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‘Legal freegans’ are looking to ‘eat your lunch’

Managing Editor Regular News
Vision 2016

‘Legal freegans’ are looking to ‘eat your lunch’

Advanced technologies and nonlawyer entities are encroaching on the traditional practice of law

Mark D. Killian

Managing Editor

In the 1880s, a group of experts was asked about New York City’s future. While the prognosticators correctly predicted the city’s population would swell exponentially, they concluded New York would become uninhabitable due to the waste generated by more than six million horses the city would need. The impact of the internal combustion engine and electricity was not taken into consideration.

John Stewart When the Vision 2016’s Technology Group sat down at the Bar’s Winter Meeting in Orlando, Chair John Stewart told that story (taken from Jeff Stibel’s 2013 book Breakpoint and discussed in an article by William & Mary law Professor Frederic Lederer in the January/February issue of The Bencher ) as a parable of the difficulties in discerning how emerging technologies and other trends will affect the future practice of law.

Nevertheless, the 68 members of the Bar’s Vision 2016 commission continue their three-year mission to identify the challenges that lie ahead for the profession and to set out a framework for meeting them. In addition to technology, the commission is also focusing on the future of legal education, Bar admissions, and the delivery of pro bono/legal services.

Bar President Eugene Pettis said the commission will spend the next six months collecting information and educating themselves on the issues at hand.

“It is important that if we are truly going to shape the future and be the architects of our future, we are learned in the subject matters we are going to address,” Pettis said.

Jay Cohen, the commission’s administrator, asked the four subgroups to spend the afternoon narrowing their focuses to three to five key issues each. (See story, here. )

Jordon Furlong, a Canadian lawyer and consultant to law firms on strategic and tactical issues with Edge International, told the Technology Group the biggest issues the profession will face in the next three to five years include:

* Technology that performs a legal or lawyer function.

* Online dispute resolution.

* Technology assisted review.

Companies entering the legal market, including LegalZoom and RocketLawyer, can draft, in a matter of minutes, “airtight, top-notch contracts,” pulled together without the use of a lawyer, he said.

“They are really not doing anything that a law firm could not be doing right now, as well, or frankly could have begun doing five years ago,” Furlong said.

But that’s just the beginning, as more powerful and sophisticated technologies start pouring into the legal marketplace.

“Software,” Furlong said, “can answer straightforward legal or regulatory or compliance questions without the involvement of a lawyer.”

One such company is Neota Logic, which Furlong said is already being used by law students at Georgetown and some large law firms.

On its website, Neota Logic touts itself as able to deliver knowledge in an operationally useful form as expert systems that can be consulted interactively online or embedded directly in business systems.

“We transform expertise into answers and action in law, compliance, risk management, accounting, human resources, environmental regulation, medicine, and other fields,” according to the company. “Our technology, the Neota Logic System, solves problems in many fields, just as Microsoft Excel solves financial and numerical problems without programmers, quickly and efficiently.”

While Furlong said predictive data technology is still in its infancy, interviewing software is quickly growing in power, traction, and users.

Are these machines practicing law?

“Yes,” Furlong answered — to a certain extent.

He threw out a few questions:

* Should we ban them? “The effort will be interesting, but I’m not sure will be very successful.”

* Should we ignore them? “I think that would be unwise.”

* Should we adopt them? “Instead of worrying about how technology like this would replace us or knock us out of our position, can we find ways to co-opt it —find ways to integrate it into our practices in order to make those practices more effective and deliver more value to our clients?”

Online Dispute Resolution

Online dispute resolution is already well established, Furlong said, with companies such as eBay and PayPal already using ODR to resolve upward of 60 million disputes per year.

“This has the potential to get really big really fast — resolving disputes without going to a lawyer or judge,” Furlong said.

One online dispute resolution company is Fair Outcomes, Inc., which Furlong said was created by a Boston lawyer and uses game theory to eliminate disputes in both business and family law.

Fair Outcomes, Inc., says on its website that it provides parties involved in disputes or difficult negotiations with access to newly developed proprietary systems that are grounded in mathematical theories of fair division and of games.

“Our founders and staff include game theorists, computer scientists, and practicing attorneys with extensive experience in designing, administering, utilizing, and providing consulting and online services with respect to such systems,” according to the company.

“Is ODR in a position where it is going to replace some aspects of ADR?” Furlong asked. “Full replacement? I highly doubt it, but displacement or moving into that field? Quite possibly.”

Furlong anticipates advancements in ODR will ultimately reduce the number of cases litigated in court.

He said the Vision 2016 commission should consider if courts should adopt these technologies to use in affiliation with its other dispute resolution tools.

Furlong said ODR technologies most likely will appeal to the latent legal market and will be seen by the public as something that improves access to justice and legal services, which will make it difficult for lawyers to make the case that these types of services should not be offered.

Assisted Review

Also on the horizon are assisted review technologies that do not require the active participation of lawyers, or, at the very least, the central participation of lawyers.

“Predictive coding is basically computer software that, instead of saying to a lawyer: ‘Here are 10,000 emails; read each one and figure out what is relevant to our case,’ the system uses an algorithm, scans a sample of each document, and can make accurate forecasts of which are significant and which should be used,” said Furlong, adding that it is similar to software used in spam filters.

Looking at long-term ramifications, attorneys also need to be concerned about predictive analytics or the whole area of “Big Data,” such as IBM’s Watson, which can understand natural-language questions and access huge amounts of information to come up with answers. While Watson is currently being used in medical fields, Furlong expects it eventually will turn to the law.

“When it does, we have to be clear about the impact it will have,” Furlong said.

