SiloI spent my formative years in Illinois and part of my college years and working years in Iowa. I have seen my share of silos. But the silos lawyers construct top anything scattered among the cornfields. If we had a silo competition, lawyers would take the top prizes every year. The closest I found was a silo competition focusing on how to re-purpose old silos. Since lawyers keep using their silos, it won’t help us.

Finding ways lawyers enforce the silo mentality is easy. We can start with the basics: lawyers and non-lawyers. You are either in the silo or outside the silo, no middle ground. We cling to the belief that law is a monopoly, with rights to practice law granted by each of the states. That makes a lot of silos. You can join several silos, but it is a complicated process involving years of training on the secret handshakes.

We have some silos that touch our lives for a brief period—three years, to be exact—the law schools. Apart from the residual ego-boosting, social status pumping, or job-getting benefit of a law school’s name, three years pass and we fugetaboutem.

The silo list goes on. Law firms build walls between themselves and clients (strange, but true). Clients stay separate from law firms, consulting firms, law schools, and everyone else. Technology vendors are each to their own. You feel me?

In my talks, presentations, and interviews I suggest we breach the silos. Forget that other professions have done so. Forget the it would benefit all of us. Forget that it makes sense, could reduce costs, would increase efficiency and would improve quality. Let’s get to the heart of the matter: it would result in a lot of rip roarin’ parties! But I digress.

Removing the silos is a logical step in moving from our pre-20th century agrarian view of the world to a post-Industrial Age profession. Understanding how silly the silo structure is depends at times on the little things. For that idea, we can look to digital object identifiers.

Building Networks

Publishers throughout the academic world and many other deep scholarly environments, such as movie studios, use digital object identifiers (DOI). How many you ask? Over 5,000 entities have assigned over 133 million DOIs, which connect to media viewed over 5 billion times each year. So, a lot.

What is a DOI? It is an “actionable, interoperable, persistent link” to media. In other words, it is a unique identifier that a digital item calls its own. Wondering whether you should read Nudge by Richard H. Thaler and Cass R. Sunstein (you should)? Perhaps you would want to read a book review by Thomas C. Leonard. He says, “Though costumed in the guise of pop economics, complete with a cute logo—Nudge is, in fact, a manifesto for the new paternalism.” The DOI for Leonard’s book review is: 10.1007/s10602-008-9056-2. That DOI uniquely dentifies Leonard’s book review.

We have had DOIs since 2000. The DOI system is a standardized system—Digital Object Identifier System (2012), ISO 26324. It is international. The DOI Handbook and other information necessary to participate in the DOI system is online and open access.

You can use DOIs in many ways. In citations, a DOI points to a unique item—no confusion. If you posted the item on a publishing site that uses DOIs, you have a persistent link to the item. Since computers can capture DOIs, they can show the relationships among published items. Think of the many ways a legal citation can appear and consider the difficulty in training a computer to know all of those formats. DOIs have one format. Computers can scan all published materials and show the inter-relationships.

DOIs are “extensible by design to any sector.” If we assigned a DOI to each reported decision from the courts, we could show linkages among cases without trouble. Yeah, but look at that thing—the DOI is long. No problem! Use the shortDOI and that unique identifier for Leonard’s book review becomes 10/cp6mx8 (or, http://doi.org/cprmx8 if you prefer the link). What would happen if case citations changed to DOIs? We could make citations easy and accurate: Smith v. Jones, shortDOI (date).

We could go further. Each brief, motion, order, and other paper filed as part of a lawsuit could have a DOI. Instead of developing complex algorithms to link documents in PACER or try to discern from titles or other materials what relates to what, include the DOIs.

The Legal DOI Blockade

I have encountered DOIs as I increase my publishing. That led me to the legal world’s ignorance of DOIs. In 2010, Benjamin J. Keele published, “What If Law Journal Citations Included Digital Object Identifiers? A Snapshot of Major Law Journals.” If you want to read the article, use the DOI: http://dx.doi.org/10.2139/ssrn.1577074. As Keele notes, “DOI has become the standard digital identifier for scholarly publishing, with most hard science and many social science and humanities publishers using DOIs for their articles.” Keele did a study. He checked 1,041 articles and found that 37.8% had DOIs. Articles published in law journals: “most major law journal articles did not have DOIs assigned to them.”

Becoming part of the DOI community is easy. Despite the ease, lawyers and legal publications persist in the silo mentality on knowledge. If we dropped that mentality for publishing, these are a few ways we could benefit:

  • Access to Justice. If we published legal materials including cases, statutes, articles, etc. using DOIs, those who need the materials would have easier access to them. We want people to access the law, explanatory materials, forms they need to file, and anything else that eases the path to interacting with the legal system.
  • Since each DOI points to a unique thing, we avoid confusion. The citation system lawyers use attempts to get us to the correct, unique thing by throwing information at the reader in the hope that enough information will lead us to the correct material. A short DOI string does the same thing.
  • Lawyers and all others who work with legal materials can avoid learning, spending time deciphering, and navigating complex citation systems. One DOI finishes the task. Imagine the reduction in time spent learning and using the Bluebook.
  • Want to go to the third concurring opinion in that recent Supreme Court case? No problem. We can assign a DOI to the entire case and a separate DOI to each opinion. In fact, we can go further. We can assign a DOI to each paragraph, quote, or other segment. The Dodd-Frank Wall Street Reform and Consumer Protection Act covered 2,300 pages. Citing to specific sections means tracking through the byzantine sections, subsections, sub subsections, etc. Instead, we could assign granular DOIs. A DOI becomes an active URL by appending it to “http://dx.doi.org” and pasting it into a web browser. No confusion. The DOI takes you to the most current, official version of the statute.
  • Lawyers want to sit at the table and talk strategy. We want to share our thoughts and show leadership through them. But if we build silo walls , we become irrelevant. Make it easy to find, share, and discuss what we think and we become part of the community.

The Ideas Marketplace

Gillian Hadfield, in her book Rules for a Flat World explains the absence of markets in the legal infrastructure. The legal infrastructure, a term she coined, is everything “law,” including the institutions. The market absence, she argues, holds back law from effectively handling society’s increasing demands for guidance and regulation. With a few exceptions, I agree with what Professor Hadfield says.

DOIs facilitate participation in the marketplace of ideas. By making our ideas easy to find and easy to incorporate with ideas from other disciplines, we join and participate in that marketplace. Economists should have easy access to what lawyers publish, but so should technologists, sociologists, biologists, and ethicists. Are we all cool with technologists creating the algorithms for AI independent of (and perhaps lacking knowledge of) existing law? When the autonomous vehicle has to choose who to kill, is it a technical and ethical question devoid of legal implications?

Many thought we crossed this bridge in the 1920s. Columbia’s and Yale’s law schools looked beyond law to the social sciences. At first, the current and prospective faculty (including future Supreme Court Justice William O. Douglas) engaged in bitter battles. But, the schools found a happy medium. They refrained from becoming the social science research focused institutions some favored, but social science became part of legal study and education.

