Is the Future of the Practice of Law in Jeopardy?

Is the Future of the Practice of Law in Jeopardy?

Technology is affecting every part of our lives and the legal world is not immune to the changing world.  The practice of law as we know it will be unrecognizable in the next decade.  Technology is the biggest threat to the legal paradigm as it currently exists.  The legal establishment is complacent and unwilling to accept its ebbing grip on the legal market.

The recent ISBA report regarding the future legal practice[1] world severely underestimates the cataclysmic, exponential changes technology will have on the paradigm of legal practice.  The legal community has turned a blind eye to technological tsunami hitting our society and affecting inside and outside the legal profession for years, even now disregarding its most potent threat staring it in the face.  In their current state, the framework of law firms and schools are sorely underprepared to deal with the tsunami of technological changes and the non-legal alternatives it has created.

Within the lifetime of this year’s newly sworn attorneys, automation will radically change the legal profession. This may sound extreme, but once the dots are connected, anyone can see the domino effect on the legal structure.  For instance, self-driving cars are a not-so-distant reality. The idea of not having to drive yourself to the office seems like a dream, but in reality it will dramatically change the practice.  If vehicles are completely controlled by a computer, human error will be removed from driving, resulting in near eradication of accidents.  Of course, accidents will occur, even with autonomous cars.  However, when these accidents occur, will lawyers have the technological competence to interpret the computers that drive the vehicles?  Accidents involving autonomous cars will create a plethora of new legal issues and standards lawyers must be prepared to address.

In 2005 alone, 35% of the 26,950 civil cases that reached disposition stemmed from motor vehicle collisions across the nation.[2]  This seems insignificant, until compared to the 7.4 million civil cases filed around the nation in the same year.[3]  If the claims filed are representative of the cases that reached disposition, roughly 2.5 million claims caused by motor vehicles reached an out of court resolution, settlement or otherwise.  The harsh reality is that accidents create work for attorneys. Although the shift to autonomous cars will be gradual, it is obvious the lawsuits arising from accidents will decrease towards non-existence.

Autonomous cars will cripple the existence of solo-practitioners and big law firms alike.  With lack of accidents, the need for auto insurance will become  obsolete. The purpose of auto insurance is to cover the driver from any damages they may cause while operating a vehicle. If vehicles are operated by computers, the driver has no liability, and no reason to purchase auto insurance. If auto insurance is no longer needed, auto insurance companies’ revenue will plummet.  These companies will either adapt to the change, providing coverage for self-driving vehicles at a highly-reduced rate, or cease to exist.  Regardless, there is one clear outcome for attorneys employed by insurance companies: their jobs are in jeopardy. With less income, insurance companies will be less willing to employ big law firms for representation. Insurance companies may not be able to afford in-house counsel, eliminating the position entirely.

A decrease in accidents will also cause a decrease of injuries requiring hospitalization. When there are less patients in the hospital, one can assume a proportional reduction of medical malpractice claims will occur. Just like the insurance industry, attorneys on either side of medical malpractice claims will suffer from technological advances.

The effect of automation is not limited to the civil arena.  Cars that are self-driving cannot violate traffic laws, notwithstanding maintenance issues such as a dead brake light.  A computer cannot be inebriated, which will virtually eliminate DUIs.  Additionally, if there are no traffic violations, there will be less arrest resulting from routine traffic stops, lowering the case load of public defenders, and in turn, reducing the amount of employed public defenders. Fewer accidents means less work for au
to body shops and a change in the auto insurance business.

Is technology really a threat?

Non-legal for-profit companies like LegalZoom and Avvo have been around for decades.  These businesses provide do-it-yourself guides for a variety of legal actions, easily accessible and competitively priced.  By paying a small fee, LegalZoom provides its customers with questionnaires, using the answer to fill out and file the required legal forms for the requested service.  Additionally, it provides a year of unlimited attorney consultations, with an option to keep these services for a monthly fee.  Recognizing consumers desire convenience and price transparency, LegalZoom assisted 1 million customers in the first 10 years of its creation in 2001.  Since then, LegalZoom has assisted another 2.5 million customers in 7 years, and that number will only continue to grow in the state of the current legal paradigm.  This flat-fee pricing is arguably the biggest draw to these types of technological services.

Unfortunately, these for-profit companies are not the only threat to the legal community.  In New York and London, DoNotPay.co.uk assists users with a “robot-lawyer” chatbot.  Through a series of questions, the chatbot determines if an appeal is possible, and if so, guides users through the appeal process.  In the 21 months from it’s creation, DoNotPay has taken on 250,000 cases, winning 160,000, giving the program a 64% success rate.  This sophisticated program, which provides a simple process for appeals, was created by 19-year-old college student.   An individual with no legal training created a simple step-by-step online guide to traffic tickets.  This traffic ticket “robot” gives a clear warning to the legal field:  Adapt or Die.  The reason these services are such a threat to the legal community is their pricing.  These easily accessible sites provide flat fees and a well-defined service.  Customers know the exact price for what they are paying.

The opposite is known for the legal field where the adage “a lawyer’s stock in trade is his time” has governed our fee structure since Abraham Lincoln rode the circuit in the 1850’s.  Lawyers need to bill hours to make money, and thus strive to have more hours at the expense of efficiency. This common knowledge, combined with a general public lawyer stigma, causes consumers to be uncomfortable not knowing the actual price of legal counsel until a matter is resolved.   The billable-hour mentality prevents law firms from adapting to the changes of technology.  Sacrificing efficiency for profit is hurting the legal field.  Lawyers have known that technology can threaten the practice since the early 2000’s.  It was possible for a firm to automate a 65 page lease template, which generated leases in a mere 15 minutes, as opposed to the 4 hours it would take to generate manually.  The project was scrapped because based on the billable-hour model, the revenue expectations would be cut in half.[4]  By refusing to incorporate this technology, lawyers are willingly losing clients to non-legal companies.

