Blockchain and the Law

In our previous article, we explained what Blockchain is. In this follow-up article, we look at how it is pertinent for lawyers. In short, it is relevant in two ways: on the one hand, there are the legal aspects of using Blockchain: Blockchain is changing the way things are done in several industries, and lawyers active in those fields should be prepared for that. On the other hand, there already are new legal applications, like e.g. smart contracts, that are built on Blockchain. We can expect many more of those to come.

Legal aspects of Blockchain

A lot of the work lawyers do, has to do with helping to facilitate the secure transfers of assets. Blockchain was developed for exactly that purpose: it creates real-time digital records that verify and confirm that the transactions, detailing such transfers of assets, did happen at a certain time, and in a specific order. In other words, Blockchain offers proof that at present is as good as irrefutable.

In his book Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business and the World, Dan Tapscott states: “anything of value – money, but also titles, deeds, identities, even votes – can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries like governments and banks.”

Blockchain has already started disrupting markets, and is expected to affect many more industries. In fact, it has the potential to affect most of them. The most obvious example is the world of finance, where Bitcoin and Blockchain started. Thanks to Blockchain, virtual currencies are a reliable alternative to traditional currencies. Blockchain is also being used in post trade settlements (Securities). Intellectual property, too, is a prime candidate for a Blockchain overhaul: applications are already being developed with regard to digital rights management which will affect music, eBooks, and other online content you purchase or rent. For trademarks, too, Blockchain technology can prove that a certain trademark was registered by a specific party at a specific date. Applications that rely on the Blockchain technology are being developed for real estate (transfer of title deeds), health care (patient data), insurance, energy (peer to peer market for energy), digital voting, gambling, etc.

If you, as a lawyer, represent clients in Blockchain-affected industries, you’ll need to get acquainted with how Blockchain affects those industries. Doing it early offers a competitive edge, as you become a greater resource as trusted adviser to your clients.

As Blockchain is changing the way business is being done, we can also expect the law to start regulating the use of Blockchain. A recent example of this was in the US, where the SEC made a ruling on 25 July 2017 in a case of an ICO, i.e. an Initial Coin Offering:  instead of launching an IPO (Initial Public Offering), a company wished to raise capital using a cryptocurrency instead of US dollars. The SEC ruled that “federal securities laws apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology.”

Legal applications using Blockchain

One of the areas where Blockchain is expected to make great strides is ‘smart contracts.’ OpenLaw, e.g., is a joint US and Swiss project that is working on a smart contract platform that will allow lawyers to make legally binding, and self-executing agreements. The platform uses Ethereum, which is an alternative to Bitcoin but is also built on Blockchain. In a first step, lawyers can choose one of many contract templates that can then be further customized online. If the parties for whom the contract is made agree, they can confirm and activate the contract on the Ethereum Blockchain, and then have the contract self-execute its key agreements via the same Blockchain.

Smart contracts are expected to start pitching up everywhere. For this reason, on 15 August 2017, a new legal Blockchain consortium, called the Global Legal Blockchain Consortium (GLBC), was launched. An array of law firms and leading legal tech companies are involved, and their goal is to discuss and consider the issues around the use of Blockchain and smart contracts.

All of this creates new opportunities for lawyers: your law firm can become a Smart Contract Firm, or a Smart Contract Mediator, and/or a Smart Title Company. Individual lawyers can become ‘Distributed Ledger Lawyers’ who are Blockchain law and policy advisors.

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An introduction to blockchain

You probably have heard about Bitcoin, and you may have heard about the underlying technology, Blockchain, too. But, if your clients asked you what Bitcoin and Blockchain are, could you explain it to them? In this first of two articles, we’ll explore what Blockchain is. In a follow-up article, we will look what its relevance is for lawyers.

Bitcoin is probably the best-known cryptocurrency. A cryptocurrency is a digital or virtual currency that uses encryption techniques to a) regulate the generation of units of currency, and b) to verify the transfer of funds. What is important about these virtual currencies is that, unlike regular currencies, they operate independently of any government or central bank. Blockchain is the technology that was developed to make this possible. And the technology has the potential to revolutionise the way we do business.  Some experts even predict that Blockchain will replace the Internet for doing business online. Add to that, that Blockchain technology is not just useful for virtual currencies. Many other uses are possible, including legal ones like self-executing smart contracts.