Since that time, the trend to crossover from law to social science or the reverse accelerated (with peaks and valleys). Today, seeing law professors with PhDs has become common. Some law schools, including my alma mater Northwestern’s Pritzker School of Law, have developed new reputations as hubs for this silo-breaking, multi-disciplinary approach. But, apart from these tidbits, lawyers and law resemble those siloed cornfields I got to know in Illinois and Iowa. Want to know what lawyers think? Join us or stay out of our silo.

Building Bridges

We can rail against the institutions or start fixing the problem. We can start with those pesky DOIs. Each time you write an article, ask the publisher if it assigns DOIs to the articles it publishes, assuming the article will appear online. If the publisher says no, push the publisher to start using them. The process to participate in assigning DOIs is beyond simple, so any excuses ring hollow. If you get a DOI for an article, use it whenever you cite the article and encourage others to do the same.

Add your article to the body of knowledge. If you publish your article in a traditional journal and it uses DOIs, indexing services can capture the DOI. You can use other vehicles to get your ideas out in addition to that lawyer trade journal. Authorea, ResearchGate, SSRN, SocArXiv, and Academia are publication outlets (and for most purposes, they are free). Try to retain pre-print or post-print rights to your article, even if you must assign the copyright. Ask whether the publication permits you to self-archive. Use your rights and publish through one of these vehicles. All of them give you ways to get your knowledge and research in the public domain, even if access to the final version or typist version remains behind a paywall. Don’t let legal publishers benefit from your work and exclude you from benefitting and helping the community.

Of course, being part of a knowledge community means you should access knowledge beyond articles outside the law silo. It seems that every day, I hear a lawyer speculate on how to address an issue outside the law. Checking, I find articles and books addressing the topic. But, the lawyer—staying within his or her silo—fails to look for the knowledge that exists. Clients pay for those knowledge deficits. By exploring the larger knowledge community, lawyers benefit from the work of others who have tackled many of the tough problems.

TippingAs my kids used to say, “made you look”! Remember, we rarely know a tipping point until we have passed it. We see them while looking back. We realize the world changed as we watched another cute cat video. For the record, I prefer the video of Professors Collins and Stone talking with Judge Posner. The Judge shares some provocative thoughts about the Supreme Court.

A recent survey from Corporate Counsel magazine suggests we did pass a tipping point. Steve Kovalan reports in “Your Clients Just Aren’t That Into You,” that 74% of general counsel project increased budgets in 2017. Then we get the belly drop: 43% expect to reduce use of outside counsel. About 92% of that work will go in-house. The trend of clients bringing work in-house continues. Eighty-five percent of general counsel cite cost as the reason for bringing work in-house. Seventy-four percent expect the same or higher budgets in 2017. But, we have a more interesting story than cost savings.

As Kovalan says, law firm leaders have blamed “more for less” and decreasing budgets for pressure on firm revenues. Data suggests, however, law departments have different motivations. They pull work in-house because they can. Recently, general counsel added another reason. They said they will trim law firms that seem to be on shaky ground. This move was inevitable. It could hasten the demise of some firms without resources to survive the departure of major clients.

We may have serenely watched general counsel realizing they can live without outside counsel. Are they changing their Facebook statuses from “in a relationship” to “alone and loving it”?

Why Do Law Firms Exist

As clients reduce the number of law firms they use, we should revisit a basic question: why do law firms exist? In 2011, Jordan Furlong published a nice essay taking a look at this question. He came up with one clear reason. Law firms exist to reduce transaction costs. Lawyers would face higher costs if they practiced separately. Re-reading his essay, it is hard to fault his logic. And, Furlong’s conclusion is consistent with the development of law firms over the past 150 years.

After the Civil War, solo practitioners started joining together into firms of two or three lawyers. The main motivation as best we can tell was to save transaction costs. A few firms, such as New York City firms representing corporations, needed more attorneys. They handled complex legal work. The rest saved money by partnering.

In the 1900s, the volume of regulatory work grew. Legal work also became more complex and it took more lawyers to do the manual labor of law. All of this led to some law firm growth. But,  saving on transaction costs was the main driver.

Furlong argues that technology replacing labor drives transaction costs lower. It decreases the justification for large law firms. Transaction costs fall below what firms can get by banding lawyers together.

I think he has a good argument, with one exception. A segment of the large law firm cohort—the superrich law firms—thrive. Twenty large law firms increase revenue and profits each year despite all the challenges facing law firms. Experts claim these firms provide legal services that weather cost cutting efforts. They provide specialized services in high-risk areas and command premium prices for their work. The lawyers in these firms band together because doing so supports lucrative businesses.

These firms don’t feel the challenges other firms do. Competition and technology do not have the same effect on them. Clients with high-risk work are not cost sensitive. Clients demanding specialized and sophisticated work will pay for the “best” to avoid failure.

If we slice off the top 20 firms, we have 180 firms left in The American Lawyer 200. They need to show why they exist. Lowering transaction costs is not sufficient. I am not arguing all but the top 20 law firms will disappear in a decade. But, I believe we will see continued firm consolidation. The gap between the top 20 and the remaining firms will grow. Today, we see a law firm size distribution resembling a two-humped camel. It has a bulge at the right end, one at the left end, and a trough in between. I think we will see a similar distribution in the right end bulge. That is, two humps with a trough in the middle. A camel on a camel?

Large law firms carved up the middle market firms years ago. Today, the 180 law firms in The American Lawyer 200 have become the new middle market firms. They face just as much risk as their predecessors. The live in a trough. That trough holds the firms that have trouble answering “why do you exist?”

A Late Bloomer

In many respects, this firm size evolution reflects broader trends. When I was young, mid-size department stores populated retail malls. Today, those stores have gone away. We have a few large stores, but the others merged or folded. We can go through industry after industry and see the same trend. Why should law firms be different?

We also see competitors entering many of these industries. Amazon? The legal industry is remarkable for having held on so long before living these changes. The tipping point has come (if it has come) late to law.

What Now

Assume we did see a tipping point in 2016 and in 2017 the remodeling pace in the legal industry will accelerate. What does that mean? I think it means a lot for clients. As I’ve said before, I’ll leave the firms to fend for themselves.

Clients need to get serious about understanding their supply chain and how to structure it. We hear that clients use alternative legal services providers more frequently and pull more work in-house. Those changes don’t show supply chain understanding and remodeling. They show clients swapping higher cost for lower cost in an existing supply chain.

The suppliers in the legal industry may change, but the supply change structure remains the same. A client hires a law firm. Everything is transactional, with little or no integration. Even when that client goes back to the law firm for help, each matter is transactional without integration. This is an old supply chain model. To the client’s detriment, it favors the supplier, not the buyer.

In 1980, Harvard Business School professor Michael E. Porter published the Five Factors Model. We use it to analyze an industry’s structure. We consider: 1) bargaining power of suppliers, 2) bargaining power of buyers, 3) threat of new entrants, 4) threat of substitutes, and 5) industry rivalry. Based on the analysis, we can measure the intensity of competition in an industry. Intense competition means suppliers earn lower profits.