In January, IBM announced it plans to invest $1 billion in its IBM Watson Group, according to The Economist magazine.

“If you are a litigator, I imagine a point in the not very distant future, where if a client asks you: ‘Will I win this case?’ and you will be actually able to provide a predictive response based on analytics and data.”

Legal Freegans

University of Miami law Professor Michele DeStefano, founder of LawWithoutWalls —which strives to develop the skills necessary to provide effective legal services in today’s global, multi-disciplinary, and cross-cultural marketplace — said as the legal profession changes, lawyers need to grow with it.

“People outside of the law keep saying, ‘When is law going to change?’ But, as you all know, we all have actually changed a lot over at least the last five years, and some of those changes have been brought about by globalization.”

While globalization offers many benefits, it also presents challenges. No longer are lawyers just competing for business with each other; now nonlawyers around the world are vying for work traditionally associated with attorneys, especially when it comes to support services, she said.

Any legal work that can be defined, repeated, and is predictable is ripe for legal process outsourcing, or LPO, DeStefano said.

Some of those companies include:

* Black Hills IP, a U.S.-based company that provides outsourced legal support services. Its legal support services include intellectual property docketing, paralegal, proofreading, and annuity management services. The company says it uses advanced automation software to make paralegal work more accurate, efficient, and cost-effective.

* Pangea3 is a company that DeStefano says provides many law-related services, IT, and back-end services that are profit centers for many U.S. law firms. Headquartered in New York and Mumbai, India, Pangea3 provides legal services and intellectual property services to in-house counsel in U.S., European, and Japanese corporations, and attorneys in international law firms.

* KM Standards describes itself as a knowledge-management company using “technology delivering the first and only contract analysis software.” KMS says it has brought “innovative search engine analyses to the field of transactional practice.”

DeStefano said the technological changes now entering the legal marketplace are often referred to as “disruptive innovations.”

“To differentiate, you do need to innovate,” DeStefano said. “At least for us to stay profitable as lawyers, we need to change what we are doing.”

DeStefano warned there are “legal freegans” out there who are looking to “eat your lunch.”

“They are trying to give to our clients what we do, and they are not lawyers,” DeStefano said. “But the problem is: Who can tell the difference? What we are defining as law versus non-law has changed dramatically.”

One of the challenges is that these nonlawyer companies are offering the same services as lawyers at a much lower or the same cost, and many of the companies entering their field are large accounting firms “that are not bound by the same rules of professional conduct that we are.”

DeStefano said the result is new law firm models and ways to deliver legal services, such as Riverview Law, a U.K. company that aims to change the way organizations use, measure, and buy legal services through fixed price annual and multi-year contracts, plus litigation and advisory packages.

Another is Axiom Law, a 1,000-person firm that bills itself as “experts” in the business of law. “We experience a nerdy excitement from helping general counsel solve business problems, and we do it through three forms of engagement: insourcing, outsourcing, and projects,” says Axiom Law’s website.

“Axiom Law is changing the game,” DeStefano said. “They are not a law firm, but I would bet 80 percent of people surveyed in the law market that have ever heard of them or looks at their website would think they are.”

Axiom Law says it is currently serving nearly half of Fortune 100 companies through 12 offices and four centers around the world. DeStefano said Axiom Law opened in 2000, was profitable by 2003, and has raised more than $90 million in private equity, including investment by J.P. Morgan.

Axiom Law’s niche makes sure whoever uses its services is an in-house lawyer, in order to avoid running afoul of unlicensed practice of law statutes, DeStefano said.

Services are offered “at a fraction of the cost,” of traditional law firms, she said.

“But, believe me, they are offering legal services — or what you and I would call legal services,” she said.

On the other end of the spectrum is the aforementioned LegalZoom, going after the legal consumer directly, and also mid-sized corporations.

“You can get divorced online,” DeStefano said. “You can draft contracts online.”

When LawWithoutWalls went looking for trademark protection, DeStefano said, she was looking at an $8,000-to-$10,000 expenditure using the traditional legal market. LegalZoom did the job for less than $1,000.

Like LegalZoom, RocketLawyer is also focusing on mid-level corporations, offering all the forms LegalZoom does for free, but charging for lawyer and consultant services, DeStefano said.

Another new company is Legal Force, which DeStefano said maintains an in-person kiosk in Palo Alto, and everything else is offered online.

“Blending may be the future. . . a lot of virtual interaction, but when you need a person, you can have them,” she said.

Jim Calloway, director of the Oklahoma Bar Association’s Management Assistance Program who has chaired the ABA’s Tech Show, said with more artificial intelligence functions entering the legal marketplace, lawyers are going to be forced to pick up the pace.

“We, as bar associations and as court systems, proceed very cautiously and deliberately. And, too many times in meetings, we are very good as a profession at poking holes in other people’s arguments or standing up for the status quo. We are approaching a time — largely because of technology, but also because of consumer demand — that we are going to have to be more dynamic and be more nimble,” Calloway said.

He said technology is already pervasive in law firms, and there is no getting around that technology is going to push aside a lot of barriers.

“Whether we think it is a good thing or a bad thing is going to be irrelevant. It is going to be something that happens,” Calloway said.

Furlong used a football analogy to describe the future role of lawyers.

“We need to look at various areas of the legal market and the various functionalities of legal services and ask ourselves if we are the quarterback, the ones who direct the entire offense and are in charge of everything. Or, are we like a wide receiver, an essential member of the offense but not necessarily involved in every play? Or, are we a situational third-down slot back, which is to say a specialist brought in maybe one play out of 10?” he said. “I don’t know the answer to that, but I do think there are factions in the legal market in which lawyers can play any of those roles.”

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