To understand what Blockchain is, it is necessary to understand why it was created in the first place, and that is to solve the problem of “double spend”. If I go to a bookstore and buy a printed book, the book is physically transferred from the bookstore to me. The bookstore no longer has that copy, I have. And it’s possible for the bookstore to run out of copies. But if I buy an eBook online, things are different. What I get is a copy, and the online bookstore I got it from can still sell an unlimited amount of copies. Digital products can be copied, infinitely. And that creates a special problem for digital currencies. What prevents me from spending one amount of 20 € three times, online? In this example, the bank does: if I go to an online store and spend 20 €, the bank will take that amount off my account and hand it over, often through intermediaries like credit card companies, to the store owner. But the whole purpose of Bitcoin was to be able to operate without any central bank or government. So, how can we make sure one Bitcoin isn’t spent more than once by the same owner? Blockchain is the technology that was invented to solve that problem. The way it is done, is by creating a secure register or ledger that keeps track of all transactions, and of which copies are distributed over a peer-to-peer network.

Blockchain can be described as a distributed ledger technology (DLT) that consists of a distributed data structure and algorithms, which create a decentralized ledger or registry of transactions, which is both permanent / immutable, and secure.

A distributed ledger technology

Instead of keeping one central register or ledger, Blockchain consists of a decentralized network of volunteer-run nodes, each of which keep an identical copy of the register. (The idea was that, to work with bitcoins, you need a bitcoin wallet, and every owner of a wallet should have a copy of the register). Each transaction that is registered gets a timestamp, and the network uses algorithms that ‘vote’ on the order in which transactions occur, and ensures that each transaction is unique.

Blockchain is secure and permanent / immutable

“Once a majority of nodes reaches consensus that all transactions in the recent past are unique (that is, not double spent), they are cryptographically sealed into a block. Each new block is linked to previously sealed blocks to create a chain of accepted history, thereby preserving a verified record of every spend.” (ZDNet). This ‘cryptographic sealing’ uses hash functions and digital signatures that work in one way only. Let’s take an example: on 4 August 2017, at 8:15:0000 AM UCT, wallet X transfers 1 bitcoin to wallet Y. Just as is the case with an online money transfer, this information is structured in a specific way. To that set of data, a one-way encryption is applied, that is irreversible. The result of the encryption is a unique string, let’s say, fictitiously, W(#MD31NAP^FV12. It is impossible to read from that string who paid what to whom. But if X claims he paid Y 1 bitcoin on 4 August 2017, at 8:15:0000 AM UCT, to Y, then the ‘key’ will have to be W(#MD31NAP^FV12. So, if that key is found in the ledger matching that timestamp, it is irrefutable proof that indeed that transaction occurred in that way. If X claims he paid 2 bitcoins, then the key would be different.

Blockchain uses ‘consensus algorithms’ to make sure each transaction is unique, which is needed in case of conflicting data. Because of the algorithms it uses, Blockchain comes as close to being unhackable as currently is possible. And while there have been instances where Bitcoin was hacked, Blockchain itself, i.e. the underlying technology, has not. Still, the consensus mechanism has one inherent risk, which has been called the 51%-problem. The nodes in the network vote by majority. If a hacker would succeed in taking over 51% of the nodes in the network, then he could start manipulating the votes to change records, i.e. replace them by modified ones. It would still be a hard thing to accomplish, extra security mechanisms have been built in. Which leads us to the next item.

Blockchain is permanent and immutable: each block of data in the Blockchain is time-stamped, and can only be added to the chain after the time stamp is applied and verified by the distributed computers across the chain. The practical effect of this is that a block of data can never be changed retrospectively, as all subsequent records would have to be modified as well.

Blockchain has many advantages: its decentralization makes it independent and secure. Because the whole process is managed by algorithms and no human interventions are necessary, the transaction fees are lower, and transactions themselves can be conducted more quickly.

In short, Blockchain technology has the potential to disrupt several markets, and lawyers will have to be prepared for that. There already are legal applications for the technology, as well. We will have a look at all of that, in a follow-up article.