When we look at the legal industry, the model shows low competition. Suppliers can earn outsized rewards at the expense of buyers. As competitors have entered the legal industry, the results shift a bit. But, the structure favors suppliers earning outsized rewards. This is one reason law firms can raise rates each year.

The structural shift that makes sense for the legal industry goes counter to the direction clients have taken. Jeffrey Dyer and Harbir Singh call it the “relational view”and described it in a 1998 article.

Under the relational view, suppliers and buyers integrate processes. This creates seamless, cost effective, higher quality workflows. The automotive industry is a visible example of this approach. An assembler integrates with Tier 1 suppliers, who integrate with Tier 2 suppliers, and so on. Before you say “lawyers don’t assemble cars,” I’ll point out that some clients and law firms use this same approach. The supplier and buyer work for mutual advantage rather than winner takes all.

How does this work? The supplier and buyer think long term. Working together, they set a goal. Then, they examine and integrate their existing processes. They design a value stream that flows through the entities. Value streams in the old model start and stop at each entity’s door. They build and invest in a relationship and in each other. They develop trust and expect the relationship to continue.

That relationship means the supplier will invest in innovation that benefits both it and the buyer. It means it won’t try to maximize the return on each matter. Instead, it will maximize the return on the relationship. It means the buyer will return to the supplier rather than shop every matter. The buyer invests in the supplier. Studies show that using the relational view, suppliers and buyers both do well. The supplier has a continued relationship at lower profit per transaction. But, that is better than higher profit per transaction and constant churn.

Finally, external competition keeps the parties on their toes. If a buyer stops investing, innovation will drop off. That in-house law department will be less competitive than departments in other companies. The corporation has a competitive disadvantage. If a supplier stops investing, the buyer will leave for a stronger relationship. We see that today. Buyers report they already have dropped many firms and plan to continue the trend.

Today, corporate law departments still use the transaction view for supply chain structure. They do not build competitive advantages, just temporary cost benefits. Law firms do not invest, because they have no incentives to do so. The transaction view drives low innovation, higher cost for the buyer, and higher revenue for the supplier.

Conclusion

Buyers have more alternatives today to get their legal needs serviced. They understand this and have decreased their reliance on law firms. Law firms struggle to respond and keep the benefits of the current supply chain structure. That is, law firms still want outsized profits. Buyers perpetuate the transaction structure that helps law firms. Swapping one supplier for another does not change the structure.

Both buyers and suppliers will do better over the long run by changing the supply chain structure. Moving from a transactional view to a relational view balances benefits to both parties. We have seen instances in the legal industry of this move. The client and the firm prosper with stronger relationships. Innovation increases. Buyers should consider a new supply chain structure. Otherwise, they will replicate the current system with different players, which is not real change.

References

Jeffrey H Dyer & Harbir Singh, The relational view: Cooperative strategy and sources of interorganizational competitive advantage, 23 ACADEMY OF MANAGEMENT REVIEW (1998).

LAWRENCE M. FRIEDMAN, A HISTORY OF AMERICAN LAW   (Simon and Schuster. 1973).

Steve Kvalan, Your Clients Just Aren’t That Into You, Law.com(2016), available at http://www.law.com/sites/ali/2016/11/13/your-clients-just-arent-that-into-you/.

Tony Mauro, Judge Posner Slams “Stupid” Decisions by Chief Justice Roberts, “Silly” Stances by Scalia, Law.com(2016), available at http://www.law.com/sites/almstaff/2016/11/30/judge-posner-slams-stupid-decisions-by-chief-justice-roberts-silly-stances-by-scalia/.

MICHAEL E. PORTER, COMPETITIVE STRATEGY : TECHNIQUES FOR ANALYZING INDUSTRIES AND COMPETITORS   (Free Press. 1980).

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.

DataAccessAccording to AngelList, there are over 1,000 startups focusing on legal industry solutions. But, as Keith Lee points out in a nice post here (and you should read the comments) that number is inflated. After pulling out the long-departed, large firm “startups,” and other misfits, the total number of legal industry startups drops. And, of course, startups do not have to register on AngelList so there are many out there not included, which would increase the list. Still, if you are a traditional lawyer, pause to let the AngelList number sink in. Even adjusting it, there are at least several hundred entrepreneurs gunning for ways to switch legal work from your clients to their businesses. Yeah, most of them will not succeed. But when it comes to your clients, it may only take one success.

I often write that large law firms are not the place to look for real innovation, spelled with a capital “I.” This isn’t some failing of large law firms. They were not built to be Innovation engines and until very recently, no one expected them to Innovate. In fact today, most clients still do not look to them for Innovation.

Could they change? Maybe. But about 80% of culture change efforts fail, a number that has held for decades. Even if a large firm did want to change, the odds are against it and even if it did succeed, the amount of change needed to go from today’s model to one that would succeed with Innovation is huge. And then there are the clients.

I have read many stories featuring an apologia for clients. The authors all give reasons why clients do not push for change. In some cases, they argue that clients should not have to push for change. I have found, through teaching at a law college, that Latin has worked its way out of law so I’ll put this in English: poppycock!

For twenty years I was a client—if you want change you will get it and especially today. First, much of the change can be had with a simple phone call. The many existing alternatives to law firms are ready to show up in response to a simple call. Drop a note to your law firm that you will be meeting with firm X and you will see how fast your old firm becomes interested in making changes. So let’s be serious. Law departments’ interest in change is not much more than law firms’ interest in change. I have yet to see a law department re-invent itself using Innovation. Incrementalism abounds!

I may be pilloried now for my heresy, but I believe I am on pretty firm ground here. Some departments use more technology than others, some have tried more alternative service providers than others, and many profess to be more forward-thinking than their peers. But none, as far as I am aware, have re-invented how they deliver legal services. We talk about disruption, but when the best we can muster is about $8 billion out of $275 billion of services shifting from firms to lower cost labor, disruption is at an early and unsophisticated stage.

Why?

When I was in Japan being re-trained into a lean thinker, I was taught to incessantly ask one question: Why? Ask the question, don’t accept the answer, ask it again, and so on. By following this approach, I and my colleagues would eventually get to the root cause of a problem, attack it, and see improvement.

I have asked many times why we are not seeing Innovation in law, and see instead innovation or no change at all. In lean thinking we talk about using the “5 whys” but here I think I have well-exceeded the target of five. I have found a lot of explanations, some excuses, and many theories. I am sure somewhere in there lies “The Truth,” but so far it has not been apparent. That probably means that there are many reasons and the mix of reasons varies by law firm and even lawyer.

Can we at least say things are starting to change? There are signs that among those startups, we have some innovators and possible some Innovators so Innovation may come to the legal industry. In the meantime, those startups are giving us clues to what may be a root cause worth revisiting—the lack of data that could be used to drive Innovation.

You may have heard about the data challenge, so my root cause announcement won’t come as a surprise to you. The legal industry in the United States, and more so in many other countries, still locks up most of its data and provides no access, limited access, or expensive access. In a world where access to data is starting to define those who will have the most power, the lack of data access should be troubling. Data does not stop anyone from Innovating, but data sure makes it a lot easier to do a lot of Innovation.

