Stephen Wolfram on Computational Law and Symbolic Discourse Language

Posted in Analytics, Innovation

SymbolThis could get ugly. I’ll step our way through it so stay close and hopefully you will make it through to the end okay.

Dr. Stephen Wolfram is the guy you did not hang around with when you were in school. He was born in London in 1959. As often happens with people of high intelligence, he struggled in school and had no patience for the “silly” arithmetic books he was asked to read. But by his early teens, he had written three books on particle physics (not published).

One of the reasons you would not have hung around with Stephen in school is that he hardly spent enough time at a school for you to get to know him. By age 15, he had published articles about his research in quantum field theory and particle physics. He went to Eton College, but left before graduating and at age 17 entered St. John’s College, Oxford. He also left St. John’s before graduating and enrolled at the California Institute of Technology where, at age 20, he received a PhD in particle physics. One of the members of his thesis committee was Richard Feynman (yes, that Richard Feynman). What next? He joined the faculty at Caltech and at age 21, became the youngest recipient of a MacArthur Fellowship (the so-called genius grant).

If you think Richard Feynman was a brilliant theoretical physicist who did things ranging from assisting in the development of the atomic bomb, to creating Feynman diagrams (visual representations of the mathematical expressions describing the behavior of subatomic particles), to nanotechnology, you are right. But he also was perceptive about human character. When Wolfram wrote to Feynman saying he was considering starting an institute to study complex systems, Feynman replied “You do not understand ordinary people,” and suggested Wolfram “find a way to do your research with as little contact with non-technical people as possible.” Again, another reason why you probably would not have hung with Wolfram.

Wolfram left Caltech and joined the faculty of the University of Illinois at Urbana-Champaign where he founded the Center for Complex Systems Research and the journal Complex Systems. When he was at Caltech, Wolfram had developed a computer program called Symbolic Manipulation Program. A battle with Caltech over the rights to the program and related issues led to Wolfram leaving for the University of Illinois. Shortly after arriving at Illinois, Wolfram began developing Mathematica and within a year founded his company Wolfram Research. Today, Mathematica is widely used around the world and Wolfram Research, which Wolfram joined full-time shortly after founding it, develops and promotes the program.

In 2002, Wolfram published the book A New Kind of Science, in which he argues that the universe is digital. He further argues that simple computational systems can be devised to model and explain all of nature. In 2014, Wolfram finally named the programming langue that had been driving Mathematica for 25 years, calling it “Wolfram Language.” Wolfram Language can be used to write the computational systems, but Wolfram had been expanding the Language’s reach. Wolfram spends his time on Mathematica, on developing Wolfram Language, and on giving it greater exposure so others will use it. In essence, Wolfram followed Richard Feynman’s advice by creating a world in which he can spend most of his time working with technical people on his vision of a computational future.

And I Care Because …?

Last week, Wolfram posted a long blog post laying out his vision for computational law. The post covers a lot of ground and stretches from Aristotle to the present, so I won’t try to cover it all in my recapitulation. Instead, I’ll focus the rest of this blog on the key point in Wolfram’s blog, his argument that now is the time (and of course Wolfram Language is the vehicle) for creating a symbolic discourse language. In other words, Wolfram believes we are ready for a language we can use to express legal concepts and which computers can use to compute outputs. Creating the symbolic discourse language, within Wolfram Language (a symbolic language) is his next step. Again, talk like this is probably another reason why you wouldn’t have hung with young Wolfram.

Think of symbolic discourse language as something that exists between natural language and computer language. Without getting deeply into computer software and hardware, think of the computer’s operating system (e.g. Windows or Mac OS) as the base level. On top of the operating system we have applications, like Word. When you want to write a letter, you can open Word and just type. Word interacts with the computer’s operating system and the operating system interacts with the hardware, so that when you click “print” your letter is printed.

That system worked well for lawyers and poets, but those who used math were left struggling. They had to program the computer to run their computations, and that meant learning computer languages such as Fortran (in the old days) or C.

Wolfram created a new language that allowed people to run math and get answers to formulas or graphs without having to go deep into programming. The new language, Wolfram Language, is a symbolic language. That means you can enter relatively simple commands and Wolfram Language converts them into the complex commands that drive the computer. The more sophisticated the language, the more symbolic the commands you can use.

If you ask Wolfram Alpha, which takes as one form of input natural language, “what is the diameter of the earth?” it can translate your natural language inquiry into the code needed to search for the information, assemble it, and present it to you in a way that you can understand.

Now think of a court decision. Judges do not use symbolic language. They attempt to explain the law, the facts, and their reasoning using natural language. But using natural language can get messy. Think about separating “preponderance of the evidence” from “beyond reasonable doubt.” You get the terms, but that doesn’t mean a computer or others get the terms. They convey a concept, but not precisely.

A symbolic language could take each term and turn it into something a computer can understand (e.g. >50.0%). Once the computer can understand it, it can receive inputs and deliver outputs. Lawyers and judges would then write contracts, briefs, case law, and other materials using the symbolic discourse language instead of natural language.

If you are straining to extend this idea to all legal discourse, that isn’t surprising. It will take quite an effort to develop the entire symbolic discourse language. But Wolfram’s point is that our knowledge and tools have developed to the point where he thinks his team can do it.

Don’t Get Rid Of Lawyers Just Yet

Let’s address the first issues that come up in a lawyer’s mind when reading this story: what is good or bad in it for me? You may find it surprising, but Wolfram does not take the position that the symbolic discourse language will be the end of lawyers. He says, “Today lawyers have to learn to write legalese. In the future, they’re going to have to learn to write what amounts to code: contracts expressed precisely in a symbolic discourse language. … [I]t will help lawyers think better about contracts.” For those in legal education, this is another, and perhaps the most powerful yet, reason to start teaching law students logic and coding.

If symbolic discourse language won’t decimate lawyers, will it decimate the law. Will law become so simple that anyone can do it? Not so, according to Wolfram,

Once computational law becomes established, the complexity of what can be done will increase rapidly. Typically a contract defines some model of the world, and specifies what should happen in different situations. Today the logical and algorithmic structure of models defined by contracts still tends to be fairly simple. But with computational contracts it’ll be feasible for them to be much more complex—so that they can for example more faithfully capture how the world works.

He goes on to describe how the symbolic discourse language will interact with machine learning software that is gathering information from other sources (e.g., the internet) that the language uses to inform the contract. This gets a bit tricky, but I’ll take a stab at explaining it borrowing from one of Wolfram’s examples.

The contract calls for X to happen when condition Y is satisfied. But Y is something itself difficult to define as “satisfied” or “not satisfied” in simple terms. Wolfram uses the example of fruit. I will pay you $10,000 for delivering to me a certain quantity of fruit meeting the standard “Fancy Grade.” The question is whether the fruit met the standard.

We could define the standard as no more than Z% of the fruit has blemishes and we can further define a “blemish”. A computer could examine all the fruit, calculate the percentage of blemished area, and feed that into the contract yielding an output: pay or don’t pay.

Many lawyers may be shouting “huzzah” right now. We’ve just said that law will evolve to a symbolic discourse language (in other words, legalese of a different type), become more complex, and require knowledge of both legal principles and computers. Is law going back to an opaque art that will require clients to pay for access? I don’t think so, but let’s leave that question to the side and explore other “what does it mean” questions.

Crushing Poetry Out Of Law

Every law student knows the Aristotle quote, “The law is reason, free from passion.” Wolfram says that symbolic discourse language would take us there, “In a sense, the symbolic discourse language is a representation in which all the nuance and ‘poetry’ have been ‘crushed’ out of the natural language.” This will raise some interesting questions, particularly when it comes to equitable considerations. Should contract law be devoid of poetry?

Going in another direction, we can ask how symbolic discourse language might affect our understanding of the economic underpinnings of contracts. On October 10, 2016, the Royal Swedish Academy of Sciences awarded the Sveriges Riskbank Prize in Economic Sciences in Memory of Alfred Nobel 2016 to Oliver Hart and Bengt Holmström “for their contributions to contract theory.” They have focused much of their work on the area of incomplete contracts. The theory starts with the thesis that contracts are incomplete, because they cannot specify what is to be done in every future situation.

Part of specifying the future is data, part is computational power, and part is complexity of the contract. Today, we can’t possibly analyze sufficient data to predict all possible future consequences. Even if we could get enough data, we would need tremendous computational power to analyze it. Finally, writing a contract to cover all the contingencies would result in a document no one would dare write or read.

Wolfram posits a future where those problems would be greatly mitigated. Computers can scour vast databases and use machine learning to analyze data relevant to the contract. With access to tremendous computing capacity, the power to analyze the data becomes available. Finally, if the contract will be written in code—and given that the computer itself could write at least some of that code—we don’t care how long the contract becomes. We can see a touch of this today in electronic trading on the stock exchange. Computers gather and analyze the data, develop algorithms based on the data, and place the trades.

As you can begin to see through the fog, data plays an ever more important role in contracting. Data helps inform the terms of the contract, but data also becomes the fodder for the programs that determine whether terms of the contract have been met. Data also affects the dispute resolution process. If both parties and the court have access to massive quantities of data and the computing power and systems (machine learning) to analyze the data, dispute resolution could become focused on very narrow issues as more contract issues are answered through complex contracts and data.

We Still Have Ground To Cover

Wolfram’s post (which consumes 20 single-space pages) touches on some of these issues and addresses many more, yet still leaves large gaps in its wake. The core proposition is this. Work so far, with some exceptions (many of which Wolfram notes) has been focused on backing into discourse analysis by examining what courts have done and attempting to find ex ante ways to construct systems for describing the logic of law. Wolfram proposes to construct a symbolic discourse language that lawyers, judges, legislators, and society would use to create law. Computers could use the language, augmented by machine learning analysis of relevant data, to evaluate questions arising under the law.

Wolfram acknowledges the huge amount of work it will take to accomplish this feat. But, as his biography suggests, he is not someone to shy away from challenging questions or large amounts of work.

Lawyers should consider what Wolfram proposes in a different light. Perhaps Wolfram will succeed or perhaps this will be a challenge that survives him. But, most of the work we see today involving computers and law involves attempts to automate the present or to decipher the past, not create the future. Just as we are at an inflection point in the delivery of legal services, one could argue we are at a similar point in the substance of law. It has become too chaotic and faces challenges too great (e.g., explosion of relevant data, speed of societal change), for the current approaches to developing law to work. Add on to that other issues, such as the privatization of law and many issues never reach the courts, affecting the evolution of common law.

Wolfram’s path is not artificial intelligence in the law. It doesn’t remove lawyers from the equation (though that is theoretically still possible at some point). Instead, and at a closer point in time, it leverages the power of computers to use data, handle complexity, and make law (in theory) more precise (though at a cost to humanity, a topic for another post). Those are benefits we can deliver to clients and, ultimately, what makes his path intriguing. It will be up to lawyers to determine whether they let this turn out to be an ugly or beautiful path.

