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Towards the Law of Legal Services: Reflections on Gillian Hadfield’s “Rules for a Flat World”

By Dean Andrew Perlman, Chair, ABA Center for Innovation

The public now has access to an increasingly wide array of legal service providers other than lawyers and law firms.  I referenced some of those options in an earlier post.  These developments require a new way of thinking about the regulation of legal services, and Gillian Hadfield’s excellent book, Rules for a Flat World: Why Humans Invented Law and How to Reinvent It for a Complex Global Economy, adds an important new conceptual framework for what this approach might look like.

The Inadequacy of the Law of Lawyering

I come to this subject having written a bit about it.  In an article, “Towards the Law of Legal Services,” I argued that it is time for us to broaden our thinking about the regulation of legal services.  Rather than focusing on the “law of lawyering” – the body of rules and law regulating lawyers – I suggested that we need to develop a broader “law of legal services” that authorizes, but appropriately regulates, the delivery of more legal and law-related assistance by people who do not have a J.D. degree and who do not work alongside lawyers.  Here is one way to visualize the point:

The “law of lawyering” branch of the tree includes the traditional subjects that have occupied legal profession scholars for decades, such as rules of professional conduct, the law of malpractice, and administrative regulations directed at lawyers.  Of course, some of these subjects overlap with other doctrinal areas (e.g., civil procedure, SEC regulations, and IRS regulations), but the point is that there is now a fairly robust body of law governing lawyers’ work.

In my article, I argued that we need to spend a lot more time thinking about (and growing) the right side of the tree – the law of other legal service providers.  This means devoting more attention to the increasing array of legal services professionals who are authorized and regulated by courts, such as Limited License Legal Technicians, Legal Practice Officers, courthouse navigators, and document preparers.  (You can read more about these types of providers here.)  Other kinds of service providers are emerging in the marketplace and are either public-facing (e.g., LegalZoom) or delivering services to law firms and corporate legal departments (e.g., legal process outsourcers and e-discovery companies).

For the public-facing providers who are not authorized and regulated by courts (the bottom right corner of the diagram), the regulatory framework has not been particularly robust.  It has consisted primarily of restrictions on the unauthorized practice of law and consumer protection laws.  Put another way, new players are either accused of engaging in the unauthorized practice of law or they are subject to the minimal regulatory constraints of ordinary consumer protection provisions.

I believe that this binary approach is inadequate.  Unauthorized practice of law provisions are notoriously vague, have been used in anti-competitive ways, and are stifling competition without any clear public benefit.  At the same time, a laissez faire approach is also problematic, because it provides the public with only modest protections when purchasing these services, as if they are no different from (say) purchasing a pair of shoes.  A third way is possible and desirable – the development of new kinds of regulations that expressly authorize these emerging providers and subject those providers to more rigorous regulations than currently exist. I sketch out a few such possibilities in my article.

Towards “Right Regulation”

Gillian’s book tackles these and many other broader issues, such as how we might develop more effective legal infrastructure for a modern world.  I can’t do justice to the many threads of the book, but Gillian develops two ideas that nicely supplement what I have sketched out above.

First, Gillian describes a concept that she refers to as “right regulation.” For all intents and purposes, it is the “third way” that I think needs to exist when regulating new kinds of legal service providers.  She explains:

Challenges to the existing regulation of legal markets by bar associations are sometimes cast as proposals to deregulate legal markets.  But the name of the game is not deregulation; it’s what I call right regulation: putting in place intelligent regulations that ensure the markets for legal goods and services are functional and competitive.  (p. 244)

Gillian cites the UK’s Legal Services Act of 2007 as an example of such an approach; that is, it liberalizes, but appropriately regulates, the legal services market in the U.K.

“Right regulation” also has some applications to the left side of the tree.  For example, Gillian argues that lawyers should be permitted to partner and share fees with people who are not lawyers (currently prohibited in nearly all U.S. jurisdictions under rule 5.4 of the rules of professional conduct), but with appropriate regulatory arrangements, as is the case in the U.K.

Who Does the Regulating?

One of the greatest strengths of Gillian’s book is that she provides a conceptual framework for addressing a particularly challenging question: who should be responsible for drafting the relevant “right regulations”?  This is not an easy question to answer, and it is one that I have expressly bracketed in my own writing.

One possible answer is that we should leave these issues to the courts, which historically have regulated legal services.  Another possible answer is to have legislatures more actively involved, with appropriate delegation to administrative agencies.  Both of these answers have benefits and costs, but neither offers an ideal solution.

Gillian’s innovative answer, drawing on the U.K. for inspiration, is to have private market-based approaches to regulation and to use government as a so-called “super-regulator” (regulating the regulators).  She describes it this way:

Instead of civil servants or the managers of a regulated company designating the details of how to achieve politically set goals…, private for-profit and nonprofit companies could offer this as a service in the market, for a fee.  In order to participate in this market, these companies would have to be approved as private regulators by the government.  Approval would be based on meeting the policy objectives established by the government for regulation—developing a system that ensures that regulated businesses meet targets [of various kinds related to the industry]. (p. 266)

I came away from the book with a much greater appreciation for the ways in which we might go about creating a more flexible legal infrastructure in the future.  Although the approach won’t work in every setting (as Gillian concedes), I think there are some interesting implications not just for the law of legal services, but for many other regulatory structures in a rapidly changing world.

