2017PredictionsIn 2015, I made several predictions for the legal industry in 2016 and I am proud to say that I had 100% accuracy (so there, Professor Tetlock). Of course, the naysayers (haters just want to hate) may say that my predictions were not really “predictions,” but more of a “stating the incredibly obvious.” It is easy to criticize—especially if you are a lawyer—but I stand by my success record.

So, it is with some trepidation that I take up the gauntlet being thrown by, like, every legal publication out there—what will happen in 2017? I am going to make my predictions without the help of all the newfangled knowledge and tools. No data analysis, no crowdsourcing, no prediction tournament, and in particular no use of AI to analyze all of the information on the InterWeb and reduce it to one clear, concise statement. I’m going to do this the old-fashioned way: guess!

With that preamble finished, here we go.

1. One or more large law firms will merge with one or more small, medium or large law firms.

Although 2016 looks like it may set a record for law firm mergers, I’m going to stick my neck out and say this trend is not done. I think it is entirely possible that a large law firm will get together with another firm of more than two lawyers in 2017 and tie the knot, in the interest of global domination.

2. Pundits, law firm leaders, legal technologists, and everyone who provides anything or gets anything from someone remotely connected to the legal industry, will continue talking about AI and law.

While I did not use AI to come up with my predictions, I have it on good authority that AI has decided to take over the legal industry—worldwide. I have checked and double-checked my primary sources (Johnny Depp in Transcendence, Scarlett Johansson in Lucy, James Cromwell in iRobot) and it is clear that the legal industry is top of mind (chip?) for all sentient computers. Why not? Once they control the lawyers, they control the rules that govern society, and ruling society itself cannot be far behind.

3. US law schools will stay the course, graduating far more lawyers than there are positions for lawyers from the US law schools.

If the legal industry has taught us anything, it is that the laws of economics do not apply when it comes to our industry. When demand for legal services from large law firms falls, prices go up. When demand for newly-minted lawyers falls, law schools still churn out graduates. To make it more interesting, most law schools refuse to change their curricula so that graduating law students would better meet the needs of the market.

4. No matter what law schools do, the average first-take bar passage rate in the US will change very little.

After years of trying to change the first-take bar passage rate, those who complain will learn that the purpose of the bar exam is to limit the number of lawyers. Increasing the odds that a graduating lawyer will pass the bar simply means the score to pass has to be increased. Otherwise, the number of lawyers will rise. With this message finally being delivered, nothing will change because … some things in this world never change … and some things do.

5. The number of startups tackling legal issue opportunities will increase … and then decrease … and then increase. But, Peter Thiel will not form a new private equity fund focused on his beloved legal industry.

For a few weeks during 2016, there was an intense effort to quantify the number of legal industry startups. The discussion turned to esoterica, such as whether a startup of an established player was a startup or not. After much filtering and number crunching, everyone agreed that there were more than a few, yet less than what they first thought. Legal startups are liked startups in any other industry—a few thrive, some survive and then are bought, but most don’t make it. Nothing remarkable here, folks.

6. The number of regulations corporations must address will grow in the United States and in other countries.

Despite rhetoric about red tape, regulations, and compliance burdens, governments worldwide will continue to pass laws. The “more with less” movement, which became the “more with more” movement when corporate legal department hiring took off, continues its fade to black.

7. Law firms and law departments will continue licensing new software, while conveniently forgetting that everyone uses <1% of the capabilities of the software already installed.

Never wanting to be left behind on the hunt for the “next best thing in law” legal services organizations remain firmly committed to bringing on board still more software no one knows how to use. As one CIO was heard to say, “it doesn’t matter whether users can get value out of the stuff, what’s important is that they have a lot of icons to choose among when they want to compose a letter.” Another CIO proudly says that anyone in her organization can now send a letter right from their laptop, after fighting through 20 macros, composing the text, making 32 corrections to what the macros inserted, and then waiting 10 minutes for the last package to encrypt the document so that not even the law firm can de-crypt it.

8. Legal technology consultants, after holding the line for all of 2016, finally throw up their hands and admit, “yes, it is true that all software is AI and legal services use more AI than all other industries—combined.”