There are, of course, many who have tried to attack the legal industry’s lack of access to data problem. I will not try to list them all, because I will miss many of the key players. Perhaps the best known is the Legal Information Institute at Cornell. There are many others. The most recent entry is the joint Harvard/Ravel Law effort. They are scanning United States case law and will make it available over time to everyone.

All of the parties who are pushing for “open access” to data in the legal industry are helping reduce the problem, and even the U.S. government is in on the action. The data.gov site is a treasure trove of information that as recently as a couple of years ago was not available.

Could Massachusetts Trial Courts Spur Innovation?

An interesting situation to watch will be the invitation of the Massachusetts Trial Courts for public to comment on the “Proposed Trial Court Rule XIV Uniform Rules On Access To Court Records.” As you might expect, access today is a bit haphazard. One group (and I am a signatory) has proposed an “API” approach. An API is an application programming interface. Simply put, it gives programmers a way to connect to a data set and extract information. A public API means anyone can connect and get the information. For example, the Securities and Exchange Commission has a public API for its EDGAR database, allowing anyone to access and download documents filed in the EDGAR system by public companies.

If Massachusetts introduced API access to its system and then other states used the same approach (or the states reconciled to a common approach), we all would have access to information already “public” but basically inaccessible. That data access would spur innovation. Researchers, law firms, entrepreneurs, and yes, even the public, could go online and access the materials that already are part of the public domain, but are sitting in closed file cabinets and boxes. (And by the way, documents filed under seal would stay under seal, so an API does not mean making public that which is private by order of the court.)

You Know You Aren’t an Innovative Industry When …

The House of Commons heard from an MP recently. It seems the House of Lords, without consulting the House of Commons, decided to stop the practice of recording laws on vellum and switch to paper. The MP was calling this to the attention of the House, because many MPs disagreed with the decision. There is much to be said for a 1,000 year-old tradition. But, pause for a moment and consider how your tech clients would think about a similar discussion in the United States.

Most of the data the legal industry could use still remains buried in files and computers, inaccessible to the world or at least inaccessible unless you are well-funded. For example, only a few states make appellate briefs available online. If you want to get materials from federal lawsuits, you must pay PACER—an irony since other government agencies are posting data on data.gov, but the judiciary is relying on a statute to charge us for access to its data. You can get some of this material from other databases (such as LexisNexis or Westlaw), but again, you must pay.

I am not ranting against capitalism. I understand that there are costs to making the data available and that agencies outside the judiciary charge for some information, such as in response to Freedom of Information requests. I also do not harbor a grudge against companies taking the data, adding extras, and charging for access to the enhanced package.

But if we (the public, scholars, researchers, etc.) do not have access to the basic data (and cost means lack of access) then we will see innovation stifled. This argument comes up frequently today, as large players in search and social media create enormous data sets. They have the data for innovating that others will not be able to replicate (or at least, not without great cost and difficulty).

The tipping point for Innovation in the legal industry may come when someone creates or gets access to the data. Many thought the major legal publishers would do this, because they already have access to great treasure troves, much like the large search and social media companies. So far, we have not seen it happen, but competition from disruptors may force that to change.

Another possible source is the large accounting firms. They have the resources to drive significant change and to acquire or build data sets, but again we have not seen much happeN. Right now, they seem to be benefitting from the same client lack of interest in re-invention that I mentioned above.

A final thought on the data issue. Many still believe that value in the legal industry comes from having the data and controlling access to it. This was the model large law firms used back when I started practicing. To get to the data, you needed to call your outside lawyer. Then, legal publishers and eventually the all-powerful internet broke through that wall. Large law firms could not control access to, for example, documents. Any lawyer could get a document to use as a template. Value came through knowledge and large law firms moved away from believing access was the choke point. This wasn’t access to data, but it was a start.

Just as moving away from a labor-centric model will be necessary for lawyers in firms and departments if they want to avoid obsolescence, moving away from hiding data will be necessary for the legal industry to spur Innovation. Imagine what would happen if the world had access tomorrow to the data locked in all of the file cabinets in all the courthouses around the U.S. Could we radically change the litigation model to reduce the cost? To even eliminate much of the burden litigation puts on society? Access to data raises many important issues. In the legal industry, perhaps the most important one is: why aren’t we making access to data happen?

TrustMost of you probably subscribe to Netflix. Some of you may be Netflix addicts (House of Cards, Orange Is the New Black). But even if you are not an addict and do not subscribe, you have heard about Netflix. It is the company that obliterated Blockbuster and pretty much every other video rental store.

Netflix is not just a business innovator it is a workplace innovator. In a world where the battle to hire talent makes a wolf pack struggle over a recent kill seem like a Brady Bunch dinner, having a highly regarded and distinctive culture can mean as much as a marquee VC backer on your board. An obvious question, then, is how does Netflix’ culture make it such an innovator?

Patty McCord was Netflix’ not-so-secret weapon. She started at Netflix in the early days having done the entrepreneurial thing with its founder, Reed Hoffman, once before. Early on, McCord wrote a 124-page slide deck that has become famous for defining the Netflix culture and setting a standard for workplace innovation. Today, much of Netflix’ success is attributed to its successful culture and what McCord wrote.

The Netflix Culture Story

Netflix is one of “those” companies. If does not have a vacation policy, a travel policy, and (praise the gods) does not have annual employee reviews. Instead, the culture was designed to attract what McCord calls “fully formed adults.”

McCord’s slide deck explains that Netflix’ culture is formed around nine values, described as the things Netflix looks to when determining who gets hired and promoted (McCord does not like the term “fired” so she describes that step as helping people move on):

  • Judgment
  • Communication
  • Impact
  • Curiosity
  • Innovation
  • Courage
  • Passion
  • Honesty
  • Selflessness

It provides detail about each of those values and the seven aspects of the company’s culture. It does not just list the values and aspects, it goes into detail about what each means.

Take the “no vacation policy” example. Netflix started with a standard vacation policy. Then, an employee pointed out that the company did not track hours worked per day or per week. So, the employee asked, why did the company track vacation time? Apparently the answer was “for no good reason” so it stopped. The company focuses on getting things done not the time it takes to get them done.

The culture Reed Hoffman, Patty McCord and the other executives established has allowed Netflix to transition from a mail-order DVD rental business, to a streaming video business, to an original content production business.

As they say, if the story ended there it would be nice. But it did not. At one point, Netflix was struggling with the costs and benefits of the DVD business versus the streaming business. McCord was a strong backer of splitting into two businesses where subscribers would pick one or the other. The idea failed—big time. In fact, it was such a disaster that Netflix decided it was time for McCord to move on. The culture that McCord helped create decided she no longer was a good fit.

Lawyers Fear Meritocracy

The Patty McCord story petrifies lawyers. Clients and consultants point to law firms and moan that they are not innovative. The new ideas, say lawyers, will not come from law firms. Many think clients will need to come up with innovative ways to deliver legal services. I believe it will be other service providers, looking to push law firms aside and cash in on the bonanza of legal spending. I believe it because it already is happening.