Legal Education in the 21st Century

By Dean Andrew Perlman, Chair, ABA Center for Innovation

I argued in an earlier post that Richard and Daniel Susskind’s predictions in The Future of the Professions: How Technology Will Transform the Work of Human Experts are likely to be pretty close to the mark.  In that post, I left open the question of how law schools should respond to this emerging new reality.  I argue below that we should adapt by updating the law school curriculum to ensure that our graduates are better prepared for professional success in the coming decades.

How many lawyers?

The Susskinds’ forecast raises one obvious preliminary question for legal educators that is unrelated to the curriculum: if automation is poised to displace a portion of the work currently performed by lawyers, how many students should law schools be admitting?

There is a robust debate elsewhere about the appropriate size of the lawyer pipeline, and I am not going to resolve it here.  I will simply note that, if the Susskinds are right, we may need fewer lawyers per capita in the future than we needed (say) ten years ago.  Of course, U.S. law schools are already on pace to graduate far fewer students than in the recent past – nearly 30% fewer students – because of both planned and forced enrollment reductions over the last few years.  Whether further reductions will be necessary to ensure that law students have professional and financial outcomes equivalent to the past is still an open question.

Of course, the same could be said about nearly every other form of professional education.  As the Susskinds’ book makes clear, many professions are seeing (and will continue to see) marked transformations in the coming decades.  The point is that it is very difficult to predict with any precision what the size of the legal market will be in 10 or 20 years or determine whether the recent 30% decline in the new-lawyer pipeline is too much, too little, or just right.

What should law students learn?

What is clear is that tomorrow’s lawyers will need additional skills that law schools traditionally have not taught.  This means that, in addition to asking how big the future market for new lawyers will be, we also need to ask a different question: for those who do enroll in law school, are they getting the education that they need?

My answer is yes and no.  There are many features of the traditional law school curriculum that serve law students quite well in a rapidly changing world.  Legal analysis, a close reading of texts, clear writing and thinking, and an ability to discern good arguments from bad are all valuable skills and will continue to be so. Law schools (particularly through experiential education) also help students to develop essential law practice skills in the areas of fact investigation, negotiation, oral and written advocacy, problem solving, document drafting, and client counseling.

These skills are important and necessary, but they are no longer sufficient.  If you think the Susskinds’ predictions are accurate, students should also be able to identify how technology and other innovative methods can be used to deliver legal services better, faster, and cheaper.  Put simply, students will still need to “think like a lawyer,” but they will need to “think like 21st century lawyers.”

What does this mean specifically?  The answer varies depending on the school, but at my own school (Suffolk), it means exposing students to concepts like legal project management and process improvementlegal design (accompanying story here), automated legal document assembly, expert system toolselectronic discovery, and other areas as well.  We’re also teaching students how to innovate the operations of a law practice to make legal services more affordable for currently underserved clients, and we are giving students paid opportunities to learn about new delivery options.

We’re certainly not the only ones pushing the envelope.  A growing number of law schools (and universities) have developed an expertise in this area and have emphasized a range of related skills, such as legal analytics.  Here’s a partial list of such schools.  (Please feel free to email me I have overlooked a relevant program.)

BYU LawX — Legal Design Lab

Columbia Law School – Lawyering in the Digital Age Clinic

Duke University School of Law – Law Tech Lab

Georgetown University Law School – The Program in Legal Technologies

Harvard – Center on the Legal Profession and LawLab (housed at Harvard’s Berkman Center for Internet & Society, but with many collaborators)

Hofstra University School of Law – Law, Logic, and Technology Research Laboratory

IIT Chicago Kent College of Law – Center for Access to Justice & Technology and The Law Lab

University of Miami School of Law – Law Without Walls

MIT – Computational Law Research and Development

Michigan State University College of Law – LegalRnD

Northeastern University School of Law  – NuLawLab

Northern Kentucky University Chase College of Law – Lunsford Academy for Law, Business, and Technology

Northwestern Pritzker School of Law – Technology, Innovation, and Entrepreneurship Concentration

University of Pittsburgh School of Law – Innovation Practice Institute

Stanford – CodeX The Stanford Center for Legal Informatics and the Legal Design Lab

Suffolk University Law School – Institute on Law Practice Technology & Innovation and Concentration

Vanderbilt University Law School – Program on Law & Innovation

Vermont Law School – Center for Legal Innovation

These innovations are paying off.  Students are getting jobs that did not even exist a few years ago, such as in legal project management, knowledge engineering, and legal solutions architecting.  For example, when my law school graduated its first group of students with some coursework in these new areas, employers specifically reached out to recruit them. (See, e.g., here.)  Granted, this is hardly an empirical study (the sample size is still small), but the available evidence suggests that legal employers are increasingly looking for students who have learned the skills taught at the schools referenced above.

