Image [cc] Giulia Forsythe

There are very few legal research and analytic platforms that are truly unique, ground-breaking, advantage-giving resources. One of the newer products out there that does seem to fit this category is Lex Machina. Although I’m still not sure the proper pronunciation of the “Machina” (is it “Mah-CHEE-Na” or “Mak-IN-ah” or “Mah-KEEN-ah”?? ), it is one of the few products where I’ve heard lawyers from multiple firms say it is a “must have” as part of their IP litigation arsenal. In fact, when talking with an IP Lawyer at a conference once, that lawyer said “I was tired of getting my ___ kicked by a firm that was using it, so we had to bring it into our firm to level the playing field.”

[Note: the folks at Lex Machina set me straight, it’s pronounced “Mah-Kee-Nah”]

Products like Lex Machina, and Neota Logic are really just scratching the surface of what data analytics and logic-based processing can do to help better position attorneys in understanding, planning, and overall strategy of handling legal matters. 

Lex Machina is launching a new tool, and is presenting a webinar today at 2:00 PM Eastern, that describes the Legal Analytics platform and how law firm and in-house counsel can use this in their strategy of protecting and defending their IP resources. If you haven’t had a chance to look at Lex Machina before, this webinar might be a great place to start. I’ve put the webinar information and press release below.

Whether you call something like this big data analytics, or computer-based mining and logic, or adaptive learning resources, products like Lex Machina are the wave of the future. Leveraging huge amounts of data, computer processing, analytics, advanced algorithms, and human interaction is slowly creeping into the legal research market. What is really interesting is that these advancements are coming from the smaller companies, not the big ones. Now, whether they get acquired by the big players is yet to be seen, but probably inevitable. Not to worry, though. I’m sure there are others at Stanford, MIT, and in basements and garages that are working on the next big advancement in legal research and analytics. I, for one, look forward to seeing what’s next.   

Lex Machina Launches Custom Insights: Personalized Analytics for Unprecedented Insights into Cases, Motions, and Trends
New capabilities enable lawyers to design their own approach to crafting winning IP strategy

Menlo Park, November 12, 2014 – Lex Machina, creator of Legal Analytics®, today raises the bar for legal technology by introducing Custom Insights with the new release of its Legal Analytics platform. With traditional legal research tools, it’s difficult not only to find relevant cases, but also to glean key strategic insights, unless attorneys are willing to drill into each and every case. This is where Lex Machina gets started. Custom Insights helps attorneys surface strategic information from only those cases or motions they care about, quickly and easily. 

To mark the launch of these exciting new capabilities, Lex Machina will be hosting a webcast on November 13 to demonstrate how in-house and law firm counsel can leverage Custom Insights in their workflow.

“Since launching our platform in October last year, our engineers have worked closely with Lex Machina’s customers to take Legal Analytics to the next level,” said Josh Becker, CEO, Lex Machina.  “More than predefined charts and graphs, our customers wanted the flexibility to apply analytics to the cases and motions that matter to them. With Custom Insights we are delivering a groundbreaking capability that changes the business and practice of law.”

Lex Machina is introducing these new capabilities that provide attorneys with Custom Insights:

Case List Analyzer

The new Case List Analyzer puts lawyers in the driver’s seat by enabling them to select cases based on specific criteria and filter the results by case type, date range, court, judge, patent findings, and more. Available on every case list page, Case List Analyzer helps lawyers uncover strategic information and visualize trends – from how to approach a case, to how to litigate, or how to defend against legal action. With one click they can see trends and gain actionable insights across their case selection.

“Case List Analyzer allows me to quickly compare judges, law firms, parties and patents, using the criteria I care about.  I can find a judge’s tendency to award damages of a specific type,” said Scott Hauser, Deputy GC Ruckus Wireless.  “Custom Insights enables me to craft winning IP strategy.”

