I had the opportunity to speak at the CodeX, FutureLaw Conference at Stanford Law School last week. Its my second time attending, and I continue to be impressed with the diversity of topics, professions and people who participate. One of the presentations to catch my attention was conducted by Professor Daniel Linna, from Michigan State University. Professor Linna is the Director of LegalRnD, the Center for Legal Services Innovation, and gave a presentation showcasing an index he has developed to measure legal innovation in law firms and universities. The measurement of innovation adoption is challenging. Casey Flaherty established test criteria to grade lawyer’s mastery of technology, and Jeff Ward at Duke Law has spoken at the AALL conference about innovation levels students reach as they progress in law school. I think even Professor Linna will be the first to say his index is version 1.0, and there is much room for further development (OK, he did say that actually), but the point is all these people are trying to tackle the measurement and data presentation challenge.
Innovation is hard. Despite how easily the word gets tossed around, like a “bong at a frat party” as a friend likes to say, but to truly innovate, to truly change a process, a culture, a product is one of the most difficult things to do.
Many legal industry pundits call for law firm innovation, and us non-lawyers have been called out as the gatekeepers of innovation because we are not moving mountains, challenging the status quo faster or with enough chutzpah. There may be some truth to those claims, we do get frustrated, our ideas can be difficult to implement in the highly matrixed world of law firms and we can get stymied by politics. Often we give up and retreat into the comfortable, “we’ve tried that before” type excuses. But we have to keep trying, use different approaches, find new language and keep repeating the cost benefit of not changing. If we don’t innovate or transform what and how we do things, we may see more of our roles outsourced or vanish entirely as has been the trend. Today, I pulled out a report I created back in 2008 as an example of what firms could and should be doing for CI and practice strategy. At the time, the report was shot down for a variety of reasons but as I resurrected it from my “precedents” folder today, and blew off the dust, I still saw its brilliance. It would have been easy to walk away and not keep trying to innovate in the space given that set back. I was crushed to be honest and wondered why I was working in the industry when what I was hired to do was not welcomed with open arms. The report was and still is a perfect example of CI innovation in firms. At the time, no one was talking about insights or big data. But the report pulled together internal insights with external data, it combined form with function. It’s a beautiful report and it lives in my file cabinet to this day. A pretty picture of what could be.
This is the (much belated) final talk from the ILTA Session – Legal Technology Innovation – Bolstering and Destroying the Legal Profession. This post is from Noah Waisberg, CEO of Kira Systems. See other related posts from Michael Mills, Stuart Barr, Joshua Lenon, and myself by following the links on our names. – Ryan
- underserved legal consumers, and
- technologies and processes that make legal work more efficient, which make serving these consumers possible.
Lawyers who embrace efficiency have the opportunity to do more law for their clients. And make more money in the process.
We lawyers sell to a market that is not getting anywhere close to all the legal services it needs. Underserved legal consumers fall into three categories:
- Access to Justice. People without means to pay premium prices for a lawyer needing access to legal services.
- Middle class legal needs. Many decently-well-off people don’t spend money on legal services that would help them. How many people use lawyers to resolve their disputes, negotiate their employment contracts or write their wills?
- Corporates. Most companies, even the biggest ones, do not obtain anywhere close to all the legal services they need.
This spread between latent demand and supply represents opportunity to sell more. Unfortunately the current techniques for delivering and selling legals services are so expensive and inefficient that these underserved consumers can’t or won’t pay for them.
On 3Geeks, I shouldn’t need to detail ways to practice law more efficiently. There are heaps, some more impactful than others. Processes. Using the right people for specific tasks. Expert systems. Contract analysis software. Machine learning. Collaboration systems. And so much more. With some effort, law firms could do much of their work at higher quality, at significantly lower costs (i.e., 50–75%).