Anticipating Objections

One objection to updating the curriculum in the way that I have outlined here is that law schools should not try to teach all of the knowledge and skills that students need for professional success.  Legal education is premised on the idea that considerable learning takes place on the job, so one could argue that the new areas of study, even though important, should be learned later.

I agree that considerable learning needs to take place on the job, but we should want our students to have learned enough in law school so that, when they see a particular problem or issue in practice, they have a reference point for how to deal with it.  They need to be able to “issue spot.”  The new skills and knowledge described above are simply giving students the ability to engage in a new kind of issue spotting.  That is, students should know these new concepts sufficiently well to identify when they can be deployed to deliver services more effectively and efficiently.

A more important reason to offer this kind of education in law school is that students will not necessarily develop the skills in practice.  Although the industry is rapidly evolving, many law school graduates will join practices where few people have these new skills.  Put another way, the knowledge that I have described is less likely to be learned on the job than traditional practice skills and doctrinal subjects, because the knowledge is so new and most lawyers are not expert in these areas.  In this sense, junior lawyers will not be learning these new concepts on the job; rather, they may be educating their superiors.

The flipping of the traditional information flow has another benefit: it increases the relevance of junior lawyers.  At a time when the value of a young associate is increasingly questioned, law schools have an opportunity to give their graduates a knowledge base and skillset that clients increasingly demand and that most legal employers lack.  In short, teaching these new skills will position law schools and their graduates as leaders of a profession at the cusp of significant change.

A second possible objection to this new curriculum is that the skills will be quickly outdated.  This argument, however, proves too much.  In law school, we regularly teach students about doctrines that have changed or are likely to change.  When we teach an area of law (say an older, but now discarded, doctrine), we do so to convey both a conceptual point and a way to think about an issue.  In much the same way, teaching law practice technology and innovation is designed to help students think in new ways about legal services.  The technology will change, but the mindset will serve graduates well throughout their careers by giving them the conceptual tools they need to improve how legal services are delivered and accessed.  This will make them more competitive and better able to serve their clients and the public.  It is hard to think of a better reason to update the law school curriculum than that.

The future of legal services in the United States

by Judy Perry Martinez
Past-chair of the ABA’s Commission on the Future of the Legal Profession

(This essay originally appeared in the book “Innovation and Future of the Legal Profession in Europe / L’innovation et l’avenir de la profession d’avocat en Europe” edited by Michel Bénichou.  A copy may be purchased here.)

Regardless of industry, change occurs for two reasons: necessity and opportunity. Both are in large supply in the legal sector.  The American Bar Association already has made its mark as an innovation leader with the creation of the Commission on the Future of Legal Services in 2014 and the establishment of the ABA Center for Innovation in August 2016. The ABA is now well positioned to lead through the period of profound transformation in legal services presently unfolding in the United States and beyond.

Before discussing the future of legal services, it is instructive to look at the environment of necessity and opportunity in which the ABA’s efforts were conceived.

The United States requires attorney representation for criminal matters, but no such guarantee exists for civil issues. Traditionally, the bar has relied upon pro bono and government and privately funded legal aid attorneys to meet the civil legal needs of the American public. However, in recent years, those efforts have been shown to be woefully insufficient. In 2016, the World Justice Project’s Rule of Law Index ranked the United States as tied for 94th out of 113 countries on “accessibility and affordability of civil justice.”

The statistics are staggering. It has been estimated that eighty percent of the poor and the majority of people of moderate means don’t have access to legal services. As many as 100 million Americans are living with civil justice problems, many of which are rooted in a lack of what the ABA terms “basic human needs”, i.e. Food, Shelter, Safety and Health. Even if an individual meets the strict income and subject matter requirements necessary for legal aid representation, there simply are not enough legal aid attorneys to meet the need. The recent “The Landscape of Civil Litigation in State Courts” report by the National Center for State Courts found that in 76 % of civil cases, at least one litigant is self-represented.

It is estimated that less than a quarter of all civil legal issues are taken to an attorney. This is not due solely to the cost of legal services; many people don’t realize that their issues have a legal component or legal resolution available to them with which the courts or an attorney can assist. They see the challenge they face as a moral failing, a challenge presented for which there is no legal solution, or even just the way life is. The justice consumer’s lack of awareness regarding where to turn to solve what ultimately are legal issues, in part, represents a failure of the bar to educate the public on how the bar can assist them to assert their legal rights or how they can otherwise address the challenges which they face.

However, as a direct result of advancements in technology, opportunities exist to communicate with the public regarding how the problems they face have legal solutions and to deliver legal services to those in need in ways that are faster, smarter, and more efficient. Legal services can now be delivered on a variety of platforms, not just in a traditional one lawyer to one client as they sit in a physical office. The new surge of technology should not be viewed as a force that is going to supplant lawyers, but rather as tools and enhancements that lawyers can harness to benefit a broader segment of the public they have been sworn to serve. That same technology and innovations in delivery models also can bring legal services to those whom lawyers have not reached historically.

It was into this ecosystem that the American Bar Association created the Commission on the Future of Legal Services in 2014. This Commission was made up of practicing lawyers, in-house counsels, judges, innovators, academics, and futurists. The Commission sought to determine how they could harness technology and innovation to increase access to justice in the United States.