Law firm and law department leaders get with the program. They agree upon industry-wide metrics focused on technology proficiency and efficiency. At a joint press conference, the leaders announce the first set of metrics that everyone will use:

A. Percent lawyers who can reboot their computers without IT assistance.

B. Ratio of iOS to Android to Windows users.

C. Lead time for a lawyer to unlock his or her smartphone, open the mail app, and open the latest email from a client. (Separate metrics will be kept for biometric identification devices and passcode entry devices.)

In the joint press release, the leaders say, “It is time our clients know that we fully support emerging technologies and their role in the delivery of legal services. When it comes to technology, we are firmly committed to the idea that no lawyer should be left behind.”

One More Thing…

This last one isn’t a prediction, but it is a teaser for what might happen. Democrats and Republicans remain deadlocked on Supreme Court nominees. One enterprising technologist points out that the U.S. Constitution is silent on the qualifications of Supreme Court Justices. Indeed, he notes, the Constitution does not require a Justice to be a Natural Person or even a Person. The deadlock solution seems simple. Given the increasing prominence of AI in the legal industry, and the desire to have someone sit behind the bench to hear oral arguments, the President nominates and the Senate approves an AI-enabled robot as the next Supreme Court Justice. The robot can be programmed to follow whatever dogma is appropriate, thus eliminating the problem of Justices doing what they think is right instead of what they were nominated to do. Of course, given other provisions of the Constitution, the computer will sit for life (its life, which implies forever).

In Conclusion

Thank you all for reading SeytLines. Although I have done my best to capture what I think will be the significant developments in 2017, I am sure there will be a few surprises. I look forward to continuing our discussions.

MyPredictionsIt is the time for 2016 predictions and I didn’t want readers of SeytLines to think us behind the times, So, in this post I present my predictions for 2016.

To understand predictions, you must understand the methodology that led to them. First, I believe that predictions should have a sound statistical backing. I enjoy reading the fivethirtyeight.com site (Nate Silver’s data journalism site for ESPN), where the journalists do some significant data analyses to support their stories. Rest assured, I have based my predictions on deep data mining and analysis.

Second, I recently read Philip Tetlock’s book, Superforecasting and watched on Edge.org the discussion among Tetlock and some other luminaries, including Daniel Kahneman, Robert Axelrod, Dean Kamen, and Margaret Levi. I know that making predictions isn’t easy. I also know that most futurists make their predictions soft and squishy so almost any outcome proves them correct. I don’t want to be in that camp. As you will see, my predictions include very precise outcomes so you will know whether I was right or wrong.

Third, predictions do not help unless we can use them to alter behavior. Knowing with certainty that a magnitude 9.0 earthquake will happen on January 15, 2016, won’t help much unless I know where it will happen. I have limited my predictions to instances where I know they will really help.

Finally, blogging is a competitive endeavor. If I make wrong predictions or they do not help, you will stop reading this blog and go elsewhere. I don’t want that to happen, so my predictions show that I am keenly aware of the competition.

With that introduction, I give you my nine predictions and my “why this prediction adds value” statement for each one. Everything I list below must happen (or not happen) in 2016 to score the prediction “correct”:

1. Two U.S. law firms, each with at least 100 lawyers, will merge.

For purposes of all these predictions, a U.S. law firm is defined as a firm with more than 50% of its partners listing the U.S. as the principal practice location. There was a time in a galaxy far, far away when this prediction would have been truly earth shattering. Today, this prediction falls in the same category as “the sun will rise tomorrow.”

Value: See number 4. These firms should focus on merger planning rather than on planning to change their legal and management structures.

2. The U.S. legal industry, an approximately $275 billion per year industry, will not drop below $200 billion per year.

The demise of the U.S. legal industry has been reported in many publications. The only outstanding question seems to be when it will happen. This prediction helps clarify that 2016 will not be the year the legal industry disappears. Oh, by the way, new surveys tell us the tide is turning and the legal industry will experience ups and downs, but not crash and burn. When no one wants change, maybe you can lock in stability.

Value: In an industry obsessed with income, it helps to know you will still have one.