Motion Metrics

This new feature identifies the docket events and documents connected to a specific motion, and offers Custom Insights into all activity that led to a court’s grant or denial of that motion. With Motion Metrics, attorneys can get Custom Insights for each motion chain within a case to analyze the performance of judges, or opposing counsel, and also compare motions across districts, judges, parties, and law firms. Attorneys are able to compare motion outcomes and select the strategy that has the highest probability of producing the desired results.  

“Motion Metrics may reveal that a judge almost never grants a motion for summary judgment,” said Miriam Rivera, former Deputy GC at Google.  “The ability to see this information in an instant, not only saves a tremendous amount of time, but also helps me for the first time to quantify my ROI.”

About Lex Machina

Lex Machina is defining Legal Analytics, a new category of legal technology that revolutionizes how companies and law firms compete in the business and practice of law. Delivered as Software-as a-Service, Lex Machina creates structured data sets covering districts, judges, law firms, lawyers, parties, and patents, out of millions of pages of legal information. Legal Analytics allows law firms and companies, for the first time ever, to predict the behaviors and outcomes that different legal strategies will produce, enabling them to win cases and close business.

Lex Machina is used by companies such as Microsoft, Google, and eBay, and law firms like Wilson Sonsini, Fish & Richardson, and Fenwick & West. The company was created by experts at Stanford’s Computer Science Department and Law School. In 2014, Lex Machina was named one of the “Best New Legal Services” by readers of The Recorder, American Lawyer Media’s San Francisco newspaper.
Image [cc] Richard Aird

[Editor Note: Please welcome guest blogger, Deborah Schwarz, CEO and Founder, LAC Group. Since we know there has been a lot of talk about outsourcing in library services, we thought it would be interesting to get Deb’s perspective on what she hears from the business side of Managed Services for law libraries. So our thanks to Deb for giving us five things she hears, but thinks are misperceptions when it comes to Law Library Outsourcing. – Greg Lambert]

As the legal landscape continues to shift, law firms are looking for every possible advantage to mitigate risk and maximize opportunity. That includes outsourcing of support functions like the law library. As information is nearing a complete shift to digital and information needs become more diverse, extending to functions like business development and finance, firm managers are facing some difficult questions:

Do you adopt a greater self-serve information model and risk overwhelming attorneys and staff who are running lean and mean already? How do you balance the cost and complexity of information technology and information resources to gain the benefits of automation and access? How do you optimize information to help satisfy existing clients while attracting new ones?

As firms examine the options that will help them answer these questions and others, outsourcing has come to the forefront. As CEO of a company that has built a successful business around Managed Services (aka Outsourcing) for law libraries, we firmly believe what we espouse: Outsourcing is a very useful and appropriate business tool that helps firms focus more effectively on their core business. We also believe, and we are not reticent to say so, that there are times when it’s not a good idea.

Although outsourcing has come a long way in terms of acceptance and understanding, some apprehensions and misconceptions persist. To that end, I want to debunk five myths about outsourcing, based on questions we get asked most frequently by law firm management. And I want to finish by turning the spotlight on important benefits of outsourcing that often take a back seat to the ‘usual suspects’ of efficiency and cost savings.

1. Outsourcing is less expensive.

As for cost savings, I would like to begin by saying that outsourcing isn’t always cheaper, at least not in the short run, because of simple and obvious economics—the cost of severance and because the outsourcing company doesn’t work for free! There will be a management fee in addition to absorbing the cost of the outsourced staff’s compensation, including benefits as well as “grandfathered” paid time off, etc. In almost every outsourcing scenario we have encountered, LAC Group has worked closely with firms to ensure that affected employees have the same or similar benefit packages and salaries.

However, in the long run, outsourcing can be cost effective. After one-time costs are paid out, the financial and managerial responsibilities are handed off to the outsourcing firm. The financial burden of attrition, salary increases, bonuses, benefits and other employee expenses such as workers’ compensation and professional development are borne by the outsourcing company. The client company pays one invoice to one outsourcing provider and everything else, including service level agreements and meeting agreed-upon targets, is part of the outsourcing agreement.