Over the course of two years, the Commission held eighty-five grassroots meetings and hearings. It produced five white papers on topics of major concern in the legal innovation space and solicited hundreds of comments on the papers. Additionally, the Commission presented a compendium of fifteen scholarly works by leading academics on legal innovation which was published in the University of South Carolina Law Review. The final work product of the Commission, “The Report of the Future of Legal Services in the United States”, laid out findings and recommendations of the Commission. Some of the findings of the Commission included:

  • many recent law graduates are un- or under employed, despite the great need for legal services by the public;
  • the traditional law practice business model constrains innovations that would provide greater access to, and enhance the delivery of, legal services;
  • there is an inherent resistance to change in the legal profession;
  • there is a limited amount of data available to inform public policy recommendations regarding innovations.

The Commission published twelve recommendations for the legal services industry to undertake to improve the efficiency of the delivery of legal services as well as increase access to justice. One recommendation was that courts should examine judicially authorized and regulated legal service providers and, if the courts deem it appropriate, adopt rules and procedures to govern them. The guiding principle in determining whether to authorize the legal service provider should be if it is beneficial to the public. The Commission determined that online legal services by entities that employ new technologies and internet- based platforms should also be examined. One note of caution was extended to the courts: the absence of regulation in these areas may be what is sparking innovation and courts should take care to not inadvertently stifle innovation through regulations.

It should be noted that the rules and regulations regarding the practice of law in the United States are promulgated at state level. The ABA can only offer guidance regarding regulations that should be considered by the fifty state supreme courts. To assist in this endeavor, the Commission created the “Model Regulatory Objectives for the Provision of Legal Services.” These objectives will serve as a guide to state supreme courts as they navigate the rapidly changing landscape of legal service providers. The objectives can also be used as a guidepost in interpreting existing regulations. The “Model Regulatory Objectives for the Provision of Legal Services” was submitted as a resolution to the ABA House of Delegates at the 2016 midyear meeting and was approved. The ABA Model Regulatory Objectives are now policy of the ABA.

One recommendation of the Commission on the Future of Legal Services that already has come to fruition is the creation of a Center for Innovation housed within the ABA. The Center started operations in September 2016. The Center will be at the forefront of the role of the ABA as the leader in legal innovation. A special feature of the Center is that its operations and activities will be guided by all interested in legal innovation – not only lawyers, but those involved in other industries such as design and engineering, and academe. Through the Center, all are invited to participate in the shaping of the future of legal services.

The Center for Innovation will facilitate the creation of tools and services to be used by lawyers and the public in the furtherance of access to justice. First, the Center will host fellows who will be involved in the creation of tools and resources that will assist either the public or the practicing bar. NextGen Fellows will be recent law graduates who will spend a funded year with the ABA working on their ideas to improve legal services. Innovation Fellows will be individuals more established in their career (and not necessarily lawyers) who will spend 90-120 days at the ABA Center focused on accelerating an innovative project, app, or idea.

Another way that the Center will improve legal services is through in-house creation of tools that will increase Access to Justice. Two of these are already in production and they are both mobile applications for smart phones. The first was developed in the wake of devastating floods in Louisiana this year. Due to cultural norms around unofficial transfers of property ownership, it was very difficult for residents to prove the ownership of their houses necessary to be eligible for government disaster relief funding. The app created by Stanford Law School in collaboration with the ABA Center of Innovation will guide people through the process of collecting information and documents necessary to prove ownership which will in turn allow them to more easily collect federal and state disaster funding. The other smart phone application is being created in response to the rise of hate crimes seen in late 2016. It will allow people to report these crimes to the appropriate agencies and organizations and aid individuals who are victims of hate crimes.

In addition to the tools created in-house by fellows and Center members, the Center will act as an accelerator and champion of innovation in the legal services industry. It will look for projects that will benefit from collaboration with the tools and resources that the Center for Innovation and American Bar Association can provide. It also will seek out innovative tools and practices and shine a spotlight on them.

The Center of Innovation will be a hub where all those interested and involved in legal innovation can connect and learn from each other. The Center will sponsor and produce educational content for the ABA membership and public at large so that they can learn the best practices in legal innovation as well as the latest cutting-edge trends.

The Center will also maintain an inventory of innovations currently taking place in the legal industry. Many of the people working in the legal futures space are operating in isolation. One goal of the innovation inventory is to connect those working in legal innovation. It is hoped that this effort will allow innovators to find collaborators, prevent duplication of effort, and afford a way for innovators to learn from each other’s mistakes. This inventory also will serve as a valuable resource for legal educators who are trying to design their curricula to keep pace with a rapidly changing legal landscape.

With the benefit of new tools and new service models, there is opportunity to redefine how not only lawyers but, more importantly, how the public sees legal services. The American Bar Association Center for innovation is embracing the possibilities presented by change and will lead the legal profession and the public to greater access to justice.

(This essay originally appeared in the book “Innovation and Future of the Legal Profession in Europe / L’innovation et l’avenir de la profession d’avocat en Europe” edited by Michel Bénichou.  A copy may be purchased here.)