Technology is leading to the downfall of the billable hours framework and is establishing a flat-fee structure.  Technology will automate or replace many of the traditional, billable functions performed by lawyers.  Some technology has become accepted within the legal field, particularly with document review and e-discovery.  With globalization of work, work usually done by junior associate and paralegals is being outsourced to companies in different countries for a fraction of the cost.

Is the legal job market still stagnant?

The legal field has yet to recover from the Great Recession in 2008, nearly a decade later.  Due to the escalating need for sophisticated legal representation prior to 2008, legal firms structured themselves to handle prodigious amounts of work while simultaneously training sophisticate business lawyers.  Post 2008, the need for representation plummeted, and firms have attempted to adapt, “reducing the number or entry-level lawyers, turning the traditional pyramid structure into a diamond with many senior associates and nonequity partners composing the broad middle.”  Unfortunately, “the short-term needs of established law firms to generate higher revenue and profits to retain the firms’ biggest rainmakers are at odds with long-term needs to invest in a more sustainable business model tied to the changing demands of its clients.” [5]While the industry attempts to shed the training costs of entry-level lawyers, it will eventually produce as shortage of mid level attorneys and higher labor costs to stave off unwanted attrition.

Despite law school enrollment and graduate numbers falling, the available jobs for new attorneys has decreased.  Law school enrollment in 2016 has decreased from 5% from the class of 2015.  The graduating class of 2016 dropped 9.2% from the previous years numbers.  In addition, so did the number of entry level legal jobs, dropping 8.6%.  Although the ABA reports a climbing employment rate of 86.7% for the classes of 2014 and 2015, only 62.4% of 2015 graduates and 64.1% of 2014 graduates obtained employment that required Bar passage.[6] [7] For those 83,816 graduates, only 53,000 were employed in positions that requires passage of a bar exam.

The 2014 OOH predicted 74,800 new lawyer jobs through 2022. Between 2014 and 2024, the agency now estimates, the number of lawyer positions will grow from 778,700 to 822,500, adding just 43,800 jobs—a plunge of 41 percent.  [8]

Although the disproportionate number of entry level jobs to recent graduates has been known for years, the disproportionality will only increase with incorporation of technology into the legal practice.  New legal technology will equivalently decimate the work load of entry level associate positions, document drafting and reviewing used to hone their skills will be outsourced to third parties or technology.  Although this will bring down the cost to consumers and increase efficiency, it will lower total billable hours available and drive down profits.

Are law schools preparing lawyers for the future?

In addition to the radically changing legal field caused by technology, law schools are stifling the job market.  Law schools have become cash cows, churning out inexperienced lawyers with crippling student loans who are as effective as a paralegal after graduation.

Foremost is the weight of the student debt most law school graduates incur.  Ten years ago, law school cost half the amount it does now.[9]  Historically, law school tuition has doubled every 10 years, roughly three times the rate of inflation.  But this is not limited to law school, because newly admitted law school students are most likely carrying over debt from undergraduate colleges which are facing the same problem.  It is not unheard of for a law school student to graduate with $250,000 of debt, a great place to start in a struggling job market.

Further, law schools do not adequately train their students in a variety of aspects that are necessary to provide effective legal representation.  Law students are not required to take courses that teach marketing or business, nor are students required to learn about practical legal practice.  Most law students don’t know how to properly fill out and file motions in court, some have never even stepped foot in a court room.  In order to gain this legal experience through law school, a student must take specific courses, sacrificing opportunities to study other areas of law.  Unfortunately, most students don’t even realize they need this practical knowledge until they have graduated.  Additionally, courses on how to market yourself or run a business, which is essentially what an attorney does, are almost non-existent.

Of course, law students may be able to gain some practical knowledge through legal externships, but many times the work is limited to drafting, document review, and research.    However, many an externship can consist of busy work, filing papers in an office.  Although these externships can help students gain practical experience, they must seek out these positions themselves.  Law schools do little more than provide information on where these externships may be sought.  Compare this placement to other professional education.  Medical students must participate in residencies where they hone their skills before beginning practice on their own.  Speech-language pathologists, or SLP, are required to participate in at least 9 months of medical “placements,” working with patients under the supervision of licensed therapists.  Specifically, in the SLP field, the schools assign each each student placement facilities.  In these fields, this practical training is required before you can receive a license to practice.  Although relatively inexperienced, this practical knowledge allows these students to have a level of competency before receiving licensure.  In the legal field there is no such requirement, many young attorneys learn on a trial-by-fire basis.  These student’s laughable experience, combined with a dismal job market, does not bode well for those who seek to practice in the legal field.

Technology is changing the legal paradigm and there is nothing that can be done to stop it.  Throughout history, technology has been adapted to innumerable industries, changing them entirely.  In the not so distant past, vehicle manufacturing was entirely changed by automation.  Technology decreased the labor costs by replacing humans with technology, making cars more affordable to consumers.  Today, technology is threating threatening the legal market in the same way.  This is not speculation; todays business giants are warning of the effect of technology.  Bill Gates, Mark Cuban and Elon Musk have recently warned of the impending displacement of human jobs from automation.  But don’t take their word for it, just ask your travel agent how their business survived technological advances.

In Summary:

The ISBA Report recognizes some of these issues, but instead of helping lawyers deal with the changing landscape, the report focuses on providing legal services to the mass of people who do not have access to legal services.   We need to start taking care of our own.  We are a trade association with selfish interests. Lawyers must showcase the value of legal expertise, differentiating ourselves from do-it-yourself websites. As as the legal paradigm shifts towards speed and efficiency, we must address the inherent clash of the billable-hour framework with the forced efficiency of technology.  To insure the existence and profitability of the legal practice, we must adapt to survive.