But imagine if lawyers decided to become innovative. What if law firms said “hey, what our clients need is high quality, timely, efficient legal services.” We will track our lawyers and other employees on what they do not how long they take to do it. We will bill our clients for value, not for effort. We will respect those we hire as “fully formed adults” and focus on what is important.

From the perspective of law firm partners, if this Utopia came to be, they would face an interesting world. But it also would be a riskier world. If a partner did not produce, did not satisfy clients, did not innovate, the firm would not have room for her. Firms would become meritocracies instead of fiefdoms.

Some might argue that law firms already have moved toward meritocracy. Most firms, however, still operate on the quick to hire, slow to fire principal. Once you make equity partner, it takes a lot for a firm to help you move on.

Lawyers Shy Away from Trust

Law firms today are not institutions built primarily on trust. There was a time when this was not the case. Law firms were much smaller, the partners typically grew up in the firm, and through working together over they years they came to trust each other. Most firms did not have multiple offices, so the partners frequently interacted and those interactions bred familiarity and trust. Today, of course, large law firms have offices spread around the world. The partnership includes many lateral partners and, given the size of the firms and the many practice specializations, most partners never work together. It is not uncommon as a client to work with two partners in a firm who have never worked together and never met. It is hard to build institutional trust in such an environment.

Since most law department lawyers come out of law firms, law departments also can be organizations that lack trust. Within the law department (an environment often resembling a small law firm) the lawyers probably do trust each other and their colleagues. But they do not trust the lawyers toiling away in the law firms. We see the result each day when it comes to things like acting as “fully formed adults.” Read through the billing guidelines of major corporations, if you do not believe me.

Build Trust, Make a Buddy

If you have not built trust within your law firm, and if your clients do not place a lot of trust in you, then being an innovator can be hard—or nearly impossible. Innovation means taking risks, failing, and doing things outside the norm. In a Netflix environment, which starts from the premise that its employees are “fully formed adults” who can be trusted to do the right thing, taking a chance at something innovative is not taking much of a chance. Everyone knows you will fall short occasionally, as will they, and that is okay.

If a law firm environment, where the norm is protect your clients, not trust your partners to do the right thing by you, and watch out for number one, taking a chance is more like walking off a cliff. The fall is not that bad, but the landing hurts.

If you are a law department and you do not trust your outside lawyers on day-to-day legal work, then you certainly do not trust them to be innovative to your benefit. Instead, you probably question each thing they do wondering whether you get any benefit from it or if it is just another way to tack on a few more billable hours.

We need to break the lack-of-trust bottleneck. Firms and clients can do that, even in a billable hour environment. Like other lack of trust situations, it starts with communication and plenty of it. Watch a buddy movie and somewhere along the way you will hear the line, “I just can’t believe he would do that.” When you know someone well, you believe in them and they believe in you. In those movies, faith in the buddy character seldom is misplaced. The movie works, because it reflects real life.

So if you want your law firm to innovate to your benefit, you need to meet with them and build that trusting relationship. If you refuse to do that, you should not blame your law firm. Instead, think about what you do when your clients do not trust you? Do you go the extra mile? Do you innovate on their behalf? Do you take on extra burdens? Or, do you spend time with those who are willing to invest their trust in you? If you want your lawyers to innovate for you, then you need to be their buddy.

CreativityAndProcessI spend a lot of time writing, preparing presentations, teaching, researching, and doing all the other things you would expect a Lean Law Evangelist and Adjunct Professor to do. In other words, I create a lot of content. At one point, I was turning out the equivalent of a full-on blog post every day in addition to preparing weekly presentations and class materials. I often get asked how I can generate so much material each week.

It is an interesting question. I don’t think I turn out a lot of written material. In fact, when I compare myself to other writers, I find I lag behind. Take, for example, Sean McCabe. Sean got in to writing as something ancillary to his true love, hand lettering. Sean then expanded his empire to podcasts and YouTube videos and today Sean keeps several people employed. His businesses include teaching people to hand-letter and teaching people how to build businesses through content. Sean estimates that he writes over 1,000,000 words each year. For those without a calculator handy, that is about 2,700 words every day of the year, though for Sean the word count actually is higher. He takes every seventh week off to refresh.

Another writer with a decent work ethic is Monica Leonelle. Monica has an impressive background, with a bachelor’s degree in physics and computer science and an MBA from Chicago Booth. But what is really impressive is Monica’s writing speed. She puts 3,500 to 4,000 words on paper each hour. Think of it this way: blog posts usually run 500 to 700 words, so Monica writes four to eight blog posts an hour. Now, she doesn’t do that eight hours a day, day in and day out. But even one hour a day gives Monica about 1,460,000 words per year (compared to Sean’s 1,000,000).

Creativity and Process are Bedfellows

As you can see, compared to writers like Sean and Monica, I’m a piker. At my present pace, I turn out around 4,000 – 6,000 words a week, or about 200,000 to 300,000 words a year (not including writing for articles and books). Obviously, writers fall all along a continuum of writing speed. But, it seems like many who succeed do so not just because of creative talent (whatever that means). They succeed because they have some process which helps them succeed.

This mix of creativity and process is important for lawyers to understand. When many lawyers are confronted with ideas such as project management and process improvement, they roll their eyes and mutter about these mundane techniques impairing their creativity. “I’m a lawyer, not a toaster maker,” some say. “You can’t treat legal services the same way you treat manufacturing – the creative process is different.”

Let’s look at another creative person, Sunni Brown. Sunni is a writer and an artist. Obviously, she falls into the creative camp. She has written two books on creativity and is working on her third, so she also gets things done. (Note the subtle point here. How is it that creative people get things done if they are so anti-process?)

Sunni says she doesn’t follow a consistent routine each day, but she is consistent in her commitment. As Sunni says, “For me, it’s not about a consistent time in my routine. It’s more about a constant commitment to that process, to being creative.” Now she goes further. As a business person (she runs a consulting firm called Sunni Brown Ink), she has confronted the need to have a more consistent schedule. Listen to how Sunni describes her way of combining creativity with process (the emphasis is mine, just to make sure you get my point):

Up until about three months ago, I didn’t know if it was Monday or Saturday. I just recently started putting parameters around that. If you run a business, you’re very consumed by that. So I just learned the great art of structuring your week as a workweek. I have a coach—a creative coach—she and I over time realized that consistency is one of my biggest challenges. What I’ve seen is much less anxiety. For creatives, I think we have more of a tendency to move into anxiety and instability. So I think one of the best-kept secrets for long-term, sustainable creativity is consistent discipline and sustainable, predictable actions. It’s kind of like getting a container for your creativity so that it doesn’t wear you out.

The creativity-and-process story doesn’t end with Sean, Monica, and Sunni. As I’ve written before, great chefs become great not just by being creative, but by consistently delivering a great experience. Great companies that innovate don’t get there just by having really cool ideas, they have cool ideas and execute on them.

Marry Creativity With Process For Success

Creativity and process live hand-in-hand. Try to name a famous creative person who didn’t execute. You couldn’t, because it was a trick question. Without execution – without some process that gets the creative idea to the public – creativity is just an idea in some person’s head.