You Be the Judge

Judge (insert your last name here), John Doe pleaded guilty last week to breaking into his neighbor’s car and is ready for sentencing.  Judge, what is your sentence?  If you decided to place Mr. Doe on probation or sentenced him to anything less than life imprisonment, then your community is now faced with the same challenges that every community faces on a daily basis.

Regardless of what you believe about sentencing, most individuals who commit crimes will either be placed on probation or released at some point after their imprisonment.  So Judge, how do you best protect the community?  How do you hold Mr. Doe accountable and give him a second chance?  How do you ensure that he has a real opportunity to succeed so that there are no more victims?  How do you wisely spend the limited tax dollars available?  Before we try to answer these extremely complicated, nuanced questions, let’s take a step back and look at the problem from a bird’s eye view.

According to the Bureau of Justice Statistics, there were 4,650,900 adults, or 1 in 53 adults, under community supervision at the end of 2015.1  Additionally, 67.8% of released prisoners in 2005 from 30 states were arrested for a new crime within 3 years and 76.6% were arrested within 5 years.2  If you are like me, then you think that these figures are unacceptable and that it is our responsibility to do everything within our power to prepare those under community supervision for the challenges ahead.  If we do nothing and keep the status quo, there will be new victims, the ugly cycle of recidivism will continue, our budgets will soar out of control, and the rehabilitation of those under community supervision likely will not occur.

While I do not have all of the answers, I suggest that we reimagine the criminal justice system and consider operating like other social service industries.  Take for example the health care industry.  Why not look there for possible solutions and consider using the technologies doctors and dentists use on a daily basis to run their practices in the criminal justice system?

Assume for a moment that you have a cold and that you schedule an appointment with the doctor next Wednesday.  What are the chances that you are going to show up for that appointment?  Very high, because shortly after you hung up the phone, you probably received a calendaring notification from the doctor’s office that you placed on your smartphone.  You also probably received a text and/or email the day before to remind you of the appointment.  Now assume that after your visit with the doctor, you were referred to a specialist.  Your information would likely be transmitted electronically to the specialist so that your arrival the next week would be expected and documented.  The use of technology in the healthcare model has drastically improved the coordination of services necessary for all of us to get healthy.  And your health is a benefit to you, your family and our community as a whole.  So what would the criminal justice system look like if we followed this health care model and utilized similar technologies?  I hope to answer this question soon.

Over the past few years, we have been working with our criminal justice partners and various technology companies to develop a fully integrated case management system with a complimentary communications platform to improve the likelihood of success.  When I place a probationer under one of our Smart Supervision programs, his/her personal information is electronically transferred from the Clerk of Court into a case management system. The Smart Probationer is then assessed by a licensed professional to determine his/her individual needs.  The Smart Probationer is then required to place an “app” on his/her smartphone, which provides the probationer with easy access to important information, including a calendar, phone numbers, group class schedules, and a geomap that plots services available throughout the community.  All of this information is web-based so that the Smart Probationer can access this critical information even if something goes wrong with his/her smartphone.

We also built a website, which contains a careers page for potential employers and a legal aid page for lawyers willing to volunteer to handle any of the collateral consequences a Smart Probationer may face.  Further, we have implemented a communications platform that allows the Smart Supervision Team, which includes the Judge, Prosecutor, Defense Attorney, Probation Officer(s), Social Workers(s), Counselor(s), Minute Clerk and other law enforcement, to communicate with one another in real time so that we can be more responsive to the needs of the individual, hopefully before it is too late.  This Smart Supervision model promotes efficiency and helps eliminate error.  We also hope to soon place the Smart Probationers within this smartphone ecosystem (with the proper permissions, of course) and implement a videoconferencing platform.

While the proposition of eliminating crime in its totality is impossible, the Smart Supervision Programs aim to change the existing model and use technology to improve public safety and drastically reduce recidivism.

Hon. Scott U. Schlegel
District Court Judge, Division “D”
24th Judicial District Court
200 Derbigny Street, Suite 5400
Gretna, Louisiana  70053
Phone:  504-364-3876
Fax:  504-364-3418

 

Want to innovate? Break the law firm business model

by Jordan Furlong

 

“Innovation destroys hours.”

 

Those three words, written by Neota Logic founder Michael Mills in a 2014 blog post, summarize the fundamental challenge that every law firm faces today. They reflect two market realities that are inherently incompatible with each other.

 

  1. Virtually every recent innovation in the legal services market — from automation to process improvement to multi-sourcing — has operated to reduce the amount of time and effort required to produce and deliver legal services.

 

  1. Virtually every law firm in the legal market prices its work, bills its clients, compensates its lawyers, and rewards its shareholders on the basis of the amount of time and effort required to produce and deliver legal services.

 

This fact has to constitute the starting point for all our inquiries into “why law firms don’t innovate.” When a law firm engages in any of the most common types of innovation, it reduces its inventory and lowers its lawyers’ revenue.  It’s no wonder innovation is anathema within most law firms: it’s antithetical to the law firm’s foundational business premise. You might as well ask a ship to innovate by drilling holes in its hull.