Doing work more efficiently opens up two types of opportunities:
Do More of Current Work. Sure it’s possible to steal work from less-efficient competitors, but another interesting possibility is to upsell clients to more work by offering better value. Here’s an example from the contract review world I know best. In a typical mid-market M&A deal, with a company getting bought for $200 million, law firm due diligence contract review would cover 75–200 contracts. But most $200 million companies don’t have 200 contracts, they have more like 5,000–10,000. That means counsel reviews under 5% of the target’s contracts. Is this limited review because diligence doesn’t matter? Well, no: due to the inefficiency of current approaches, even that scoped-down contract review is likely to eat up 30–60% of total legal fees on the project (arguably demonstrating importance). But a missed restrictive covenant or bad indemnity could be crushing for the buyer, whether it’s in the twentieth-most-important contract, or the thousandth. Clients would mitigate more risk if they reviewed more agreements. Why don’t they? Well, as above, status quo contract review can cost thousands of dollars per document. What if lawyers pitched clients on reviewing twice the materials for 20% more money than the last review they did for them? Might that be appealing to clients? Would lawyers be able to sell clients on this? Well, selling risk is something successful rainmakers do. What if clients buy this proposition? Can a law firm profitably deliver on 2x the work for 120% of the money? Yes! It’s easy to do more efficient due diligence contract review. We have seen Kira’s customers review contracts in 20–90% less time using our contract analysis software, and they tell us they are at least as accurate as without the software; we have started seeing transactional reviews in the tens of thousands of contracts, using our tech to filter where to look. Firms also have lots of opportunity to improve their diligence efficiency through streamlining processes and staffing matters differently (e.g., using less expensive people for parts).
Do New Work. There are lots of opportunities to offer new legal “products” that clients will pay for. Create new options leveraging efficiency to offer clients services they need but currently can’t get. Offer your clients a contract management system. Help clients prophylactically determine whether their contracts have FCPA compliance language. Build them a tool that will allow them to evaluate whether their team members are employees or independent contractors. Come up with other useful ideas!
Embrace efficiency to grow the pie and DO MORE LAW! Law today is the land of opportunity, but the opportunity is only there for those who seize it.
 This runs like a #dolesslaw checklist. Options include: Have lawyers go through a company’s processes to spot risk. Set up a contract management database listing important dates (term, renewal), price increase calculations, rights, and obligations. Redo contract templates to be simpler to negotiate and use modern drafting language. Ensure legacy contracts meet company standards. In house lawyers at large corporates can tell you about how they are pulling back from using outside law firms but don’t have the personnel to meet their legal needs. This is not the behavior of people who think they are getting good value from their current legal spend. This is a contract law heavy list because of what I am most familiar with. Suffice it to say there are a lot more opportunities than these for corporates to spend money on.
 Clients, perhaps rightly, might be willing to take the risk of missing a change of control clause in the thousandth contract, but how about an exclusivity or MFN clause that binds affiliates?
A lot has happened in the AI world in the last year. Robots can now create art, learn how to play computer games, categorise buildings and even determine how creative a painting is. But I think we can all agree that the most exciting development in computing this year has to be the IBM food truck, which combines cognitive computing, big data and the cloud to invent delicious new food. The perfect combination for us techies 🙂
This is the third talk from the the ILTA Session – Legal Technology Innovation – Bolstering and Destroying the Legal Profession. This is from Michael Mills, Co-Founder and Chief Strategy Officer at Neota Logic.
I concede. I am obsolete. The robots are winning.
Fastcase is a better legal researcher than I am—despite a University of Chicago law degree, a federal court clerkship, and a hand in hundreds of briefs and memos.
Recommind Axcelerate is a better document reviewer than I am—despite tutelage by demi-gods of the American bar, and years of experience, some of it in unheated warehouses and abandoned salt mines.
And of course Google is a better driver than I am.
Nonetheless, for a while, I have work to do.
Kira is not a better contract analyzer than I am—my pattern-recognizing brain is more precise, more adaptable, and faster than Kira’s algorithms. And the algorithms need training, so I can have a job as an algo trainer—like a dog trainer, but without a whistle or a biscuit.
But … Kira’s algorithms are getting better and its computers are getting faster. My brain is not, alas.
So, one day . . . poof! ZMP for me—that’s Zero Marginal Product, the economists’ term for adding no value at all.
As Harvard professor Bill Bossert said many years ago—“If you’re afraid that you might be replaced by a computer, then you probably can be—and should be.”
