Automation Technology and the Future of Law
The below post comes from eBrevia co-founder Adam Nguyen. It originally appeared in the American Bar Association’s Law Technology Today.
Last month, I had the privilege of participating in a spirited panel discussion at the second annual Above the Law Converge Conference at the University Club in New York City. The panel examined the future of legal practice, specifically exploring the impact of emerging technology on legal careers. Joining me were Dr. Silvia Hodges-Silverstein, Executive Director and Founder of Buying Legal Council, Jessica Hunt, Managing Director of Axiom, and Rakesh Madhava, CEO of Nextpoint. Elie Mystal, Media Editor at Large at Breaking Media, moderated the session.
A central message I sought to convey is that the future of law is already here. With the proliferation of automated legal tools, we are witnessing a wave of new methodologies that reduce or eliminate tedious legal tasks. There is a burgeoning legal technology scene that the world needs to hear more about.
Three main issues arose during the panel discussion.
What will happen to our jobs if “robots” take over?
No lawyer wants to be replaced by technology. However, technology has long since been automating legal tasks. For instance, we have been conducting legal research by using search engines with complex algorithms versus going to libraries and thumbing leather-bound books; e-discovery tools automatically sift through millions of pages to identify relevant documents; for decades, redlining software has been performing document comparison, a process previously done by hand. We often take for granted automated tasks precisely because we no longer have to concern ourselves with doing them manually.
The phenomenon of technology automating manual tasks will only accelerate, but I do not envision a dystopian future. Although technology is taking over many aspects of lawyers’ jobs, automated tools are adept at rescuing lawyers from low-level and repetitive tasks, such as document management, contract review, filing, docketing, billing, and accounting, which bear little connection to law practice but increasingly consume much of lawyers’ time. In fact, according to a survey of 500 lawyers nationwide, more than 50 percent of the respondents ranked administrative or practice management tasks as the top activities eating up the majority of non-billable work hours.
The rise of machine learning and other artificial intelligence technologies means that lawyers can shift their focus from grunt work to the meaningful practice of law. Instead of paper pushing, lawyers can now perform work that clients truly value, i.e., the work of the intellect. In effect, automation is not eliminating jobs, but reallocating time to allow lawyers to engage in the analytical, creative, and strategic parts of legal practice.
Will there be a trend of smaller firms and solo practitioners starting their own practices?
For many lawyers, the business administration associated with the practice of law is a major hindrance to forming boutique firms or solo practices. If we could adopt technology to eliminate most of the menial, administrative tasks, we would see a proliferation of smaller firms and solo practitioners focused on delivering value to clients. Lawyers will have more time to pursue specialized legal work, which is often an important differentiator for smaller firms. I predict also that the increase in cheaper practice management tools will break down barriers for lawyers to launch smaller practices.
What should law schools do to train future lawyers?
Many law schools are ill-equipped to train their students on legal technology and tools that are widely available today. Law school pedagogy, which relies on appellate court rulings and the case method devised nearly 150 years ago, bears little semblance to the reality of legal practice.
Law schools must innovate their curriculums by incorporating technology as part of a larger interdisciplinary approach to enhance the practice of law and, in particular, to train future lawyers to more effectively and efficiently deliver legal services—whether representing large corporations or advocating on behalf of indigent individuals. Schools should consider offering coursework, clinics, internships, and conferences that focus on legal technology. A good example is the Stanford Program in Law, Science & Technology, which positions Stanford Law School to be a leader in shaping the trajectory of legal technology, as well preparing its students to be innovative legal practitioners and thinkers.
The Converge Conference is aptly named as we seek to shed light on what the convergenceof law and technology means for our industry. Increased automation will help lawyers focus more on the analytical part of their work, lead more lawyers to open up specialized, boutique practices, and hopefully motivate law schools to make technology an integral part of their curriculums. As we continue to map the future of the legal industry, I have no doubt that technology, especially automation software, will remain a significant catalyst for further changes.