Bottom line: Outsourcing initially costs more, but when done correctly and efficiently by the outsourcing provider, long-term fees and costs are stabilized and predictable. And it becomes the outsourcing company’s challenge and value proposition to deal and perform with fluctuations.

2. Outsourcing disrupts morale and brings down the firm’s culture.

Yes, it can, but like any other change it can be managed and controlled. In our experience, and contrary to popular belief, law firms spend more time considering and outright worrying about the reactions and feelings within their organization than they publicly acknowledge. In the 28 years of LAC Group’s outsourcing experience, every client of ours has worked diligently to make the transition as humane and thoughtful as possible.

Many employees view outsourcing as a betrayal of their loyalty. Yet the decision to outsource is always a business decision and it is never personal. It can be an admission that the organization is not able to properly manage and support that group. It may be that the outsourcing provider offers greater efficiency, not strictly in terms of people, but due to better use of technology, better restructuring of workflow and processes, more capable recruiting and hiring practices and greater flexibility in matching resources to needs, no matter how often they change.

3. Outsourcing means sending work to far-away places.

This may be outsourcing’s most persistent myth, but it’s not necessarily so. Outsourcing today takes many forms, which doesn’t always mean sending work to another country. In my experience, not only have we kept jobs at home, in many of the outsourcing arrangements we are involved in the work is done on site, in firm offices. Often “our” employees work seamlessly and side-by-side with firm attorneys and staff, the only difference being where the person’s paycheck comes from. Increasingly, outsourcing may involve work done virtually by individuals working from home.

It’s also important to note a related outsourcing myth, which is that all current staff will lose their jobs. That’s not usually the case, and if some reduction in staff is required, we can assist with placement of anyone who may be outplaced.

4. Outsourcing denigrates wages and devalues the employee who is outsourced.

In LAC Group’s experience, matching wages and continuing to provide a total compensation package with benefits is usually a condition we have to meet. While we can’t always match the scope of benefits offered by large, multinational firms, we can and do offer a competitive package. When we take over an operation or a function, matching salaries and honoring the privileges of established employees is often a condition.

In addition, the outsourcing company can offer better soft benefits such as greater support and mentoring, as well as opportunities for advancement and professional development. At LAC Group we pride ourselves on the fact that offering these advantages contributes to our very low attrition rate. Our people are very important, so we strive to reward them professionally and financially.

5. Outsourcing turns permanent jobs into temporary assignments.

Nothing is forever. No one’s position remains static year-after-year—technology and globalization have made that a truism for everyone in the work place. Working for a reputable outsourcing company is neither better nor worse as a career move than a “permanent” position within a law firm.  

Sometimes outsourcing is temporary, as in the case of disaster recovery. For example, a major university library system hired us after an unforeseen disaster which required additional staff for an assignment that would be long term, but not permanent, and the workload would diminish over time. The people we placed were aware of this, and as needs changed we lost some to attrition and some were moved to other clients and projects.

On the other hand, many of LAC Group’s outsourcing contracts are over 10 years old. That’s become a lifetime in today’s work environment! But does it mean these contracts remain the same every year? Not at all. Contracts are reviewed regularly and compared to the current market. This keeps us on our toes as we have to make sure that we continue to deliver value, quality and service excellence. All outsourcing contracts should be able to stand up to this level of scrutiny. In my judgment, any arrangement where this isn’t happening ought to be revisited.

The Unsung Advantages of Outsourcing

Often the drivers behind an outsourcing decision are to streamline operations and save money. And when the primary goal is saving money, there’s no denying that sometimes the work goes offshore to places with lower wages. Yet in my experience, even when law firms come to us seeking cost savings, other benefits end up being more desirable to them. Those benefits are expertise and agility, and I call them the ‘unsung heroes’ because they get so little public mention.