Why Law Firm Referral Networks Fall Short

Posted in Leadership
ValueNetworkPrior to World War II

During the Edo and Meiji Periods up until World War II, Japan’s economy was influenced and then dominated by zaibatsu. Eventually, four zaibatsu became the most powerful: Sumotomo, Mitsui, Mitsubishi, and Yasuda. Each zaibatsu was controlled by a family. The zaibatsu controlled significant portions of steel, banking, mining, and other core industries that were critical to Japan’s industrialization.

The typical zaibatsu was made up of a holding company, a banking subsidiary, and many industrial subsidiaries concentrated in a few core industries. Those industrial entities, directly or indirectly through other subsidiaries, formed a vertically integrated system. The four zaibatsu were powerful, but there were many smaller zaibatsu focusing on less critical industries.

The Japanese military was not fond of the zaibatsu. The zaibatsu wielded enormous economic power and had great influence over the government in areas such as trade and foreign policy. Outside the military, the Japanese population  viewed zaibatsu with suspicion and awe.

While the zaibatsu increased their power as Japan’s industrialization increased during the early 1900s, they lost much of their power going in to World War II when the Japanese government took over many of the zaibatsu-controlled industrial operations. Coming out of the war, General Douglas MacArthur, leader of the allied effort to assist Japan in re-building, took further steps to dissolve the zaibatsu. He was not completely successful at eliminating them and remnants of the systems still exist today. But the devastation of Japan’s economy, the introduction of many Western ideas, and the desire to move further away from the feudal-like structure of the zaibatsu meant it was time for something new. As Japan began re-building a new structure helped the country take the next step.

The Keiretsu

A keiretsu is a loose affiliation of companies that work together. Typically, they have interlocking ownership structures. The keiretsu, unlike the zaibatsu, are not controlled by a family and are not monopolies. Each keiretsu is built around a bank that provides primary financing to the companies in the keiretsu.

The Toyota Group is affiliated with Mitsubishi UFJ Financial Group (MUFG), which is part of the Mitsubishi Group. Toyota Group’s keiretsu consists of many tiered suppliers who produce parts or sub-assemblies for Toyota vehicles. There are horizontal keiretsu and vertical keiretsu, and Toyota Group is considered one of the largest vertically integrated manufacturing group keiretsu (a seisan keiretsu).

Japan’s laws do not allow banks to own more than a certain minority percentage in industrial companies. As a result, the keiretsu are not as tightly integrated as the zaibatsu. Even ownership among keiretsu industrial entities usually is limited to minority positions, allowing member companies to participate in coordinating and directing other companies without directly controlling them.

The keiretsu system has not been replicated outside of Japan, with  possible exceptions in South Korea and India. Within the United States, for many legal and cultural reasons, the keiretsu idea has not taken hold.

Modern Law Firm Systems

Although the United States does not have keiretsu, we have seen a very distant and pale cousin appear in the legal industry. It is the law firm referral network. These networks have been formed to help clients who need services in many jurisdictions, but who prefer to connect into a pre-existing network over creating their own network. There are two basic types of lawyer referral networks.

First, there are the dues-paying membership law firm networks. These networks pre-screen firms, provide an administrative hub, and restrict member firms to providing services in certain jurisdictions (exclusivity). They exist somewhere between trade associations and vereins.

Second, there is Dentons’ Nextlaw Global Referral Network. The Network is structured similar to other referral networks. But, Denton argues, it differs from the traditional law firm referral network in two major ways. First, traditional law firm referral networks usually require that member law firms pay to join the network. The fees cover the administrative costs of the network, which include advertising, vetting current and potential members of the network, educational events, and handling administrative duties associated with the network (such as maintaining and populating a web site). Second, Dentons does not give member firms territorial exclusivity in its Network, something other referral networks usually do.

However, both network types lack an essential characteristic of a lean network and, therefore, do not move us toward an improved legal services system. The Toyota keiretsu integrated the the operations of each supplier with those before and after it. It was this integration, done through understanding and interconnecting processes, that caused the network to rise well above any competing supplier system.

Why Keiretsu Are Superior

When a client works with multiple law firms, or even one law firm using multiple offices, or even one office of one law firm, it will get—well, it isn’t sure what it will get. Each lawyer will do his or her thing his or her own way. The legal industry is famous for its love of autonomy and lack of standardization.

Sticking with the traditional law firm referral network model, the lawyers in each firm deliver services using their own processes, standards, timetable, and customs. For each firm, this is a custom mix that someone must integrate with what all the other firms are doing. For the client, this means a lot of wasted time (integration), risk (variation among firms), and extra labor (re-work and fitting the work of firm A into the slot left by firm B). Simply putting the firms in a network or on the same software backbone doesn’t solve the problem (though it adds cost to the system).

Toyota Group faced the same problem. No matter how lean it would get, it relied on many suppliers who in turn relied on many suppliers. If that chain wasn’t well-integrated, Toyota Group would be limited in what it could achieve. The solution was to work with those tiers of suppliers to create the integration necessary for continuous improvement.

If a Toyota assembly plant gets its engines from a first tier engine assembler, then the engine assembler must deliver to the plant exactly what that plant needs, when it needs it, and configured exactly the way the plant wants. Toyota Group did not need the wrong engine built efficiently, the right engine delivered late, or the right engine delivered on time, but poorly constructed. That meant Toyota Group needed to work with its engine supplier to develop the value chain through both of their systems. This is key: Toyota Group and the supplier worked to create one integrated, seamless, value chain built on continuously improving processes.

The same problem existed for the engine supplier, which received parts from many second tier suppliers, and so on back through the chain. The value chain was not just what the Toyota assembly plant did, it was what every supplier that participated in the chain did, from the business that made the bolts through the assembly plant itself. Otherwise, waste would get passed along and build up in the system, much as many streams filled with debris will eventually dump all that debris into the major river. Cleaning the river does no good if the streams continue to send debris.

Law firm networks do not integrate the way Toyota Group integrated. Part of the problem lies in legal services delivery. Someone must work with the organization at the head of the system, and then convince that entity and the supplier entities to work together—for the good of their clients—to improve and integrate the system. Then, of course, all of those entities must fulfill the promise. If the head of the system is not standardized, efficient, run on metrics, etc., then the rest of the value chain will have similar flaws.

You can already hear an objection. Each firm argues that it works with many clients and firms and that it can’t adapt its systems for each one. The firms and lawyers will ask why they should “optimize” for one system, or how they could possibly optimize for many systems. This objection comes from not understanding process improvement.

Within Toyota Group, the same objection could have been (and probably was) made—at least below the assembly plant. The supplier companies do not work solely with Toyota Group. They work with suppliers outside the network and they have customers other then Toyota Group. Toyota Group encourages that diversification. Each supplier benefits from learning and improving its processes, because it gains (or maintains) a competitive edge. It improves its financial prospects and becomes more valuable to the companies with whom it does business. It is hard to find a supplier who can plausibly make the claim that using too much labor, delivering mediocre quality, having high variability in its products, and engaging in other wasteful practices works to its benefit.

The Client Network

Although a Toyota assembly plant is a manufacturer and the client is the ultimate  customer, in this story the assembly plant is the customer. In the legal industry, the customer, for large corporations, is the corporation not the lead law firm. Clients should be building networks that contribute to their value chain, not the law firms’ value chains. To do so requires a very different way of thinking than what we see in clients today.

The client needs to start with a value focus and define what it means when it says “value.” It should then assemble suppliers in its value chain who are willing to align their goals with the client, and suppliers means more than law firms. Those suppliers must work together to define the points along the value chain. Then they must go the next step and define processes. The suppliers and client must work as a team to improve and then improve again. In other words, continuous improvement must be built into the client’s supply chain, through law firms, managed service providers, e-discovery vendors, and so on.

For large corporations, this approach sounds feasible, if not easy. But what does the small corporate client do? It can’t reinvent the legal supply chain, but it can reinvent its own supply chain and choose suppliers based on those who will work with it on process definition and improvement. Supplier selection based on what the supplier can and will do becomes more important that name recognition. The size of a supplier recedes in importance and the supplier’s ability to flex, to re-work processes, to understand value chains, to remove waste, and to align itself with its clients goals become selection criteria. Again, we do not see this level of continuos improvement throughout legal services value chains.

The need for end-to-end value chain process improvement in the legal industry leaves an interesting opening for businesses, such as managed service providers (MSP). Clients, rather than depending on law firms to do the integration, could turn to the MSPs to play that role. By providing legal project management, process improvement, technology expertise, and metric knowledge, the MSPs can knit together the law firms, MSP, and other providers (e.g, e-discovery companies) into well-integrated, cost effective, legal services networks. Medium and even small clients could tap into these networks.

The MSPs would have better goal alignment with clients and more incentives than law firms to work with clients for the long-term (long-term benefits accrue more to businesses with long-term perspectives than to law firms which operate on one-year perspectives). They also can build and maintain networks where one client may need Brazilian counsel one time, but across many clients that assistance is needed frequently so there is an incentive to continue improving processes. The MSP also can help with tasks, such as project hanging deals where tight network integration would reduce the friction costs in-house counsel encounter when creating ad hoc deal networks. Of course, a law firm could decide to play the MSP-integrator role, but we have not seen firms willing to take on the challenge (again, we see only loose networks with little or no process improvement integration).


The lawyer referral networks that exist today have been built for the benefit of the network members, not the network users. Law firms participate because they believe the network will increase their exposure to clients and, ultimately, client revenue. This network structure is similar to the zaibatsu, which were built for the benefit of the controlling families. As a client, however, that is not the network you want.

As a client, you want a network structure that delivers value to you, and that means a structure that is aligned around your goals. Unless your goals include spending money on inefficient structures, modern referral networks are not likely to align with goals such as increasing efficiency, cost, and timeliness.

The network that will add the most value to your business should be built with you—the client—at the focal point. You are the starting point for the value stream that will deliver services that are fit for your purposes. The members of your network must be flexible, able to adapt what they do to operate smoothly within the value stream passing services through the network with minimal waste, and well-positioned to add value along the way. In other words, networks should not be law firms strung like pearls on a string. They should consist of diverse service providers who are strategically positioned to deliver what is needed, when it is needed, in the way it is needed.

So far, we have not seen a law firm network emerge with this process-focused, goal-aligned, value driven structure. Even attempts by clients to build networks have focused far too much as cost and spent almost no effort on a true grassroots approach to building the system. Technology will exacerbate the problems of the current lawyer referral networks, though they will undoubtedly herald their use of technology to integrate the members of their networks. As with most changes affecting the legal industry, the real question of change goes back to the client. Will clients today take the lead in building true, value enhancing networks or will they continue to settle for the modern equivalent of country club friends?