~ George S. Bellas (www.attorneyscreativeroundtable.com)

 

[1] https://www.isba.org/ibj/2017/01/seeingandshapingthefuture

[2] https://www.bjs.gov/content/pub/ascii/cbjtsc05.txt

[3] https://www.bjs.gov/content/pub/ascii/cbjtsc05.txt

[4] http://www.americanbar.org/publications/gp_solo/2014/may_june/how_technology_changing_­practice_law.html

[5] http://www.americanbar.org/publications/gp_solo/2014/may_june/how_technology_changing_ practice_law.html

[6]http://www.americanbar.org/content/dam/aba/administrative/legal_education_and_admissions_to_the_bar/reports/2015_law_graduate_employment_data.authcheckdam.pdf

[7] http://www.nalp.org/1216research#table1

[8] http://taxprof.typepad.com/taxprof_blog/2016/01/government-cuts-projection-of-2014-2024-lawyer-jobs-by-41-16k-lawyer-jobs-for-37k-law-grads-each-yea.html

[9] http://www.americanbar.org/content/dam/aba/administrative/legal_education_and_admissions_to_the_bar/statistics/ls_tuition.authcheckdam.pdf

 

 

Programming Life And Death Decisions into Robot Driven Cars

google-carGoogle’s corporate motto from day one has been “don’t be evil.” Of course, anyone who wants to debate whether the company has met that objective must first consider the question: “How do you define evil?” With Google (along with Audi, Ford, Mercedes, Nissan, Toyota and Volvo) emerging as a key player in “driverless car” technology, that question is rapidly becoming more than just philosophical. The way corporations apply ethics has literally taken on life and death urgency.

So far, engineering features that improve vehicle safety have been a straightforward matter in terms of ethics. Blind-spot monitors, electronic stability control, forward-collision and lane-departure warnings are good things, with very little downside. But the march to autonomous vehicle control is a continuum. In 2014, the Federal Department of Transportation approved V2V, a gateway technology that allows cars to communicate with each other. These systems will eventually prevent a huge number of accidents by providing more data than a human can comprehend in an emergency situation.

But truly driverless cars will involve a huge ethics element that so far has been missing from the deployment of automated safety features. This is because at some point robotic drivers of a driverless cars will be required to make the life and death decisions that human drivers confront now. There will also be situations that cause the robot to choose between two unpleasant outcomes – two forms of evil if you will. How can the machine be taught to make those decisions and who decides what moral platform they are based upon?

In a typical “two bad choices” scenario, the hypothetical driver must choose between horrible outcomes. One choice means they might sacrifice their own life to save others. The other choice means they will selfishly choose to live while others die. In a recent real life example, a Russian police officer saved the lives of children on a school bus by choosing to drive his squad car head-on into the grille of a reckless driver, preventing the motorist from hitting the bus. The fact that the policeman miraculously survived in no way changes the fact that he made an instantaneous decision to save children at the potential cost of his own life.

Now manufacturers of fully automated vehicles must confront the question: Is it practical and right to expect a robot driver to make the kind of ethical decision that would mean saving a dozen lives while killing its passenger? Unlike a human driver, the robot has no stake in the matter. In terms of technology, is it even possible to program a machine to analyze visual data and commit its passenger to injury or death without their input.

What if the robot makes the wrong decision? Computers make a lot of errors that are based on sound logic.

Taking the argument further, what if the robot driver makes a moral decision based on ambiguous data? For example, let’s pretend the school bus is carrying murderers rather than school children. If the robot driver concludes it must save the bus because it is a school bus, then the occupant of the automated car is involuntarily sacrificing their own life to save a busload of evildoers. Or can a robot be programmed to establish a hierarchy of human value – say school children vs criminals – and will the passenger have any influence over the outcome? Would you choose to sacrifice your life for a bus full of pickpockets but not a bus full of murderers? Admittedly, we don’t expect this type of situation to come up often, but it is an illustration of how complex the issue can become.

This brings us hard up against the reality that robot drivers will inevitably make digital missteps that cause injury or property damage. They will also make mistakes that cost someone their life. At that point, the question moves beyond the ethical and becomes economic and legal. Since the robot is a machine, the question of liability will become perhaps even more complex than it already is. Since the manufacturer programmed the robot, are they not responsible for decisions that result in wrongful death? Will government impose ethical programming standards on manufacturers that requires all driving machines to make the same decisions? Or will the free market allow us to choose a range of moral options that give us some control over the decision making process in specific scenarios.

Driverless car manufacturers are well aware of these challenges, and are actively engaging philosophers and ethicists in an effort to work through the challenges linked to the first generation of “social robots.” While the moral questions regarding the greater good vs the rights of the individual have always generated endless debate, the issues of insurance and legal liability must get resolved in order for the driverless future to begin.  Will the same principles of negligence, strict liability, misrepresentation, and breach of warranty be applicable in this brave new automated world?

The Institute of Electrical and Electronics Engineers (IEEE), a well-respected organization serving the technical professions, has listed legal liability and public policy making as more important than technology and infrastructure as potential deal-breakers for in-car automation. In California, the Association of California Insurance Companies is already pushing legislation clarifying that manufacturers retain all liability for damage and injuries caused by their “product.” And the RAND Corporation think tank issued a report last year suggesting that a no fault approach for evolving car insurance laws would remove a blockade to a technology that will ultimately improve safety.

With on-road testing going on right now and manufacturers promising preliminary roll outs by the end of the decade, look for new developments in the area of vehicle liability law. In fact, this may be the time to supplement your law degree with a PhD in philosophy.

Secondments: A New Type of Legal Employment

I assume you are aware that we are now several years into an era of fundamental disruptions in the foundations of the law business.  Yet even as technology and other mega-forces drive this rapid and sometimes painful evolution, there are plenty of examples of innovation, progress and opportunity.