Lawyers who cry that process improvement will destroy their creativity fundamentally misunderstand both ideas. Process improvement doesn’t stop a lawyer from coming up with a brilliant legal tactic, a new legal theory, or a stunning solution to a complex problem. Creativity doesn’t preclude efficiency in bringing that legal tactic, theory, or solution to life. They work together, with a time for creativity and a time for execution.

As Steve Poor recently wrote, hyperbole is the new fashion in writing and talking about the legal industry. The pendulum has to swing one way or the other. In a way, I suppose, this fashion matches the world at large where hyperbole is the way to get noticed in a sea of voices. If you want to get on the evening news, don’t say the economy is slowly improving and is likely to continue doing so. Either say we are in another bubble and it will burst any day leaving all of us destitute, or say the economy is about to take off and we will see economic growth like we have never seen before. Extremes play; middle of the road is boring.

At the risk of being boring, then, I’ll go back to creativity and process. We see real value when the provider, lawyer or organization, finds the right balance of the two. Creativity without process leads to great ideas that never see the light of day. Process without creativity leads to drudgery where the next incremental improvement becomes more important than the goal. Hit the sweet spot and like the great writer, painter, or chef, you will find success. Nothing makes a client happier than a brilliant idea delivered early and under budget.

WeNeedAnAppOddly enough for lawyers, a group enthralled with the size of their brains, humans have large brains because of social, not analytical, needs. Scientists questioned over the years why humans evolved to have big brains; what was the environmental pressure that caused the evolutionary adaptation? A consensus has formed around the social aspect of our lives and the benefits groups provided for survival.

Members of the human species discovered early on that humans do better in groups than alone. Put simply, humans thrive in groups and struggle as individuals. Cheetahs and leopards, also large mammals, do better alone, but elephants do better in groups. But group activity comes with its own challenges. Understanding social interactions and navigating amongst others is, as any teenager can attest, a complex thing. Human brains grew and adapted to handle these social challenges.

Cognitive scientists and neuroscientists know that much of the human brain is devoted to handling tasks tied to social activity. While humans are capable of analytical thinking, it isn’t the human brain’s forte. This leads to a paradox for lawyers. Legal education and training has focused on perfecting the analytical side of things while neglecting the social side. Think back to law school. How much time did you spend on dissecting the concept of consideration versus understand group dynamics?

Lawyers Want to Be Cheetahs, Not Elephants

Jump into the world of delivering legal services and you will find lawyers overemphasizing the analytical and underemphasizing the social. One of the most popular pastimes in the legal industry is analyzing legal invoices. Lawyers slice and dice invoices every way possible looking for hidden meaning in six-minute increments. At the same time the social side of the practice—interactions between lawyer and client—are ignored. With some serious effort, lawyers may begrudgingly agree to an “after action” review. Gritting their teeth, they spend 30 minutes breezing over what went well and delicately touching on what failed during a recent engagement. Then, having endured the pain, they are back to managing invoices.

In many ways, this process reminds me of the annual performance review. When I transitioned from practicing law to leading a manufacturing plant, I found that managing people was far more important than managing words. With 700 people in the facility, we had social issues—boy did we have social issues. Like all large companies, we approached performance reviews as an annual thing. Although we talked about interim coaching, in reality the performance review became the big event. For employees, that one brief meeting could determine pay raises, bonuses, work opportunities, and career paths.

Lawyers do the same thing. At best, law departments meet with their law firm counterparts once a quarter. More commonly they meet once a year, and often even those meetings don’t happen. The meetings are perfunctory reviews of what happened during the prior period. For many outside lawyers, the point of the meeting is to get more work not to evaluate how to improve. Even a quarterly meeting misses a lot of the daily action and the details often have long been forgotten by the time everyone gets in the room. Periodic meetings in the age of “always connected” don’t make a lot of sense.

Your Clients have an App for That

Several large companies have recognized that performance feedback should be a continuous improvement opportunity. They moved to using systems where, by combining technology with new thinking, employees and their managers carry on performance dialogues throughout the year. The annual performance review goes away or simply becomes another step in an ongoing dialogue.

To accomplish this change, a culture change that has its own challenges, the companies use apps. The employees and their managers communicate daily using the apps, addressing issues and delivering coaching right when something happens not many months later (or not at all). By including various tools in the apps, such as the ability to share photos and voice recordings as well as text, the companies make it easy for the employees and managers to communicate naturally and frequently. The users include goals in the apps, so everyone can go from the bigger picture to the day-to-day performance, and then back.

The Legal Continuous Improvement App

The after action review has been a staple of six sigma and has become embedded in most operational excellence philosophies. In legal services, we talk about having discussions during a matter to stay in communication and then a review after the matter. But these discussions often don’t happen. Lawyers are busy and don’t like having these communications, so the discussions fall by the wayside. When everything seems to be going well the excuse is “no need to fix what isn’t broken.” When things aren’t going so well, the last thing lawyers want to talk about are the problems.

As an alternative, lawyers should pick up on what their clients are doing. Why not create an app that allows lawyers and clients to communicate continuously about a matter? The app could include milestones, such as court dates, deadlines for transaction documents, and board meetings. The users could share text, photos, and voice recordings, discussing the status of tasks and raising questions. When something goes off track, the parties can communicate immediately, though—and this is the tough part—they should do so thoughtfully and positively. When the matter ends, the users have a record of how things went and can have a more meaningful dialogue with a more focused discussion. When used throughout the year, the quarterly or annual meeting between lawyers and clients would become a chance to discuss ways to enhance improvements rather than a “review by ambush” experience to dread.

Technology Can Help Lawyers Add Value

As technology noses into the delivery of legal services, lawyers must become more focused on where they add value. Understanding the core human thing, the social experience, is a defining difference. By using technology creatively, such as an app to speed communication on matters in ways that enable continuous improvement, lawyers can facilitate client problem solving and higher quality communication. This type of differentiation will separate lawyers from minute-counters.

KillthePyramidMost lawyers I know value hierarchies. It starts with their undergraduate education. Lawyers were the students who competed to get into the best schools. The hierarchy, of course, was school rankings. Of course, not everyone got into the best schools (I’m skipping what “best” means; for this purpose it means ranked higher). But, they generally went with the best combination that available funds and educational performance could buy.

Once they were in school, these students competed to rank high in the next hierarchy: grades. I have not met many lawyers who came out of college with a grade point in the middle to the bottom of the pack. They repeated the process when taking the LSAT. A mediocre LSAT score wouldn’t get you into the best law school.

Then, these students went to law school. The competition started over. Students competed to get the top grades and, at least in my day, get on to the most prestigious law journals. All of this was a predicate, of course, to getting the top law job and then making partner or general counsel or attorney general.

In other words, most lawyers built their careers by focusing on the top of the hierarchy and then doing their best to get there. While the saying may be that there isn’t any “I” in “Team,” for lawyers it really means there isn’t any “Team” in “I.” Lawyers learned to climb the hierarchy, not collaborate.