 

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Legal Chatbots

One year ago, we wrote about the world’s first robot lawyer. Donotpay.co.uk was created by Joshua Browder. It is a website with a chatbot that started off with a single and free legal service: helping to appeal unfair parking tickets. When the article was published, the services was available in the UK, and in New York and Seattle. At the time, it had helped overturn traffic tickets to the value of 4 million dollars. Apart from appealing parking tickets, the website could already assist you, too, in claiming compensation if your flight was delayed. Since then, a lot has happened. By now, DoNotPay has successfully appealed traffic tickets to the amount of 10 million dollars. But, more importantly, its activities have expanded considerably. And in the last year, several other legal chatbots have seen the light of day, as well.

Let us start with DoNotPay. A first important expansion came in March 2017, when it started helping refugees claim asylum. Using its chatbot interface, DoNotPay can offer free legal aid to refugees seeking asylum in the US and Canada, and assists with asylum support in the UK.

A second, and far more massive expansion followed only days ago, on 12 July 2017, when DoNotPay started covering a much broader range of legal issues. Its new version can offer free assistance in 1,000 legal areas, and does so across all 50 US states, as well as in the UK. It can now, e.g., assist you in reporting harassment in the workplace, or to make a complaint about a landlord; or it can help you ask for more parental leave, dispute nuisance calls, fight a fraudulent purchase on your credit card… The new DoNotPay covers consumer and workplace rights, and a host of other issues.

Browder didn’t stop there. Because he wants to address the issues of ‘information asymmetry’ and ‘inequality of arms’, as of 14 July 2017, DoNotPay is opening up so that anyone can create legal bots for free, with no technical knowledge. If you want to create your own free legal chatbot, all you have to do is fill in this downloadable form, and send it to automation@donotpay.co.uk.

Another interesting legal chatbot, is Law Bot, which was created by a team of Cambridge University law students, consisting of Ludwig Bull, Rebecca Agliolo, Nadia Abdul and Jozef Maruscak. When Law bot was launched, it only dealt with aspects of criminal law in the UK. More specifically, the bot wanted to inform people who had been the victim of a crime about their legal rights. What had motivated the creators, was the observation that most advice from lawyers on legal rights of the victims of a crime felt like it was written mainly for the use of other lawyers, rather than to help inform the general public, who were in fact the people most in need of the information. The first version of Lawbot guided its users through a series of questions and answers that helped them to assess what, from a legal perspective, may have happened to them and what they should do next, such as to formally report a crime to the police.

A second Law Bot initiative was Divorce Bot. It asks its users questions via an internet-based interface to guide them through the early days of a divorce. The chatbot explores different scenarios with them, and helps clarify their exact legal position. It also explains legal terms that are commonly used in divorce, such as ‘irretrievable breakdown‘ and ‘decree nisi‘, and provides a comprehensive breakdown of the divorce process. It gives a breakdown of the costs and forms needed, too. This way, people (in the UK) know exactly what to expect, even before they talk to a lawyer.

One of Law Bot’s co-founders also launched an AI-driven case law search engine, called DenninX. The free application’s aim is to help lawyers and law students conduct legal research on English case law by making use of AI technology, such as natural language pre-processing and machine learning.

24 July 2017 is the launch date of a new and more expanded version of Law Bot, called Lawbot-X.  Lawbot-X will now cover seven countries: Great Britain, the US, Canada, Hong Kong, Singapore, Australia and New Zealand. It will also be available in Chinese, for markets such as Hong Kong. The new bot further adds a case outcome prediction capability to assess the chance of winning a legal claim that the bot has analysed. The free legal bot will also operate from a new platform and will be hosted on Facebook Messenger.

Another useful chatbot for legal consumers is Billy Bot. Unlike the DoNotPay and Law bot chatbots, Billy Bot does not offer legal assistance, but helps you find a lawyer, barrister or solicitor, in the UK. Billy Bot was created by Stephen Ward, a career barristers’ clerk, and founder of clerk-oriented technology company Clerksroom. Billy Bot can interface with members of the public about some of the same preliminary legal questions that barristers’ clerks often handle. It can currently refer users to appropriate legal resources and pull information from the 350 barristers’ offices. Ward intends to give it access to other systems, including scheduling and case management capabilities. It currently answers questions on LinkedIn.

Next, we have Lawdroid, which was created by Tom Martin. Lawdroid is an intelligent legal chatbot that can help entrepreneurs in the US get started by incorporating their business on a smartphone for free. No lawyer is required. Lawdroid is available on Facebook Messenger. Lawdroid, too, has expanded its services, and the company that created the bot, now also makes legal chatbots for lawyers. They claim to have over 100.000 of them already on Facebook.