One shining area of positive growth is the “secondment” segment of the law services marketplace.  With increasing frequency, corporations and law firms are turning to secondment placement to fill knowledge or personnel gaps with high quality lawyers for short-term assignments. As a reflection of the overall employment marketplace as a whole, secondment is entirely consistent with the corporate shift toward more consultants/contractors and fewer employees.

For corporations, the rapid development of the secondment market is a welcome platform for maintaining high levels of performance within the corporate operation while controlling internal staff size.  The emergence of this business model has been particularly helpful for corporations who need a legal specialist, but don’t have the budget to hire one full time.  In-house legal teams also report that a secondee can leverage improved access to their outside law firm’s full range of resources.

Law firms are embracing secondments for essentially the same reasons as corporations do.  Beyond the prospect of tapping into specialty skills, law practices are also retaining the temporary services of a junior lawyer to perform routine work for large cases. As an extra bonus, the ability to search for “on demand” specialists – say intellectual property rights or health care – gives a small-to-midsized law firm to ability to take on a wider range of cases. Furthermore, clients are naturally predisposed to chose attorney firms that can tap into first hand knowledge of their particular business.

On the other side of the career coin, secondment placement can present  opportunities for attorneys with a wide range of experience levels and expectations. In particular, lawyers with who have had successful legal careers but have been downsized (or perhaps simply tired of workplace games) may use secondment as a re-entry point. Or they may simply be interested in controlling their own hours and income while leaving company politics behind.

The flexibility of the secondment concept opens the door to other scenarios as well. When lawyers who have spent time as successful secondees return to private practice, they usually discover they have developed a broader perspective as a result. With in-house experience at a secondment level on their resume, they are likely to be viewed as more qualified for work with corporate counsels. In general, the potential to expand one’s portfolio into more than one vertical business realm allows an attorney of any age to develop the kind of career agility the future (actually, the present) demands.

The secondment model is also ideally suited for mothers re-entering the legal market. The approprinate secondment strategy can accommodate women who are ready to go back to work full-time or who need to incorporate child-care into their daily plans. When the match is right, it is not uncommon for companies or law firms to hire their secondees as full time employees.

For law students as well, I recommend taking a look at a secondment placement as a place to start your career. While you have been in law school, the law business has transformed itself. And the transformation is continuing.  You will need to deploy a realistic balance in your attitude and expectations as you begin your career.  Consider looking at a secondment  as a first stepping stone into your future.

Artificial Intelligence: The Law Machine In Your Future

Everyone knows that technology has transformed every industry, market sector and profession, but few really understand how Artificial Intelligence (sometimes referred to as AI) is about to change everything again.  Unfortunately, as history has demonstrated time and time again, lawyers will be among the last to adapt to the changes.

The rise of online legal services has been foreseeable for some time, and the fact that they are already taking a bite out of traditional practices should not be a surprise.  Today, now, as we speak, technology in the practice of law is optimizing work flow, document production, information visualization in the practice of law.  Sites like LegalZoom are offering packaged legal services.  The fact is that these services are servicing a segment of our society that has been underserved because of the high cost of legal services.  Lawyers argue that these online services are inadequate and don’t cover all of the issues that consumes face.  But that rationale is lost on a public that sees these low cost, online services as being good enough for their purposes.

And That’s Just the Beginning

A bigger scary surprise is the thing called quantitative legal analytics. This term means that computers are increasingly able to predict the outcome of cases. They are intelligent.

Commercial organizations such as Lex Machina now offer Legal Analytics to legal clients, lawyers and even judges based on the ability to derive meaningful patterns from massive legal data banks. Among other functions, the software behind Lex Machina has been taught to digest data from other cases and documents and provide an assessment of facts and risks. When deployed in the marketplace, these “law machines” forecast the probability of success for any given lawsuit, and may well be involved in arriving at a settlement based on that knowledge.  And the company has just launched Trademark and Copyright Litigation Analytics Modules.

At this point, Lex Machina is said to be predicting the results of Supreme Court cases with 70% accuracy. As computers get faster and more data is processed, we can expect that percentage to rise.

From a personal point of view, I have already encountered one legal consulting firm which has created their own proprietary algorithm to help its business clients assess litigation challenges and outline a plan to defend a lawsuit. In other words, some lawyers have seen the writing on the wall and leveraged it to their advantage.

Saying Goodbye to the Hourly Fee

Lex Machina is not the only artificial intelligence product out there. Consider Kent Law School’s A2J Author software, which allows students to create guided interviews that help clients obtain standard legal documents (such as wills) without paying fees.

And that leads us to the bottom line: cost vs performance. The public doesn’t care whether they are using a real live lawyer or not.  All the public knows is that that legal services of all kinds are being offered at a low and fixed price – something they may be able to afford for the first time.

Lawyers need to face the reality that the hourly fee is an early casualty of smart machines because market forces are making it obsolete. Like anyone else, we need to sell to our clients what they want.  Maybe we should even start thinking of them as customers.

Nevertheless, I believe we will continue to selling our knowledge of the substantive law, procedural law and our judgment of what should be done in specific cases.  The practical problem we face is how to price this knowledge to our clients (customers). This is not an easy task for lawyers who have been raised with and have lived with the hourly rate. It doesn’t help that the courts employ an hourly model when awarding fees in fee-shifting cases. Nevertheless, for those looking to change with the times, the ABA has been offering publications on Alternative Fee Arrangements that offer guidance to lawyers on alternatives to the billable hour.

For predicting some aspects of the future, we don’t need algorithms. Here’s my personal prediction based on decades of experience and human analysis: In the future of law, there will be Lex Machina but there will be noDeus Ex Machina.

It will be the lawyers of the coming decades who learn how to harness smart machine technology as a tool to help assess a situation and provide a solution that survive and thrive.