Or, as I say to law firm partners who worry that Neota Logic expert systems will cannibalize their billable hour work—“If your business model is to do work that my software can do … you’d better get a new one.”
So what’s left for me? For us? We went to law school, we’re nice people, we’re pretty smart.
Fortunately, there are some things for us humans to do:
Geoff Colvin of Fortune Magazine just published a book with a great title “Humans are Underrated.” (In some contexts, one might argue that he has that backward.)
He writes that the right question is this:
“What are the activities that we humans, driven by our deepest nature or by the realities of daily life, will simply insist be performed by other humans, regardless of what computers can do?”
He then says that the foundation of all the other abilities that make people valuable as technology advances is … empathy.
Discerning what some other person is thinking and feeling, and responding in some appropriate way.
We have evolved to do that—collaboration was essential for survival, in hunter-gatherer and then in agricultural economies.
As Colvin puts the point:
“We want to work with other people in solving problems, tell stories to people and hear stories from them, create new ideas with people. We want to follow human leaders. We want to negotiate important agreements with people, hearing every lilt or lament in their voices, noting when they cross their arms, looking into their eyes.”
We, both individually and as members of groups and organizations, keep changing goals, purposes, understandings, directions, conceptions of the problem, interests—software simply can’t keep up.
People can, groups can.
One might say, then, that what humans will continue to do, so as not to drown in the rolling wave of technology, is what we do best in groups:
- Idea-generation, problem-solving, strategy
- Persuasion, argument, storytelling
So … if groups are essential to our economic survival in a world eaten by software, to use Marc Andreessen’s phrase, how do we know an effective group when we stumble into one?
Cambridge University psychologist Simon Baron-Cohen developed in 1997 a simple test, the RME—Reading the Mind in the Eyes. Participants are asked to choose a word that best describes people’s thoughts or feelings based only on photos of their eyes.
Group members’ average score on RME has proven to be an excellent predictor of group effectiveness.
More recent research supports a much simpler test—no advance testing required. Just count the number of women in the group. More women, more effective. Period.
Another reason for diversity in STEM disciplines!
MIT professor Alex Pentland invented the sociometric badge, a little tag that hangs around your neck and tracks how you work with others—the amount of face-to-face interaction, conversational time, prosodic style, physical proximity to other people, and physical activity levels.
After sociometrically measuring many groups with his little badges, Professor Pentland found that groups do their best work when the participants:
- Generate many ideas in short contributions to conversations. No one natters on.
- Constantly alternate between talking and listening, encouraging, and reacting.
- Take turns.
It does sound a bit like the prescription for a good kindergarten, but it works. These 3 factors are as important to group effectiveness as all others together—individual intelligence, technical skill, personalities, and so on.
Interestingly, and here we technophiles should take note, this research suggests that online, technology-mediated collaboration is far less effective than we think.
Apple agrees—their new headquarters is gigantic, in order to bring people together, physically, to do the empathy thing, to do the human thing.
Google agrees—they engineered the cafeteria (it’s a metrics-driven company) – optimum wait time in line 3–4 minutes, table spacing to encourage bumping, long tables to encourage sitting with people you don’t know.
So, even at Google, there is room for us humans.
But … and here I think we come to the rough reality of the legal services industry (and others too, which raise profound long-term questions about the civic compact)—technology is pushing the performance bar for humans ever higher, chopping off the bottom tail of the bell curve, shrinking the space in which “just OK” is OK, in which being “pretty good” is good enough. It isn’t any more.
This is the second talk from the the ILTA Session – Legal Technology Innovation – Bolstering and Destroying the Legal Profession. This is from Joshua Lenon, Lawyer in Residence at Clio.
Technology is No Threat to Lawyers
A while back, NPR’s Planet Money show issued a nifty interactive tool indicating whether or not certain employees would be replaced by technology in the future. If you looked up lawyers, you’d see the following result:
|(Image from NPR.org)|
The calculations that determined this statistic included such issues as:
• Do you need to come up with clever solutions?
• Are you required to personally help others?
• Does your job require negotiation?
• Does your job require you to squeeze into small spaces?