 

Don’t make the mistake, therefore, of blaming lawyers for the lack of law firm innovation. Sure, lawyers are change-resistant and conservative and all the rest — but so are most people, to a greater or lesser extent. Since almost any worthwhile innovation in a law firm will destroy hours and therefore reduce lawyers’ stock in trade, lawyers will understandably fight those innovations. It’s an entirely rational response, and we shouldn’t demonize lawyers for it.

 

The true barrier to law firm innovation is the firm’s ironclad insistence on measuring value — both external to the client and internal within the firm — on the basis of lawyers’ time and effort.

 

Law firms maintain a direct, causal connection between the time and effort lawyers expend to deliver a service and:

 

(a) the money clients pay to receive that service, and

(b) the money lawyers receive as compensation for their services.

 

But there is no fundamental economic reason why either of these should be the case. These aspects of your business can and should be largely independent of each other.

 

(a) Clients need not be charged on the basis of lawyers’ time and effort. They can be charged on the basis of successfully accomplishing a task within previously agreed parameters for a previously agreed price (with both parameters and price established according to competitive market realities). Indeed, clients have been telling firms this for the last ten years: they don’t care how much time and effort was required to generate their legal services. All they care about is the result they received and the experience they enjoyed (or endured) to receive it.

 

(b) Lawyers need not be compensated on the basis of the time and effort they expended to deliver a service. They can (also) be compensated according to clients landed, business generated, relationships maintained, solutions identified, teams managed, projects led, juniors mentored, and a host of other criteria. Should we really be surprised that law firms that incentivize maximum lawyer time and effort are filled with overworked male lawyers disproportionately prone to depression and substance abuse?

 

Law firms don’t seem to understand that their costs of production and their revenue from clients are not supposed to be causally connected.

 

If you want to successfully introduce innovations into your law firm, therefore, you first need to recognize that these innovations pose an existential threat to the way the law firm does business. So your real challenge — the challenge every law firm faces, whether it wants to innovate or not — is to change the way the law firm does business. Break the causal relationship between the amount of time and effort required to render a client service and (a) the price clients are charged for those services, and (b) the rewards provided to lawyers who helped deliver those services.

 

That’s not going to be easy, obviously. In fact, it might seem like I’m just substituting one insurmountable challenge for another. But here’s the difference: You have zero chance of stopping innovation from destroying lawyer hours. But you have a non-zero chance of changing the way law firms charge their clients and compensate their lawyers.

 

There are two paths out of this mess for law firms. One path is impossible to follow. The other is merely extremely difficult. You’re going to choose one of them eventually.  Eventually might as well start today.

 

Jordan Furlong is a consultant, author, and legal market analyst who forecasts the impact of changing market conditions on lawyers and law firms. He has given dozens of presentations to legal audiences in the US, Canada, Europe and Australia over the past several years. A member of the Advisory Board of the ABA’s Center for Innovation, Jordan is the author of Law Is A Buyer’s Market: Building a Client-First Law Firm, and writes regularly about the changing legal market at law21.ca.

Predicting the Future of Legal Services

By Dean Andrew Perlman, Chair, ABA Center for Innovation

To get this blog started, I’m delighted to share some of my reflections on the future of legal services.  These posts were originally part of an online symposium on Prawfsblawg focused on two books: Richard Susskind & Daniel Susskind, The Future of the Professions: How Technology Will Transform the Work of Human Experts and Gillian Hadfield, Rules for a Flat World: Why Humans Invented Law and How to Reinvent it for a Complex Global Economy.

The reflections contain three parts.  The first part (below) describes the Susskinds’ prediction that technology will drive dramatic changes to the delivery of legal services.  I conclude that, although the Susskinds’ predictions are probably close to the mark, the changes may be more uneven than the Susskinds acknowledge.  The second part discusses how law schools should respond to the rapidly evolving legal marketplace and suggests curricular changes that will put law school graduates in a better position to thrive in the 21st century.  The final part discusses how the regulatory framework for legal services will need to evolve in light of the rapidly changing legal marketplace.

A Disclosure 

My views on the future of legal services have been informed by Richard Susskind’s earlier books and my own work on projects where “futures” discussions have been front and center.  For example, I served as the vice chair of the ABA Commission on the Future of Legal Services, which produced a report describing many “legal futures” issues in great detail. And I have been serving as the chair of the governing council of the ABA Center for Innovation.  Before becoming a law school dean, I was fortunate to serve as Suffolk Law’s inaugural director of our Institute on Legal Innovation and Technology and the related concentration in the area.

These experiences lead me to believe that we are going to see more significant changes over the next couple of decades than we have seen over the last twenty years (and those recent changes already have been considerable).  That’s a long way of disclosing that I read the Susskinds’ book expecting to find myself largely in agreement with their predictions, and I wasn’t disappointed.

The Essence of the Susskinds’ Forecast

The Susskinds’ predictions turn in no small part on an important narrative about how people have developed and shared their expertise during different periods of human history.  Namely, we have seen an evolution from strictly oral communications, to written work, to modern printing, and (most recently) to a digital age where knowledge is acquired and shared with great ease (pp. 147-53).