Unbundled Legal Services: Opportunity or Threat?

Lawyers are part of a Changing World.

If you’ve been reading this blog recently, you know that we’ve been focusing on the hard realities of a rapidly evolving legal profession, along with lawyers’ general reluctance to confront them.  This week we will take a look at unbundled legal services: a runaway freight train of a trend that in many ways embodies the complexities of our changing business.

Also known as “limited scope representation,” “legal knowledge management” or even “discrete task representation,” this rapidly emerging business model could just as easily be called “a la carte law shopping.” The principle is simple and compelling: In order to reduce overall costs, client and attorney agree to limit the scope of the attorney’s involvement for a specific legal representation scenario. The lawyer provides representation or support for clearly defined legal tasks but hands over overall responsibility to the client.  The client saves money by paying a flat fee rather than a retainer and/or hourly fees and in the process assumes greater control over their legal destiny.

From the consumer’s point of view, this arrangement is a no brainer.  Why pay for the silver coffee service in a law firm’s conference room when you can source many of the key documents and components for your case online?  You do the footwork and buy your own cappuccino at Starbucks.

In an unbundled world, a client willing to shop for a “legal product” can save a lot of money and direct their own legal destiny.  In return, they must only be willing to forego the psychological safety net of full service representation.  The appeal is immediately obvious, the downsides less so. What could go wrong?

Catching up with everyone else
This new legal business strategy reflects developments in areas of commerce.  Take, for example, another industry that had things their own way for a long time: home entertainment delivery. For years there has been an ongoing dissatisfaction with cable/satellite companies’ practice of offering over-priced programming packages that require customers to pay for channels they don’t want.  Yet even in this semi-regulated, quasi-monopolistic market, a combination of consumer pushback and free-market technology have forced content delivery outfits to begin unbundling their channels.  Ironically, the cable industry may be up-ended even before it has had sufficient time to extinguish the network television model that dominated home entertainment for over half a century. The ability to download video via Netflix, Roku and Amazon has changed everything again.

These events (and dozens more) have not gone unnoticed by the more forward-looking, entrepreneurial members of the legal community who see the upside of delivering targeted legal tools in more efficient ways. And there are also plenty of non-legal organizations looking to grab the low hanging fruit, particularly public accountants and other financial services firms.  In fact, virtually every other market segment has moved to add value and remove expenses by deploying the internet and other disruptive technologies, while the historically closed law profession has been slow to get it.  The reason behind this movement is simple economic principle called supply and demand.   There is a strong need for legal services amongst the lower income people who have not been able to afford traditional legal services, and there are entrepreneurs and venture capitalists out there who recognize this untapped market and are using technology to service this market.

And, as usual, lawyers now need to play catch up.

The Genie is Not Going Back Into The Bottle

In 2002, the ABA Model Rule of Professional Conduct 1.2(c) formally opened up the possibility of unbundling: “A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.”  In the years since, the deployment of limited representation strategies began trickling and then spilling over into mainstream law practice.  By the time the California State Bar issued new ethical guidelines officially legitimizing the practice in 2009, the unbundling train had long left the station. Lawyer regulators have followed and adapted their rules.

Hand in hand with official support for on demand lawyering has been a corresponding wave of online advertising targeted to more focused markets – markets that have been underserved by legal services.  While certain areas of practice have always been more compatible with targeted messaging (family law, personal injury), the advent of unbundled services transforms the art of connecting with clients fruit into a science.  Not only do limited representation scenarios cost less, they are easier to market.

Within the past couple of years, we have witnessed the rise of online search engine-based sites that offer a veritable smorgasbord of legal services for set fees.  Some of these are backed by traditional law firms, but others guide the law shopper to legal support services companies, often based in low-wage countries overseas. And as more U.S. lawyers catch on, some of these unbundled products turn out to be new “brands” set up by traditional law firms.

Challenges and Opportunities

The truth is that many lawyers are offended by what is perceived as the commoditization of the legal profession.  It runs counter to our long held understanding of a lawyer’s special place in society and potentially cedes more control of the relationship with our clients than we are comfortable with.  But none of these means the end of the legal profession, merely that we need to change our approach to the legal service market.

There is no question that this new paradigm opens the door to downsides on both sides of the coin. There is enormous potential for substandard representation and even fraud in the marketing of unbundled legal services. There is certainly no reason to think that an assembly line approach to legal representation is going to improve the quality of advocacy, but it is also true that the standards of traditional lawyering have always run the gambit as well.

There are other landmines as well, including the possibility that traditional lawyers may be liable for malpractice lawsuits.  And there is no way around the fact that fees charged by attorneys for a wide range of services is under downward pressure.  Even law firms are outsourcing some types of expertise to the equivalent of online junior partners and forcing the largest firms to change their business model.

Nevertheless, there is at least one possible upside to this paradigm shift and it is connected to a principle of social justice.  Some of the most powerful arguments for unbundling legal services concern better access to legal services for poor and middle class citizens.  The ABA has long recognized that lower and moderate income households have historically avoided bringing cases to the legal system because of the high costs.  Unbundling is likely to make legal representation affordable for a segment of the population previously excluded from the game. At the same time, the slashing of legal aid budgets almost everywhere is removing a resource that has served less advantaged population segments.

In other words, there is every possibility that unbundling legal services will increase the value of the legal services pie as a whole. The law services market will grow even as traditional fee structures are sliced up.

For my money, the positive approach to the unbundling monster is to make friends with it and put it to work for you.  The very definition of “unbundling” means a law business can incrementally add components of the model into an existing business while still preserving a conventional practice at the core.  In a world where dentists are making more money giving collagen injections than cleaning teeth, we need to be prepared for anything.

