Imagine the world of law in the United States as a fixed amount of legal work that needs doing. That fixed amount includes all the legal services lawyers do for large corporations, individuals, criminals, and others. One recent estimate put the market for legal services by lawyers in the United States at about $275 billion.
In the United States there are about 1.2 – 1.3 million individuals who call themselves “lawyers.” Using some basic math, we can say that each lawyer has a claim to $275 billion divided by 1.25 million or roughly $220,000 of legal work. Some lawyers are very good and they get more than their share, other lawyers do not practice law so they forfeit their share, and many are employees so they don’t get a share they get a salary. In other words, do not go looking for your $220,000, that is just the average per lawyer.
In 2014, roughly 44,000 students graduated from law school. Of those, 71% or about 32,000 got jobs practicing law (more precisely, they found jobs either requiring a law degree or in a position where a law degree was preferred). Add those 32,000 to our 1,250,000 and we are at 1,282,000 lawyers. Of course, some lawyers retired, so we will drop the number of lawyers to 1,275,000. Redo the math and each lawyer now has a claim to about $216,000 of legal work. Makes sense, right? The more lawyers given a fixed amount of legal work, the less legal work per lawyer.
Now assume that we can start replacing lawyers with computers. The Harvard Business Review recently ran an article suggesting that 30% of tasks done by knowledge workers can be done by existing computer programs. Assume that number holds true for legal work (there is nothing suggesting that it wouldn’t, since the tasks are basic ones that apply across all types of knowledge worker jobs) and we could say that of the $275 billion of legal work, $83 billion could be done by computers leaving $192 billion for those 1.275 million lawyers. That would reduce the legal work claim by each lawyer from $216,000 to $151,000. Ouch!
Economists do not believe a world exists where the amount of work available to laborers is fixed and so they call the imaginary world I describe above the “lump of labor” fallacy. They argue that in the real world, the amount of work increases as technology enters the market. This is the broader argument by many technologists: artificial intelligence and increasing computer power may displace workers from some jobs they hold today, but those jobs will be replaced by other jobs many of which we cannot imagine right now. People may shift jobs, but we will not have mass unemployment in the foreseeable future. Relax.
The Lump of Lawyers Argument
A good lawyer always has another argument and when it comes to technology replacing lawyers, lawyers are ready. Many lawyers argue that law is different than other knowledge work. It is not a profession that is amenable to computerization like, say, medicine or finance. It takes a certain amount of lawyers to process a given amount of legal work. The amount of lawyers may vary a bit depending on a lawyer’s experience, expertise and (not to be forgotten) pedigree, but within a narrow band the amount of lawyers to do the work is fixed. Therefore, lawyers argue, computers will not greatly affect the legal profession in the foreseeable future because computers cannot replace lawyers doing legal work. It takes a certain lump of lawyers to do the work. This is the lump of lawyers fallacy.
Unlike the lump of labor argument, which is in disrepute, the lump of lawyers argument has tremendous support in the legal profession. Lawyers trot out the argument almost any time they are in a room talking about technology. Some of what they say comes from ignorance, some from the challenge of believing that a computer could replace any part of what took them three years of post-graduate education and 20 years of practicing to learn, and some from economic self-interest. Mix all of that together and lawyers dismiss the “computers replace lawyers” idea and head back to their offices to review the latest draft for typos. No fallacy to see here, keep moving.
The Amount of Legal Work is Growing
While a few lawyers may challenge the lump of labor argument, it seems most believe that the amount of legal work is growing. We have seen increases in compliance work, regulatory work, and laws going on the books in countries that are modeling their legal systems after the United States. Any lawyer at a global corporation knows that his or her workload is not shrinking. Add to that the legal complexity coming from new technologies (e.g., 3D printing, artificial intelligence, nanotechnology) and you have plenty to do if you are in the corporate legal world.