Expertise and Agility

Regarding expertise, I don’t mean to imply that firm librarians are not experts. However, firms are finding it increasingly difficult and impractical to keep specialists on staff for all their information needs, which have become much more dynamic. In addition, many firms are not committed to the kind of training and development that’s needed to ensure their library staff can stay ahead in today’s big-data world.

As for agility, the one underlying skill we all need today is flexibility and openness to continuous change, because that’s the new normal! Outsourcing is one way law firms can be more agile in responding to, and developing strategies for, changing demands and expectations of clients, competitors and markets. They can scale up, down and sidewise as needed, often with not much more than a phone call. While this concerns some librarians, the truth is that they can gain their own advantages, leveraging outsourcing for their own personal and professional flexibility.

Outsourcing is a valuable tool, albeit one with the proverbial double edge that can cut both ways.  Separating myth from reality gives law firm leadership, and law firm librarianship, the knowledge they need to view outsourcing realistically and use this tool wisely.

Update 11/18/2014: A recording of the presentation, handouts, and examples are available on the CIBlawg site.

NOTE: The Webinar has been over-subscribed! Unfortunately, this may mean that some of you may not be able to log in and listen. 

The Slides of the presentation will be available shortly after the webinar. Seems like AALL and PLL have a popular thing on their hands, and hopefully will present additional CI webinars soon. – GL

If you’ve ever wondered what Competitive Intelligence looks like, then sign up for this free webinar sponsored by Private Law Libraries Special Interest Section of the American Association of Law Libraries (or PLL as we like to call it.)

Fellow 3 Geek contributor, Mark Gediman, is on the panel with a couple of Dallas-based CI experts, Emily Rushing and Kevin Miles, as well as Juli Stahl Hughes. Should be a great webinar, but hurry, there’s only room for 100 participants.

CI Deliverables – FREE PLL Webinar

November 13, 2014, 2-3 PM EST (this coming Thursday)

This webinar will give you insights from three veteran CI professionals showing you their best practices and how their response to these requests is tailored based on these factors:

  • Turn-around time
  • What the need is 
  • Preparing for a meeting
  • Responding to an RFP
  • Having Lunch
  • Planning a Client Check-up Meeting
  • Participating in a Business Development Initiative, etc.
  • The Audience’s Context

Register soon as space is limited to 100 participants.

Moderator/Coordinator – Kevin Miles (Norton Rose Fulbright)

Speakers: 
 Emily C. Rushing (Haynes & Boone)
 Mark Gediman (Best, Best & Krieger)
 Juli Stahl Hughes (Stradley Ronon)

Image: Internet Mapping Project

Law Technology News recently published a two-part series on Competative Intelligence, authored by Oz Benemram and Louise Tsang.

  • Part One offers an overview of types of CI programs. 
  • Part Two covers the building of CI teams. 

Focused and to the point, the articles offer a nice primer on points to consider in building or modifying CI teams and products. 

This post comes from a good friend of 3 Geeks who would prefer to remain anonymous.  – RM

Image (CC) – moyamoyya

It has taken me a while to post my thought’s on Ryan’s series on The Exponential Law Firm and the technological practice of law not because I wasn’t interested but, because ironically, I took a short but personally refreshing break from technology. But I’m back and have been further inspired by Toby’s recent post, “Stop It With the Stupid Rules“.  So, for whatever they are worth, here are the thoughts of a geek librarian turned geek lawyer turned geek I’m not sure what anymore …

Like many, I chose law for a number of different personal reasons but mostly because, I naively thought, it was about what was fair. Okay, and it was about winning.  Sue me – I liked the idea of a job where I got paid to be a winner.  There aren’t many careers out there where someone officially wins and someone officially loses. But I left once I realized that law wasn’t so much about fairness, as it was about rules.  And here comes the relevance to Ryan’s posts: Although my career in practice was relatively short, it didn’t take me long to realize that robots would be better lawyers than most of the people who claim that title today. 