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On the lighter side – July 2017

Sometimes Law and Technology combine in ways that one does not immediately anticipate. Here are some recent items that have been in the news.

A hardware keyboard for lawyers

Lawyer Brian Potts got frustrated when he was writing a brief and had to insert a section symbol (§) into the text. As the symbol is not on the keyboard, it takes just enough steps that have to be undertaken to interrupt one’s train of thought. So, it dawned on him that having the section symbol as a key on the keyboard would be easier.  He realised that there were other things, too, that lawyers use every day, which would make his life a lot easier if he could access that functionality straight from his keyboard.

Potts created the LegalBoard, which has specially designed function keys and keys on numeric pad that can be used to insert commonly used legal words or symbols, or to perform specific functions, like

  • Adding a section symbol, a paragraph symbol or a copyright symbol.
  • Or adding words and phrases that lawyers frequently use (like court of appeals, plaintiff, appellant, etc.) with a single keystroke.
  • Adding a bullet.
  • Turning italics, underline and bold on or off with a single keystroke.
  • Changing the line spacing.
  • Inserting a footnote or comment with a key stroke.
  • Turning track changes on and off.
  • Using the find function.

A software keyboard for lawyers

Emily Montgomery is an attorney in Las Vegas and a graduate of UCLA Law, who had a similar idea. She came up with the Citepad, which is a software (on-screen) keypad, rather than a physical keyboard.  It also comes with buttons for commonly used tasks involving citing legal references, inserting some often-used symbols, and some formatting, etc. Citepad can work with e.g. Lexis Nexis and Word, OpenOffice,  Google Docs, and is available for Mac OS and Windows 10.

Napping Pods

Some big law firms in the US have been installing napping pods, and they are well-received. The “energy pods” are lounge chairs with a domed privacy visor and they can play “relaxation rhythms” while the user snoozes. After 20 minutes, the pods use vibrations and soft lights to wake the user.

Wearables

Lawyers are using wearables, like smart watches, to help their practice, in three different ways. Smart watches are used to keep connected (retrieve email, etc.). Some law firms are experimenting with Virtual Reality Headsets, e.g., for interviewing witnesses, or for multisite meetings. Inspired by dash cams, some are experimenting with smart glasses to record evidence in situ.

An AI ‘Workspace assistant’ for lawyers

A legal software provider recently announced the launch of Workspace Assistant, which allows lawyers to perform time management functions using the Amazon Echo or other Alexa enabled devices. So, it is now possible for lawyers to just say, ‘Alexa, Track My Time,’ and it does. At present, it can perform time management functions like tracking billable hours and controlling time entry. As this functionality is hosted by an existing legal service provider, confidentiality aspects are covered by the agreement you have with the provider.

Emoji Law

Did you know there already is such a thing as ‘Emoji Law’? At present, there are three relevant legal aspects to emoticons. A first is how the courts will deal with questions of interpretation raised by emojis used in communication. Courts have already ruled that emoji can convey content. (Noteworthy in this context is that Emojis change depending on the version of the OS of the device: one study showed that people interpreted an earlier implementation of a grinning emoji to mean “ready to fight” while the later version is more clearly smiling and happy. Therefore, someone on a newer iPhone sending that emoji to someone using an older version of iOS could unintentionally appear threatening).

A second aspect has to do with intellectual property that underlies the small, digital pictographs themselves. Emoticons are graphic works, and as such are protected by copyright.

Finally, the topic of emoji is also relevant in eDiscovery. Recent court decisions stated that messages sent by SMS, MMS or instant messaging all had to be included in the discovery process. At present, however, nearly all text-based legal research tools fail to capture visual communications.

 

 

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Digital Marketing for Lawyers

The Wikipedia defines digital marketing as an umbrella term for the marketing of products or services using digital technologies, mainly on the Internet, but also including mobile phones, display advertising, and any other digital medium.