Tech Innovation Next Growth Driver for CRE Industry
Several years after the global financial
crisis, the commercial real estate industry has gained solid footing, better positioning itself for growth in 2015. A positive outlook has large institutional investors showing greater interest in the industry, as evidenced by a recent BlackRock survey.
Commercial real estate is a massive industry (approximately the size of the $15 trillion US stock market), yet it faces a host of challenges in order to continue growing. A primary challenge relates to finding ways to promote efficiency throughout the industry by embracing technological innovation. This is particularly true as it pertains to some of the more laborious but essential aspects of the industry such as lease administration.
Historically, a sense of technological complacency has characterized the CRE industry. Real estate is notorious for having created immense wealth without much alteration to tried and true processes. For this reason, CRE firms often see little incentive to expend resources on technology, even though much of the lease administration implicit in commercial real estate work is extraordinarily time and labor intensive.
For example, lease abstraction is an integral part of lease administration as well as an important element of CRE transactions. However, accurate lease abstraction, whether performed in-house or outsourced, requires extensive review and manual mining of lengthy and complex lease documents, costing property management organizations fees in excess of hundreds of dollars per lease. Investing in automated lease abstraction technology to augment human reviewers translates not only to significant cost savings for CRE firms, but also leads to an improvement in the quality of lease data abstracted, giving firms who utilize such technology a distinct advantage over competitors.
Up to this point, technological innovation on the commercial side of the real estate industry has been limited, giving CRE firms few opportunities to improve their workflows. Yet with $605 million invested in real estate tech in 2014, a whopping 2.5 times venture fund investments in real estate the year before, many are pointing to innovation on the commercial side as the next growth driver for the industry.
Parallels can be drawn to other industries in which innovative technology has substantially improved efficiency and accuracy. The litigation side of the legal industry has been using eDiscovery software for many years to accelerate processes that were once performed solely by people. More recently, artificial intelligence tools have been augmenting human contract review on the corporate side of the legal industry as well. In both cases, technological innovation spurred increased efficiency, helping firms get through reviews more quickly, with ultimate time and cost savings passed on to the clients. It is not surprising that real estate attorneys in law firms have been some of the earliest adopters of CRE technology.
As real estate technology continues to evolve, more and more commercial real estate professionals will incorporate technological tools as a seamless and essential addition to their natural workflow. Some may argue that when it comes to improving commercial real estate management through technology, we’ve only just begun to scratch the surface. But I would argue that where technology stands today marks a significant starting point for helping real estate companies create additional real and measurable value for themselves and their clients in the years to come.
Why Corporate Law is Ready for Technological Innovation
The following is a repost from an article written by eBrevia’s CEO Ned Gannon in Law Technology Today.
Undeniably, technology has revolutionized the business world, rapidly changing and expanding in every field imaginable. When it comes to the legal services industry, technological innovation is no exception. This is not surprising given the size and scope of the market—the second largest professional service industry in the U.S. With the 250 largest law firms employing more than 113,000 lawyers, this industry has the means and the need for technology to help address the many challenges facing today’s legal professionals.
Even in light of recent news about a hot M&A market and increase in associate bonuses, the legal climate has changed significantly over the past five years and a new reality is taking shape. More and more, clients are refusing to pay for junior associate work, outsourcing low-level work, and seeking alternatives to the billable hour. Increasing cost-cutting mandates from clients have made finding value and efficiency high priorities. In-house legal departments are facing mounting pressure to both improve the efficiency of their own operations while tackling a more expansive workload and also reducing the amount they spend in legal fees on outside counsel. This demand to do more with less is in turn passed on to law firms, who in a buyer’s market, must find ways to differentiate themselves and provide more value for clients to justify their fees. This relentless drive toward cost-effectiveness has made it necessary for both law firms and in-house legal departments to adopt technology that will make them more efficient.
Technological innovation as a means of creating more efficiency has been steadily emerging across many areas of the law. According to Altman Weil’s 2014 Law Firms in Transition Survey, when asked about the most likely change agent in the legal market over the next ten years, 32% of law firm leaders chose technological innovation.
