Speaking of the industry being "over-lawyered," one of the reasons that that conclusion is being reached is because of the impact of incoming new technologies, which are not even yet being fully felt in the industry–technologies that both raise the hope of more targeted and cost-efficient client service while at the same time spelling the demise of many back-office, data slogging, routinized legal jobs.
The current market size of legal process outsourcing companies (LPOs), the most established industry adjuncts using technology to facilitate and speed routine legal work, is hard to estimate, but it is likely between $500 million and $900 million in revenue, with forecasts, acccording to Sylvia Hodges, director of research services of TyMetrix Legal Analytics, of $2 billion in 2012 and $4 billion in 2015. Already the three leading LPOs’ market share has grown significantly over the last few years– CPA Global and Integreon were the only LPOs in existence in 1998, with Pangea3 being formed in 2005–at a time when many traditional law firms have been suffering negative to flat growth.
Another fairly entrenched technologically-based legal adjunct is LegalZoom, founded in 2001, which Forbes warned "[j]ust as Craigslist decimated the newspaper industry by taking away its low-end but profitable classified-ad business… targets the high-volume, low-cost business of providing basic consumer and business documents."
Then last year Google Ventures announced it is part of a group investing $18.5 million into Rocket Lawyer, the "fastest growing online legal service." For $9.99 to $39.95 a month, basic personal and business documents are reviewed by a real lawyer and further on-call legal advice is available at no additional cost.
If you are thinking that these services target the kind of business your firm is not providing, that your advice is more nuanced or complex than any online service can offer, be aware that technological creep, or perhaps an avalanche, is heading your way.
At a class at Georgetown University Law Center this year called Technology, Innovation and Law Practice: An Experiential Seminar, students used a new technology platform developed by Neota Logic to provide on-line generated expert answers to various complex problems that would require a real-life associate hours of research and interaction with a client to duplicate.
[Full disclosure: I once practiced law with Michael Mills, formerly a partner at Mayer Brown and for many years the Chief Knowledge Officer at Davis Polk & Wardwell, who is currently CEO of Neota Logic, and from whose insights into the tech side of the practice of law I benefit greatly.]
The six expert systems designed in the class were:
- Business Entity Adviser
- Copyright Navigator
- Palagora: The Online Marketplace of Legal Vendors
- Protective Orders Made Easy: On the Beat – Automobile Search Warrant Adviser
- Same-Sex Marriage Adviser
- The Citizen Adviser
The Citizen Adviser won Best Iron Tech Lawyer 2012. The Same Sex Marriage Adviser won for Excellence in Design and Copyright Navigator won for Excellence in Presentation.
Neota Logic touts its expert systems as the solution to business operations that generate a steady flow of questions in an area that is important or complex enough to require advice of counsel, yet repetitive or frequent enough that continutally consulting counsel isn’t practical or financially sustainable.
According to Neota Logic’s publicity material, it is "a unique form of publishing, in which law firms… build applications that companies can deploy on their intranets or embed in compliance, HR, trading and other systems," enabling law firms "to create innovative, differentiating services that, first, solve problems for clients that can’t otherwise be solved cost-efficiently, and, second, leverage the firm’s expertise more effectively than can be done via billable hours alone."
Neota Logic applications deliver "legal and regulatory guidance to business people when and where they need it—while business is being done, 24/7, anywhere. As one general counsel said, ‘No more memos . . . we want answers.’”
As examples, the company can help provide real-time answers in financial services as to netting and collateral enforceability in cross-border transactions, an issue with daily balance sheet impact, and in human resources, it can advise line supervisors on employees’ entitlement to family leave under federal and state law, a frequent source of litigation when decisions are made poorly.
Do these sound like any part of your practice?
The other upside to such a technologically driven expert system is a better quality of practice for young lawyers. When asked by a reporter if she worried about competing with a computer program, one of the class participants answered:
"No, because this is our ally. This is basically our associate and we’re the partner. And the associate gathers all the information for us at a cheaper rate, and then they come to the partner, and the partner can give them all the tailored advice they need." Which of your associates wouldn’t rather be the partner to a data crunching, law searching computer program than the fodder in lieu of the program?
As Law Professor Tanina Rostain, who developed the seminar contends, "technology is most likely to eliminate boring, routine legal work, the kind of stuff lawyers hate to do. What’s left is the creative legal work computers can’t do."
Of course, every firm risks the downside too–the elimination of inefficient lawyering that punishes your bottom line if other more efficient services are not being offered.
As Ms. Hodges points out: "The intelligent use of purchasing has already helped companies rein in rising legal fees by separating legal services into commoditized segments, including paralegal and research needs, and creating sourcing strategies for each individual segment. Rather than emphasizing the firm’s quality legal services (this is assumed), and the relationship with the GC, firms need to get their own metrics right, benchmark themselves against industry-best and develop robust pricing models and business practices to support them. That’s what counts. The new litmus test is: ‘Does it make good business sense to work with you (your firm)?’"
Management guru Tom Peters, author of In Search of Excellence, pointed out years ago that "excellent firms don’t believe in excellence—only in constant improvement and constant change."
Is yours a firm of excellence or is others’ excellence going to run your practice over?