How Does the Idea of "Lawyer-less Law" Grab You?
That rumble you hear is the artificial intelligence steamroller, coming after your profession.
by Doug Richardson
Changes in the legal profession are accelerating so quickly that we've already transited through the fleeting period of law's "new normal" -- i.e., new ways of doing old things -- to a significantly different state of affairs some futurists are calling "New Law." This isn't just about a shift of power from law firm to client, or the layering of new tools and attitudes onto existing habits of service delivery. It's an entirely new ball game -- only actually soon it may not even be a ball game, because for most of the game there may not even be human beings out there on the diamond to toss the ball around.
Legal change agents already have gotten their minds around the notion of alternative methods of service delivery and a legal market invaded by a multiplicity of novel and innovative legal service vendors. But until now, their vision of the legal profession's future still centered on human judgment and human decision-making. In short, we're convinced we're always going to need lotsa lawyers.
Okay, we'll admit that many legal tasks (often those repetitive ones that we disdain by saying they are "commoditizable") can be done more cost-effectively and equally well by people, many of them out of sight in foreign lands, who aren't even lawyers. Legal Process Outsourcing, once dismissed as a relatively inconsequential service niche created to handle the narrow demands of e-discovery, suddenly is morphing and expanding to handle other tasks, as well. LPO vendors can forge direct alliances with clients to handle a diverse spectrum of tasks -- enabling the clients to lean out their internal legal departments and, even more significantly, reduce their outside legal spend by cutting law firms out of the loop (or, in some cases, compelling their outside firms to collaborate with LPOs, rather than using their own, less cost-efficient junior lawyers). You can see why this would be pretty scary stuff to law firms.
But, most lawyers' self-protective thinking goes, LPOs and other "alternative" modes of legal-service delivery are still only about handling ministerial tasks, right? We remain convinced that work that requires legal judgment will always be the province of lawyers. Technology may alter the landscape, we tell ourselves, but we will always control the technology. Law will never become some science fiction movie where the computers get smart and take over.
A Real Paradigm Shift
Except that it looks like this is an incorrect assumption. At the moment, we are probably in denial about the inevitability of a technology-driven profession in which, for the lion's share of legal work, human lawyers are unnecessary and insufficient. But it's time for a big-time wake-up call. As Richard Susskind has so cogently put it, "The enemy that kills you doesn't look like you."
I now am among those who believe that the legal profession is in for even a ruder surprise than it is now experiencing. Consider this singularly apt analogy: before the industrial revolution, firearms were made by craftsman. Each gun was fashioned, start-to finish, by a single artisan, with each component custom-crafted and slowly, carefully fitted to a weapon of often exquisite beauty. The parts weren't interchangeable, of course, and every gun was different, but purchasers were willing to pay for this unique product -- largely because it was the only product available.
When mass production enabled identical weapons with interchangeability of parts, no one cared that the artisans' guns were beautiful, because the primary purpose of a gun was to kill things and not to be beautiful. And, of course, mass-produced guns could be had at a fraction of the cost. Yes, today there still are craftspeople who can fashion a bespoke Purdey or Beretta shotgun or engrave your .357 magnum with a gorgeous Florentine design, but they function at the margins of gunsmithing. They are respected, but they are expensive, and their services are called upon only in a few unique situations. The mainstream has moved elsewhere.
Take Knowledge Management as an Example
Applying this analogy to just one small province in the legal profession, consider this: multi-office law firms with hundreds or thousands of lawyers already are spending big bucks to develop "sophisticated" knowledge management (KM) functions that allow all the lawyers in the firm to aggregate and access their collective knowledge, experience and work product. This is a tough challenge for the KM managers because honchoing all this information rapidly is bound to become an exercise in Very Big Data. Preserving all of a law firm's work-product history while organizing it in a way that's relevant to current conditions and engagements presents problems of scale and technology that boggle even the most innovative human mind (and that's only for a single firm's knowledge base; even the most razzle-dazzle KM capability in one firm won't access and integrate other firms' collective knowledge, so our grasp of "all the legal knowledge there is" is bound to be incomplete, no?).
On the other hand, data aggregation and management is right down the computer's alley. So most of us accept that we soon will stop trying to use the human mind to master, organize, and catalog legal information. But we still think we lawyers will continue to be the ones to deliver legal wisdom to clients.
Where Did Everybody Go?