Much of the focus of innovation to date has been seen on the litigation side. For example, eDiscovery tools and software have enabled significant time and cost savings when it comes to reviewing emails and other digital records.
Unfortunately, the level of innovation in legal technology has not been evenly distributed, particularly when it comes to transactional work. In the $93 billion corporate law industry, companies spend an estimated $4.2 billion each year on legal fees in mergers and acquisitions alone.
Why so uneven? One of the reasons we have seen technology advance with eDiscovery versus due diligence is that litigators must go through vast databases of email, coding responsive or non-responsive documents, which yields a binary analysis. Artificial intelligence tools can learn based on how attorneys have coded a subset of documents and then apply that learning to the remainder of the documents. However, in the context of corporate due diligence, complex provisions that wind their way throughout a contract must be extracted and summarized for a vast number of highly varied documents. As a result, it is imperative that the machine learning technology used in this setting be more specific and nuanced to be able to recognize the variety of ways in which concepts can be expressed and extract them with a granular focus.
One of the biggest lessons learned from eDiscovery is how dramatically software can improve speed and efficiency, particularly with regard to low-level work. Prior to using some of the eDiscovery tools now available, document review was extraordinarily time intensive. But technological innovation spurred increased efficiency, helping firms get through reviews more quickly, with ultimate time and cost savings passed on to the clients. Expedited document review is also a helpful differentiator firms can use to better market themselves. Many parallels can be drawn to the transactional side of the legal industry where completing the due diligence process efficiently in a merger or acquisition allows the corporate attorneys involved to focus on the negotiation of the deal documents.
This is not to say that software will replace the junior attorney. Rather, attorneys will be able to use technological tools to help them work more accurately and efficiently. Software is most effective when incorporated as a seamless part of an attorney’s natural workflow. This is particularly true of machine learning software in contexts where use of the software enables it to get “smarter” over time. As legal technology continues to evolve it will be important to use what we’ve learned from eDiscovery to apply to future due diligence and transactional tools.
If technological innovation is to play a role across a wider range of legal specialties, now is the time for transactional attorneys to experience and embrace it. Due diligence and contract management are significant cost drivers in corporate law, making this an area that would particularly benefit from the efficiency of technology (speed, cost savings, increased accuracy).
In today’s changing legal climate, lawyers have the option to embrace technology that will help them do their jobs better, more accurately and more efficiently. Corporate lawyers are in a strong position to reap the benefits of this next wave of innovation, setting the stage for a more efficient legal practice.
What is the Future of the Legal Profession?
At ReInvent Law NYC, legal futurist and Professor Richard Susskind presented on the Future of Artificial Intelligence and the Law (full video available here). He sought to forecast the future of the legal profession. Much of the development in the next few decades will come from a combination of big data, cheaper, faster, stronger computer processing, and AI. In his eyes, law has always been a fertile field for artificial intelligence because it involves rule-based expert systems that can be programmed into computers.
Professor Susskind outlined areas where AI could be applied in law:
AI to discover patterns. He used the example of how Google uses search queries for symptoms to identify flu outbreaks in geographic areas. Similarly, AI could be used to identify patterns and areas of weakness for lawyers (i.e. potential plaintiffs).
E-Discovery. The most inroads in automation have already been made here, but this technology is still evolving.
IBM’s Watson. Susskind discussed how IBM’s supercomputer beat chess masters and Jeopardy champions using its natural language processing and machine learning features. In a few years, Susskind believes that we will all have Watson-level supercomputers in our smartphones. In a decade, we will have Watson-level applications geared specifically to law.
Susskind made additional forecasts about the direction of AI in general. He believes we will begin to move away from AI modeled on the human brain. He predicts that we will become comfortable interacting with systems as though they were people, especially as technology improves (the combination of near perfect speech recognition, real-time translation, enhanced natural language processing, and brute force computing). He views online dispute resolution as an area with great possibilities for AI in law.
Stage 1 = Denial. GC’s are re-tendering legal services. Firms are offering alternative fee agreements and addressing redundancies. The industry at this level is hoping for no real change.
