In this week's Law Firm Disrupted, we look critically at the claim that advances in artificial intelligence will let lawyers focus on higher-value work.

I'm Roy Strom, and as the author of this newsletter I'm also focused on high-value work. Let me know how I'm doing at [email protected].

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As the legal industry has plugged along on a no-demand-growth trajectory for the past few years, some managing partners have explained their response as desiring to do “only the best, highest-value” work for their clients.

If managing partners are to be believed, nearly every law firm is pushing its way higher on the priority list of its clients. Everyone wants to be picked for “bet-the-company” litigation. I suggest not sleeping on “sell-the-company” deals, either.

If this is actually what is happening in the legal market—a great number of firms fighting for a small number of the highest value matters—then, of course, not every firm will win. There's just not enough of that work. On this point, I think most people agree.

A similar explanation has taken hold as people guess about the effect legal AI will have on the workforce. It goes like this: As AI takes more of the grunt work off lawyers' plates, they'll be free to move up the value chain to a higher level of thinking and legal analysis.

In short, everyone will go from grunt to great.

“I don't want to replace any creative thinking done by lawyers. I'm saying quite the opposite. I want to maximize the use of their important skills.”

That's what I was told by Shmuli Goldberg after his company, LawGeex, released a study this week that showed lawyers are probably wasting their time by manually reviewing non-disclosure agreements.

The study pitted 20 human lawyers against the LawGeex AI platform in a test to identify certain issues in five different non-disclosure agreements. The computer blew the competition—including lawyers from major companies and with Big Law experience—out of the water. It was faster and more accurate.

It took 26 seconds for the AI to spot issues in the contracts, compared to an average of 92 minutes for the lawyers. And the computer was 94 percent accurate, compared to 85 percent for the law school-trained individuals.

One of the (human) lawyers who participated in the contest said it opened his eyes to “how ridiculous it is” that people like him still spend their time reviewing NDAs.

“Having a tool that could automate this process would free up skilled attorneys to spend their time on higher-level tasks,” said that attorney, Grant Gulovsen.

If there is a more accurate and cheaper tool to accomplish a legal task, I have no doubt it will eventually be utilized—even in spite of lawyers' reluctance to trust machines.

But all of this talk about lawyers moving on to “higher-level tasks” is harder to take at face value, especially when it is offered as a reason not to be concerned about the legal job market.

There are questions to ask about that:

  • How much higher-level work is not getting done for today's clients at today's prices?
  • Will lawyers lower their prices in order to capture more work clients currently don't pay for? (Keep in mind this would be the opposite of how law firm pricing often works today. Much of the push by law firms into higher-value territory is done in order to protect rates.)
  • What types of higher-level tasks will clients pay lawyers to do?
  • Will clients pay younger lawyers to do things that partners do today?
  • What will partners do if that happens?
  • Will all the lawyers at your firm or company want to do higher-level tasks?

My point is this: Saying that every lawyer will move from grunt to great seems like an oversimplification of the effects that AI and greater efficiency will have on the market for high-end legal work.

That's not reason to abandon efficiency. It's reason to think more critically about what the future market for high-end lawyers will look like, and how law firms and law schools should respond to it.

Roy's Reading Corner

 

On Innovation: Sorry to burst my own bubble here, but a new survey shows a significant group of clients don't consider law firms innovative at all. As reported in The Artificial Lawyer, a group of 153 Australian clients were asked, “What makes the most innovative firm you know innovative?” More than a quarter—27 percent—answered “I do not consider any law firm innovative.”

From the Artificial Lawyer: “The report also states that '…of the law firms that were nominated as innovative, two-thirds were not the primary firm for the respondent. It seems most clients need to look over the fence to find innovative firms; and then the question is: are these firms amenable to and capable of helping?'”

On Law Firm Hiring: My colleague Caroline Spiezio reports on a convergence program at Avis Budget Rental that trimmed the number of provider firms at the rental car giant from 700 to seven. The revamp also included hiring more in-house lawyers and ended up saving the company 33 percent on legal fees in 2017 compared to 2015.

From Spiezio's report: “One crucial aspect of the plan, Koepke says, was bringing on more in-house legal help. Avis looked at its yearly revenue and realized the legal department was understaffed, he says, and that work that could have been done inside was being outsourced at a higher cost.”

On Hacking: From San Francisco, my colleague Xiumei Dong reports on the Global Legal Hackathon that was held last weekend at Orrick, Herrington & Sutcliffe's San Francisco office. The event, billed as the largest hackathon ever focused on the legal industry, was held at more than 50 locations across the globe.

A few good quotes from Xiumei's reporting:
“It is not that the legal industry is reluctant to adopt the technologies, it's just the design problems the legal industry faces are much harder,” said Mohamed Shakir, who brought with him a team of five engineers and designers from consulting firm Keystone Strategy LLC. Shakir is a technical engagement manager and head of Keystone Labs.

Zac Padgett, a managing associate at Orrick in Portland, Oregon, told Dong: “The legal industry is not immune to disruption.” He added, “The industry, just like other established industries, is susceptible to technology. Change is inevitable [and] it is time to focus on it.”

That's it for this week! Thank you for reading, and please let me know whether you think lawyers will smoothly transition into a post-grunt work world here: [email protected]