For small to mid-sized firms languishing in the doldrums of uncertainty, incorporating limited representation options into an existing law business could well provide a jump start.  It is impossible to predict exactly where all this will lead, but forward-looking legal businesses are beginning to integrate unbundled services into their practices.  Emerging a la carte services include research, document review, discovery material organization and exhibit preparation. Tech savvy organizations are proffering teleconferencing services and cloud computing-based online dispute resolution.  Lawyers in many jurisdictions have begun offering legal ghostwriting, coaching and even role playing services in lieu of full representation. Yet others are opting to provide courtroom representation only in the trial phase.

Taking a cue from CPA firms, a new generation of attorneys may in due course find themselves pursuing professional roles as legal advisors and consultants in a role similar to that of a financial advisor.

Through most of this post I have avoided taking a strong position on whether the trend toward unbundled legal services is “a good thing or a bad thing”. That’s because how we lawyers feel about it ultimately doesn’t matter, in the same way there is no point in judging a tsunami.  It’s better to spend your energy getting to high ground while you are able to control the situation. You never know what opportunities you might find up there.

Resources
In Illinois scope representation is governed by the Illinois Rules of Professional Conduct and the Supreme Court Rules. Supreme Court Rules 11, 13 and 137 were amended effective July 1, 2013 to permit lawyers to provide limited scope representation in civil proceedings.

The Illinois Bar Association has provided numerous resources and guidelines for lawyers exploring unbundling services.

The American Bar Association offers additional resources to help lawyers, bar leaders, the judiciary, court administrators, scholars and the media better understand and critically analyze the issues involved in self-representation and unbundled legal services.

Are You Amazon or Mastodon?

A famous Chinese curse threatens: “May you live in interesting times.” Whether the result of a blessing or a curse, there is little doubt that the times we live in are interesting.  Even in the context of 5,000 or so years of constantly rising and collapsing civilizations, colossal change has never taken place as fast as it is happening now.  To a large degree, this roller coaster of upheaval and progress has been driven by major scientific and technological innovations. But in the 21st century, we have put the pedal to the metal.  Today, technology is evolving at such a breakneck pace that artificial intelligence seems to be developing more quickly than its human counterpart.

Every aspect of business and commerce is changing overnight, and then changing again.  If you wonder how fast things can move, consider the rise of online selling.  Amazon was founded just over 20 years ago and since that time the brick and mortar retail business has never been the same. Sears and JC Penny’s still don’t know what hit them.

An entire generation now does business using tablets and smartphones, while basing their social lives around the cool devices held in their hands.  On a daily basis, new apps are released that perform tasks that humans used to handle ourselves and some that had not been conceived of a year ago. Is there some reason to believe that the practice of law is somehow immune from this mobile revolution? Hint: the answer is “no.”

Large law firms in particular are under pressure to change their business models. Indeed, few professions suffered as greatly during the financial meltdown of 2008 – 2009. Many have dissolved, gone bankrupt, or laid off significant portions of their staff as corporations turn to other legal services such as e-discovery vendors. Some clients are outsourcing legal reviews to services in India. The pressures on these leading firms will ultimately have deeper impacts in legal education and lawmaking, and will affect the perception of lawyers’ place in our culture.

But large or small, every aspect of the legal practice is or soon will be affected by internet driven technological change and off-shoring. Global competition is hitting the law industry just as hard as it has hit other professions. The difference is that lawyers, understood by default to be among the more intelligent members of the workforce, are unaccountably slow to get the message.

But once you get the message, what do you do?

One credible voice sounding the alarm is Professor Richard Susskind, an Oxford professor and author who advises international law firms as well as national governments. Susskind has been a pioneer in legal information technology for over three decades and originated “The Grid”, a matrix that defines four general categories that map out potential IT applications for law businesses. In the proper context, the Grid can be employed as a rubric to move forward.

The good news is that Susskind believes that for those who are ready to adapt, this legal paradigm shift represents nothing but opportunity. But the upfront challenge will be for lawyers to pinpoint their special skills. In order to thrive, legal professionals will have to leverage their unique attributes, ideally those that can’t be replaced by an algorithm, sourced overseas or provided by non-professional personnel using advanced search systems.

In his most recent book, Susskind identifies four businesses models he believes law firms will need to embrace in the near future.  If you agree with his general approach to the future, I suggest you check out his suggested tools in The End of Lawyers?: Rethinking the nature of legal services.

Run Your Law Practice Like a Business

You have probably noted an ongoing “debate” on the topic of whether the practice of law is a business.  Some lawyers argue that since we are a learned profession, we are not running businesses, nor should we.  To those dinosaurs I say: Poppycock!

It speaks for itself that most of the lawyers who claim we are a highly educated profession and therefore not a business were either very successful in a specialty field or were professors of law. More power to them.  But as for the rest of us, we are operating businesses.  And if we don’t begin paying attention to how well we manage and promote our legal enterprises, we are in danger of going out of business as a profession.

If you don’t think the legal industry is a commercial enterprise, consider the following. We hire employees with related personnel issues. We have a payroll and pay payroll taxes.  We pay rent or buy real estate. We have debt. We have (or should have) systems to operate our practice. We have partnership issues. We market ourselves. We have business plans. And we are regulated. What else is needed to convince lawyers this is a business?

In one sense, the question at this point is more or less a matter of semantics. Law is clearly a profession, but since you are selling a service, it is also clearly a business. The distinction is not only arbitrary, it is also a potential threat to our future livelihood.

In an even more urgent sense, this philosophical debate is impractical in the real world.  The rest of the world is preparing to move ahead with or without us.  The market place has already recognized the legal practice as a business and is proceeding accordingly.  In fact, the entire legal field is viewed by many Venture Capitalists as fertile grounds for investment opportunities, but not necessarily by investing in law firms.  Instead, Venture Capitalists (who are not interested in whether or not they are part of a profession but are interested in making money) are throwing hundreds of millions of dollars at legal technology startups.