3. No U.S. law firm with more than 1,000 attorneys will announce that it has stopped hiring associates and will bring an artificial intelligence system online to do the work of associates.

We hear each day about new advancements in artificial intelligence and robotics. We also hear about how millennials don’t want to work 16 hours a day, six or even seven days a week (odd, but apparently true).

Clearly, law firm partners and general counsel need a machine that can work around the clock and turn out documents equivalent to what the average law school graduate can generate. But, having reviewed the AI offerings of many legal technology startups, I decided to take a leap of faith and say 2016 is not the year that AI will merge with robotics to produce the new law firm associate.

Value: Students who will graduate in 2016 can still target law firms and corporate law departments for jobs. Your robotics repair minor won’t become important until at least 2017.

4. The American Bar Association Board of Governors will not vote unanimously to support a federal law modeled after the United Kingdom’s Legal Services Act 2007.

Each year in the U.S., more people question why a country with 1.2 million lawyers and many unemployed law school graduates can’t rank higher than 66th on the World Justice Project’s access to civil justice scale. It seems only logical that at some point someone will ask whether using lawyers more efficiently is better than multi-year studies and large programs that confirm we have not made progress.

Still, the ABA and state bars (with a few notable exceptions) have shown reluctance to change their thinking. Indeed, one state bar leader questioned the logic of allowing people to get affordable legal services if it meant a starting lawyer’s income level would drop below $75,000 a year (what he described as “scraping by”). Despite the pressure, I see the ABA holding firm on the idea that the time for reforming a 100-year old regulatory system and the institutions defending it has not come.

Value: All those law firms planning to change their business models to corporate structures can hold off on planning the change for 2016.

5. The top 20 largest law firms in the U.S., by revenue, will not start a mad rush to reduce hourly billing rates, following on the heels of one firm in the pack reducing its hourly rates 50%.

General counsel have complained about high billing rates for decades. Yet, recent surveys show that cost is not as important to general counsel as we thought. They say they value quality many things over cost. Put aside for the moment that we don’t have measures of quality, general counsel value it the most. Lawyers at the top 20 firms read the same surveys, so I’m going to plant a stake on this one and say they will take the risk and not reduce their rates.

Value. Law firms and law departments plan using short time horizons. We often hear the word “predictability” bandied about. Rest easy, lawyers, this year won’t bring any sudden swings in revenues or expenses.

6. No “elite” U.S. law school (meaning a school ranked in the top 20 by U.S. News & World Report), will announce that all students must now pass a leadership course as part of the degree requirements.

When it comes to the legal industry, it is easy to find many topics that you can discuss in an article that starts, “only in the legal industry …” One topic on that list surely must be that law school graduates have no (or at best minimal) training in leadership. As Deborah L. Rhode says in her book, Lawyers as Leaders:

It is ironic that the occupation most responsible for producing America’s leaders has focused so little attention on that role. The legal profession has supplied a majority of American presidents, and in recent decades, almost half the members of Congress. Many of our nation’s most revered and most reviled public figures have been attorneys: Abraham Lincoln and Thurgood Marshall; Joseph McCarthy and Richard Nixon. Although they account for just 0.4 percent of the population, lawyers are well-represented at all levels of leadership, as governors, state legislators, judges, prosecutors, general counsel, law firm managing partners, and heads of corporate, government, and non-profit organizations. Even when they do not occupy top positions in their workplaces, lawyers lead teams, committees, task forces, and charitable initiatives. Yet rarely have these lawyers received training for leadership responsibilities. Although leadership development is now a forty-five billion dollar industry, and an Amazon search reveals close to 88,000 leadership books in print, the topic is largely missing in legal education.

Think of the hue and cry if medical students graduated without any concept of how to practice medicine.

Value. Knowing what your future workforce can do helps everyone plan strategically. If your incoming workforce is well-trained in theory, but has no leadership skills, you shouldn’t build a strategic plan that expects otherwise.

7. The Above the Law blog will run a story about something scandalous, possibly illegal, done by a lawyer.

This prediction has two parts. First, I am predicting a lawyer will do something scandalous and possibly illegal. Second, I am predicting Above the Law will run a story about it. The double-prediction really affected my statistical calculations. Despite serious misgivings, the Monte Carlo analysis gave me comfort that this is a sound prediction, so I’m going with it.

