Recently, Microsoft made news when it announced that it will challenge each of its outside law firms to describe one innovation that they have brought about in the prior year. It is hard to say which element of this is the most troubling. It might be that only Microsoft, among major purchasers of legal time, is asking for this, or it might be that Microsoft is only asking for one innovation per year. Then again, it might be my pick, that the mere act of a client asking a law firm to innovate is considered newsworthy.
But we know this, right? Other industries—pharma, aerospace, finance, and even cannabis—cannot wait to tell us about their many innovations in product and delivery. Law lags so far behind that at some point there is little point in noting it.
This also means that there is no shortage of opportunities to innovate in the legal sector. So here’s a better question: Where is the productive frontier in legal tech? Where is the best place for us to invest our blood, our sweat, our tears, and other peoples’ dollars? To put this question in Jetsons’ terms: Should we seek to create the law equivalent of flying cars—blockchain and synthetic polities and AI (weak, strong, and breakfast blend)? Or should we just try to improve the cars we already have?
Our community is in wild disagreement on this point. In the flying cars camp, we have the purported creator of blockchain explaining that we must free law from the constraints of government, burning our legal system to the ground and building a new one from the ashes. The other team, well, they are telling me that a Dell laptop counts as an investment in legal tech. Because it’s tech. That could be used by a lawyer. Right?
So Who Wouldn’t Want A Flying Car?
I have heard the flying car arguments. They are deeply appealing and seductive. Generally, they fit into one of three categories:
- The legal system is so broken that we must throw it away and start over.
- This new tech is so damn cool, it must surely have a use.
- We can create new capabilities that prior generations never thought of, and therefore, we should.
Each of these has its merits. The first proposition, the idea that we might actually start over with a fresh sheet of paper (and one that is not 8.5” x 14”—just imagine!), is achingly beautiful. But what would we replace the legal system with? I don’t know. No one else seems to, either.
I find similarly on the other two categories. If you cannot find a product-market-price fit, you have an answer in search of a question. This is not a good investment posture. I’m certain that your AI, with five years of tinkering, can let me know when my parking meter has expired or counsel me through a divorce—Kryder’s Law and Moore’s Law certainly say it’s possible. But does anyone want it?
“But That’s Not Real Innovation”
Many people feel that flying-car innovation is the only “real” innovation. I’m often told so. Respectfully, I disagree.
If we really want to bring about change, I say start by asking, “Where is the change needed?” Here, we have some clear answers. People don’t know who they can trust when it comes to legal help. They’d like to know who they can rely on. If they are in a rural area, they would like better delivery; if they have to pay, they would like it to be more affordable. Would they also like to understand the help they are being given? Maybe, but just as with medicine, it might be enough to grasp the big picture, or it might be enough that a provider they trust says it is what they need. In either case, your cloud-enabled service to deliver machine-curated citations on demand is likely not the answer for the average Joe or the average CEO.
Learning From Others
Recently, the automotive industry faced a similar choice of strategy—not concerning flying cars, exactly, but cars that can drive themselves. This sector has the deepest R&D investments in the world. It has long been clear that autonomous vehicles are coming and that governments will increasingly mandate all-electric automobiles and therefore create consumer demand. Still, it wasn’t until 2016, 13 years after Tesla opened for business, that investment in these two areas finally jumped:
Source: Brookings Institute, Gauging Investment in Self Driving Cars, Kerry, C and Karsten, J (2017)
And yet, about half of all vehicle R&D continued to go to other areas, even after 2016. What in the world were these dumb researchers working on, when they had such sexy-sexy alternatives? I interviewed an employee of Ford’s autonomous vehicle division who, after getting me yawning with his explanations of concepts like mixed-material crumple zones, told me that a lot of effort went into things like materials—more specifically, toward proving to U.S. car executives that aluminum could be molded to be as strong as steel. Why bother with this when you could be teaching a Porsche to Whip and/or Nae Nae? Well, because if you use aluminum, you will have lighter cars, and lighter cars use less fuel, and using less fuel means fewer emissions.
Over the last few decades, the results of all this dumb un-sexiness—crumple zones, new materials, braking systems, fuel delivery innovation, harness improvements—has been jaw-dropping:
These went counter to the overall trends in automotive since we’ve been adding thousands of new cars to our roads each year. Innovation like this is not going to get you a spot on talk shows or a slot at TechCrunch Disrupt. All it does is save lives and improve the planet.
Follow The Money
The attention-grabbing investments in legal tech this year have gone to companies that the flying car crowd would not call innovative at all. The E&Y acquisition of Riverview should terrify BigLaw, but not because Riverview brought advanced technology, rather because of what the union of smart lawyers and a Big 4 accounting firm might do. When Atrium’s website touts “the power of Atrium Blockchain,” it means that it will help you navigate through the legal complexities of your blockchain business (particularly if an ICO is in your future)—you bring the tech, they bring the law. Thumb through the list of 2018 American Corporate Counsel (ACC) Value Champions and you will see millions in savings through relatively low-risk changes to legal operations.
Is LegalZoom building robot slaves that can both litigate and do laundry—thereby both preparing and folding briefs, perhaps? Maybe; I’m not telling. But in the meantime, the focus is on investing in technology and people to constantly improve the delivery of high-quality legal services at a price that makes sense. Sadly, that’s still a radical concept.
Think Different Boring
This does not mean that advanced tech has no practical application outside of e-discovery. An insider at Axiom tells me that the firm is constantly investing in its internal tech, such as the machine learning (ML) they apply to M&A, which automates deal analytics. This is happy news for everyone except first-year analysts, who soon may not have the money to shop at Vineyard Vines any longer.
I’m also hugely proud of my friends at Ironclad, who started with standard tech (albeit created by Palantir engineers) but are now applying ML to the challenge of “setting up the infrastructure for contracting,” as Tobias Willcocks explains. “Most companies’ ‘houses’ are in disrepair. We do the crappy stuff … so it frees up your brain to the beautiful things you want to do.”
Or take Judicata, who I have gotten to know in the five years—yes, five—that it has spent formulating what it calls “the legal genome.” Sounds like a flying car? Perhaps, but it has a very specific purpose: Evaluating the quality of legal work. “We leverage powerful natural language processing, advanced search capabilities, reliable machine learning, and a ton of finely crafted legal logic,” explains CEO Itai Gurari, “to spot errors, flag issues, and identify pretty significant defects. Like misspelling the name of the judge.” Makes sense to me.
Innovation In Six-Minute Increments
In the final analysis, Microsoft may have been wise to request only one innovation per year. Perhaps by keeping its requirements realistically modest, it will achieve actual results. It’s also possible that with the bar set this low, law firms will simply be too embarrassed to fail.
But perhaps we can learn something from this approach when we think about legal innovation overall. Legal innovation comes in many forms, yet we tend to only pay attention to the flashiest. Maybe this is how we can encourage BigLaw, our punching bag for so long, to join in our revolution: By showing them that legal innovation can be sturdy, practical, and achievable. While I will not give up on hopes for my flying car—it’s red, and it’s on order—the problems we have today require a solution we can engage with now.
About the Author
Eddie Hartman is the co-founder of LegalZoom. He is also the entrepreneur-in-residence at Simon Kucher & Partners.