The commoditization of the practice is already well underway. If you are curious about the inevitable outcome of this juggernaut, ask your doctor how his life has changed.

In this rapidly evolving environment, I hope we can agree that simply doing a great job for your existing clients is not going to be enough.  If you expect to compete with the legal services companies that are growing under your nose, it’s time to get in the game as a business manager. And there are plenty of resources available.

Michael Gerber, author if the immensely popular book, “The E-Myth”, has written a version just for lawyers titled The E-Myth Attorney: Why Most Legal Practices Don’t Work and What to Do About It.”  In his book, Gerber points out that the secret to thriving is to operate like a business with systems in place and a comprehensive plan – a strategic plan – that focuses on your strengths and opportunities.

A great place to start is to set aside a specific chunk of non-law time dedicated exclusively to the administration and marketing of your law business. If you allot 30 to 40% of your time to developing and implementing a structured strategy for your organization, you may well find that you can pick and choose your clients.

There are lots of DIY books available on how to write a plan with all kinds of secret strategies.  One of the best I’ve seen is Successful Business Plan: Secrets & Strategies by Rhonda Abrams. I guarantee if you spend some time with this book you’ll find more than one idea that works for you.

You can’t afford to wait, so get a plan!  And remember: one of the things we help lawyers prepare is a strategic plan that is adapted to their particular field of law and locale.  Check out the Attorneys Creative Roundtable.  You won’t be disappointed.

 

A Checklist for Failure in 2015

or many people, it’s traditional to look back on the previous year seeking hints as to how to improve and thrive in the year to come. Common wisdom tells us it’s beneficial to begin the New Year on a positive note, but that doesn’t mean one shouldn’t be realistic as well. In this day and age, one needs to move forward with eyes wide open, especially members of the legal profession.

Over the course of the past year, the Attorney’s Creative Roundtable has focused on the unique challenges facing lawyers, especially change related to technology and global economic forces.

The recession has decimated the middle class, which has comprised the primary market of most small law firms. Commoditization of many aspects of the practice by online services has also cut into our traditional business model, while the onslaught of technology has taken over many routine functions. And, a recent report suggests that artificial intelligence may even cause a structural collapse of many law firms.

These pressures and others have put intense pressure on lawyers to adapt quickly or perish. So, while you’re considering your options for morphing your legal practice into the 21st Century, here is a checklist of practices that will ensure your imminent obsolescence.

  • Put up a simple webpage that doesn’t brand you or your firm.
  • Don’t create a Unique Selling Message (brand) for your practice.
  • Don’t establish a budget for marketing activities.
  • Don’t create a Strategic Business Plan for your practice. After all, your practice is not a business and you don’t have to use traditional business strategies in a law practice.
  • Don’t learn about Search Engine Optimization and how to improve your ranking on Google.Don’t have a LinkedIn Account and don’t post a picture of yourself
  • Don’t read Susskind’s book “The End of Lawyers” and in particular “Tomorrow’s Lawyers
  • Don’t add your name to any online attorney directories because prospective clients would never look for a lawyer on the web.
  • Don’t join Google Plus because you’ve never heard of it.
  • Don’t have professional pictures taken of you and your firm, and definitely don’t use these pictures on lawyer listing services.
  • Don’t have a Facebook page that tells people about who you are or what interests you.
  • Don’t reserve your business address on Google Local.
  • Don’t have a Twitter feed.
  • Don’t share anything on LinkedIn, Facebook, Twitter, or Google Plus.
  • Don’t adapt your practice to emerging technologies.
  • Don’t get a Smartphone and definitely don’t merge your client contacts information and your office calendar to your Smartphone.
  • Don’t use a tablet or iPad.Don’t publish anything, anywhere, and if you do publish something, don’t brag about it.Don’t send your clients, contacts or friends regular emails promoting your Unique Selling Message
  • Don’t exercise regularly.

Move ahead and don’t look back!  Wishing you a prosperous New Year!

The Tortoise and The Lobster

The Legal Profession Is Losing the Technology Race Faster Than You Think

robo-lawyer The legal profession continues to move at its traditionally measured tempo even as the winds of change blow past us like a rocket plane passing a Piper Cub. Unlike the relentlessly unhurried tortoise of Aesop’s Fable fame, however, the established legal profession is not necessarily going to win the race in the end. In our tale, we may be more like a lobster tossed onto the rocks in the sun: too lethargic to move the few inches back to the water necessary to survive.

To some degree, it is the very nature of our legal training and traditions that keep us from competing aggressively in a modern business world that sometimes seems to morph every few minutes. Lawyers are taught to be risk averse from the beginning. Our education requires us to assess problems and recommend conservative solutions that pose minimal legal exposure both to our clients and ourselves. Furthermore, our primary business models are antiquated. The partnership form of ownership requires consensus, but unanimity and compromise requires time that we don’t have. And at an even more fundamental level, we have been institutionally isolated and virtually free from competition. Court rules, laws and regulations have created what once amounted to a monopoly on the practice of law, and now that monopoly is being eroded by commoditization of the practice by online services

These are among the reasons we have been so slow to adapt our business practices to the tech driven revolution that is defining virtually every aspect of civilization. While we dawdle, cyclical economic forces and globalization are putting downward pressure on the demand for lawyers in the United States and the fees we can charge for their professional services. Indeed, some employee benefit packages now include limited coverage for legal services, allowing insurance companies to negotiate legal fees in the same way they dictate costs for medical services.

But the most powerful force of all is the relentless march of technology, and this is where the legal profession has historically struggled to keep up. I’m not talking about office technology here: certainly we have adopted desktop publishing, accounting and communication tools as well as anyone.