What If You Didn’t Just File A Lawsuit, You Designed It?

Posted in Analytics, Technology

BespokeThurgood Marshall was not just a justice on the U.S. Supreme Court, he was the lawyer that led many of the civil rights cases striking down de jure racism in the United States. While he successfully prosecuted many cases, he is perhaps best known for the Brown v. Board of Education landmark decision in 1954. The Supreme Court unanimously ruled that “separate educational facilities are inherently unequal” and, therefore, racial segregation of public schools violated the equal protection clause of the 14th Amendment.

Justice Marshall’s strategy to bring down racist practices in the United States is still studied today as a model for how to run an activist program through the court system. But today’s court system is far more complex, and the contexts in which activists bring their challenges far more convoluted, than at any time in the past. If a few years from now you were faced with a challenge of the type that Justice Marshall faced, could you run a similarly successful campaign?

The Maker Era

We have entered the maker era. You can buy a 3D printer, put it in your basement, and within minutes you can make or replicate replacement parts, toys, or your own inventions. Connect your computer and software, and now you are in the business of designing whatever you want. Once you are satisfied with the design, you can send the file to a commercial manufacturer or license it over the web. You are in competition with the global world of manufacturing.

What if you are a nascent clothing designer? New nanotechnologies allow you to spray on clothing. You can add colors, create texture and design combinations, and even build in special features (anti-perspirant?) into the new shirt. If you don’t like what you created, simply peel it off, dissolve it, and start over again.

If you aren’t interested in manufacturing or clothing, perhaps you would like to use software to mine behavior? Go to the internet and you can download software that lets you analyze text, apply machine learning, and find secrets hidden in the words. You can analyze sentiments, build behavioral paradigms, and test your ideas without leaving the comfort of your office.

Lawyers often struggle to comprehend how fast the world is moving around them. 3D printing, nanotechnology, and artificial intelligence are just three of the many areas rapidly scaling from the laboratory to real life. Yet most lawyers are still in the quill and paper era, trying to master Word and occasionally venturing into Excel or PowerPoint.

Most law and technology posts focus on simple automation or perhaps elementary artificial intelligence applications, such as finding all bankruptcy cases with certain elements. The “scary” futurists speculate about robotic lawyers sitting next to human lawyers as they compete for the next case that comes over the transom.

In this essay, I’m going to take you on a bit of a journey into the future. Let’s imagine how a clever software engineer with knowledge of the law and a lawyer with a bent for social justice could start a movement in the 21st century.

The Designer’s Lawsuit

Thurgood Marshall faced a significant challenge in the 1930s, 1940s and 1950s when he was attacking racism as a lawyer for the NAACP. He had to maneuver key issues through federal district courts and appellate courts, often hostile, to get those issues before the U.S. Supreme Court. To do so, he relied on research, experience, intuition, and luck. Could he do it differently in the 21st century?

Imagine using computational linguistics and machine learning to look at all the reported opinions relevant to the issues you wanted to get before the U.S. Supreme Court. The software “reads” the opinions and the briefs, finding those obscure connections you couldn’t find even you if you had the time to read the hundreds of thousands of pages.

To make the analysis more interesting, you also look at databases built from the biographies of the judges who may sit on the case at each federal court level. The databases include all the information about the judge’s experience (undergraduate school and major, law school, etc.), training (law firms, government positions, etc.), and personal characteristics (age, gender, etc.). It also includes everything the judge has written or said that is public, outside of opinions. Speeches, law review articles, and op-ed pieces sit in the database.

While it may seem like you have the relevant information you need, you don’t stop there. You pull together information on the community where each judge lives. What is the political sentiment within the community? Is it affluent? What religions predominate? You dig deep into the community to understand how it may affect the judge’s thinking.

You also look at the national climate. Where have the trends been going—are the people in the United States moving in your favor or against you on the issues? Are there similar issues from which you can gain guidance? What about legislative movements at the local or national level?

With this massive database, you turn loose your machine learning software again on a small subset, the “training” database. The algorithms (and you use many, stacked to mimic the way the human brain processes information—as best we can tell) run through the information over and over again. The algorithms are learning, attempting to “understand” the data. You ask questions and the algorithms respond.

As the algorithms respond you check the results. You reject most responses and inform the software of its hits and misses. Over time, the hits grow and the misses shrink. The algorithms seem to be organizing information the way an expert might. You reach the point where you think the algorithms are ready for the big time.

You turn them loose on your large data set and wait to see what happens. As the results start to come in, you see that the algorithms have identified some court possibilities you would have picked, but there are some unexpected choices as well. In fact, it turns out the unexpected choices rank higher on the probability of success than your expert choices.

That was the easy part. The next step is to ask the software to design the lawsuit. What arguments will work best in each court? Which arguments should be emphasized and which added as “just in case.” Again, you find some of the picks familiar, but some are unexpected. In fact, there are a few creative uses of arguments that came out of cases decided long ago, but that seem to fit with the times.

With knowledge of the arguments, you turn the work over to the next program: the legal argument drafting program. For many years now, software has been writing corporate earnings articles and recaps of sports games without human intervention. The software takes the financial results or the game record and, using some training on writing styles (a dash of Hemingway mixed with a bit of Lardner), turns out articles that people can’t distinguish from articles written by journalists.

That software has now been trained on legal writing styles. Using opinions by Holmes, Jackson, Hand, and Posner, you have trained the software to write like a judge (or, perhaps, like some judges wish they could write). With the legal arguments preferred by the machine learning algorithms, the legal argument drafting program turns out a passable first cut at a motion for summary judgment. You can use that to back into a complaint. Once you know the district judge and she issues her opinion, you can use the software again to churn out the first draft of your appellate brief. You have designed your first lawsuit. (And before you yell at me about all the professional responsibility issues involved, please remember the spirit in which this essay is intended – to spark interest in what types of analyses will be possible, not to suggest ways to improperly create and file claims.)

Don’t Wait, Dive In

The designer lawsuit is, of course, a thing of the future. The software we have today can do bits and pieces of what I have described, but we still have a way to go before all of those pieces can knit together a new case tweaked for what may work best in each court. Still, we are closer than what many lawyers think.

The point of this exercise is not to scare lawyers into thinking software will replace them soon. It also isn’t to add on to the fatalist pile the thought that lawyers will soon become extinct, or nothing more than the handmaidens of computers.

I do hope the story has piqued your interest in staying current with what software can do. The amount of data available to lawyers is vast and far beyond what we can reasonably consume and use to help our clients. It grows much larger each day. As tools come online that can help us digest that mass, to not use them approaches the irresponsible. That information contains judicially recognizable information that may tip the balance in an argument. It puts judicial decisions in the context of what is happening in society (and if you still think judicial decisions aren’t political or are limited to extending law on the books, then I apologize for rudely dragging you into the real world).

We have entered the augmented age, where humans plus computers can take us further, faster, than humans or computers can go alone. If you believe that is fantasy, think about what you hold in your hand: a smartphone you can talk to that reaches out to all the data on the internet to answer your question. In seconds, Siri or Cortana translates your spoken request to digital commands, processes them, and come back with an answer or at least relevant web sites. Your mind has been augmented, through the smartphone, by the internet. That connection grows closer and stronger each day

When will we have designer lawsuits? Five years? Ten years? Longer? We don’t know and the correct answer isn’t relevant. The designer lawsuit will not be like falling off a cliff: one moment you do all the work and the next the computer does it for you. We will creep closer a step at a time, with the steps coming quickly at some points. Whenever the time comes, you will be much better off for having kept pace with the changes, than trying to quickly run to catch up. No matter how fast you are, you will not succeed.

Find the Greater Purpose to Succeed with Lean

Posted in Leadership

karateThe next time someone approaches you and suggests it is time to change, check your heartbeat. The simple mention of the word “change,” regardless of what follows, seems to evoke a reaction in each of us. Heart rates increase, breathing becomes faster and shallower, adrenaline starts pumping, and we get ready to fight or flee. The words following “change” could be something benign—such as,  yesterday’s paper to today’s paper in the reception area—or significant—such as, our basic business model. That simple word “change” affects us and colors everything that follows.

We have all perpetuated the story that lawyers are more change resistant than others. It makes sense, after all. Lawyers are trained to live in the past. Ask us a question and we want to dive into the books to find what the law says. What has happened in the past sets the guardrails for what we can do in the future. If the guardrails are missing in a few places, then we want to stay as close to the center of the road as possible for fear of transgressing some as yet undrawn line.

This belief that we are special, augmented with an extra dollop of change resistance, allows us to shut down attempts at change by merely pointing out who we are. We are lawyers, we recite, who are conservative by nature, trained to feed off precedent, and we are told by the more conservative members of our tribe that we should not take it upon ourselves to carve new areas of law (unless we sit in a legislative body).

The thing is, as they say, we just aren’t that special. Perhaps we do have a bit more change resistance than the average person, but change resistance is within all of us and it comes out whenever any of us (even the most change-loving) hear that trigger word. The key is in what happens next.

Lean and Change Resistance

Whenever we introduce Lean into a new environment, whether an industry, an organization, or even a department, change resistance appears. Since Lean started in manufacturing, most people assume it was met with mild to no resistance since it was a manufacturing thing. To the contrary, from veterans to newbies, manufacturers fought the ideas brought by Lean. Today, that resistance still appears whenever Lean is brought into a new setting. More significantly, even when Lean has been in the setting for a long time, perhaps years, we still see  active and passive resistance.

Move outside of manufacturing, and you continue to hear resistance to the changes Lean brings. Of course, the starting point is always the “we don’t make toasters” argument. Lean may be fine for manufacturing, but once you enter services the whole ball game changes. People are not machines so expecting them to act like and be measured like machines just won’t work (this sentiment tells a lot about the misconceptions of Lean, but I’ll hold off on that thought for a moment).

If we really want to hear the change-resistance arguments flow, we can move to professional services. Providing professional services is something that comes from the brain, not the hands, so trying to standardize how we think and have us respond to a takt time makes no sense. Clearly Lean is out of its element when it comes to Law, Medicine, and any other of the professions aimed at helping people.

Having heard resistance from people at all levels, in all industries, doing all manner of jobs, one could start thinking that the problem is Lean. Perhaps Lean just doesn’t work anywhere. But then, of course, there are the thousands of companies employing millions of people who have successfully introduced Lean and made a go of it with outstanding success. How do we dismiss all of them to decide that Lean doesn’t work? Perhaps we need another theory, and that theory is where Lean practitioners went for guidance on how to overcome change resistance.