Stage 2 = Re-Sourcing. Here, legal services are being disaggregated, deconstructed, and outsourced. GC’s are rethinking what work is done in-house and firms are turning to business process outsourcing.
Stage 3 = Disruption. Here technology such as intelligent discovery, automated document production, and electronic legal market places will augment what exists now.
eBrevia is well-positioned to help companies and corporate attorneys navigate stages 2 and 3. eBrevia’s advanced technology already uses proven natural language processing and machine learning software to help attorneys extract and summarize contract provisions. As Moore’s Law makes supercomputers readily accessible to the consumer market, eBrevia’s products will become more powerful and effective at helping our customers analyze and draft contracts.
Oxford Study Cleverly Uses Automation to Predict the Effects of Automation in the Workplace
Bloomberg News recently reported on an Oxford University study on the impact of automation on the future workforce. Carl Benedikt Frey, a research fellow at the Oxford Martin Programme on the Impacts of Future Technology, and his colleague Martin Osborne, created a study where they tried to evaluate 702 different jobs to see which ones could be automated. They discovered that they could not create standardized computerized parameters for 70 of the jobs, and they analyzed the remaining 632 jobs to see the likelihood that the job could be fully automated.
Fortunately, for the legal profession, the study found that lawyer positions only have a small, 3.5% chance of becoming fully automated (of the remaining jobs, 47% were at great risk of being automated within the next two decades). This is because legal work requires creativity, such as thinking of novel, contract clauses or case strategies, and this creativity is difficult to automate. Day-to-day legal practice also requires another hard-to-automate skill, the human component of communicating with clients one-on-one, and anticipating their needs.
Automation and artificial intelligence will instead help streamline the more mundane parts of existing legal practices for cost and time savings. For example, the article discussed the eDiscovery space, which has a number of automated tools to assist associates. On the litigation end, one firm used the eDiscovery software from Recommind, a San Francisco company, to reduce a colossal document review project that would have required 13,000 human hours to complete to 600 human hours. Similarly, corporate lawyers can use tools such as eBrevia’s Diligence Accelerator to reduce the number of human hours spent on the standardized task of due diligence. As Professor David Martin Katz, who we profiled in this earlier post explained, “It doesn’t mean you need zero people, but it’s fewer people than you used to need.” These labor savings will be passed on to clients and will also help firms meet tight deadlines while conducting a more accurate due diligence review.
Consumer Facing Legal Tech Start-ups Vying for “Regular Joe” Customers
Consumer-oriented legal start-ups are trying to use technology to bring down the cost of legal services for the low-to-mid-income legal market. The LA Times recently highlighted companies hoping to tap into the latent $45 billion legal market that is would otherwise find itself priced out of conventional legal services.
One company, Shake, offers a Smartphone app that streamlines the process of creating and signing simple contracts. The app allows users to create one of six contract types and parties can sign the contracts by swiping with their fingers. The app is targeted to freelancers and participants in the sharing economy who may rent out their apartments for a short time. (A screenshot of the Shake app’s simple user interface is featured to the right.)
A much larger player in the field, LegalZoom, which provides legal documents online and matches lawyers to clients, is focused on both developing new tech products in-house and acquiring and partnering with companies in the legal tech mobile app space.
We, at eBrevia, are keeping an eye on the consumer space. We one day hope to offer to consumers the ability to harness our technology to compare and analyze common agreements.
Artificial Intelligence Startup DeepMind Bought by Google for $400M
Google announced that it was purchasing London-based AI start-up DeepMind Technologies, Ltd., for $400 million. This purchase is an acqui-hire of the DeepMind team, including its founders Demis Hassabis, Shane Legg, and Mustafa Suleyman. Per Re/code, which broke news of the deal, DeepMind has a team of at least 50 people, and is “the last large independent company with a strong focus on artificial intelligence.”
DeepMind combines machine learning with systems neuroscience to develop learning algorithms. The latter component shows the influence of its founder, Hassabis, a neuroscientist.