What is stalking our profession (at least as we know it) is information and data technology that is rapidly approaching the level of artificial intelligence. Internet-deployed software and databases combined with astounding computing power have made many routine legal services more widely available at a cost significantly less than what lawyers have charged. Routine (but billable) tasks have been increasingly offshored to places with educated work forces but far lower labor costs. Increasingly advanced search engines provide instant support for paralegal staff in far off locales that compensates for lack of a law degree.

Yet we have not yet begun to feel the full impact of algorithm-driven legal services. We are now seeing the legal equivalent of Deep Blue computers analyzing massive amounts of data relevant to law cases and spitting out evaluations and opinions in the same way a team of lawyers has always done. The difference is the computer can analyze far more data, far faster and far cheaper. The computer’s assessment is then turned over to a team of lawyers who can apply their knowledge and experience to the case. At least for the time being.

I am using the present tense to describe this scenario, because it is happening now. There are now litigation consulting firms offering analytical services based on complex proprietary algorithms. They are helping big corporations assess strategies and litigation alternatives and eliminating a lot of lawyering positions in the process. As big firms dump personnel, those unemployed lawyers will become sole practitioners practicing out of their basements, which inexorably means more competition in a shrinking market.

Will all this lead us to a legal profession dominated by Robo Attorneys? Will cars really be self-driven within a decade? Will stores disappear as Amazon takes over the retail world? Will people inhabit a virtual reality dictated by their eyewear? These answers are unknown.

But beyond question there is a potentially hostile reality waiting for lawyers who have not faced the onslaught of technology and what it means for anyone resistant to innovation.

As technology catches up to the slow moving legal practice, our challenge will be to find out how we can apply technology to our practices and remain relevant to the public. There will be drastic changes – just as Richard Susskind in his two books The End of Lawyers and Tomorrow’s Lawyers has predicted– and the challenge to lawyers will be to find a way to survive and thrive in the new legal landscape. Each of us needs to move into the tech waters or – like the lobster in our story – remain stuck on the rock and perish. How each of us does that depends on your unique situation.

Recommended Reading for the 21st Century Lawyer

If you love the legal profession as I do, nothing beats the actual practice of law, to the point that one can forget sometimes that a law practice is also a business. But there is no getting around the fact that law is simultaneously a business and a profession. If you run your own law practice, it’s essential to stay on top of the rapidly evolving business landscape of the 21st century.

Over the years, I’ve discovered a lot of valuable business guidance between the pages of books, particularly concerning how to anticipate and benefit from change. Here are some of the publications we recommend to lawyers who are committed to staying on top of the game as the century races onward to tomorrow.

“The End of Lawyers? Rethinking the Nature of Legal Services” by Richard Susskind. This is the book that catalyzed my thinking about the future of the practice and how lawyers need to adapt to evolving technologies, the internet and a sometimes tumultuous economy. In fact, this is the book that led me to start the Attorneys Creative Roundtable. I think “The End of Lawyers” should be required reading for every law school student. And, don’t forget Susskind’s follow up book, “Tomorrows Lawyers: An Introduction to Your Future” which describes a new legal world of virtual courts, Internet-based global legal businesses, online document production, commoditized service, legal process outsourcing, and web-based simulated practice. Both books are must reads and should serve as guides for lawyers looking to build a business for the future.

“The E-Myth Attorney: Why Most Legal Practices Don’t Work and What to Do About It” by Michael E. Gerber. In this book, “the World’s #1 Small Business Guru” applies his E-Myth theory to lawyers, stressing the importance of systems in a law practice. There are any number of components in a practice that can be systematized, which not only reduces costs, but also creates a better client (read “customer”) experience. As a follow up, we also recommend Gerber’s The E-Myth Revisited.

“StrengthsFinder 2.0” by Tom Rath. Many solo practitioners are forced to open their own practice just to survive and often have no sense of strengths and weaknesses. An old lawyer once told me that a solo practitioner is an unemployed lawyer. This books helps you identify the areas in which you excel and improve those in which you are weak.

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson and Andrew McAfee. Two visionaries discuss how technology is increasingly affecting our economy and the way we do business. As a result, we need to closely examine our business paradigms and adapt new rules that will keep every person economically viable in a time of increased automation.

“Abundance: The Future Is Better Than You Think” by Peter Diamandis. You won’t find this book on any other lawyer reading list. Diamandis’ book talks about the exponential escalation in computer speeds and how this technology explosion is creating new opportunities.

“Linked: How Everything Is Connected to Everything Else and What It Means” by Albert-László Barabási. An expert in the emerging science of networks, Barabási takes us on a compelling voyage to show that social networks, corporations, and living organisms are more similar than one would initially think. He then argues that this knowledge can help us improve our business structures, as well as improve the lot of humanity in general.

“The Cluetrain Manifesto” is a compendium of blogs by several authors that examines how the Internet is a new marketplace that offers a unprecedented freedom of expression. This disruptive cyber forum forces businesses to listen and converse with customers on a real level or face business extinction.

“Outliers: The Story of Success” by Malcolm Gladwell. A popular best-seller, “Outliers” may also be one of the best business books ever written. From his unique point of view, Gladwell explores why some business owners succeed, but others never reach their potential. What is it about their background and families that allows them to thrive? Gladwell believes some people have hidden advantages that propel them to high achievement.

“Traction” by Gino Wickman. Zooming in on the most common bad habits of entrepreneurs – such as piling on too many tasks – Wickman offers six key components for running your business more efficiently. This book provides a framework that can help a lawyer quickly get to a better place as a manager.

“The Goal” by Eliyah Goldratt. The late Mr. Goldratt is well known as the originator of the theory of constraints. In a departure from the self-help format, the former physicist lays out his relatively complex topic in the form of a thriller. Goldratt’s “bottlenecks” principle applies to virtually type of business and the novel is a fun-ish read.