Dan Katz on Legal Informatics, Corporate Law Firm Ownership and 21st Century Legal Education

recent article argues “65 percent of today’s elementary aged kids may end up doing work that hasn’t even yet been invented.”  This is a thought provoking number and it points to the disruptive nature of innovation and its impact on a variety of labor markets.  There is a portion of the downturn in legal hiring that is associated with the business cycle.  When economic conditions improve – there should be a rebound.  However, starting even before the recession, it is reasonably clear that a serious structural change was underway.  Expect this broader trend to continue.  As Bruce H. Kobayashi & Larry E. Ribstein have argued, we are at the very beginning of Law’s Information Revolution. Whether we like it or not, informatics, computing and technology are going to change both what it means to practice law and to “think like a lawyer.”

Yesterday’s Fast is Today’s Slow: For better or for worse, when it comes to building software, there is nothing deeply exceptional about a subset of tasks undertaken by lawyers. In this vein, law is like other industries. The bundle of skills associated with the practice of law falls on a continuum – where a number of basic tasks have already been displaced by computation / automation / “soft” artificial intelligence. Faced with cost pressures, legal information technology is being leveraged to either automate or semi-automate tasks previously performed by teams of lawyers. Namely, a series of first generation innovations such as e-discovery and automated document generation have already imposed significant consequences on the legal services market. Like many industries before it – the march of automation, process engineering, informatics, supply chain management and quantitative prediction will continue to operate and transform the industry. In fact, when it comes to the application of the leading ideas in computation, informatics and other allied disciplines, the market for legal services lags behind many other sectors.  In other words, this is only the beginning.

As I have mentioned previously, what is very much in play is the infamous line from There Will be Blood – “I Drink Your Milkshake.”  In this metaphor, technology is the straw and the legal information engineer is Daniel Day Lewis.

Software is eating the world (including white collar jobs) and as such yesterday’s fast is today’s slow.

The Scandal of the Profession: Legal Service Provision at the Retail Level: Technology is a disruptive force but it can also be a force for good.  At the retail level, legal services are simply too expensive.  For years, the outright inability to provide reasonably priced legal services for even simple tasks has forced millions of Americans to go it alone.

Companies such as LegalZoom have admirably tried to fill this gap.   However, various regulatory limits such as the bar on corporate law firm ownership and limits on the unauthorized practice of law have prevented a real solution to the problem of the unlawyered population.  With respect to corporate law firm ownership, both Renee Knakeand Gillian Hadfield highlight the significant potential upside for the consumer.  The ability to apply process engineering, leverage supply chain techniques and analyze queueing datashould allow for the unlawyered to become lawyered at an affordable price point.

Although the job will likely come with a lower salary, a service delivery model at the lower end of the market should help create net jobs for lawyers.  When it comes to deregulation, I would consider myself to be a pragmatist.  Given just how bad the current model of legal service delivery actually serves the average consumer – we should be prepared to usher in the age of reasonably regulated corporate law firms (i.e. the age of WalMart Law / Google Law/ etc.).  

London Calling: I would like to also highlight at least one additional upside of a rapid move toward corporate law firm ownership – the ability of U.S. non-firm firms to be global competitive.  As has been mentioned by others, the UK has recently modified their Legal Services Act such that WH Smith Law / Tesco Law / etc. will likely go live in the coming months.   Given this rule change, it is likely that the UK is going to generate the service delivery model and ultimately export that model to the United States (not the other way around).  The future is likely to have fewer lawyers (as we traditionally understand them today).  However, the future will also give birth to completely different job sub-sectors.

The center of the legal world may very well shift toward London. I am quite concerned that presence of the ban on corporate law firm ownership will cause the United States to be left out of a significant portion of the new jobs created during this new era of legal service delivery.  London (and not somewhere in United States) may become the Silicon Valley of the Law’s Information Revolution.

Why?  Because the UK is going to develop the business model, the UK is going to develop the internal logistics and the UK is going to develop the legal information technologies that will allow it to become the center of the 21st Century legal universe.

Product Differentiation in the Market for Legal Education and Being Part of the Solution Professor Campos has asked us to be part of the solution.  I agree we should be part of the solution.  However, what is the solution? What is the positive agenda? How can legal education be reoriented to help increase the chances that our students are able to secure employment?

Across the entire economy as well as within the law business, there is a great skills mismatch.  Thus, the question that should be asked is what class of skills an individual needs to be successful in the 21st Century law practice.

If our students are going to survive (thrive) in this market, they need to be trained to efficiently leverage information technology and in some cases develop a new class of information products. This is an age of technology – an age of information – so you might wonder – where is the MIT School of Law? As Larry Ribstein has argued, we need product differentiation in the market for legal education.  Arbitrage opportunities abound – the question is who is going to be Billy Beane.

In this conversation, it is important not to be fatalistic and to instead emphasize how individuals and institutions can respond. Students with a background in science and technology (rather than say the humanities, etc.) are likely to have a significant advantage in law’s information revolution. Institutions can help level this playing field by offering their students the requisite skills training necessary to be competitive within this new ordering.  At Michigan State University – College of Law, I am currently developing a series of potential courses that I believe can aid my students in being Legal Information Engineers and 21st Century Lawyers.  (1) Quantitative Methods for Lawyers (which is part Statistical Methods and part Legal Information Technology) (2) Legal Informatics, Legal IT and Legal Supply Chain Mgmt. (3) Law 3.0 – Yeah There is an App for That  (Building Legal informatics Software including IPhone/Android Apps).  Expect other institution to follow suit.

Yes – There is Going to be Math on the Exam: In closing let me offer these thoughts.  Markets are not pretty places and all one can do is try to adapt to changing circumstances.  The pathology of attending law school to avoid math/science simply must give way to a new reality.  In other words, if the real world is the ultimate test — then — yes — there is going to be math (and computing) on the exam.