If everyone initially opposes Lean, then the challenge may not be Lean, it may be how people respond to change. In fact, we can see that Lean is not singled out for change resistance, any form of change meets a somewhat hostile reception. It seems that Lean is not the trigger, change is the trigger, and that gives us a clue. If we can determine how to address change resistance, then it should work for Lean as well as other change ideas.

Overcoming Resistance

Change is change, so it doesn’t help to try and disguise change by saying you are keeping things the same. I remember my first exposure to civil law when I was a junior lawyer. Throughout law school, I had heard professors say, “of course, this is the common law everywhere in the United States except Louisiana, where they follow a hybrid of common law and civil law.” Since I had no expectation of practicing in Louisiana, that limitation was fine. But, sure enough, the first major lawsuits I worked on after graduating were in Louisiana, and it wasn’t long before I was trying to research state law claims.

As a newly trained common lawyer, I started by reading the cases. As I worked my way through them, I would go back a few years and then hit a case which noted that the civil law in Louisiana had been changed. I went to the statute, read the changes, and then read the comments which said “the changes in the statute do not change the law.” After a few hours of research, I had gone through this routine many times as I worked my way back until I got to the French version of the Louisiana civil law. Looking at several civil law claims, I found the same thing with each line of research. It seemed that no matter what the change to the wording of the statute, it did not change the law. “Of course it changed the law,” I would silently scream, “the wording is completely different!” I felt like the legislature was playing a game of hide-and-seek with the law. I did not buy the line that the law had stayed the same, even though the words used to express the law had changed.

The first step, then, is to acknowledge when you are changing something. The second step is to work through why you are making the change. If that sounds like a command-and-control statement (“we are making the change for you to follow”), then you already know the third step—don’t impose change, invite those who will be affected to help you create change. When the people affected helped drive the change, they are more likely to participate in its success.

So far, I have not said anything remarkable, but I have listed three guidelines mostly followed in the breach. There are other guidelines, such as clearly explaining the expectations and goals for the world after the change, listening and responding to concerns, and course correcting when necessary. But even when you follow all the guidelines, something disconcerting happens. In Lean, that means that the improvement journey stalls.

It Is Easy To Succeed—At First

Any Lean improvement journey should start out with successes. Going from a non-Lean world to a Lean world involves removing waste. Look at any system that hasn’t been through Lean improvement, and you will find waste wrapped around all the processes in the system. Even a poorly run Lean improvement program will pull out some waste, and everyone will feel good about the success. But after several of the improvement exercises, things begin to slow down. The teams are confused where to go and start questioning whether they have hit that point where there is no additional waste to remove, or at least the waste that remains can’t be removed. This is the infamous change fatigue plateau.

What seemed impossible, then became possible, then fun, and then tedious. Going back to the same well or even a new well for more improvements starts to seem like drudgery. Yes, perhaps we can take out some additional steps and trim a day off the lead time, but does it really matter? Over time, the frequency of improvement events drops off. The processes that were improved start to succumb to the overgrowth of waste creeping out from other processes. Wait a bit and everything will recede to where it was before the change. What was accomplished?


Lean is not alone in hitting the change fatigue plateau. As I said at the outset, the key is in what happens next. Lean practitioners were sensitive to the plateau. It is hard to sign people on to a program if you and they know it will eventually die. We learned that for Lean to be sustainable, we needed to focus on kata.

Kata is a Japanese word that comes up most frequently in marital arts (in English, you will hear the word “form” used). A kata can be described as a series of specific steps, in a sequence, that the practitioner practices over and over again, seeking perfection. There are many kata for each type of martial art. If you have ever seen a movie with a martial arts class training, you will recognize kata. The class moves through a sequence of steps with each student performing the same step at the same time. Over and over again.

No, as Lean practitioners, we do not expect everyone to become proficient in karate. But we have borrowed the term kata to mean learning how to do become proficient in improvement so that it becomes second nature. By practicing and repeating improvement activities, the Lean thinker gets to the point where continuous improvement is one of their habits. Across an organization, as everyone moves to continuos improvement, the organization becomes extremely powerful because it is constantly engaged in improving. This continuous improvement is a sign that an organization has moved through Lean change to Lean thinking.

Kata Is Necessary, But Not Sufficient

It isn’t easy to do something over and over again. Martial arts students often drop away after a few years of practice. Practicing the kata requires a mental discipline and many students find they do not have the internal motivation to stick with the training. If you have children and they wanted to play a musical instrument, you probably have seen the same thing happen. At first, they have great enthusiasm (if they helped pick the instrument—see above about involving the person in the change process). They happily go to lessons and even put in some time practicing. Then they hit the fatigue plateau. They practice less frequently and start skipping lessons. Now, that instrument sits in its case in the basement, waiting for the next garage sale.

Kata is important, but we need something more to make Lean a real success. That something more is the commitment to a common goal and to the organization trying to achieve that goal. Put simply, it is a sense of purpose beyond accomplishing what needs to be done each day.

Many companies have tried to get to that sense of purpose by adopting mission statements or slogans. I live in Michigan, so here are some from companies that operate in Michigan:

  • “To passionately create innovation for our stakeholders at the intersection of chemistry, biology, and physics.”
  • “People working together as a lean, global enterprise to make people’s lives better through automotive and mobility leadership.”
  • “Imagination at Work.”

These statements attempt to convey what the company is all about externally, and to give employees a point to focus on as they go through each day. Sports teams do the same thing. Running drills every day is tough, but focusing on a bigger goal (winning the game, being the top ranked team at the end of the season) gives players something greater to focus on as individuals and as a team.

The team concept is important in organizations as well as in sports. If everyone has a common goal, a common purpose, then everyone is in the boat together. Employees have more reasons to work together to improve, because not doing so means they are letting down the team. Learning how to continuously improve becomes part of the competitive spirit of the organization as it works towards its goal.

Can Lawyers Find Purpose?

Lean, then, is like other changes. To succeed, the individuals and the organization must develop the kata of continuous improvement. It isn’t the individual improvement events that make the difference. It is the daily repetition of continuous improvement activities with each improvement building on the ones before that distinguishes the organization. To develop that kata, the organization must provide (with the help of its members) the purpose for going through the effort of continuous improvement. There must be a greater goal.

So far in the legal industry, we have lacked both purpose and kata. The focus has been on cost cutting, and that is never going to be sufficient (putting aside the misunderstanding of Lean). Many organizations in the legal industry are pushing Lean or jumping into it. We already are seeing some experiencing fatigue. The danger of failure is not just an organization laboring under waste. It is the danger of failing to transform. The legal industry must get past its present form and that requires leaders—individuals and organizations. To make it through that transformation, we need purpose. If you can’t articulate the common purpose of your organization, then you have more to worry about than becoming Lean.

Stop Pummeling Big Law, You Are Hurting Yourself

Posted in Leadership

BoxersThis is not a robust defense of the embattled millionaires running today’s large law firms. I am not going to throw myself between the partners of those firms and the many (and growing) ranks of in-house lawyers taking free shots at them for failing to convert the money machines of big law into egalitarian not-for-profit organizations aimed at helping the poor large corporations. I realize that many corporations are suffering under the crushing burden of legal fees that in some cases range up to (or even higher than) .60% of revenue. I recognize legal fees are the most significant problem of our time, but I’m going to ignore that issue and instead talk about why the slugfest isn’t good for any of us.

Round 1 – Heavyweights in the Ring

The College of Law Practice Management (COLPM) held a conference last week and, while I wasn’t there, I did follow the tweets of attendees. One tweet in particular caught my eye:

Screen Shot 2016-09-17 at 9.08.36 AM

Jordan provided a nice string of tweets repeating prognostications from the speakers, most of them filled with interesting if unsupported statistics (80% of legal services are basic or low touch, 20% of legal work is high-value bespoke, etc.). It seems, from reading the tweets of many attending the conference that the air was filled with specific numbers talking about the decline (the next 10 years seemed to be the favorite timetable) for lawyers. Estimates range, but about 50% of the profession will disappear during that period, from what I read.

The COLPM conference focuses on Big Law and Big Corporate Law (the in-house equivalent of the large law firms), so the speakers presumably meant that around 50% of what lawyers in large firms do will move off lawyers’ desks reducing the need for about 50% of lawyers. Some of the COLPM speakers who were throwing around those numbers also are leaders of the Corporate Legal Operations Consortium (CLOC). CLOC members focus on improving the operations of Big Corporate Law. None of the speakers were talking about the hundreds of millions of individuals who get little or no legal services.

Using the tweets as a proxy for the full text of the presentations is not a reliable way to gauge sentiment at the conference. But they suggest there is a lot of anger being directed towards Big Law. Clients have spoken and Big Law has not responded. So, borrowing the words of Jordan’s tweet, the large law firms are “being detoured around.”

Round 2 – A Draw

At one time, I was general counsel of a company owned by a large, well-known private equity firm. The chief financial officer was a hard-working very conscientious person whose goal was to run the company in the best interests of all constituents. For those who have worked at private equity portfolio companies, you know it can be a problem to focus on anyone except the managing directors of the private equity firm. It varies by firm, but many have the goal of making the most money in the shortest period of time, and taking no prisoners.

The CFO would come to my office (frequently) to complain that the CEO, with the permission of his fellow board members (all private equity firm managing directors) had decided to spend money on something the CFO opposed. The CFO was frustrated because he felt spending the money was not in the best interests of the other constituents (a jet to take the CEO to all the remote locations of the retail chain was a particular source of concern).

We would talk and I would explain that our company was something like the local doctor’s office. The doctor owned his practice and if he wanted to spend money on a fancy office, that was his business. His employees might want him to increase salaries or do other things, but since he owned the practice he could do what we wanted (within some obvious restrictions). So could the private equity firm.

Big Law is the same way. If the owners of the law firm—the equity partners—choose to follow a path that they think is in their interests but seems contrary to the interests of their constituents (and does not violate applicable restrictions), so be it. They own the firm and can do what they want. There is no law of nature that says law firms must exist or survive. In fact, there is no law of nature that says lawyers must exist or survive. We trip on this last one quite a bit.

There seems to be a strong feeling among many not in the firms that Big Law is violating some sacred trust by not changing to meet what others want. Of course, the firms have no obligation to make any such changes, even changes demanded by their clients. A large law firm is entitled to look a client in the eye and say that it will continue billing by the hour, increase its hourly rates whenever it pleases, and put as much time into a matter is it wants. In fact, for a long time one of the cherished benefits of being an equity partner was the freedom to do just that. You could run your practice as you saw fit and if your quality, cost, ethics, or anything else exceeded what your client wanted, then your client was free to find representation elsewhere.