How did I reach that conclusion?  Well, law school started the journey that led me there.  It was all about reading and understanding rules.  Rules written down in legislation, rules written by judges but all along, it was rules that I had to memorize. Corporate lawyers know this better than anyone.  Litigators however, like to think that it is their bespoke argument about those rules that makes them uniquely capable of practicing law.  That is true to the extent that judges are (just) people too and can interpret the rules. So, based on that argument, there is truth to the argument that there is something unique about the practice of law.  But 99% of the time it’s just about knowing how the rules apply to the facts. So why couldn’t a computer do that?  Ultimately, the interpretation of rules is really just an algorithm.

Let me give you an example.  I chose to practice administrative law which, in common law jurisdictions like Canada and the UK, is more flexible than most.  We actually have the concept of “patently unreasonable” which means that an adjudicator can be wrong about their interpretation of the rules to the facts but, so long as they aren’t really, super duper wrong, their decision should stand. (There are some technical qualifications to that of course … the Supreme Court of Canada denied this standard several years ago but has practically applied it all the time in any event. And the “unreasonable” standard – which is being just wrong, but not super duper wrong – still stands).  I was acting for an anonymous tribunal who had awarded an individual with a disability the benefits to help him get a job and receive the basic necessities of life.  The government agency granting the benefits challenged the decision on the basis that the tribunal hadn’t applied the rules to award those benefits correctly. My argument was that he shouldn’t be able to know the reasons that the agency decided to reconsider their decision (another rule – they are allowed to reconsider their decisions if asked) because the rules basically said they could if they wanted to (kind of like “because I told you so”).  Did I know that this person needed these benefits?  Did I know that he didn’t have the ability to challenge a decision to deny his benefits if, in fact, that’s what they decided upon reconsidering the original ruling?  I did.  But I won. The tribunal ultimately reconsidered their decision and, because the original ruling hadn’t followed the rules, he was denied.  Just like that. 

Then I realized that the law is really just rules.  I taught law courses up until this past summer and I used to say to my students that there is definitely grey areas in law, but even those areas get black or white eventually.  Law is rules and you need to know them to win. Law and Order is just a TV show. Yes, you need to be smart but ultimately, the winners are the people who know the rules, not the people who are brilliant advocates.  The best advocate I know loses all the time. So, my thought on Ryan’s posts is that law is another profession that computers could do just as well as most lawyers – likely better. Law isn’t really bespoke.  It’s just a set of rules.  Those rules are complicated and difficult to navigate by the human brain so maybe we should give computers (and brilliant algorithms written by brilliant humans) the chance to try their hand.

So now, when people tell me they’re going to law school I say “Don’t do it!”.  Go get techie instead.

Ryan has previously waxed poetic about how some mandatory bars are imposing odd and counterproductive ethics rules and opinions.

This topic resurfaced for me recently as I have been asked to present to a futures committee of a mandatory bar in November. They are wanting me to give them a picture of all that is going on with pricing, legal project management and numerous other developments in the market.

This is an opportunity to share my thoughts in a neutral environment – where I can speak quite freely. I had been giving some thought to how to best utilize such an opportunity. My mind wandered through various subjects and how I can best educate them on the realities of this changing market. My mind then shifted to what can a bar do to help its members. A lot of this thinking was around how the bar can provide resources to help its members do better pricing and bring efficiencies to their practices.

And then it hit me: Those Stupid Rules.

Oh opportunity.

Having previously worked for a mandatory bar, I have more knowledge than I care to on how ethics rules and opinions are generated. The core question at the base of every issues is “Could a client be harmed?” or some variation on that theme. On the surface this sounds perfectly reasonable, since protecting the public is part of a mandatory bar’s charge. In practice however, based on lawyers’ risk averse natures, this unit of measure is usually taken to an extreme.