If we go further and include that universe of middle income and low income people who need legal services, the amount of legal work certainly is increasing. Each new layer of regulations and laws means individuals have more areas where they are at risk for not consulting a lawyer. Despite some feeble efforts to stop the tsunami, the laws on the books of the states and federal governments seem to increase each year.
Looking at the labor to do certain legal tasks, we can point to some obvious areas where computers have made progress. EDiscovery is one, but we can add in Shepardizing, due diligence, and contract automation as a few others. Even ancillary tasks, such as recording billable hours, have seen advances. Some advancements are just starting to penetrate the thick membrane lawyers use to keep out anything new. These include ways to research caselaw using something other than boolean searches and programs that can construct basic texts from facts. Keep in mind that automation replaces tasks, not people. When it comes to automation, the legal industry is only beginning to see the tip of the point at the end of the spear.
Legal Education Needs to Drop the Lump of Lawyers Fallacy
A recent report from the Christensen Institute (yes that Christensen, the one who wrote The Innovator’s Dilemma) suggests that law schools need to dramatically restructure the legal education process if they want to survive much longer. The authors recommend moving from the time-based approach used today to a competency approach using modules, online learning, and other techniques that will make legal education more relevant and less costly. As you might imagine, many legal educators will not warmly embrace these suggestions since they would mean change in a system that has been used for 150 years and would undermine the lump of lawyers argument. The recommendations focus on students learning through modules. This approach fits with automation — as tasks are automated educators can re-focus modules on new tasks students need to learn.
Watch Out for the Black Swan
As any experienced driver knows, the greatest danger often comes not from where you are looking but from where you are not looking. In more modern terms, we call this the Black Swan. Black Swans are unexpected and for most lawyers, computers taking over much of what they do will be unexpected. But there is an even greater surprise in store for lawyers who adhere to the lump of lawyers argument, and that is the end-around.
Many programs I see in development today are not aimed at lawyers. These programs are aimed at clients who will use the programs to reduce their need for lawyers. We have seen LegalZoom and Rocket Lawyer do this in the retail market for legal services. Now, software developers are targeting small and medium-sized businesses for the next round of programs. These programs are aimed at clients and can draft documents, review documents, and provide suggested alternative language.
To put it a bit more bluntly, outside lawyers have said they will not change unless clients force them to. In-house lawyers have started looking at ways to improve and have reduced their need for outside lawyers. But clients are impatient and, seeing what can be done with computers in other areas, naturally ask the question “why can’t computers reduce or eliminate the need for lawyers”? That question is music to a software developer’s ears. The market is starting to respond and in-house lawyers will feel the impact as well as outside lawyers.
The Black Swan for lawyers may be the software packages that start eliminating lawyers as the “man-in-the-middle.” Whether lawyers like it or think it appropriate, clients will move like water finding the path of least resistance to get their work done. Lawyers who build dams will find their clients going around, over, or under those dams and that may mean using software that does some or all of the work lawyers have done. No more lump of lawyers.
By definition, it is hard to imagine the Black Swan. For lawyers, it is hard to imagine clients going around them. That is the lawyer’s problem, not the client’s. The circumvention approach is not widespread yet and the impact on law firms and law departments is very small. It will grow. But lawyers can control its growth by recognizing that client needs outweigh lawyer protectionism. Law schools need to embrace new ways to educate lawyers, and lawyers need to embrace using computers to handle client matters.
Contrary to what many lawyers believe, now is a time for optimism about the legal profession. The need for legal services is strong. For the first time in history, we have the ability to shed the boring, tedious, repetitive tasks that bog down the day and add stress to every legal practice. We have the ability to leverage a tool that can free us to focus on what we love to do instead of spending our time on exchanging labor for dollars. The legal issues societies face have never been more interesting and challenging and the promise is that there are more of those issues to come, if only lawyers structure their practices in ways that clients will pay them to tackle those issues. Time to enter the real world, lawyers, embrace computers, drop the fallacies, and focus on the issues that matter to clients.