Dreaming of the Future of Law Firms

In my previous post, I identified a number of themes that weaved their way through the sessions I attended at the annual conference of the International Legal Technology Association (ILTA) in August. I did note, however, that one session, entitled Do Robot Lawyers Dream of Billable Seconds?, was particularly provocative. I therefore opted to devote a full post, namely this one, to that one session.

The panelists were (in alphabetical order) Stuart Barr of High Q, Joshua Lenon of Clio, Michael Mills of Neota Logic, and Noah Waisberg of Diligence Engine. The panel was ably led by Ryan McLead of Norton Rose Fulbright and also of the 3 Geeks and a Law Blog.

The session generated a veritable “tweet storm” as it took place, but, more interestingly, in addition to Ryan having written a summary on the 3 Geeks blog, each of the participants afterwards wrote follow-up posts about the sessions:

• What will the law firms of the future look like?, by Stuart
• Four Visions of the Future of Law, by Joshua
• Technology & The Future of Law: A Forecast in Four Acts, by Michael
• My “More Efficient Future, Fewer Lawyers?” Talk at the International Legal Technology Association Conference, by Noah

I don’t anticipate that most readers will have the time to read all four of these, although you are warmly encouraged to do so. I would suggest, however, that, if you can read only one item about this session, it be Ryan’s synthesis and reflection, entitled The Exponential Law Firm.

An often-quoted bromide, attributed to various individuals including Yogi Berra and Neils Bohr, is that “prediction is very difficult, especially about the future.” Each of the panelists noted that particular peril, but, happily for us, plunged in regardless.

Here’s my synthesis of the different views expressed at this session and in Ryan’s follow-up article, along with a couple of related observations:

• Peter Diamandis’s keynote address (which I noted in my previous post) talked of the “six D’s,” which all start with, and flow from, digitization of content
• Digitization of “law content” has already started
  • o Just look at what has happened already in e-discovery
• It is almost impossible to see exponential change, except in retrospect
• The effect of digitization will be the same in our industry as in all the others, namely, exponential change
  • o As Michael pointed out, despite what lawyers might think or how they may currently be acting, we are not immune to the forces that have transformed far larger industries
  • o However, the general reaction seems to be that “the practice of law, which is a profession, isn’t affected by the same trends as in industry”
• “Lawyers and IT personnel, as a general rule, do not think much beyond the next immediate hurdle. They approach the world linearly, solving problems as they arise, and planning for a steady progression of linear events.” (Ryan)
• The way that legal services are currently delivered — by (expensive) legal experts, usually from (comparatively expensive) offices (which means a number of fixed expenses) — means that the current players in the legal market have significant legacy costs, which hamper their ability to do things differently
  • o The example of Blockbuster and Netflix was cited more than once
• The tyranny of the billable hour, delivered by lawyers who practise in a partnership structure that cannot retain any earnings for, say, R&D but which must distribute its profits every year, makes change difficult
  • o Every dollar invested in the future is one dollar less in the partners’ pockets today
• Many people are resistant to change, but studies have shown that lawyers are even more so
  • o How many times have we heard the comment, “I didn’t go to law school in order to do X!”
• Much current discussion focuses on the need to innovate
  • o But as Bruce MacEwen at Adam Smith, Esq., recently noted, true innovators don’t focus on innovation as an end in itself but rather on delivering exemplary customer service
  • o Law firms that wish to innovate, however, often focus on their own needs, not on client needs
• Ever greater computing power, harnessed by market entrants who are not burdened by legacy costs or the confining influences of either the billable hour or the partnership structure, gives these newer players great flexibility
  • o At a number of different sessions, it was noted that it was just a matter of time until IBM’s Watson would be trained upon the legal market

The prognostication, then, would seem to be grim. The panelists were, however, rather upbeat in their predictions of where this is all leading us.

Stuart Barr envisages the emergence of “new structures that provide a framework for innovation, more like a tech start-up than an old fashioned institution. Firms will be looking to hire entrepreneurs, technologists, and big thinkers to help them.”

Michael anticipates that the successful firms are the ones that will figure out how to “leverage without associates and bill without hours.”

Joshua said that, “It’s worth considering that the distinction between ‘big law’ and ‘small law’ may not exist in the future. We’ll all be part of a new system that I would call ‘swarm law.’”

Noah was, if anything, the most optimistic of the bunch. He noted that legal problems are, if anything, growing in complexity and hence there will be a continuing need for experts to solve evermore complex issues. “Efficiency,” he said, “can drive demand, which can then lead to more legal work.”

So, where does that leave us? We know that the death of the billable hour has been predicted for some time now, yet those pesky tenths of hours still persist. Will change be as rapid as in the changeover from Blockbuster to Netflix, or is there some underlying inertia in law, the result of which is that the changes here will be slower than in other markets? All we can do is wait and watch.