Becoming a Network in a Hierarchical World

I wrote recently (here and here) about how lawyers should take note of Navy SEALs training, because it offers some things that would help lawyers. If you want to excel, look left and right to learn what others do to excel. Look at the Navy SEALs and you will see mental training focusing on excellence.

Navy SEALs also must train to adapt to any situation. In the past, they focused their training at the team or unit level. When walking into a dark building at night, not knowing where the enemy is hiding, how many there are, or what surprises they may have set, being adaptable as a team means the difference between living and dying.

But the nature of warfare changed. Instead of large, monolithic forces, the modern military was confronting fluid networks. Chris Fussell, a former Navy SEAL, recently published an article in the Harvard Business Review about how the Navy SEALs adapted to meet the challenges of modern warfare. They did so by becoming more flexible across the entire Special Operations Forces and by using a less hierarchical structure.

SOF was organized around elite teams. When warfare meant pockets of problems popping up here and there, SOF would send an elite team to each pocket. The pockets weren’t well networked, so the SOF teams did not have to work as a network. The teams shared information, but worked as silos.

Then warfare changed. The enemy organized itself into networks. Social media and other forms of modern communication enabled these networks. The enemy was distributed and could operate through individuals, small units, large units, and combinations of these options. As Fussell describes it:

Threats that could connect with each other in near real-time were forming networks able to outmaneuver the military’s more powerful, but much slower, bureaucratic model. The barrier to entry for an individual joining these networks was simply a cell phone or a YouTube account. Relying on the capabilities of elite small teams was now an insufficient approach.

SOF had to meet this new threat and did so by flattening the hierarchy. SOF reorganized itself to operate as a network. Rather than silos, the SOF teams now work through a “team of teams” concept, sharing information across and within teams. As Fussell describes it:

We took the organizational blinders off and admitted that many of our assumptions about information sharing, leadership, and communication would need to change. Where once information was compartmentalized between small groups, now we pushed the boundaries of sharing as far as we possibly could. Where once units walled themselves off from one another, now our operations centers and ground units became a mix of intelligence civilians, special operators, and coalition partners. Where once our communications happened in a point-to-point fashion that mirrored our org chart, now our day began with a video teleconference where thousands from around the world would hear and share the latest information available. After several years of change, we could apply the force of a global enterprise with the speed and agility of a distributed network.

SOF may have loved hierarchies, but SOF loved defeating the enemy even more and so it changed.

Lawyers Need to Network

In the delivery of legal services, lawyers, like the SOF, are using 20th century approaches to fight 21st century problems. Lawyers like to work in small teams. For example, in law firms lawyers form teams (practice areas) based on substantive specialty. They don’t work as part of a broader solution provider network. Firms have tried to overcome this through ideas such as cross-selling and client-focused groups, but so far they have had very little success.

Most lawyers consider themselves in competition with everyone else for the client’s dollar. They typically don’t build teams that include individuals from multiple substantive areas outside law. (There are a few exceptions, such as individuals trained in canonical law who work in health care practices and economists who work in trade regulation practices.) Some law firms have created virtual teams by industry, with lawyers from various practice groups participating on the team. But, the primary structure of these networks is still the legal specialty, not the clients or industries.

Even when lawyers open the door a few inches to let in other solution-providers, the hierarchy remains. Lawyers like to think of teams as pyramids, with lawyers at the top. Today, most clients need flatter, more flexible and open structures where all team members are treated equally. Do lawyers really think clients (meaning the real clients) care if a lawyer, consultant, accountant, project manager, or someone else solves the problem?

Networking isn’t just another fad. It is a more advanced way of handling some fundamental problems. At one time in the dim past, an outside lawyer could claim to be very familiar with her client and its industry. She could act as something of a generalist across many substantive areas of law. Problems themselves were less complex. They often didn’t involve multi-jurisdictional issues and the problems involved fewer substantive areas of law. Today, even simple problems can cross many jurisdictional and substantive boundaries.

Lawyers address this complexity in one of two basic ways. The first is underkill; the second is overkill.

In the underkill approach, the lawyer simplifies the complexity by ignoring several aspects of the problem. For in-house lawyers, this is called making an informed guess about what things might come back to bite you, or in more technical terms making a risk-based assessment. Outside lawyers seldom engage in underkill.

Overkill is the opposite approach. The lawyer, in-house or outside, pours resources on the problem. The environmental lawyer sends his four page provision to the associate charged with assembling all the pieces, even though there isn’t even a potential environmental issue in sight.

A networking approach can avoid the underkill problem, but you must address the overkill problem by changing incentives. Using a network, the problem owner (e.g., the in-house attorney) can solicit the right help at the right time and service level. In other words, the in-house attorney crowdsources assistance on the problem.

Think of a network that involves multiple law firms connected to the in-house department through a secure social media platform. The in-house lawyer posts the problem and asks the crowd to help solve the problem. The firms participating work on fixed-fee structures, so they don’t have incentives to overkill problems. But, in-house lawyers grade the firms’ performances on crowdsourcing cooperation so the firms have incentives to participate and not ignore requests. Obviously, clients could expand these networks to include professionals other than law firms. By controlling who receives a request, the in-house attorney could avoid an over-inclusive or under-inclusive network for a specific problem.

We have technology readily available that allows us to set up these networks today. The issue here isn’t technology; it is culture. Network approaches already work in other areas, including IT departments. There, programmers use networks to code solutions to business problems. Using a network to “code” (write contract language) for business problems is fairly similar.

Time to Bury the Pyramid

Corporate clients need fast, adaptive networks to help them solve problems. The old, hierarchical process of calling an outside lawyer and waiting for him to assemble a team to answer a question is at odds with today’s nimble business environment. The slow process of moving work around through emails, with one lawyer not knowing what the other is doing, is oddly out of step with a world where everyone can instantaneously carry on conversations with multiple people around the world. Lawyers need to drop the hierarchy and favor the network.

InternetOfLawThe Internet of Things, or IoT, is upon us. For years, we have heard how devices in our lives are becoming interconnected. The coffee maker talks to your car; the refrigerator talks to the microwave oven. This interconnectivity, we are told, makes our lives easier. Run low on milk and the refrigerator will tell the grocery store. If the washing machine is about to malfunction it will call the repair company. All the mundane things we need to do each day to keep our lives running will drift into the world of computers and we will be left free to … well, we’re still working on that piece.

With the IoT comes the Internet of Law, or IoL. The IoL, like the IoT, is an interconnectedness of laws in self-effecting systems. In some cases, the laws will embed in the IoT, so that knowledge of the law is not necessary when using the thing. A car can have a Breathalyzer built into the starter system. The car won’t start unless the driver passes the Breathalyzer test. The driver doesn’t have to know the law about driving under the influence, because the law is built right into the thing. The driver can’t operate the vehicle if his or her blood alcohol level exceeds the legal limit.

The Internet of Legal Documents

These simple legal applications are, however, only the beginning. Corporate loans often have many compliance ratios and other requirements set out in the loan documents. Each reporting period, the corporation’s finance department must run calculations and then report to the lender that the corporation is in compliance with the loan covenants. A loan document could instead be built so that it resides in the lender’s and borrower’s computers. Each reporting period, the loan document automatically retrieves the necessary information from the borrower, runs the calculations, and flags any discrepancies.