It turns out that lawyers rank high in each of these categories in favor of not being replaced by robots.
This result was pretty shocking, as most online discussion list the chances of a robot replaces lawyers as somewhere between “I, Robot” and “The Terminator.” Both movies have robots taking over, but one follows the Steve Jobs’ school of design.
Research the matter further, I delved into the U.S. Bureau of Labor Statistic’s (BLS) historical data on employment for providers of legal services. Did the history of technology development result in a decrease in jobs for lawyers?
When plotted from 1997 to the latest data in 2014, both paralegal and lawyers showed substantial growth in employment over that period. Lawyer employment grew 42% and paralegal employment great 111%! This represents an expansion of 320,000 jobs. Even if you only look back to 2006, the last great year of legal hiring by Big Law, you still see 10% growth in lawyer jobs since then.
Why is this growth during this time period important? It’s because it happened during one of the great expansions in human productivity in the workplace. The Bureau of Labor provides the following chart that shows the years 2000-2007 to be the second highest increase in productivity in the work place every recorded.
While the BLS did not publish productivity gains specifically for the legal service industry, other industries tracked alongside legal in the professional services category, like bookkeeping and accountants, saw productivity improvement from 2.1 to 5.0 percentage change. That’s huge, with the only greater period being the post-WWII boom that industrialized most of North America.
If lawyers and paralegals can still grow their employment levels during huge rises in productivity, that means that technology is not replacing these employees, but instead is supplementing them.
How do we know that technology is supplementing lawyers, rather than replacing them? Because the same BLS tracking data shows that other employees in the legal sector are being replaced.
Legal secretary employment has fallen from 277,000 jobs in 1997 to 212,000 in 2014. This is a 23% change, and not for the better. Legal Support Workers, Other is currently growing, but only after losing 30,000 jobs from their high in 2005.
Technology is not replacing lawyers, but is replacing the employees that support lawyers. This is akin to the change in the Industrial Revolution when plow horses were replaced with tractors. Farmers continued to exist, just now with tractors doing a lot of the hard labor for them. Lawyers continue to exist, but they are not using the tools of the past.
This change is creating large changes in the way law firms hire as well. In ALM’s 2015 report, “Law Firm Support Staff: How Many are Enough?”, 62% of law firms surveyed have decreased legal support staff levels. At the same time, 47% of firms increased their spending on staff. One conclusion is that these firms are hiring more highly trained and specialist staff.
Much like the industrial revolution decreased jobs for farriers and increased jobs for tractor engine repair specialists, law firms are now looking for support specialists in legal technology. Law firms are ditching employees that no longer fit into the new economy operating around law firms.
That’s why I think lawyers will work with robots, but will not be replaced by them.
Two weeks ago I spoke on a panel at ILTA in a session entitled, Legal Technology Innovation – Bolstering AND Destroying the Legal Profession. Interestingly, the original title was Bolstering and Destroying Legal Work, which didn’t seem nearly as wimpy when we submitted it, as it did after the revised title was published. We kept the new title.
The panel was a reunion of the Do Robot Lawyers Dream of Billable Seconds? panel I spoke with last year that included Joshua Lenon from Clio, Noah Waisberg from Kira Systems, Stuart Barr from HighQ, and Michael Mills from Neota Logic.
Rather than post the recording of the session as I did last year, I’ve asked my fellow panelists to submit their short talks in blog post format. I’ve received a few of them and they will be published in turn over the next few weeks.
Today, I’ll start with a synopsis of my own talk:
The Napsterization of Legal Services.
The record labels used to sell plastic discs with data on them.
Today they sell nearly that same data over the internet, without the plastic discs.
On it’s face that seems like a relatively straight-forward, if not easy transition to make. It’s the kind of transition from one media type to another that you would expect a mature business or industry to be able to navigate with minimal disruption. But as we know, that transition was anything but straight-forward. In fact it wreaked havoc on the recording industry for more than a decade and they are just now beginning to get back on track.
Why was this such a difficult transition?