The Susskinds observe that, before the current digital age, information was difficult to obtain, giving professionals an important role and advantage.  People could not easily find the information they needed about a topic, such as medicine, law, or accounting, so the public had little choice but to consult experts (e.g., doctors, lawyers, accountants, etc.) to answer even routine questions.

The Internet is now leveling that playing field, making the dissemination of expert knowledge considerably easier.  (This online symposium is an example.)  When combined with technological advances that have facilitated the automated delivery of that knowledge and related services – think the Mayo Clinic or WebMD (for medicine), LegalZoom (for legal services), TurboTax (for accounting), and Khan Academy (for education) – the Susskinds argue that we are beginning to see Clayton Christenson-like changes to the professions (though the Susskinds prefer to avoid the language of “disruption”).  (pp. 109-10).  The Internet is not only making it easier for non-experts to gain access to the information they need; it is driving a gradual expansion of automation from low-cost, routine professional services to more bespoke services, especially as artificial intelligence (AI) becomes more sophisticated (e.g., IBM Watson’s applications to the healthcare and legal industries).

The Susskinds do not argue that human-based bespoke services will necessarily disappear (pp. 192, 199), but they contend that we will see a continued transformation of how professional services are delivered and related changes to the basic skillset that future professionals will need.  In a nutshell, they conclude that professionals will have to partner with the “machines” rather than try to beat them.

This is a greatly simplified account of a nuanced and well-researched book, but for those of you who have not read it, this is the gist of it.

My experience has been that some lawyers either do not agree with this forecast or have not given the subject a great deal of thought, so in the remainder of this post, I’m going to explain why I believe that we need to take the Susskinds’ forecasts seriously.

Is the Prediction Right?

The quotable baseball manager Yogi Berra once said that “[i]t’s tough to make predictions, especially about the future.”  Tough, indeed, but not impossible. Richard Susskind’s predictions about the future of legal services have been prescient for decades. Although Richard hasn’t always been on the mark, he’s been right often enough that his ideas deserve careful attention.

One of the primary reasons that I’m convinced that the Susskinds’ forecasts are reasonably accurate is that the predicted future is already taking shape.  As with just about any prediction, the odds of getting it right improve considerably with additional data.  Take, for example, a prediction that autonomous cars are going to transform transportation within our lifetimes.  Twenty years ago, that prediction would have been quite speculative because the technology needed for such a development was not yet available.  But given the technology that now exists, we can predict with a much higher degree of confidence that driverless cars will become ubiquitous and transformative within a couple of decades or so, perhaps considerably sooner.

The analogy between self-driving cars and legal services innovation is not perfect, but it is instructive.  Like predictions about the coming ubiquity of self-driving cars, predictions about the likely transformation of professional services are drawn from existing data and technology, not a speculative forecast about future capabilities.

Consider some recent developments in the legal industry.  In the context of dispute resolution, online platforms (online dispute resolution, or ODR), led by Modria, now resolve approximately as many disputes as the entire U.S. court system combined.  The technology is now moving into courthouses.  Court-annexed ODR platforms are emerging, and more are likely to appear in the near future.  Even when disputes are resolved in courts using traditional procedures, technology is changing the landscape.  When I started practicing 20 years ago, discovery required associates (and paralegals) to engage in page-by-page reviews of paper documents; today, technology-driven ediscovery is performed by outside vendors.  And technology is informing how lawyers do their work.  For example, companies like Lex Machina (now owned by LexisNexis) and Premonition are using data analytics to give lawyers valuable insights about opposing counsel, courts, etc. to craft better arguments and assess the value of cases.  One company offers to scan your opponent’s briefs and suggest possible cases to cite in response.

In the context of transactions, LegalZoom now automates the creation of a wide range of basic legal documents and has served millions of consumers.  Numerous other companies and organizations offer similar services, either directly to the public or for law firms, legal departmentscourts, and legal services organizations.  Due diligence and contract management are often outsourced to legal process outsourcers (LPOs), as are a range of other services.

Law firms and in-house legal departments are responding to these changes in various ways.  In addition to making greater use of document automation, they are using expert system tools, creating legal project management departments, hiring legal solutions architects to design new ways of delivering legal services, and establishing research and development departments (e.g., Dentons’ NextLaw LabsDavis Wright Tremaine’s De NovoSeyfarth Shaw’sSeyfarth Lean, and Littler Mendelson’s Service Solutions).  Law firms are also diversifying their revenue sources by creating ancillary businesses, such as e-discovery services or data analytics.  In-house counsel are placing a greater emphasis on legal operations (e.g., the Corporate Legal Operations Consortium (CLOC)), and they are making greater use of LPOs and unconventional lawyer-staffing solutions that include new technology solutions as well.

Bar associations are responding too.  The ABA recently issued a report on these developments and has established a Center for Innovation (which is hosting this blog).  State bar associations are examining futures issues, and other associations around the world are engaging in similar efforts (e.g., the U.K.’s Law Society and the Canadian Bar Association).

This is all just a sampling.  New legal tech and innovation startups are appearing everywhere and delivering a growing range of services.  Venture capitalists are taking notice as well and increasing their investments into innovative solutions for the legal industry.