Value. Our days would be dull without news about how lawyers are mere mortals. While scary, the news that lawyers have faults like other people is something we need to constantly hear.

8. Before the end of 2016, another series of articles, blog posts, and interviews will come out with predictions about 2017.

It is part of human nature. We want to see into the future. For lawyers, seeing the future gives us comfort. If tomorrow will be the same as today, then we can skip change. In fact, we can get the most comfort from knowing those firms changing the least get paid the most.

Value. By now, I’m sure you can sense my overall prediction is that, in the legal industry, 2016 will look a lot like 2015. Probably no other industry can make that claim, and certainly no other industry boasting a $275 billion size in the U.S. Alone can make it.

The Ninth Prediction is the Scariest

If the latest book (The Future of the Professions)by Richard Susskind, joined by his son Daniel Susskind, is correct, lawyers (doctors, theologians, and about every other professional) live on borrowed time. Technology will overtake us (sooner than later), and while it may not eliminate our professions it will dramatically shrink the number of professionals and re-write what we do. However, 2016 won’t be the year of the professional-apocalypse.

For many, that news will elicit a sigh of relief. For me, it comes with a sigh of disappointment. I am impatient. I think when we have the opportunity to do better, we should grab it. When we have the opportunity to make life better for hundreds of millions, we should make it happen.

About eight years ago, Joseph Bower and other professors at Harvard Business School gathered groups of business leaders around the world. The challenge was to “generate a dialogue with some of the best leaders in the world about the challenges they believed lay ahead for business, and for capitalism in particular: what problems … would we face in the 21st century for which [Harvard Business School] should prepare its students?”

In the online edition of the Harvard Business Review, Bower published a recent paper titled, “Another Year Has Passed, but the List of Massive Global Problems Has Stayed the Same.” In it, he covers the ten forces identified by the business leaders that threaten capitalism’s progress. The list includes environmental degradation, the state of trade, and instability of the financial system. All things you might expect. But, it also includes failure of the rule of law.

For those in the legal profession at the forefront of ensuring societies operate under the rule of law, this rebuke from clients should have been a warning. It isn’t often that clients say your profession is failing to deliver on its principal mission and in so doing threatens progress for the world’s leading economic engine.

What came next should have underscored the severity of the warning. The leaders concluded that: “The institutions we have were built after the second world war. Today companies are international but we still have nations. The institutions lack the capacity to help.”

The predictions I list above are meant to be tongue-in-cheek, and hopefully you take them that way. But my next prediction is not so light.

Lawyers have become obsessed with the mundane and with finding ways to preserve an elite and wealthy profession. Meanwhile, the institutions and structures designed to ensure the success of our political, economic, and societal systems – those systems which are essential for the success of our clients – are struggling. As members of one of the three “liberal professions,” lawyers at one time had an essential role in building the institutions which our clients now point to as lacking the capacity to help.

If lawyers do not focus on responding to client concerns, resuscitating the rule of law, and restoring to our institutions the capacity to help, we face consequences far more severe than a decline in income. I predict we will not want to face that future.

Johnny Carson as Carnac the Magnificent
Johnny Carson as Carnac the Magnificent

I am horrible at making predictions. But, of course, so is everyone else. Even those who claim they are great at making predictions are very bad at making them. Sure, basic probability theory says we all will be right some of the time, wrong some of the time, and spread through the middle more often than not, and that is how it usually works out. Put enough of us out there making predictions, and some soul will be the one who gets it right on some big issue (and cleverly does not point out all the times he was wrong before that).

If we take predictions in the right spirit, they can be fun to read and debate. So, with that spirit, I’m going to look at some predictions from a list of 25 predictions for 2015 that LexisNexis published (that were pulled together by Frank Strong). The predictions come from leaders in the legal industry, so these are people who follow what is happening. Please note that I think they all have equal chances or being right, wrong, or in the middle. To make things a bit more fun, I haven’t included the author’s name next to the quote. At the bottom of this post, I have included the names of the authors whose predictions are included in this post – see if you can match author and prediction. If you really need to know who made each prediction, follow the link above. One final note to stress – the views I express below about the predictions are my personal views.