Its first commercial applications are in simulations, e-commerce, and games. Its applications’ breadth shows the ever-expanding growth of machine learning and AI tools.
An Evangelist of Legal Innovation
One of the figures that Law Technology News chose to spotlight not just once, but twice, in 2013 was Daniel Martin Katz.
When he isn’t teaching law students as an assistant professor at Michigan State University, Katz travels the world as the co-director of ReInvent Law, a “law laboratory,” which seeks to meld “innovation, technology, and entrepreneurship.” On the conference circuit, he is a proselytizer for disruption in the legal industry, and pushes for change through technology on his blog, Computational Legal Studies. He pushes firms to compete not on legal expertise alone, but to also compete on process, essentially “law + tech + design + delivery,” an application of the TED ethos to law firms. At a talk last year at Fordham University, he highlighted the ascendency of the legal technology industry and the challenges that law firms face to growing their own R&D departments internally.
Katz described the legal tech sector, as a fragmented one, where some product areas are mature, while others are heating up. For instance, while the names of some electronic discovery software vendors may be household names already, there are fertile additional areas for development, including search, data visualization, document generation, and quantitative legal prediction. In Katz’s words these independent legal tech providers “are eating the lunch of traditional entities,” the firms.
Katz advised big law that they need to have their own research and development departments, but noted that firms are hampered by an under-investment problem, where the partnership model makes it difficult to risk partners’ money to develop products within the firm, products that may or may not pay off in the long-term. Moreover, the ABA Code of Professional Conduct Rule 5.4, ties the hands of firms further, because it forbids firms from accepting financing from non-lawyers. There’s no outside pool of money to fund ambitious training or software projects.
Katz’s proposed solution to the Rule 5.4 problem is a dual system in big law, one “that allows for ‘both legal service provision by partnership,’ and ‘technology, process, [and] marketing by [a] separate entity with outside capital.’” A long-term service contract between the services-providing partnership and the firm’s innovation division would prevent partners from defecting and give them a vested interest in the technology under development. Given the familiarity of firms with the process of providing legal work, Katz anticipates that this change and a focus on R&D within firms would create “even more innovative configurations of Law + Tech + Design + Delivery.” As developers of the technology, firms could license the platforms they develop to other entities and firms.
We are excited to see how Katz reassesses his push for firms to innovate in 2014. If you are in the New York Area, his next ReInvent Law NYC event will take place on Friday February 7, 2014 at Cooper Union, and Ned and Adam from eBrevia will both be there. If you would like more info on trying to meet up at ReInvent Law 2014, feel free to drop us an email at email@example.com.
Technology as a Central Component of In-House Comprehensive Management
Per Corporate Counsel, Huron Legal surveyed 71 law departments from companies, with revenue ranging from $5 billion to $89 billion dollars, for their 2013 Benchmarking Report. The survey highlights common project management practices that in-house teams are using reduce legal costs:
Would Your Firm Pass an Associate Tech Audit?
At the 2013 Legal Marketing Technology Conference/West, a panel of in-house counsel emphasized that possessing tech savvy was key to winning their business. As Law Technology News reported, one of the panelists, D. Casey Flaherty, Kia Motors’ corporate counsel, highlighted his self-devised “tech audit,” where “Candidate firms are asked to bring a top associate, who is given mock assignments that test the computer skills…like publishing to PDF, sorting a Microsoft Excel spreadsheet, and using Word styles.” While these tasks would seem fairly straightforward to a firm’s word-processing pool, so far no firm has passed this test using associates.
In addition to these rudimentary skills, the panelists emphasized that “Knowledge management is also becoming a differentiator.” Flaherty explained, “If I have to review 50 different sets of statutes, I will be attracted to a firm that consolidates all of this information in one place and gives me one tool for finding it.” This quote highlights the fact that as the legal technology space continues to evolve, to compete effectively, law firms must stay abreast of electronic tools that will help their clients save money and make information easily accessible.
(*Photo courtesy of RLHyde)