Take for example Ryan’s target; the Texas Bar Ethics Opinion 642. I can predict how the discussion went around this issue. The core question was: Could a client mistake someone with an “officer” title working at a law firm to be a lawyer? At the extreme the answer is: Yes. Someone, somewhere could make that judgement. And if that’s the case, there is a concern that using those titles could be interpreted as holding oneself out as a lawyer. And we all know the danger in that. (For normal people out there, the danger is that someone might pay this ‘non-lawyer’ for legal advice.) Given that string of logic, it makes perfect sense to issue an ethics opinion prohibiting law firms from using that title.

Back in reality – this type of rule actually inhibits a law firm’s ability to better serve its clients. Professional CIOs, CFOs, CMOs and others bring an expertise that adds to the abilities of firms and lawyers to serve their clients. Inhibiting the ability of firms to attract such talent is running in the wrong direction.

The straw that pushed me over the edge (metaphor blender engaged) to write this post was visiting a law firm’s web site and seeing the words “This is an Advertisement” prominently displayed on their homepage. Of course they felt compelled to include this since some ethics rule requires it.

Seriously?

I know – I know. Someone, somewhere might confuse a website as legal advice. Right.

So … mandatory bars, here’s my top recommendation. Stop it with the stupid rules. They are not protecting clients. They are doing the exact opposite. Restrictions on advertising limit the information avilable to clients about the value and need for legal services. So in addition to asking “could a client be harmed” ask some follow up questions, like: Will these restrictions hurt clients? If clients are not aware of the value of estate planning, will they be harmed? Not only is the answer yes, but last check 50% of adults in the US do not have wills in place. Enough said.

1974 was 40 years ago. Try implementing some rules suited for today or better yet, tomorrow.

Rant Complete (for now).

It is not often that my role in the world as the Canadian Geek Add-On enables me to write about things happening in the Legal Research world up here, north of the border. But today, I have the honour and privilege to share with all 3 Geeks Readers, who share my interest in technology, law libraries, and access to information about CanLII Connects. I am not the only one who has noticed, and it was recently profiled in the ABA’s Legal Rebels cause you know that’s how we roll up here. And, Connects, was also featured earlier in the year on Slaw with commentary by Connie Crosby. That post can be read here. 

But six or so months in, I thought I could highlight Connects, which is focused on building a community of contributors to promote the discussion and synthesis of legal issues, tying it all back to the primary law. What’s different about CanLII Connects is that it’s gathering and re-publishing existing case commentary as well as attracting new, original material. Connects launched in April and now has more than 30,000 documents, hundreds of members (lawyers, law students, professors, judges, and law librarians), dozens of law firm publisher accounts, and scores of contributing authors. 

I think this is important to share for a few reasons, first and foremost, Connects cuts through the clutter, providing commentary with your case law, which makes it easy for anyone to understand Canadian law. Whether, you are from here or otherwise. Secondly, its proof that there is innovation in legal internet content, not just more data being created which is always a refreshing change. Practice of law aside, Connects is also it’s a great place to look at the business of law as well. You can check out who is publishing, what they are saying and assess the impact. The fact that I get to share a Canadian legal tech and content story with a primarily American audience is just icing on the TimBit.  

So, next time you are looking for some Canadian content, check out CanLII Connects! 

Previously I posted on some knowledge gained at the Bridgeway Conference in Nashville. I wanted to add one more item to the list.

Jeff Paquin, who now works with Bridgeway, gave a presentation called Legal Department 2050. He started by looking back at the evolution of legal departments and then projected forward on what the future might hold for them. In looking back he noted that since the mid 80’s, legal departments have grown substantially. Back then about 5% of the legal budget went to pay the in-house team. A recent report shows this number is now approaching 50%. Quite a bit of this growth has occurred recently with legal departments pulling more work away from outside counsel.