Let’s play this out. Imagine the 200 largest law firms do not pivot to what some (certainly not all and maybe not even a majority) of clients say they want them to do. We have ourselves an old-fashioned standoff. Now what? Most assume some combination of the following: 1) new firms will rise up to provide what clients want, 2) alternative service providers will fill in, 3) in-house lawyers will take over the work, 4) some number of the large firms will cave and change, or 5) computers will take over. Imagine 1, 2, 3, and 5 come true, but that the 200 largest law firms hang tough. They don’t change. In fact, they are so obstinate that all 200 fail. Where does that put clients?

Clients presumably would not have any problems with that mass collapse. If they let the largest law firms fail, they had alternatives to those firms. They did not need the firms. The only ones “hurt” were the law firms. Life goes on. The lawyers who were foolish enough to stick with the large law firms to the bitter end may suffer and staffers may suffer as well. Or, they both could exit before the firm collapses. Businesses fold every day so the death of such firms should not come as a surprise or a source of concern.

Round 3 – Another Draw

According to surveys by one consulting firm, large corporations have pulled over $12 billion of work from large law firms over the past four years, with about $4 billion of that being pulled in the last year. The pace of decline for Big Law has quickened, point out the critics. They need to get with it.

Large law firms still are run by baby boomer lawyers who control large percentages of the client relationships. Strangely, it seems these lawyers are running the firms the way they want to not the way others want them to. The firm’s managing partner may get that things are changing, but the other partners show high resistance to change (and the resistance to change among partners seems to be increasing).

Clients point out that they are no longer standing idly by. If the firms don’t change, they will pull their work and bring it in house and the numbers show that some are following through on the threat. That means that when a law firm doesn’t respond, it risks losing work from clients. The point may seem obvious, but I want to make sure you read it given what I’m about to say.

I think clients, in-house lawyers in particular, need to stop beating on the lawyers in the large law firms. Give it up and let them be. As I noted at the beginning, I’m not protecting them. Rather, I think the verbal pugilists would be better off spending their time showing they really do want change and not just talking about it.

I regularly talk to general counsel who overspend on a daily basis. They aren’t pushing for change, don’t really seem to want change, and emphasize that they are not being pushed to change. Some of them run very, very large departments in very, very large corporations. Right now, they could cut legal service spending by 50% in a year, but they won’t. They will tinker around the edges enough to stay in the good graces of the management team. But they won’t do the obvious things to get spending down. I suspect there are quite a few of these general counsel. While a spending drop of $12 billion over four years is worth noting, it is small compared to what we would see if Big Corporate Law was serious about change.

More interesting are some of the loudest voices in the call for change. They, too, are not really into cutting their legal spending. They are into making a lot of noise and getting lots of visibility, but not into really cutting legal services costs. This is the dark secret that isn’t so dark or secret in the profession. There is a line between saying you want to cut costs and actually doing so, and virtually everyone stays on the side of talk and does not wander into serious action. Let’s face it folks, if you want to cut your legal services spend it is not hard to get it down to a small percentage of what you spend today (as in well under 50%) within a year or two. And that just gets you the low hanging fruit.

Now Let’s Stop the Fight

I get frustrated listening to all the Sturm und Drang. Real change does not happen by getting in the ring and pounding on someone. At the end of the fight, both fighters are worn out and everyone else walks away. One fighter bested the other, but neither changed the world around them. Real change happens outside the ring.

The range of issues that lawyers could attack is enormous. Many of them have direct impact on their existing corporate clients. There are services lawyers (in-house and outside) could provide clients that would add value. Lawyers could help clients steer through murky and turbulent waters. World governance structures are changing quickly, technologies are emerging and evolving every day, societal concerns are shifting presenting new opportunities and risks for clients, and lawyers are ignoring all of this in favor of fighting in the ring over inanities.

Killing off a profession isn’t easy, but it also isn’t hard. Big Corporate Law can throw stones and complain, all the time not really addressing what their clients need and skirting around real reform. They can duck and jab, making sure they don’t pull enough work way to truly weaken Big Law but at the same time showing their bosses they are serious.

By continuing on this route, they ensure that 10 years from now, fewer people will care about the aging legal profession because it will have less to offer people. Big Corporate Law lawyers forget that they too are expendable. Whatever services they pull from outside lawyers can also be pulled from in-house lawyers. As inefficient as outside lawyers may be, in-house lawyers are just as inefficient. The over-hiring of today’s corporate law departments will eventually result in downsizing, because cheaper labor does not replace working smarter. Big Corporate Law is following an old playbook used by their colleagues in other departments and a little investigation will show that it is, at best, a short term trick.

Apparently, the folks at COLPM did not talk about the few corporations who have skipped the urge to add in-house lawyers and are exploring the next evolution in legal service thinking. There are some who are looking at ways to replace outside and in-house labor using process improvement and technology. Their goal is to dramatically reduce the number of lawyers outside and in-house handling routine legal work. Instead, they will use lawyers to tackle the challenges I talked about and new challenges on their way—substantive and meaningful challenges. These lawyers will divert what one speaker called the 80% of low touch, basic legal work away from in-house lawyers as well as outside lawyers, not in-house legal work to reduce labor rates. None of these lawyers were the ones who took shots at Big Law during COLPM.

I agree with the sentiment in Jordan Furlong’s tweet. I think, and have been saying for years now, that clients are simply going around lawyers. The big issues of our time are being faced down by groups that don’t include lawyers. Clients are not seeking lawyers for strategic thinking (the exceptions are very few), and clients are tired of the in-fighting over things like billable minutes and who doesn’t trust whom.

Big Law is tough enough to take the punches and it doesn’t need me to defend it. But if you are one of those doing the punching, ask yourself this: is your time better spent punching or working with academics, entrepreneurs, venture capitalists, and practicing lawyers (even those in Big Law) to find ways to meaningfully change the profession? That includes reducing the number of lawyers in law departments focusing on that routine work. But it also means finding new ways that lawyers contribute to solving the pressing problems clients face and in the end, that is where lawyers want to be anyway. If you think punching away is best, then knock yourself out. If you think change is better, then contact me—we should talk.

Is Value Over-Hyped in the Legal Industry?

Posted in Efficiency

ValueWhen you read hype, it sounds like something is about to take over the world. Read an article on artificial intelligence in the law and you can be sure that the offices next to you are now occupied by robo-lawyers. In another article, you learn about blockchain technology. By the time you are done reading, you fear that if you haven’t mastered blockchain by the end of the day, your legal career is over. The art of hype has taken to new levels the ability to scare the bejeezus out of those being hyped.

Unfortunately, hype has a dark side that we all experience. If you do think there is something to artificial intelligence, blockchains, or any other development, hype is sure to set expectations so high that reality cannot reasonably reach them.  When those scared into learning more dig into the facts they find that the real world pales in comparison. Over-hype a good thing and you can send something down the path to obscurity before it reaches its potential. Value fees almost became one of those victims.

Value Should Be at the Heart of What We Do

Value fees (alternative fees, appropriate fees, etc.) came close to never reaching its potential. Apart from the head of finance at a major law firm, it is hard to find anyone who really likes the billable hour. Everyone knows its evils, but few sing its virtues (we all know there is a reason for that, but some valiantly try to squeeze out a few notes). Value fees were hyped far ahead of their time.

The idea of value fees was and is great. It is hard to argue with the basic proposition that the client should pay what it thinks the service is worth and the service provider should receive what it thinks the service is worth. But you may also think, it sounds like there will be a gap. The service provider will go high, the client go low, and they won’t be able to agree on a price.

Ponder this false dilemma a bit more, and you can see what will happen. The service provider will bring down its price. If the client doesn’t come up, the service provider will learn its prices are too high. If the client does come up, the service provider and client can find a point where the value exchange equalizes and they engage in the transaction.

Value fees adjust for risk apportionment. They also adjust for cost, context, point in time, and a myriad of other factors. Value fees are a way of adjusting more than just the pricing, they can adjust the entire value chain for the transaction, and that is far more efficient than having a pricing system based on a measure insensitive to the concerns I listed above (I’m looking at you, billable hour).

What is Value?

We have just hit the point where many lawyers—law firm and client—drop out of the value fee discussion. These fees require something that has been bred out of most lawyers, and that is the ability to understand how they provide services. Without the knowledge of how services are provided, lawyers find it almost impossible to make value fees work consistently. They see this as value fees being over-hyped and stop using them.

To understand this cycle, we need to explore the concept of value fees more deeply. First, we need to get past the stumbling block for all lawyers. Say “value fee” and the first question you get is “how do we determine the value.” A simple answer usually is best, especially when it is accurate: the “value” of a service at a point in time is whatever the client and service provider can agree on as a price. Second, we must recognize that the billable hour has nothing to do with value. It is a measure of inefficiency—the greater the invoice the more inefficient the process (though not necessarily the service provider).

Most people get, even if they struggle with, the part about the value being what the client and service provider agree upon. They have experience with these types of transactions. When you buy a car, a house, a pair of shoes, or a dinner at a restaurant, the value of whatever you buy is what you are willing to pay the other party.

The other part of the definition—at a point in time— throws many lawyers. The value of the exact same service can vary from time to time. In fact, lawyers also are familiar with this phenomena even though most don’t know it.

Want to buy a book from a well-known online retailer? You go on its site and check out the book, but you can’t make up your mind. The book costs $19.95 and you aren’t sure you want to pay that much for it. A few hours later, you are surfing the web when an ad from that same retailer pops up on a site you are visiting. The ad features the book you wanted, except the price is $18.95. You think “wow, a deal” click on the ad and buy the book.

The retailer’s service is selling you the book, but the retailer couldn’t close the deal at $19.95. The retailer was at $19.95 as its value point, but you were at something less. Based on experience selling millions of books, the retailer decided that dropping the price by one dollar would do the trick. So, it offered the same service at a lower value, $18.95. You agreed, and the transaction went through.

What you did not know, is that when you were buying the book for $18.95, the retailer was selling another copy for $19.95 and another for $19.25. Each time, the service was the same—selling a book and delivering it to the customer (assume that cost of delivery was the same in each instance). But, three different values were placed on the transaction, based on what the service provider was willing to accept and the customer was willing to pay. There wasn’t a “right” value for the service.

A ride-sharing service has become famous (or infamous) for understanding that value varies based on context. Hail a ride on a warm sunny day, and you will be charged $X for that two mile ride. Hail a ride from the exact same location on a day when it is cold and rainy, and the cost will be $X+Y for the same trip. Demand for rides has increased so what you the customer are willing to pay has increased, because the ride has greater value to you (staying out of the cold rain versus staying out of the warm sun).

There isn’t one “value” for a service. There are many values, each dependent on many factors. But if trying to find a value to charge (or pay) for a service is difficult, then how can the parties choose among the many values? A large part of the answer lies in that area lawyers don’t understand—how they provide their services.