At the same time, the available tools are getting more sophisticated, especially as AI itself becomes more capable.  There are increasing efforts to apply AI to law (e.g., ROSS), a development that fits nicely into the Susskinds’ predictions that the changes already underway will continue to transform legal services, even at the most sophisticated levels of the industry.

A Caveat: “The future is already here — it’s just not very evenly distributed.”

This quote is often attributed to author William Gibson, and it offers a pretty good summary of what is happening with professional services.  Innovations are transforming those services, but the changes are (and likely will continue to be) uneven.

To be sure, the Susskinds concede this point.  They believe that there will not be a “big-bang revolution.”  Rather they predict “incremental transformation,” or a “staggered series of steps and bounds.”  Nevertheless, the Susskinds conclude that “the eventual impact will be radical and pervasive.” (p. 231)

Here is where I may part ways just a bit from the Susskinds.  I agree that technology-driven changes to the delivery of professional services will take the form of “incremental transformation,” but I think that the extent and especially the timing of the changes are likely to vary much more than the Susskinds imply.  The transformational changes that they predict will vary from one profession to the next (and vary among professional practice areas) by considerable periods of time, perhaps decades.  Some practice areas within some professions, including the legal profession, are sufficiently bespoke that the AI necessary to replicate the services or substantially transform how they are delivered is still entirely speculative (much like self-driving cars were twenty years ago).  That’s not to say that transformational changes will not eventually emerge in these resistant fields; it is just that the technology necessary to bring about those changes does not yet exist and may not for quite a bit more time.

This is a variant of the objection that the Susskinds confront in their book: “this may be true of everyone else’s practice area, but not mine.” (p. 232) My objection is a little bit different.  I’m not suggesting that any particular profession (or practice area within a profession) is immune from these changes.  I’m arguing that the changes are likely to be more uneven and difficult to predict in terms of scope and timing than the Susskinds suggest.  In other words, nobody is immune from the changes, but some are likely to be more resistant than others.

Consider a recent McKinsey report (related New York Times story here), which concludes that automation of industries (including the professions) will vary depending on technical feasibility, the cost of developing and deploying the solutions, labor market dynamics, economic benefits, and regulatory and social acceptance.  Assuming these factors are the right ones (and they seem right to me), the pace of change is likely to vary depending on the industry and the specialty.  Indeed, the report suggests that the “professions” themselves have among the lowest automation potential of the types of employment surveyed.  (See Exhibit E4.)  Although I think that claim may underestimate the automation potential in many parts of the legal profession, the point is that the extent and timing of the transformation of professional services is not easy to predict.  The report explains that “[o]ur scenarios suggest that half of today’s work activities could be automated by 2055, but this could happen up to 20 years earlier or later depending on the various factors, in addition to other wider economic conditions.”  That’s quite a broad window, and it reflects the uncertainties that necessarily exist when venturing predictions across industries, professions, and specialties.

To be clear, I’m not suggesting that the Susskinds’ forecast is wrong.  I’m just a bit less confident in the general applicability of their forecast than I am about (say) predicting the coming ubiquity of self-driving cars.

Assuming you’re convinced (as I am) that the Susskinds’ vision of the future is roughly close to the mark, what should we do about it?  In my next two posts, I’ll explore what this all means for legal education and legal services regulation.

Introducing the ABA Center for Innovation Blog

By Dean Andrew Perlman, Chair, ABA Center for Innovation

As the chair of the ABA Center for Innovation, I am delighted to announce the launch of the Center’s new blog.  This blog will offer a place for the Center’s council members, staff, special advisors, and other guests to share their thoughts on the changing nature of legal services delivery.  If you have content that you would like to contribute, please contact the Center’s managing director, Janet Jackson.  With appropriate permission, you are welcome to republish content that has appeared elsewhere.

We hope you will enjoy reading this blog and sharing your thoughts with us.

Just Debt: Reimagining Fines and Fees in America – Moderated by Van Jones

You won’t want to miss a special Thursday evening program brought to you by the ABA Center for Innovation and the National Conference of Bar Presidents, featuring CNN Commentator Van Jones. While many now know the damaging effects—job loss, housing loss, license suspensions, and even imprisonment—fines and fees can have, Just Debt? Reimagining Fines & Fees in America focuses on the critical question: How can we create a more just and reliable system? This program will tackle tough questions about and explore opportunities for fines and fees innovation, justice system funding, and procedural improvements. This is sure to be one of the highlights of the ABA Annual Meeting.

 

Thursday, August 10, 2017
5:00 – 6:30 p.m.
Sheraton New York
Times Square

Metropolitan Ballroom West, 2nd Floor

 

For more information.

Call for Submissions – Clearinghouse on Innovation

The ABA Center for Innovation seeks to find and catalog the myriad innovations occurring in the legal world.  By learning and sharing what innovations are occurring, we can prevent duplication of effort and connect like minded individuals. It will also help lawyers to learn about the possibilities available to them to expand and improve their practice.

But to do this, we need your help!

We have an online submission form for the public to tell us about innovations that they are seeing in the legal world.  Self nominations are okay and encouraged!