Within the immediately foreseeable future, this comforting vision of lawyers' job security will probably prove obsolete. It appears that artificial intelligence -- AI -- will set many of us outside the igloo to freeze. We've already heard vague stories of software "expert systems" that "learn," that get smarter and more efficient as they perform repetitive tasks. Vendors are already marketing expert systems that don't simply create form documents from rigid templates, but that are capable of analyzing facts and situations to allow non-lawyers to create nuanced and sophisticated documents and, more important, to make nuanced and sophisticated decisions. As one such cutting-edge software company, Neota Logic (www.neotalogic.com), puts it:
Expert systems are a mechanism with which one can acquire the expertise of one or more people who know a lot about a subject and structure that expertise so that it can be delivered to other people (or thousands of them) who know less about the domain, but need a solution to a specific problem within the domain.
It's A Bot Time
We all know about robots and robotics: they are the mindless machines that perform repetitive tasks -- perfectly and precisely -- one at a time. As a lawyer concerned with your own survival, now it's time for you to learn a distinctly different phrase: software bot. Bots are the executive arm of artificial intelligence, and they are already here. At this very moment, IBM's Watson bot is rocketing medical science past the limited scope of human knowability, and many other mind-blowing bots in other fields are close on its heels. That rumble you hear is the AI steamroller, coming after your profession.
If you think I am warning that the sky is falling just for dramatic effect, let me suggest -- let me dare -- you to take fifteen minutes to have your world turned upside down. Pour yourself a stiff drink, sit down, fasten your safety belt, turn on YouTube, and watch the video entitled Humans Need Not Apply.
I think it will change your life. It sure has changed mine.
Winds of Change
The need for innovation has a significant impact on partnership structuring.
by Bithika Anand
Partnership structuring has undergone a wind of change in the past decade the world over. While historic structures such as the percentage based, eat what you kill, simple unit and lockstep have all stood the test of time, changing times, partner aspirations as well as evolving revenue dynamics have all contributed towards innovative modifications, as well as the creation of new equity models.
This is especially true in countries where the legal industry is at a stage where the largest law firms are not large enough, and small law firms also have the ability to compete effectively for a share in the pie.
So what are some of the reasons why innovation has become inevitable in such situations?
The changing and varied roles of a partner make it important to reward contribution holistically, including business origination, execution, administration, management, brand building, client retention among other activities.
The increasing trend of partner movement, including lateral movements, breakaways as well as consolidation, has clearly resulted in firms being open to reexamine their partnership structures to ensure that structural rigidity does not dent an otherwise lucrative relationship.
The speed of transformation from a junior partner to a senior partner has also made innovation critical. At times there is a huge generational gap between partners at a firm. This may have at some point meant respect and hierarchical order. However, in today's law firms it is fast changing due to the demand of age-equalization and the demand for larger rooms, name on the door and then the building, increased signing power as well as a more robust equity sharing system.
What are the firms doing then?
Firms that either followed or were looking at the traditional lockstep method have in the past as well as now looked at modifying the same through techniques such as introducing high-flying and performance related bonuses, managing gateways, introducing downward movements. On many occasions, we have set out to modify the lockstep and have ended up with a system that does not retain an iota of the fundamentals that a lockstep is based on.
Many firms are increasingly applying systems that are performance based. While this may give the indication that there is a movement back towards the traditional "eat what you kill" method, however as mentioned previously, "performance" has an expansive definition encompassing all aspects of performance which also include multiple firm-level initiatives.
Monthly partner drawings are also looked at with different motives and intentions. Certain firms use the same as a luring tactic by treating it as a minimum guaranteed amount, which while it will be paid out, may lead to a negative capital account balance for the partner. Some firms may also limit the monthly drawings to revenues that are generated for the month. Retaining a fixed percentage of all monthly drawings is also a trend firms use to both ensure continued commitment and investment as well as a shot in the arm for the firm's cash flow.
The buzzword that is evident in all of this as well as the mandates being received from law firms is 'Innovation.' Every firm wants the right blend of a system that is tried and tested as well as unique to their firms and partner requirements. This combination of new and old has made equity structuring in today's firms challenging yet extremely imaginative!
Contact the author, Bithika Anand
Law-firm Leadership: How to Gain Permission to Manage
Managerial culture brings out the best in law firms and their partners. Here are 8 ways to foster it.
"Herding Cats" is the all-too-familiar refrain when describing what it's like to manage lawyers. While most all law firms have some managerial undergirding, partners/owners of the law firm business itself don't like it very much when law firm leadership makes decisions that constrain the way they want to practice their craft. Deference tends to be earned grudgingly and in small increments. "You have full discretion to buy the paperclips you want, but don't make me extend myself for one of my partners to build a relationship that won't result in credit in my column . . . !"
But like most businesses, law firms need to be managed so that firm assets (i.e., relationship assets and other assets) being managed by individual partners can be fully exploited for the broader benefit of the firm and other partners. Lawyers join larger law firms in part because they expect management to help find ways to cause "1+1=3" -- and they expect some of these instances to redound to their benefit on occasion.