I suspect there are many reasons that the record labels found it difficult to move from plastic discs to no plastic discs, but I think one primary reason is that in the late 90s, they were in the business of selling plastic in pretty packaging, more than they were in the business of selling the content on that plastic. They could charge premium prices for discs and packaging and they had to to cover the manufacturing and distribution costs of discs and packaging. They were certainly aware of the internet, and probably knew that digital distribution was the future, but they had no urgency to change a model that was still largely working.
And then Napster exploded on the scene.
Napster wasn’t a rival record label, or an upstart looking to upend the industry, in fact it wasn’t even a company originally. Napster was a kid in his dorm room using technology that was widely available at the time to do something that kids had been doing for decades: sharing their favorite music with their friends. In my day we used cassette tapes. Napster was the ultimate mix tape, and in a very short time, that mix tape was available all over the world.
This highlighted a clear discrepancy between what the record labels were selling (discs and packaging) and what their customers actually wanted and cared about (the music). Whenever such a discrepancy exists, technology will step into that gap.
What this has to do with legal services?
I think law firms, in particular, are in much the same position today that the record labels were in the late 90s. We even have our own version of the ‘discs and packaging’ problem.
We sell our lawyers time – and that is true whether we’re talking about billable hours or fixed fees. We sell the time it takes our lawyers to manually perform various tasks, and produce outcomes for our clients. When what the client actually cares about is the outcome, not the hours.
Historically, this discrepancy wasn’t a problem because the best way to deliver those outcomes was to have our lawyers manually perform the work and then bill for their time. But today that is not necessarily true. With machine learning algorithms, reasoning tools, and automation software, we can begin to replicate the work that our lawyers have always done manually with technology. We can deliver a better, faster, AND cheaper solution to our clients.
Our lawyers are still compensated, and our firms are still structured, around ‘selling plastic discs and packaging’ (lawyers hours). And yet the technology to give our clients the outcomes they want, with minimal manual labor is becoming widespread. We are ripe for our own version of Napster.
We have an ever-shrinking window of opportunity from today until the Legal Services Napster Event takes place, when we can begin to manage the transition from one media type to another. If we actively and intelligently manage that change, then it will be a bumpy ride, but we’ll come through it. The alternative is to do nothing, keep selling our discs and packaging, and hope that nothing ever changes.
And thanks to the record labels, we have a good idea of how that will turn out.
We constantly make fun of the lack of innovation in the legal field, but there are a number of highly talented people out there that battle the constant resistance to change, and make a difference for their own organizations and profession. For the past five years, Ed Walters, CEO of Fastcase, has recognized those whom he lists as innovators, visionaries, and leaders in the law through his Fastcase 50 Award Winners. I was honored to be a part of the inaugural Fastcase 50 back in 2011, and I’m even happier that my fellow Geek, Ryan McClead, received the award this year. (In fact, Ryan is so good, that when the list was initially displayed, he showed up twice!)
Here’s the write-up on Ryan:
Legal Technology Innovation Architect, Norton Rose Fulbright
Ryan McClead leads Norton Rose Fulbright’s Global Legal Technology Innovation initiative, solving information supply-chain problems in one of the world’s largest law firms. Ryan is a regular contributor to the popular 3 Geeks and a Law Blog (perhaps the most prolific contributor recently). According to Original Geek (OG) Greg Lambert: Ryan’s writing is “pure genius.” Lambert adds: “The Exponential Law Firm series, and The Myth of Disruptive Technology are instant classics and not only show Ryan’s ability to talk about current trends in legal technology, but also to peer into the future, all in a funny, imaginative, and thought-provoking way. Ryan’s projects at Norton Rose Fulbright also expose his creative side. Pushing out technologies directly to the firm’s clients and other consumers across the globe, Ryan is turning the concepts of what we think technology can do within a law firm on its head. We could all use a Ryan or two at our firms, to enable us to break out of our groupthink mentality and see things from a completely different perspective.”
Ryan is just one of those people that sees things in a different way, and finds ways of making things work, sound, and look better. Much of that comes from his creative background of working in the fine arts and applying his ability to tell a story in a way that makes us all sit up and say “ohh, I get it.”
Congratulations to Ryan and the other 49 recipients of the Fastcase 50 award.