Numerous reports and posts have shown that in-house legal departments have become one of the biggest competitors for outside counsel. This is not news to law firms since they are hiring these people directly from those firms. Later at the conference I had one client comment to me on the challenges they are having maintaining relationships with law firms, since they keep hiring their primary relationship lawyers away from the firms.

Jeff then took this concept and projected it forward. He runs a group called the Legal Futurists Society. Based on the collective thinking for this group, they see this growth peaking in the next 10 years.

Jeff posed a question to the audience. He asked what we saw resulting from this trend. A hand shot up quickly followed by, “Scrutiny.” Everyone agreed that as legal departments’ personnel came to represent greater portions of the budget, cost concerns would shift from law firms to the legal departments.

Here are my follow-on thoughts:

#1 – My reaction beyond ‘scrutiny’ was that legal departments are just becoming law firms. This means they will now be burdened with all the same problems a firm has in terms of infrastructure. What do they have for document management? What about KM and all of the other tools firms have in place? This will be a significant challenge for them, since law firms are still trying to figure all of this out and they are years ahead of legal departments.

Which leads to my second thought …

#2 – In-sourcing doesn’t appear to be changing the model much. Legal departments don’t seem to be ‘doing law’ much differently. They are just doing it with lower cost resources. So the cost savings realized will only be marginal. And it won’t take long for corporate leadership to realize that limitation – and to notice the size of the department has grown considerably.

So I think Jeff and the group are right. A lot more scrutiny will come to bear on legal departments. As they grow in size and cost, the cost saving target will shift from law firms’ to their backs.

What’s good for the goose …?

Last week I was able to attend the Bridgeway Customer Connective Conference in Nashville. Unlike many of the conferences I attend, this one is directed at clients, not law firms.

One of the sessions I attended really got my attention. Pratik Patel and Peter Eilhauer of  Elevate presented on a Practical Data-Driven Roadmap for Spend Management. This was primarily a case study on how one client approached cost control for their outside counsel. Pratik gave an excellent presentation on how the client took a methodical approach to understanding its legal spend by analyzing how and where it had been spending its budget. Then they took a step-by-step approach to tackling the problem.

One component of the analysis was understanding the rates the client was paying on a practice-by-practice basis. Normally I find this type of analysis marginally useful, since rates are only one component of cost control. However, the practice breakdown was interesting, since it separated out different specialities. This meant tax lawyers were not being lumped in with labor lawyers.

With this breakdown the client was able to determine market rates by timekeeper level for each type of service. For their needs, it didn’t matter whether these were market rates on the broader level or not. Then they identified firms with rates above these client-based market rates.

And here’s where it got interesting. Pratik asked the audience how many firms pushed back on the client when they asked the firms about the discrepancy. He prefaced this by saying the client expected that number to be 50%. People gave various guesses, including mine which was “low.”

The number was 5%.

Pratik singled me out – since I was the only law firm person in the room and asked me why firms didn’t push back. I replied it was firms’ superior negotiation tactics in action – which got a good laugh. Then on a more serious note, someone else commented that he viewed it as an admission by the firms that they had been over-charging the client.

Ouch.

The Lessons:

  1. Pratik made a point early on that the client did not want to push too hard on their firms. They want their law firm partners to be financially healthy. In fact the other presentations I saw at the conference echoed that sentiment. Although clients are wary of their firms, they don’t want to be mean about it.
  2. And when firms react as if they have been charging high rates, they can be sending a bad message. If they act like they have been treating the relationship poorly, then they shouldn’t be surprised when clients view it that way.
  3. Lastly – law firms need to grow a pair. They employ very talented people. Instead of always bending over, they should have some confidence in defending their prices. Failing to do so means they will undersell the value of their services.

The legal market needs to mature around these ideas. This chaotic, wild west situation is resulting in many unintended consequences. As usual, I continue to recommend that lawyers take a more proactive approach to dealing with all of this change. To shy away from this, only leads to confusion and unhealthy relationships.