You could argue that loans aren’t things, but I’d say that even if that distinction is valid, it increasingly will be a distinction without meaning. When the loan document is over 125 pages and even its creators have difficulty following what it says, people will be motivated to connect that thing to a computer and let the computer sort out the niceties. The important evolutionary point will be that we expect computers to take off our backs mundane, tedious tasks and do them without bothering us. We only want to know about the exceptions.

Equity Should Have a Role in the Internet of Law

Lawyers get nervous hearing about the IoL. When you live in a world where things are gray, it can be unsettling to hear others talk about the world moving to black or white. Lawyers think in terms of judgment calls, where a person makes the judgment. Was there really a breach of the covenant or was there a timing glitch where something that should have happened on March 31st didn’t get recorded until April 1st? If a human was in the loop, equity would prevail and no breach would be declared. Without a human, the computer thinks in binary terms: no payment on the 31st means a default. Since a default can trigger a cascade of defaults, shouldn’t we build equity into the system? How will the computer determine if the slight delay was okay or not?

The IoT and its companion the IoL are here to stay. Lawyers may fret about whether this is good or bad, but regardless lawyers and clients must deal with them. The scary thing isn’t that the IoT and IoL have arrived it is that lawyers are still unprepared to deal with them. Rather than focusing on the many fascinating issues these developments raise and then preparing clients and corporate compliance systems to address these developments, lawyers are stuck quibbling over the mundane.

Solving Client Problems Includes Efficiency

Lawyers should focus on solving client problems, and not just the problems of yesterday but the problems of tomorrow. As a real estate lawyer, you should learn how to make leases easier and clearer for clients and tenants. Most large retail companies have teams of lease administrators who spend time making sure the retail company doesn’t overpay on leases. Isn’t that something the real estate lawyers should look to resolve through process improvement with a dollop of technology? As a software license lawyer, shouldn’t you help clients turn contracts into data to better administer and predict potential dispute areas? This list expands into every area of law – shouldn’t lawyers do more than just get it on paper?

Clients need lawyers and will continue needing them for many years to come, unless lawyers give clients no reason to use them. The IoL provides abundant opportunities for lawyers to improve services to clients, reduce problems clients face, and demonstrate that they are staying on top of developments in the world. Perhaps if lawyers take advantage of these opportunities, clients will buy into an IoT app that sends a payment to the lawyer with the push of a button when the client accepts the service and give it an Emoji smiley face for “job well done.”

1935 Duesenberg SJ LA Phaeton, Source: Wikimedia.
1935 Duesenberg SJ LA Phaeton, Source: Wikimedia.

Jonathan “Jony” Ive is being promoted to Chief Design Officer for Apple. If you read SeytLines regularly, you have noticed that I talk about Ive, Apple’s long-time design guru (for example here and here). Apart from Ive, I’ve talked about design and legal materials a few times (for example, here). Since this is a blog about the practice of law, you might ask why I’m spending so much time on design.

I believe that law is a persuasive art. As lawyers, you must persuade people to accept a viewpoint. That viewpoint could be a negotiating point in a contract, a settlement offer, or simply your advice. Today, the art of persuasion is going through a transformation in the legal industry. Lawyers are learning that visualization of data, presentations, and persuasion tools other than complex documents, all play roles in convincing clients and opponents to do what lawyers ask.

In Ive’s new role, he will have broader responsibility for design decisions at Apple. For example, he will be involved not just in products, but also in retail store design decisions and in the design of the new corporate headquarters. Ive is prolific when it comes to design, with over 5,000 design and utility patents that bear his name, so it comes as no surprise that his thoughts are highly valued at Apple. Ive is in the persuasion business, just like lawyers, and that is why I think it is helpful to understand how an expert in design could help lawyers.

Lawyers Swim Against the Current

When it comes to design, lawyers traditionally have swum away from rather than to good design. They have treated design almost as a dirty word, never to be mentioned when talking about serious law. Law departments don’t have design people on staff. Large law firms have, at best, a few people conversant in design, but severely limit their roles. Smaller firms don’t have even that luxury. In my experience, a large law firm designer typically makes sure the colors work well on newsletters, helps with the website and marketing materials, and may assist with the odd trade booth. When it comes to the real work of the law firms, however, designers beware.

I have always thought this shunning of design a bit odd, since throughout my career I’ve spent a substantial amount of time attempting to persuade people and could use all the design help I could get. I was a litigator, which meant I was always trying to persuade someone – the judge, the jury, the opposing attorneys or parties, and my clients. When I became an in-house lawyer, my persuasion duties continued. I still had my clients to persuade, but the group included in the term client expanded – executives, directors, shareholders were added to the list. I appeared before zoning boards, city and county commissions, groups of concerned citizens, various third-party organizations, and so on.

I had three primary tools in my persuasion arsenal: the spoken word, the written word, and presentation materials. I’m going to skip talking about the spoken word, but not because it is unimportant. Learning to persuade through speaking is a lifelong skill development area, but not the primary focus of this post. Instead, I’m going to focus on the other two persuasion tools.

Presentations are a Missed Persuasion Opportunity

Most lawyers think of the written word as their second main form of persuasive art. Few would talk about presentations. I think most lawyers don’t recognize how often they make presentations, which is why they don’t focus on them. If you are an outside lawyer, you present each time you meet with a potential client and often when you meet with an existing client. You present when you meet with opposing counsel and when you negotiate with opposing counsel and his or her client. You do presentations to regulators, boards, and so on. Often you are presenting, but you don’t use and understand the tools of a presenter. Instead, rather than taking advantage of displaying information visually, you use only spoken communication denying yourself a key persuasion tool. From my perspective, writing and presentation tools are becoming more intertwined and lawyers should get help with both.

Aim to Excel at Persuasion

Much of your professional time is spent persuading so you should aim to be great at persuasion. You should use the tools of persuasion to your best advantage. When you write, you should pay attention to typography, use of white space, color, imagery, and the other elements of visual presentation.

Putting aside content, which invites the reader into the document – this magazine or a typical legal document? Sources: The Outpost; Docstoc.com.
Putting aside content, which invites the reader into the document – this magazine or a typical legal document? Sources: The Outpost; Docstoc.com.

SampleContract

People seldom read things that look ugly unless forced. Giving people something ugly to read tells them you aren’t trying. The more you make the reader work to understand your material, the more frustrated they will be and, therefore, the less receptive to your message.

Now, imagine doing the same thing in person. Instead of illuminating your points with clear, attractive, visually compelling materials you either bore the listener by droning on or – shudder – resort to the traditional PowerPoint or Keynote presentation. At that point, you are practically screaming, “I don’t value your time.”

In an age where people absorb much of the information presented to them visually, to disregard this form of persuasion places lawyers in handcuffs. It is too much to expect lawyers to become wizards in the graphic arts on top of all else they must do. So perhaps instead, law organizations should hire experts in visual communication and let them work their magic. In addition to hiring project managers, process improvement experts, and technologists, maybe now law organizations should also bring on board chief design officers.