If You Don’t Know Cost, You Don’t Know Value

When you don’t understand how you provide your services, you don’t understand your cost structure, and without understanding your cost structure setting a value for your service is the same as being left in the middle of a golf course with a blindfold on and being told to find the golf ball. There is a chance it will happen, but the probability is low.

From the service provider’s side, knowing what you will accept as payment for a service starts with knowing the cost of providing the service. Once you know that cost, other factors come into play that will help you set the value. Assume you know the cost of your services is $20,000 (put aside for the moment how you know that). If you accept $20,000, then you don’t lose or make any money. Now, you can adjust up or down what you will accept for the service, based on other factors.

If the client is a new one who could spend hundreds of thousands of dollars at your firm, you may decide to accept less than $20,000 for the service. If the client is problematic and the risk of payment is high, you may decide to charge $30,000 for the service (keeping in mind, of course, professional responsibility requirements). The $30,000 isn’t an arbitrary value, it includes a profit margin and an amount to cover the risk of non-payment. In each case, the client may agree to your value amount, or disagree and decide to negotiate, or simply go elsewhere. The better you understand your services and the market, the less likely you are to lose the sale.

Now we need to circle back and examine how you knew the cost of your services. Trained in the billable hour, most lawyers assume you determine cost by multiplying the number of hours it will take to provide the service by the cost of each service provider. If it takes the partner 10 hours, and his cost per hour is $250 (even though his billable hour rate is $500), then his cost is $2,500. Do that same step for each service provider, add them up, and you have the cost of the service. Not really.

Every day, each lawyer does things at work that fall into one of four categories: value added, necessary but not value-added, unnecessary and not value-added, and other. We can dispense with “other” quickly. It includes all the things that fill up the day but have nothing directly to do with providing services to clients. Getting coffee, talking to your friends, surfing the web, and so on. Forget about those things.

The other three categories are the ones to focus on. When you say that it costs the firm $250 per hour for that partner, you really mean that it costs $250 for one hour of time spent on some combination of value added, necessary waste, and unnecessary waste. Necessary waste includes those things you must do, but which do not add value. Unnecessary waste includes those things which do not add value and which we can eliminate. Law firms typically do not break time out into those three categories, so they don’t really know the cost of the services they provide. In hour one, the lawyer might provide 45 minutes of value added services, 10 minutes of necessary waste, and 5 minutes of unnecessary waste. But in hour two, it might be 45 minutes of unnecessary waste, 10 minutes of value, and 5 minutes of necessary waste.

We can go back to that partner who spent 10 hours to perform his service. The real question is how many of the 10 hours were wasted? Let’s assume this partner is more efficient than the average lawyer and wastes only 50% of his time. That means that out of the 10 hours, 5 hours were value added and the other 5 hours were waste. Remember there are two types of waste, so one of the 5 hours was waste, but we would not have been able to prevent the waste. The remaining 4 hours of waste truly was waste—it should have been eliminated.

From the firm’s perspective, it cost 5 hours value added work by the partner (at $250 per hour) to provide the service, another 1 hour (again at $250 per hour) to provide waste that they couldn’t remove, and 4 hours (also at $250 per hour) to provide pure waste. What should have cost the firm $1,500 to perform (6 x $250) cost the firm $2,500 to perform. This is what I mean by knowing your cost.

When a market has minimal competition (the good old days in the legal industry), spending too much time to perform a service didn’t hurt a firm. It simply passed the excess cost on to the client. In a competitive market, paying more than necessary to perform a service decreases the potential revenue and profit for a firm. Other firms will reduce their cost, lower their prices, and win the client.

This is where process connects with value fees. The firm that controls its costs—not just the billable hours spent, its true costs—has more flexibility on pricing. It can even reduce prices and make more money than a competitor who doesn’t have control of its costs. The firm controlling its costs can use value fees as a competitive weapon while at the same time giving clients predictable pricing.

Flexibility in pricing is not the same as strategy, though without flexibility you are limited in strategy. Flexibility means you can drop your price below your cost, price at your cost, price over your cost, or charge a premium price, all depending on your pricing strategy. You also can vary pricing depending on the context. In other words, you now control the profitability of your organization. Clients always set the price, but by aggressively reducing costs you can increase your organization’s profitability even when revenue drops.


Lawyers shy away from value fees, claiming they are too complex, require too much work, or that they simply don’t work. Value fees are more complex than billing by the hour and they do require more work. Value fees are for firms that respect their clients and trust them. They are for sophisticated firms that understand pricing legal services should not be an exercise in demonstrating your firm’s inefficiency. They also are for lawyers who believe they should get paid a fair price for what they deliver to clients. For clients, value fees are a better, more nuanced way of making sure they pay for the value they receive, reward superlative service, and recognize when there has been a service shortcoming. For all lawyers, value fees get us off the belief that working 24 hours a day is a good thing.

Don’t Cede Our Future to Technologists

Posted in Leadership

Cede2There is a movement underway with the goal of deciding the future of law. Technologists call it deciding the metes and bounds of what artificial intelligence and robots may do. The question is not what they can do, but what humans will allow them to do. Right now, technologists have appointed themselves the leaders of this movement hoping they can pre-empt others from taking over regulation of this quickly evolving world. This is bad for all of us, technologists included. Lawyers should not cede the future of the hybrid human-computer society to technologists.

What Limits Should We Place on A.I.?

As technology evolves, a question keeps coming up: what should be the limits of where humans take technology? This is not a new question nor is it limited to one type of technology. It is not the only question asked, but as technologies evolve it has become the most important question. One evolving technology, artificial intelligence (A.I.) stands apart from the others, because unlike the others it has the potential to become self-determinative. When we talk about artificial intelligence, the question may be more than where will humans take technology, it may be where will artificial intelligence take itself.

Self-determinative does not mean what many have come to believe about the potential of A.I. through hype and Hollywood. Evil A.I., though dramatic, is less likely than literal A.I. A software program does not have to embody an evil personality type to do egregious harm. Software is literal. One example often used is the paperclip making program. Left unchecked, the program could search for ways to continue making paperclips, which could mean using everything it can find or convert to making paperclips, even though there no longer is any need for paperclips. At its extreme, the program could subvert everything to its central goal of paperclip making, without any intent to do evil or good.

When compared to other technologies of the present and past, A.I. is unique. It alone has the potential to chart its own course. Nanotechnology can do great good or evil, but which it will determine for itself which path to follow. Nanotechnology may evolve along unintended lines and may continue evolving in the absence of some external force limiting it, but will do so without the self-determinative quality of A.I. The same is true with gene editing (such as through CRISPR-Cas9) and 3D printing.

Concern about the risks emerging technologies present to humans, A.I. in particular, has led many technologists to look for prophylactic measures to limit the risks. When there is work to be done, committees must be formed. As lawyers know, whenever there is a committee the next question is “who should be on the committee?”

Scholars have put extensive effort into studying the operation, success and, relevant here, composition of committees, yet most committees are formed without a glance at the research. This should not be surprising because those who do things (including scholars) seldom stop to glance at what scholars say they should do.

The committees formed to set the metes and bounds for A.I. have structured themselves along predictable, though concern raising, lines. The committees include technologists, some philosophers or ethicists, and occasionally sociologists or other social scientists. The technologists hope that they can self-regulate the future of A.I. development and avoid the pratfalls that accompany government or some other form of external regulation. As with most domains (including law) the belief is that those who know the domain best should be the ones to regulate the domain. History has taught us that his is seldom so (again, including law).

Technologists Take Control

On September 1, The New York Times ran an article titled, “How Tech Giants Are Devising Real Ethics for Artificial Intelligence.” Five of the largest tech companies are putting together a group that will create a standard of ethics focused on artificial intelligence. The group’s goal is to self-regulate the industry before the government steps in and does the regulation for them. At this point, they have the organizers, but have not chosen a name or individual members for the organization.

The group’s goal is highlighted by a report issued by the AI100 Standing Committee and Study Panel that discusses the “likely influences of AI in a typical North American city by the year 2030.” The Committee comes out of the One Hundred Year Study on Artificial Intelligence, which is a “long-term investigation of the field of Artificial Intelligence … and its influences on people, their communities, and society.”

A few days before, Berkeley News, published by the University of California at Berkeley, had announced that Stuart Russell would lead a new Center for Human-Compatible Artificial Intelligence. The initial investigators include, in addition to Russell who is a professor of electrical engineering and computer science, other computer scientists, a cognitive scientists, and A.I. experts. According to the News, Russell expects the center “to add collaborators with related expertise in economics, philosophy and other social sciences.”

The Center will teach A.I. to mimic human ethics by having the software observe human behavior. This effort addresses problems such as the “Keep Off The Grass” sign. Read literally, even the groundskeepers can’t go on the grass. But, read with the value system humans use, it has a more reasonable meaning.

Missing among the committee members are those who have the most familiarity with governance systems, the lawyers. The Stanford Study Panel does include University of Washington law professor Ryan Calo, but it seems he is the exception that proves the rule. The presumption exists that technologists know how to create the algorithms and code that A.I. systems use, philosophers and ethicists know the moral quandaries of the human condition, and social scientists know the dynamics of small and large organizations, so all bases are covered. Somewhere, somehow, this group will determine how to create governance systems that will work at least as effectively as the legal systems that we have used for thousands of years. To me, this faith in the group to bridge the gap from their domains to law is misguided.

Lawyers Show Their Fear of Technology

Lawyers have a strange relationship with technology. The majority understand very little about technology, even the technology that sits on their desk. We know  that most lawyers can’t use the basic tools of the trade well. Word is a mystery, Adobe Acrobat even more so, and Excel something only understood when used as a word to describe their academic performance pre-law rather than as a number crunching tool.

When we go outside those age-old lawyer tools, technology becomes the black box. Whether A.I., robotics, blockchain, or any other emerging technology, lawyers cringe when presented with anything beyond the quill and parchment.  Their interest is limited to whether it will take away some of their job (the answer is yes, but not as soon as they fear or the hype tells them). How the technology works, its real potential, what is real and what is hype, are enigmas.

Though many lawyers like a good novel, they don’t like real-life mysteries. Things that are mysterious highlight that lawyers do not know everything, and lawyers do not like being in a position of weakness. Lawyers like to argue from a position of strength. Since they know little about technology, it is not a strength and they shy away from it.

There are, of course, some other explanations. Computers bring up painful memories of math, an area where there were right and wrong answers, not literature or the social sciences where persuasion rules. For many lawyers, the whole technology thing is boring. Never were interested in it, never will be.

Finally, there is the whole ripeness argument. Lawyers have been trained to hold back, let things develop, and wait until the disaster happens to jump in and try to fix things. In fact, so strong is the urge to wait until after the fact that lawyers have developed the “ripeness” doctrine. Better (and more lucrative) to solve the problem than prevent the problem. Let’s wait until A.I. is conquering the world rather than try to prevent the takeover.