The following is the final part of a 4 part post expanding on my short introduction to an ILTA session entitled, Do Robot Lawyers Dream of Billable Seconds? If you have not yet listened to the full session (and you have nothing better to do for the next 90 minutes), you should go listen to it now. If you would like to download and read the entire 4-part post you can get it here.



What does an Exponential Law Firm that can survive in this type of environment look like?

I would be lying if I said I knew for sure, but I think we can look to a number of trends and begin to get a fuzzy picture of the future.

More Legal Processing will be passed off to computers

We like to pretend that everything we do is custom tailored for every client, but it is simply not true. We are already past the point where we need to improve efficiency in order to provide a better price to our clients. In the near future, we will need to improve efficiency in order to make a profit. That means we will need an honest assessment of the work that can be automated, or performed by algorithm, and the work that will require custom analysis by specialized attorneys. Then we will begin pricing that work accordingly.

The rise of the Legal Processing Engines

This obviously goes hand in hand with the above, but one of the implications of this change is that the output of biological legal processing units (most attorneys) will shift from customized legal work, to engine building and maintenance. The focus of many firm attorneys will no longer be on individual clients, but on entire types of matters at once. Attorneys will no longer slave over a single contract, but over the engine that builds that type of contract.

Engines will manage as much work as they can and spit out any unique or unusual work to be reviewed by senior attorneys. That “unique” work will be analyzed and evaluated to determine whether it can or should be incorporated into the engine for future use. Over time the engines will do more and more complex work.

The rise of the Legal Engineer

Inherent in the rise of the Legal Engine is the role of Legal Engineer. We are already seeing this role pop up at many firms. These are people with legal training and technology “know how”. They are equally comfortable analyzing contracts and programming new applications. There are very few people who fit this role today in big law firms, but firms who want to survive post disruption will hire these people by the truckload. The engineers will be responsible for creating and maintaining the firm’s engines. As laws change, or interpretations change, the engineer will modify the engine appropriately.

Machine Readable Documents

Once we are using engines to process legal matters anyway, it will make sense to just go all the way and make all legal documents machine readable. Gone are the fuzzy shades in meaning between contains and includes, or the differences between shall and must, to be replaced by the definitive ⊇ and =.

Proactive Practice of Law

In this world, firms will stop being reactive. The idea of waiting for a client to approach the firm before working on a matter will be unthinkable. Legal engineers will build engines based on legislation and firm sales associates (or Partners) will pitch those engines to potential clients.

Is this Science Fiction?

Simply put: computers process information more consistently, accurately, and faster than people do. They are networkable, scalable, and manageable in large numbers by relatively few administrators. If I am right in my assessment that what we actually sell to clients is Legal Processing, then no, this is not science fiction. In order to compete in an exponentially changing industry, we will have to move the bulk of our processing from biological to digital processing units.

If Diamandis’ exponential framework is correct, then we are approaching a digital disruption that will fundamentally change our industry forever. The players will change. New firms will quickly morph from newcomers into industry leaders. Many of the old guard will fail to change and will subsequently fail entirely. And a few will probably stick around, doing things much as they always have for a very select, demanding, and equally slow to change clientele. At least until those clients also get disrupted.

Whether or not I am right about what we sell, or that the framework directly applies to the legal industry, is almost irrelevant. The 6 Ds Framework provides a useful model for imagining the kinds of changes that could take place in our industry, based on the kinds of technological changes that have already upended other industries.

The only thing of which I am absolutely positive is that both lawyers and IT personnel, as a general rule, do not think much beyond the next immediate hurdle. They approach the world linearly, solving problems as they arise, and planning for a steady progression of linear events. But if we are already on a path of exponential change, then our standard linear approach to managing firms will be our demise. A purely linear response to an exponential threat is the equivalent of no response at all.