliminating some of the barriers to access. Not only is the industry mired in an outdated financial model, but there are also huge ethical considerations with this new approach to the delivery of legal services. What will happen when technology and AI become powerful enough to fully replace lawyers? What will the role of ethics be in an industry that is becoming more scientific and statistical? And so much of this comes down to the digital divide. Across the globe, there are so many people who simply cannot afford legal services – and therefore justice. If only those who have greater wealth are able to utilize legal technology and understanding to resolve their conflicts, then a digital divide will exist. The negatives of such a divide are clear as are the implications of what happens when digital divides like this occur. The legal revolution must meet the challenge of the digital divide. Those who are building solutions need to do so in such a way that they are accessible to those who cannot afford the very real cost of the legal profession today. In this way, the legal industry — and those within it — can become more accessible to those it serves, and that is certainly a Revolution worth fighting for.
Evolving Landscape: Opportunities in the New Legal System
While some lawyers may feel threatened by the revolution, others are finding opportunity both within the transformation as well as specific "sub-areas" of the legal market. Some of these opportunities include: Emerging roles such as the legal project manager or legal knowledge engineer, new positions that have arisen within law departments and firms to drive results for clients more effectively. Niches that focus on consumer segments that until now have not viewed professional legal representation as a viable option. Examples are family law (particularly divorce), immigration, personal injury , and criminal defense. New services offered via outsourcing. The advent of technology enabled legal services. This is perhaps the most exciting opportunity that is emerging and one that is growing the most quickly. Perhaps the best news about the emerging opportunities is that they are not confined solely to those who are entrepreneurial in spirit. Many of the opportunities are emerging inside major corporations and law firms. Businesses are acting because clients are demanding it. Clients are insisting on results rather than billable hours. Law practices that demonstrate how they get faster, better and less expensive are quickly capturing significant market share. Competition is increasing rapidly in a number of key practice areas including commercial real estate, IP and labor. The best opportunities for growth exist in new practice areas. Areas where competitors are less entrenched such as: corporate counsel in legal departments, contracts managers, in-house counsel for commercial/retail leasing, franchising, certificates of deposit (CDs) and auction theory, and life sciences including stem cell and pharmaceutical research.