Law is Not Simple Code

With A.I. on the upswing, it is commendable that many thoughtful people are asking what society should do to build some protective walls around our future. Humans don’t have a great history of considering the consequences of our actions. We prefer to let technology take its course and then ask, as the cliff looms ahead, whether it is time to change direction.

It is time for academics and practicing lawyers to step in and provide guidance  to the technologists on building a governance system. To start, we must educate those outside the legal domain about how legal processes, substantive and operational, work.

There is a belief among some (fear among lawyers) that law, regardless of its source, can simply be converted into computer code. This stems from the belief in a formalist legal system. In such a system, law is a set of principles and rules. Lawyers discover the facts, apply the principles and rules, and the algorithm of law delivers a solution. A recent biography of Richard Posner makes the point that common law does not function in this formalist way (William Domnarski quoting Richard Posner from his essay “Killing or Wounding to Protect a Property Interest,” 13 Journal of Law and Economics 201, 208 (1971).

Those saying to restate the common law in code form had a ‘propensity to compartmentalize questions and then consider each compartment in isolation from the others; a tendency to dissolve hard questions in rhetoric (for example about the transcendent value of human life); and, related to the last, a reluctance to look closely at the practical objects that a body of law is intended to achieve. Indeed, the preoccupation with completeness, conciseness, and exact verbal expression natural to codification would inevitably displace consideration of fundamental issues and obscure the flexibility and practicality that characterize the common law method.’

Law, despite the belief of many lay people, is anything but formalist. As legal realists (and pragmatists, such as Posner) explain, law involves the application of society’s values, common sense, equity, and bias to the particulars of the case, and then resolved within a set of constraints (e.g., statutes, regulations, court decisions). Attempting to code without appreciating how our governance system has evolved is attempting to backtrack to the rational person, when today we know people behave irrationally (even if predictably).

If you think I am overstating where technologists stand, then consider this effort by some of them. “MIT wants humans’ input on who self-driving cars should kill” reads the title of a recent article published by Quartz. This is the modern version of the age-old philosophy trolley question. When faced with two choices—go left and kill someone, go right and kill someone else—which is the moral choice? MIT’s Media Lab has an online test called the Moral Machine (you can take the test here). The philosophy problem is tough, but not really changed by the technology swap (autonomous vehicle for trolley). The difference, of course, is that in one version there is a trolley driver and in the other there is a computer driver. Either way, what constitutes “kill” is a complex problem, one preferably not solved by coding a popular vote.

The rule of law may not have prevented or solved all disputes, but we do have a vast storehouse of data (poorly accessible, but still there) about how to build and operate governance systems. If may take a village to raise a child, but it takes an ecosystem of domain experts to build workable governance systems.

Governance Needs a Broad Perspective

Lawyers, technologists, ethicists, social scientists and others should work together to develop the governance structure—computer code and legal code—that will regulate the new hybrid society. That structure also will be hybrid—part analogue, part digital. Some restrictions on what A.I. can do will be built into the computer code itself. What form it will take and the best way to accomplish this is something technologists know better than lawyers. But what those restrictions should be is something for broader discussion.

While the effort at Berkeley to teach computers human ethics by having them watch humans is interesting, it is hard to see how it will capture the interaction of complex ethics systems blending in modern culture, at least anytime soon. In the meantime, technology advances many computers at a time.

Similarly, some restrictions will be built into analogue code—the types of laws humans use to govern themselves. How to write those laws is something lawyers know better than technologists, but what those restrictions should be also is something for broader discussion.

Many lawyers, believe a “wait-and-see” attitude rather than a prophylactic approach is better. When issues arise we regulate those issues. This has been the legislative history for many of our recent muck-ups. When the harm has happened we look back (hastily) and write new laws that are intended to prevent the harm from happening again. With rogue A.I., the odds of a second chance are slim.

A.I. brings a different type of threat than financial upheaval. Once computer code is embedded in billions of devices, interconnected around the world, and with many devices able to evolve code without human intervention, the threat to governance changes in degree and magnitude. Even a benign computer intent on achieving its goal of making paperclips will be hard to dislodge from its goal once it has infected the world’s devices. A.I. does not accept do-overs.

By working with technologists in companies (where many are embedding technology not well understood or protected into everyday devices), in academia, and in government, and social scientists, lawyers can create a much stronger and more workable governance system. Lawyers also can help integrate that system with the existing, complex governance system in the United States and coordinate it with governance systems in other countries (something that must happen for any A.I. system to be effective).

Lawyers must continuously step up to the problems that need solving, not simply wait for society to bring the lucrative problems to their doorstep. A.I. and other technologies will play significant roles in our future and lawyers must thrust themselves into the discussions. The past excuses, largely dependent on lawyers being ignorant of science, math, and technology, are not sufficient (though they were accurate). Lawyers who don’t feel comfortable addressing client problems in these areas are implicitly leaving the future of governance—and lawyering—to technologists.

On Economics, Lawyers, and Lean Thinking

Posted in Leadership



The legal profession is a closed system which leads to some, ahem, weird economic ideas played out in real life. I am not an economist, so I write this essay with apologies to those of you who are members of that distinguished tribe. I am sure there is a rational economic explanation for what I am about to describe. But, since I am adverse to digging back through my economic textbooks to search for one, I’m going to wing it (lawyer dilettantism at work).

In an unregulated market, tightening demand should have an impact on supply at some point. I remember that from what they taught me in economics and I’m going to assume that in the past almost 40 years we still believe that. Of course, the legal market is regulated (sort of). We see supply continue to increase as demand from clients shrinks or disappears. Demand and supply in the legal industry are not tightly linked, apparently.

Now if supply remains constant or rises, but demand shrinks, then prices should fall at some point, right? If there is more of what you want to buy than what you need to satisfy your desires, the supply side starts competing for your business and that means prices drop. Or, in the case of law firms, prices rise. Again, it seems the legal industry is different.

There is another anomaly we should cover that you do not hear about as much. This is the story of the supply of labor from those who bear the title “non-lawyer.” In my past life, we had titles for these folks. We called them legal assistants, paralegals, administrative assistants, clerks, and so on. There are others who fall into that general category of “non-lawyer” (and here I will exclude astronauts, doctors, engineers, actors, and a host of other professions not permitted to use the title “lawyer”). These others include project managers, pricing specialists, process improvement experts, legal data scientists, and so on. For the rest of this essay, I was going to throw all of these folks into the same pot under the label “non-lawyer,” but since that would confuse them with the more than 300 million people in the United States who do not have a law degree, I will instead use the term “talented professionals.”

Talented Professionals Should Get More Work

The  talented professionals are the unsung victims of the legal industry transformation. These are the people who really get whacked when law schools, law departments, and law firms want to “right-size” to meet the changing legal services industry demands. For those who like metaphors, this means that when you are in the legal industry and a storm threatens to destroy the tops of your trees, cut off the lowest branches to protect the tree. This may seem like an odd approach, but as I said at the outset, law is a bit weird when it comes to economics.

The logic within the legal industry seems to be the following: the best way to respond to cost pressures is to flow work uphill to the most expensive people in your organization. In a law school, those people are called faculty, in a legal department they are called lawyers, and in a law firm they are called partners. By flowing the work to these most highly-skilled and paid individuals, you eliminate the need for the talented professionals (the lower tree branches in the metaphor).

For those who did not get the memo, this is how lawyers trim the workforce that makes up organization tree. First, they look to technology. Word processing centers, travel groups, filling out expense reports, and many, many other tasks are ones that you assign up the ladder by implementing a plethora of software packages for the most expensive labor to use. Technology gives them the power to do what those talented professionals used to do. Use package A to make your travel arrangements, package B to do your expense reports, and this combination of packages to do your documents (including filing them).

When technology isn’t available, you can always rely on very expensive labor. You do that by simply telling lawyers they now must do tasks A through Z themselves, for the good of the organization. Need copies? No problem, go across the hall, down the aisle, through three doorways, turn left, and you are at the copy room. As soon as the four people in front of you are done jamming and unjamming the photocopier, you will have a turn. On your way, book a conference room and go online to see if your package was delivered.

I think the cost savings here are obvious, but I’ll point them out. The schools, departments, and firms allow the talented professionals to “pursue other career opportunities.” The change in staffing ratio looks on the surface like it results in immediate cost savings, because those organizations aren’t paying salaries and benefits to the professionals let go. I assume there is a cost to having the most highly paid individuals in an organization take over the responsibilities, but as I said I’m not an economist so I’m probably missing a loophole. Let’s not get caught in trivia and focus on the big picture.

Delegate, and then Delegate Some More

As those of you who regularly read SeytLines know, in addition to my background as a lawyer (my past life) I have an extensive background in lean thinking and I am a fan of using the right technology for the right purpose. I am now going to explain how a lean thinker and efficient technologist would look at the whole legal industry cost, supply, demand situation. I apologize to those who run law schools, law departments, and law firms, as aI know the approach I describe will seem strange.

We will start with a lean thinking favorite: waste. One of the eight categories of waste in lean thinking is underuse of skills. Lawyers can make photocopies, but lawyers have a wee bit more training than is needed to make photocopies. As a general rule, each time a lawyer makes photocopies we are underutilizing his or her skills, and that means waste. Lawyers also are a bit overtrained to handle travel arrangements and do expense reports. When it comes to project management and process improvement, lawyers are under-trained but over priced.

To reduce this waste (and this isn’t the only reason), lean thinkers would focus first on processes and get waste out. As part of getting waste out, they will push jobs to the skill level which best matches the requirements of the job. We recognize that people are happiest when they do jobs that match their skill level. They may aspire to having greater skills and more interesting jobs, and that is fine. But, if we use highly-skilled employees to do low-skilled work, we are wasting a lot of resources and the highly-skilled employees become dissatisfied.

I’m going to pause a moment here to let the heart rates of deans, general counsel, and managing partners settle down. Breathe slowly and read it again: a lean thinker would take work away from lawyers and give it to talented professions. Doing otherwise screws up the organization leading to bottlenecks, delays, poor work allocation, overwork, underwork, reduced quality, reduced creativity, higher costs, higher turnover, lower job satisfaction, lower morale, and a few other negatives—all things you already knew. Most large corporations have HR professionals who watch for and intervene when they see this “up the chain” delegation of work. In the legal industry, we give the leaders awards.

In our legal industry scenario, rather than pushing lower skilled work higher, a lean thinker would find ways to push as much work as possible down the chain. Doing so would mean having the talented professionals take whatever they could handle off the desks of lawyers. In the end, lawyers would give up work rather than take on tasks from the talented professionals.