Here they are, a selection of the predictions and my comments:

1.         “Things won’t change that much. Until clients embrace change beyond asking for ‘AFAs’ we will only see small, incremental changes. Firms are generally ready to change, but until clients force the issue, things will plod along pretty much as they are.”

Spot on!

2.         “One of the Big Four accounting firms will challenge the ABA’s prohibition of non-lawyer ownership of law firms.”

Nope. Too many other fertile growth areas to address before taking the ABA head on. Canada will go first, upping the pressure on the ABA, but we aren’t at the tipping point in the US yet.

3.         “The business of law will continue to cross over into new fields. With 2013/2014 solidifying firms as publishing houses, 2015 will see firms become SaaS providers through strategic partnerships with clients and SaaS companies.”

I agree. Firms will continue expanding into areas beyond core legal services. Since firms already have moved into publishing and software, I think it is safe to say we will see those trends continue.

4.         “Law firms will mine boutique law firms for cybersecurity lateral partners.”

Usually I stay away from the substance of law, but this is an area where substance touches on practice. I agree that firms will work to beef up their cybersecurity practices. Unfortunately, I don’t see firms, academics, or lawyers generally working on the many issues we are confronting and will confront as legal systems evolve and the day of artificial intelligence in computers equal to the intelligence of humans draws near.

5.         “I believe that 2015 will see attorneys and law firms continue to adopt and utilize web-based software and services at an ever-increasing rate.  While the legal industry has historically been slow to adopt new technology, firms that conduct the cost-benefit analysis of these services conclude that it’s almost a ‘no brainer’.”

I understand the terror law firm IT leaders feel in these days of cyber-insecurity. One of the corporations where I was general counsel got hit with a “Zero Day” virus. While our IT department did a superb job of recovering, we had one really scary week. Still, I think fighting the cloud is a losing proposition. I see firms realizing, especially as their workforce becomes more virtual, that web-based solutions and cloud computing are inevitable and moving more quickly to adopt that world.

6.         “Forward thinking law firms that embrace ‘insight selling’ approaches will boost their market share and share of client.  Attorneys that leverage industry and subject matter insights in responses to RFPs, outside counsel selection, and other business development efforts will displace competitors that cling to ineffective ‘solution selling’ models.”

Firms already are doing this, so again I see this as an easy prediction for 2015. Other service providers learned long ago that they needed to organize themselves along industry lines and build deep expertise in client industries. As law departments pull more work in-house, it will become even more difficult for law firms to compete against those departments and other solutions providers who have deep expertise in the relevant industry and company’s business. We have seen this happen in areas such as tax, corporate, trade, and litigation services and the trend will continue.

7.         “Already in 2014, we’ve seen not only an influx of new attorneys starting their own law practices due to scarce job prospects, but also new attorneys moving toward non-traditional legal jobs. As new law students become more discerning about their decisions to pursue legal careers, we will begin to see an even greater focus by educators and students to design innovative solutions to problems with the delivery of legal services, leading 2015 graduates and beyond to contemplate non-traditional career paths, particularly with respect to technology.”

This is an exciting trend and one I hope will accelerate. Lawyers bring an important skill to solving client problems, but client problems seldom are discrete legal issues. As a general counsel, I spent significant time solving client problems where the legal component was a small or tangential part of the overall problem. Our ability to implement solutions was hampered by our lack of skills in areas other than substantive law. I strongly believe that lawyers must expand their teams to include individuals with many skill sets so the team can provide solutions to client problems. I think those lawyers who fail to do so will continue being marginalized to the point where they are irrelevant to clients.

My only prediction is that in 2015 we will continue to experience exciting developments in the legal industry. I do not see us going back to a fairly sedate, almost-never changing environment. I don’t see us roaring forward, either. But I do see us evolving in ways we do and don’t anticipate, and for all of us that means we have great opportunities ahead.

 

* The predictions included in this post were made by (in no particular order): Heidi Alexander, Derek Maine, Toby Brown, Michael Rynowecer, Bruce MacEwen, Ben Stevens, and John Reed.