In 2017, digital marketing is a must, and this applies to lawyers, too. The following statistics, updated for 2017, explain why this is the case:

  • 96% of people with a legal issue use the Internet first to find answers with regard to their problem.
  • 38% of people looking to hire a lawyer turn to the Internet first. (29% ask a friend or relative, 10% go directly to the local bar association, 4% rely on business directories like the Yellow Pages).
  • Once legal consumers have narrowed down their search to one or more potential lawyers, 74% of all legal consumers will visit that lawyer’s or law firms’ websites first, before taking action.
  • 74% of all legal consumers end up contacting a lawyer they found on the Internet, and of those 74%, 87% end up hiring that lawyer.
  • 72% of people looking for a lawyer hire the first lawyer they speak to.
  • 70% of law firms have generated new cases through their website in the last year.
  • Potential clients for law firms spend on average 16 minutes per hour on various social media platforms. (In other words, people looking for a lawyer spend just over a quarter of their time doing so on social media).
  • More than half of interviewed law firms grew their number of clients due to increased social media engagement.
  • When legal firms use video content for marketing purposes, web traffic from search engines increases by 41%. The current prediction is that by 2020, video will make up 82% of all consumer internet traffic.

In other words, legal consumers are increasingly using digital media to find and hire lawyers, and you are missing out on potential clients if they can’t find you on those digital media.

So, what tools does a lawyer have, to engage in digital marketing? The most important ones are:

  • A website,
  • A blog,
  • SEO (Search Engine Optimization),
  • Social Media, and
  • Reputation Management

Let us explore those briefly.

Website: in a previous article we pointed out that websites must have a quick load time, be mobile-friendly, contain relevant imagery, and have a modern design, and easy navigation. To convert visitors into content consumers and clients, the texts on your site must be client-focused, and must convey clarity, trust, relatability, and differentiation (i.e. they must explain why a potential client should choose you over others). Adding personal information helps build trust and relatability.

In 2017, having high quality video on your website dramatically increases your chances of receiving traffic, and of making a good first impression. Websites should include a ‘call to action’, i.e. encourage visitors to do something (subscribe to a blog or newsletter, follow you on social media, etc.). Make sure you can easily be contacted: have your telephone number and email address clearly visible, and include a contact form.

Blogging: in one of our previous articles, we showed how to start your blog. One of blogging’s biggest advantages is that it accelerates relationships and helps establish your reputation. Develop a strategy for your blog: write about items that are you passionate about, define your niche, and know who your target audience is. For lawyers, it is generally recommended that your blog is independent from the website of your law firm. (If it’s part of the website, it’s often perceived as a sales gimmick). Listen to your audience and engage with them. Remember to write to the medium, i.e. the writing style for a blog is typically informal. And make sure to build social media equity: your blog needs to be published or promoted on social media.

SEO: Search Engine Optimization is the mystical holy grail of success in reaching your target audience on the Internet. How does it work? Search engines scan your website and blog, etc., then create an index, and finally rank the results. There are many factors that influence that ranking. Some of the most important on-page factors include the URLs and the site architecture, the title tags, the body content, the internal linking structure, as well as page load speed. The most important off-page factor consists of the backlinks to your site, which include the backlinks on social media. For lawyers, local ranking is important, too, as people typically look for a lawyer in the neighbourhood. NAP information, i.e. Name, Address, and Phone, must be easy to find. Other factors that influence ranking are mobile-friendliness, and having a disclaimer, a privacy statement, and a site map.

Social Media: in two previous articles, we first explained why social media matter, and provided a short introduction on how to use them. Using social media to attract clients by engaging with them is fast, free, and it works. Find out where your audience is and where your messages will carry the most impact, and focus your efforts there. Using social media can be a balancing act, where you don’t want to come across as merely promoting your business: discuss general legal content, but also discuss firm activity outside of legal representation, and reveal something about your personality.

Finally, Reputation Management is an often-overlooked aspect of digital marketing. A first piece of advice would be to build a ‘wall of content’: provide enough information that potential clients want to retain you. Provide not only testimonials but also customer reviews, and allow clients to give online feedback. (Make a habit of asking your clients to give you a review. Online feedback is free research into how your clients perceive you). It also vital to learn how to respond to negative feedback: done correctly, a response comment communicates responsiveness, attention to feedback, and strength of character.

 

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AI and Contracts

Artificial Intelligence (AI) is changing the way law is being practiced. One of the areas where AI, and more specifically Machine Learning (ML) has been making great strides recently is contract review. The progress is not even limited to reviewing contracts: automated contract generation, negotiation, e-signing and management are fast becoming a reality.