Those who are relieved of work others can do less expensively, with higher quality, and at their skill level, find they have more time to do what their skill level allows them to do. They have more time for creativity and innovation. The result: both the person and the person’s customer (client) are happier.

When I ran a large manufacturing facility, we always looked for ways to push work down to the proper level. Why have highly paid engineers doing work that supervisors could do? Why have supervisors do team lead work? Why have team leads doing work that line workers could do? If pushing work down overloaded those on the lower rungs, we had options.

One option was to automate the work. First, of course, we would study processes and take out waste. Unless you have a strong continuous improvement program, the phrase “I’m overworked” is a great signal that you need to do more process improvement. Once work is at the lower rungs it is easier to automate. If we couldn’t automate it and needed more people, we hired the lowest cost individuals. By the way, in this discussion when I say automate I do not mean having your best trained most expensive labor use computers. I mean having the lower cost workers do routine tasks with software.

If we didn’t have a situation where those lower cost people could improve their skills and move up the ladder, you might have a concern. But we did, which meant that people could move into jobs that better matched where they wanted to be and wouldn’t be stuck at the lowest rung.

I have covered a lot of ground, so let me sum up. Under the approach favored in the legal system, those who have the most training, cost the most, and can offer clients creativity and innovation get the most lower level work pushed up to them. Law professors, who could be creating and innovating in the law and the classroom, end up doing lots of administrative work. Law department lawyers do the same—they could be helping their clients through creativity and innovation, but instead they keep the photocopier running. Law firm partners pick up the work of associates (and administrative teams), because the more billable work they can charge out the better, even if they are tremendously overqualified. Clients do not get the benefit of the creativity and innovation of the partners, they get the benefit of the hours billed.

Under the lean thinking approach, cost is reduced because we keep pushing work down to the labor cost level, and then out to low cost automation. The individuals in the labor chain are happier because they are not overloaded with work, and in particular work well below their skill level. They spend more time using their skills, knowledge, and experience, which makes them happier. At each step in the labor chain, the customer of the person doing the work is happier, because they get the creative and innovative input of that person.

The Perverse Incentives of Legal Service Organizations

As I said, I am not an economist. I am sure there is a reason why high cost, overwork, and low satisfaction is better than low cost, acceptable work level, and high satisfaction. I realize that thinking lean requires a group of people at all levels to sit down in a room, work through current processes, and find better ways to do them. That collaborative approach strikes at the heart of an autonomous system where lawyers hide behind closed doors while talented professionals (in shrinking numbers) work in the cubicles. Having written this essay, I have concluded I have no choice but to go back and thumb through the economic textbooks to find the answer.

Before I go, however, I have one more thought. On the slight chance that the lean thinking approach is better than the legal industry approach, then what the heck is going on? Law schools should want to reduce costs, law departments should want to reduce costs, and law firms should want to reduce costs. All three environments should want to make employees happy, so why aren’t they?

Perhaps this is the answer. Law schools cannot fire tenured faculty, but they can fire everyone else. If you want to cut costs, push the work up and fire who you can. Law firms are run by partners, and while you can “fire” them it is difficult. It is much easier to fire lower level employees while bulking up at the top. Law departments are staffed and run by former law firm employees. They have learned how the system works at law schools and law firms: protect the top and lop off the bottom.

I see how it works. But, as a lean thinker, I still keep wondering if it wouldn’t be better to reduce costs, keep the work manageable, and make everyone happy. Now if I could just find my copy of Samuelson.

Keep Calm and Come Back

Posted in Uncategorized

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I am taking a short break to re-charge and get ready for the fall onslaught. But don’t worry, I’ll be back next week with a new post and new ideas about how we can improve the delivery of legal services.

If you haven’t done so, please read last week’s post, “We Need a Moonshot for Lawyers.” I’m counting on all of you to come up with great ideas for a moonshot we can use for lawyers during the next 10 years.

Thanks for reading and see you next week!

We Need a Moonshot for Lawyers

Posted in Leadership

MoonshotIt takes an undergraduate degree, a law degree, and passing the bar exam to become a lawyer in the United States. In other countries, it takes less time in the classroom, but some time in the real world. The money and time invested in training a lawyer before he or she has practiced for a day is enormous. Those investments represent a commitment by society to the idea of rule of law. Yet the overwhelming concern among lawyers today is not how to improve society, but how to make a buck.

It would be easy to chastise those in the profession and say this has not always been the case, but from what we can tell, it has. Law historian Lawrence Friedman said, “Most lawyers always served, mainly themselves, next their clients, last of all their conception of that diffuse, nebulous thing, the public interest.” As much as law was one of the learned professions (along with medicine and theology) it has been a way for an educated craftsperson to earn a living by solving problems. There is nothing wrong with earning a living by being a professional problem solver. But as Elon Musk, the man who expects to land humans on Mars in the next 10 years, has said, “Life can’t be just about solving problems. There have to be things that are inspiring and exciting and make you glad to be alive.”

From Solving Problems to Apocalyptic Collapse

Problem solving has worked well for most lawyers and presumably for most clients. But the web tells us that the legal industry is heading towards a total collapse. Large law firms are (almost) in free fall. Law schools are on the edge of closing their doors. Clients are willing to use any service provider that can bring down their legal costs while keeping them out of court, jail, or the media. Each morning I click on my iPhone waiting to see the headline, “The Legal Industry is Gone.” Richard and Daniel Susskind have predicted it, so it must be true.

While this apocalyptic vision of the legal industry’s collapse may arrive some day, reality seems to have outwitted the pundits for the moment. Things are not as rosy as they were a decade ago, but chances are high the legal industry will still be here a decade from now.

Yet, one thing bothers me every time I set foot in the classroom, give a presentation, talk to lawyers in a firm, or meet with in-house lawyers. The entire industry seems caught in a fog. Students and lawyers show up each day, do their thing, go home, and show up the next day to do their thing again. But I don’t see sparks, enthusiasm, excitement, or sense that they feel they are serving some greater purpose. I do not see lawyers who are “glad to be alive.”

I would like to believe that what I don’t see in the students at school or the lawyers at work, they have in their personal lives. Law is the thing that puts food on the table and fills the days with an honorable and sometimes interesting way to earn a living. It doesn’t always have to involve great ideas or massive challenges.

But this is where the story gets muddled. If all we can point to for the profession is the daily grind, then not many would (or should) want to join the profession. If money is the only driver, then we should expect to see exactly what we have seen: once money becomes hard to get prospective students and even practicing lawyers look to greener fields.

Some of this is good. There always will be people who chose a profession because it offers the greater gold, not because they have any particular interest in it. When gold is hard to come by, they will seek out the new gold avenue. But some of it is not so good. Individuals who could do much for society will choose another profession because who wants to spend seven years in school and take the bar exam only to find a “Not Hiring” sign on the door? Isn’t there something other than “pays the bills” and “makes me wealthy”?

Shoot for the Moon

The term “moonshot” goes back to the American space program conceived during President Eisenhower’s tenure. The United States had started its human spaceflight program in the 1950s with Project Mercury. It then moved to Apollo, a three-man spacecraft. President Kennedy followed President Eisenhower. In his May 25, 1961, address to Congress, President Kennedy announced the U.S. goal of “landing a man on the Moon and returning him safely to the Earth” by the end of the 1960s. President Kennedy’s goal, finally realized in 1969, has become known as a moonshot and programs with equally audacious goals have taken on the nickname.

During his 2016 State of the Union address President Obama announced a cancer moonshot. President Obama’s Cancer Moonshot started a new surge in the war on cancer. The moonshot, under the leadership of Vice President Biden, “aims to make more therapies available to more patients, while also improving our ability to prevent cancer and detect it at an early stage.”

Not all doctors, nor even all cancer researchers, will be directly involved in the moonshot. But many will. Many will devote their time and effort to eradicating cancer, and those who already have been on that mission hopefully will find new energy for their cause. We like big ideas and big challenges, because they give us goals. Solving a problem today has its own satisfaction, but solving a problem today that takes us a step closer to solving a massive problem can be far more satisfying. It gives us, as Elon Musk said, a reason for being glad to be alive.

Lawyers are Indispensable

As we look out across the issues affecting society, we see that law plays a role in almost all of them. Rule of law features heavily in discussions about major challenges facing countries. Access to justice is a major problem in the United States and around the world. Legal service costs have skyrocketed over the years, leaving many without any access to justice. Emerging technologies are raising new questions for which the law has no answers. How will we decide whether robots may take lethal action outside the scope of human control? What will we do about climate change?

Lawyers do things every day to help solve the world’s problems. As Professor Friedman says, “The truth is that the legal system is so complex, and so ubiquitous, that lawyers have become indispensable.” But the efforts of lawyers are hard to see and they blend with the background of all the other things happening in the world like one tile in a giant mosaic. To excite students and lawyers about what they can do, we need something bigger, something that will stand out, and something to which many of us can contribute.

To have that something, I think we need a legal moonshot. We need a legal equivalent of putting humans on the moon or taking a big step towards eradicating cancer. That is a big ask, but if we don’t have a big ask we aren’t shooting for the moon.

Because lawyers are a service profession, we think of ourselves as not having the problems, we are the ones that help others solve their problems. NASA’s engineers were there to make space travel possible, and doctors are there to help us eradicate diseases. Lawyers think of themselves as being there to help those who do the big things.

So, to find our legal moonshot, we first need to re-cast how lawyers view themselves. What is the greater good lawyers accomplish or can accomplish in the world? With that greater role in mind, go 10 years into the future to the year 2026. As you stand in 2026, look around and then look back at the past 10 years. The world’s population will have increased. The climate will have shifted a bit more. Technology will have advanced, we will have survived many calamities, and we will know much more than we know today.

What would you like to be able to say that lawyers accomplished during those 10 years as their legal moonshot? What idea do you think will galvanize those in the profession who want to make a difference? What are you willing to spend time on during the next 10 years and then be able to say “Do you see that? I helped make that happen.”

The Ask

I’m sure there are many worthy candidates for the legal moonshot. Please take a few minutes and think about what you would propose. Submit your ideas through the comments to this essay, or send me an idea on Twitter at @LeanLawStrategy. I hope to get many ideas and share them so we can together find our moonshot.

Lawyers like to say that practicing law stifles their creativity. This is your moment to let your creativity out and encourage it to have fun. Our legacy 10 years from now should not be: “We reduced the use of the billable hour by 20%.” If we want students to become lawyers for the right reasons, if we want lawyers to stay in the profession, and if we want the profession to survive as something greater than a highly educated bureaucracy, we need to create our own vision of what we can do as lawyers. I look forward to hearing your ideas.

To share a moonshot idea:

* Post a comment to this essay.

* Send me your idea on Twitter: @LeanLawStrategy

* Send me an email at (I will not share publicly who sent these ideas without the permission of the person submitting the idea)