What can a managing partner and law firm leadership do to create a managerial culture when none exists? First off, let's define a "managerial culture." One can think of it in terms of collective goals, and the individual accountability that partners accept to achieve those collective goals. Lawyers are told to build their own practice, impart leverageable wisdom to clients, and be self-sufficient. There's a kind of Darwinism endemic to law firms that can work at cross-purposes with a managerial culture -- often the only existing "collective" accountability is in the zeal with which individual partners try to build their own practices. "Build your practice, grow the pie, and the firm health will take care of itself . . . "
Partnerships that understand the role each partner should play in helping their colleagues perform better are more effective, and in this way a managerial culture can help bring out the best in the firm and the partners. Described below are a few steps managing partners and law firm leadership can take to erect some desirable managerial scaffolding.
- Take a Listening Tour. White-collar business people want to be heard, and law firm partners are no exception. Even if you have a very good idea what the managerial structure and processes ought to look like, go out and ask the other owners of the business what they think. You'll stumble onto some very good ideas that wouldn't have occurred to you and, more importantly, you'll have laid down some of the important building blocks of "credible" management -- inclusiveness!
- Pronounce a New Normal. Start having isolated dialogue with the leadership team about the need to pay ongoing attention to longer-term and near-term firm objectives. Resonate with the partnership through their aversion to risk. Partners need to see risk to their wind down compensation levels and post-retirement benefits; they need to see risk to the way they would like to run their practice longer term; etc. A high performing, actively managed enterprise that pays attention to longer-term firm health tends to respond best to the risks that may be afflicting the partnership.
- Build Consensus from The Inside Out. Before announcing the need for near-term and longer-term planning, socialize the idea in stages. Float the idea by a small subset of firm leadership.
- Adopt a Planning and Execution Process. "Real" businesses do this, why can't law firms? A real planning cycle occurs during the same time every year, and the roles that practice group and other firm leaders play in the process are spelled out clearly. Equally as important, the followup execution against substantive priorities should be supported with regular, recurring "process" -- e.g., regular meetings to assess status and monitor progress should be dialed into the calendar even if the situation on the ground is relatively quiet. Consistent and persistent progress will be made through consistent, persistent monitoring and "statusing."
- Be a Servant Leader. Give the partners the dog food they want to eat first; gain permission to move them toward other less well supported goals through the equity built up from this. I was fortunate enough to witness the MP of one of my clients execute this leadership approach beautifully. The firm was the product of a merger of equals, and the MP had been the MP of the legacy firm with a better developed approach to law firm management. After conducting his own "listening tour" (see above), he focused on putting some immediate "points on the board" by knocking down the most broadly supported wish list items that were easy to accomplish. Over time, he was able to build a rough consensus around more fractious but (in his view) necessary priorities because of the credibility he earned through his "low hanging fruit" strategy.
- Document, Document, Document! Build a habit around documenting important law firm priorities, initiatives, and decisions that emerge from the management process; if these things aren't documented then they won't have a shelf life beyond the meeting itself. Also, if something isn't important enough to write down and circulate to a broader population of business owners, then it's not important enough for them to take seriously.
- Maybe Khrushchev Had Something. You may recall the then Soviet leader Nikita Khrushchev banging his shoe on the dais at the UN to make a point that he repeated annoyingly non-stop. In most all broadcast communications MPs should mention "often and loudly" the few animating priorities the firm is pushing, and tie back the subject of the communication to those few priorities. At the risk of predictability, MP messaging should build a bridge between what the MP is asking the owners to do today (or over a multi-year period) and the well settled priorities the firm is driving.
- Democratic Management & "Ideation." Firm partners can be a great source of "ideas" that have real durability and viability. When business owners feel they have been heard, they are also more likely to get behind the collective priorities that come from the small leadership group.
Legal League Consulting, LLC
Delhi and Mumbai,
At The Podium: Upcoming Appearances by Edge Partners
Nick Jarrett-Kerr, Nov. 4
Workshop: Duties in Partnerships and LLPs. Association of Partnership Practitioners. Royal Bank of Scotland 280 Bishopsgate, London
Bithika Anand, Nov. 7
Nick Jarrett-Kerr, Nov. 7
Conference: The Convergence of Business and Law Think|Manage|Lead. Trident, Nariman Point, Mumbai
Lex Mundi Knowledge Management Roundtable. Maclay Murray and Spens LLP, London
Jordan Furlong, Nov. 18
Virtual Presentation: Legal Futures Conference, Era of the Entrepreneur
Gerry Riskin, Jan. 30
The Westin, San Francisco CA. St. Frances on Union Square. Keynote: Wayne Hyatt Lecture Series
"Anticipate the Future: Thriving in Spite of Extreme Changes in the Legal Profession"