I read Nick Milton’s Must you fail in order to learn? post on Friday with trepidation. I have written of the importance of failure a few times (In praise of failure, Ryan’s rules for projects) and I talk about it all the time. I often say my philosophy is ‘to fail quickly’ and after reading Milton’s post, I stand by that.
It’s not that I strongly disagree with anything he says, I don’t really. He’s right about nearly everything. Personal failure is absolutely NOT necessary in order to learn, but he tacitly concedes that knowledge itself always comes from failure; either your’s or someone else’s.
As Milton says:
Learn from the failures of others, not your own failures.
Now, I could be pedantic and argue that learning from the failure of others constitutes true opinion rather than knowledge. But that’s silly. There is a very good argument to be made that in everyday life, true opinion or belief is just as valuable as personal experiential knowledge.
Learn, try, succeed (then learn again) is a far better approach than try, fail, learn (then try again).
Again, I generally agree, however this approach presupposes that others have failed before you in a similar task and have published or recorded their failure so that you may learn from it. One should always begin a new task with research to determine if others have attempted what you are trying. There is no sense reinventing the wheel if it’s already been done, and there is no sense in recreating other’s failures, unless you are looking to confirm their findings.
Let’s sever this implied link between learning and failing. Let’s embrace “learning to avoid failure”. Let’s not punish failure if it is the result of informed risk taking, but lets not expect it either.
It’s the second sentence that bothers me most. Embrace “learning to avoid failure”. In my experience, most people already do this instinctively. They take the route they believe is least likely to fail and avoid the one with the highest potential reward. This is risk aversion causing sameness, stagnation, and a near total lack of innovation. Or, in other words, the legal industry for a long time now. If you only build on the failure of others, then you will only go so far as they have already gone. Worse yet, and more relevant to the legal industry, if you only attempt to replicate the success of others, you will undoubtedly fail. Situations are always unique and success is rarely replicable in different environments.
When I say my philosophy is ‘to fail quickly’ it doesn’t mean I am actively trying to fail so that I can learn something, it means I recognize that any project looking to do more than simply maintain the status quo, will have the odds stacked against it. People will actively try to kill it, unknown unknowns will rear their ugly heads, and sometimes I’ll just screw it up. If that is going to happen, I would rather that happen as quickly as possible, so that I can learn from what went wrong, try to fix it, and go again. To that end, yes, I will try to stress my projects, push them harder than I should, break them if I can, because if I can’t break them, then the partner in the corner office won’t be able to either.
People who are concerned with avoiding failure, do not think this way. They sweep inconsistencies under the proverbial rug. They ignore new information that doesn’t fit their current hypothesis. They rarely admit when they fail, let alone learn anything from it.
Let’s sever this implied link between failing and incompetence. Let’s embrace the ‘learning opportunities that failing can offer’. Let’s not expect failure, but let’s not fear it either.
Let’s do our research, plan our path, and go confidently into the unknown to learn new things.
We can “embrace ‘learning to avoid failure'”.
|Image [cc] Vyperx1|
We very often hear from bloggers on this site regarding the struggles associated with change and innovation. Fear of failure, lack of inertia, protecting territories—all seem to be stumbling blocks that many firms face when initiating change. It seems, however, some organizations have found a way to successfully encourage and nurture new ideas internally.
I had the pleasure of speaking to Karl Florida, Managing Director of Small Law Firm Business Segments and Innovation Champion, at Thomson Reuters, about a new innovation program the company has instituted.
While Thomson Reuter’s program appears mostly devoted to product development, law firms could certainly take advantage of this sort of model to solicit and promote ideas from within regarding client service and delivery, along with development of administrative efficiencies. The model, along with variations, allows and in fact, encourages a small, but safe space (with funding!) to experiment with new ideas without the associated pressure and demands to be “the right” solution out of the gate.
FYI, if you want to learn more about innovation tournaments, I highly recommend the book, Innovation Tournaments: Creating and Selecting Exceptional Opportunities, by Christian Terwiesch and Karl Ulrich (hat tip to CCH, for giving me the opportunity to see Karl Ulrich in action). Because don’t we all need some more peanut butter cups?