Why you should care

Because the driest profession going is about to get a whole lot more dynamic.

When you think about it, not a lot has changed in the legal world from the days of To Kill a Mockingbird to the latest John Grisham thriller. Sure, literature snobs may insist that Atticus Finch’s flawless moral heroism should never be compared to the conflicted protagonists of contemporary legal page-turners, but in terms of the substance of how lawyers do their lawyering, the fundamentals have barely changed in 80 years — from the career track of a young lawyer to the setup of a law firm.

The same cannot be said of virtually any other profession. Indeed, the legal industry seems more dusty than dynamic; the robes and wrinkles that mark those at the top of the field hardly scream modernity. But change is afoot, as a couple of powerful market forces are driving law firms to adopt modern corporate efficiency. At the heart of this movement are legal tech — including, yes, artificial intelligence — and demand. Since the financial crisis of 2007–08, there has been a “shift from a seller’s to a buyer’s market for legal services,” says a report from the Legal Executive Institute, as many commercial clients with tightened budgets began bringing legal services in-house. “It’s the alignment of tech and economics that is allowing all this stuff to start moving,” says Daniel Martin Katz, professor at Illinois Tech’s Chicago Kent College of Law.

The real roll-up of all this isn’t robot lawyers, it’s financialization, with law becoming an applied branch of finance and insurance.

Daniel Martin Katz, professor, Illinois Tech’s Chicago Kent College of Law

And, boy, is it moving now. In fact, some experts say the legal profession will soon look a lot more like another branch of corporate services. In areas like document discovery (sifting through a company’s entire email database, say, to look for evidence of employment discrimination) and due diligence (“reading” hundreds of corporate contracts to find anomalies), automated systems that accelerate legal work are already relatively widespread. More recent advances have started eating away at tasks higher up the legal food chain too. A few groups have developed software that can predict the outcome of court cases — some with more than 90 percent accuracy — by comparing key case details to hundreds or thousands of historical precedents. The underlying technology of these robo-legal algorithms is nothing revolutionary, says Katz, who also co-founded LexPredict, a company that employs case-predictive software in commercial consulting services. “All this stuff you could have done 10 years ago,” he says. “You just couldn’t sell it to anybody then.”

As for the profession’s decades-old business model, anachronistic practices such as charging by the hour once stifled innovation. With lawyers’ work revolving around billable hours, law firms were incentivized to make legal work as opaque and as long-lasting as possible to maximize revenue. “The alternative is to say a piece of work has a value,” says Peter Saunders, lead partner for professional practices at the accounting firm Deloitte. “If lawyers can work quickly and invest in technology to do it efficiently, then they make more money.” Experts say the culture of the legal industry is slowly moving in this direction.

Tech also is modernizing the legal industry through increased competition between firms, which in turn drives down costs and spurs greater innovation. “Probably the biggest issue in the space is that [lawyers] don’t have good quality-performance metrics,” Katz says. The cult of an individual lawyer’s reputation still holds sway rather than any objective measure of legal skill. But this old model is being thrown out as firms offering predictive legal-advice bots can compete for business based on their quantifiable past performance. This dynamic is playing out in the new medium of third-party financing of litigation: If a law firm’s machine is better at predicting case outcomes than machines at other firms, it can monetize that success by taking bets to finance the cases it thinks will be successful.

These changes to the law firm could force a restructuring of the legal workforce. The future law firm may be substantially based around a freelancer model, much like the advertising industry, argues Deloitte’s Saunders in a recent report. “Fundamentally, this model of taking people out of law school, training them, trying to retain the best ones … that needs a wholesale rethink,” he tells OZY. As law firms seek a competitive advantage, demand for varied freelancer expertise already is increasing, says Alison Bond from Vario, a freelance legal hub.

Of course, robo-law isn’t immediately going to upend the entire industry and replace all humans. According to researchers Dana Remus from the UNC School of Law and Frank Levy, a professor emeritus in labor economics at MIT, some headlines have greatly exaggerated the potential for algorithms to annihilate thousands of jobs in the industry. “You’ve got to think about a job as a bundle of tasks,” says Levy. Some can be automated; others categorically can’t. Remus and Levy’s research suggests that automation and other advances could increase the legal profession’s efficiency by around 2.5 percent per year and so reduce the labor force by the same rate.

Plus, “it’s still early days” for case-prediction technology, says Benjamin Alarie, law professor at the University of Toronto and CEO of Blue J Legal, which uses case prediction to provide automated legal advice in gray areas of tax law. Nevertheless, the nature of jobs and the skills required for them will no doubt change substantially, Alarie says.

So, young students who dream of becoming a lawyer — there is no longer a predictable career path to follow. Perhaps it’s best to ditch law school for now and first get a degree in computer science.

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