Using AI for contracts is the result of an ongoing evolution. Ever since lawyers started using word processors, they have tried to automate the process of creating contracts. Using advanced macros allowed them to turn word processors into act generators that used smart checklists to fill out templates and add or remove certain clauses. But now the available technology is sufficiently advanced to take it all a few steps further.

Some years ago, commercial lawyer Noory Bechor came to the realization that 80 percent of his work was spent reviewing contracts. As a lot of the work involved in reviewing contracts is fairly repetitive in nature, he figured the service could be done much cheaper, faster, and more accurately if it was done by a computer. So, in 2014, he started LawGeex, which probably was the first platform for automatized contract review. Users can upload a contract to LawGeex.com, and, within a reasonably short period of time (an hour on average), they receive a report that states which clauses do not meet common legal standards. The report also warns if any vital clauses could be missing, and where existing clauses might require further attention. All of this is done automatically, by algorithms.

By now, there are other players on the contract review market as well, and the technology is evolving further. At present, AI technology is able to scan contracts and decipher meaning behind the text, as well as identify problem areas that might require human intervention. This technology can scan millions of documents in a fraction of the time it would take humans (think ‘hours’ as opposed to ‘days’ or ‘weeks’). As a result, AI contract review has reached a point where it can already do 80% of the work a lawyer used to do. For the remaining 20%, it can, at present, not reach the level of skill and comprehension of a human attorney. AI contract review, therefore, focuses attorneys’ efforts on higher-level, nonstandard clauses and concerns, and away from more manual contract review obligations.

The progress made in Machine Learning algorithms means the usage of AI is not limited to contract review. Juro is a company that tries to automate the whole contracts workflow. It has developed an integrated workflow system that allows companies to save time on contracts through automated contract generation, negotiation, e-signing and management of contracts. For this, it relies on machine learning algorithms that try to understand the data within contracts and learn from it. This can be done, e.g., by analyzing all the contracts in a company’s ‘vault’ of historical contracts. Based on these contract analytics, Juro can also provide so-called ‘negotiation heatmaps,’ where customers can see at a glance which of their contract terms are being most hotly negotiated. Knowing what other customers have negotiated can help you (based on data) decide what the contract terms should be and what you should agree to in negotiations.

Another interesting evolution is the idea of ‘smart contracts’. Stephen Wolfram, the founder of Wolfram Alpha, believes contracts should be computable, and that a hybrid code/legalese language should be developed. One of the main advantages of such language would be that it would leave less room for ambiguity, especially when it comes to the implications of certain clauses. Computable contract language becomes more valuable to the legal sector, once we start using ‘smart contracts’ that are self-executing. There is also already some interesting work in this area, namely by Legalese.com based in Singapore. If law is going to be made computable then the world needs two things: lawyers who can code and a legal computer language that is an improvement on today’s legalese.

The next step would then be to move from ‘smart’ contracts to ‘intelligent’ contracts. Smart Contracts resemble computer code more than typical legal documents, relying on programing to create, facilitate, or execute contracts, with the contracts and conditions stored on a blockchain, or a distributed, relatively unhackable ledger. Intelligent contracts would not just be smart, but also rely on artificial intelligence (hence ‘intelligent’ contracts). In the words of Kevin Gidney, intelligent contracts would use an AI system that “is taught to continually and consistently recognize and extract key information from contracts, with active learning based on users’ responses, both positive and negative, to the extractions and predictions made”.

 

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The Law Practice of the Future – part 2

This is the second article in a two-part series that looks at the law practice of the future. It is largely based on the Law 2023 Study (www.law2023.org), which predicted seven evolutions law firms will undergo by 2023:

  • Technologies Will Enable Lawyers to Bill for Real Value
  • Firms Will Develop Offerings That Transcend Jurisdiction
  • Demand for Responsive Institutions Will Create New Markets for Accountability
  • Firms Will Tap New Talent and Enable New Pathways to Practice
  • Information Access/Transparency Will Push Firms to Seek Hyper-Specific Markets
  • Firms Will Launch R&D Departments to Create New Offerings
  • User/Anthropological Research Will Shape Client Experience of Legal Products

The first three were discussed in the first article. In this second article, we’ll focus on evolutions four to seven. Note that the original Law 2023 Study was published two years ago, and that more recent findings have been integrated into this article.

[Part 1 of this article can be found here].

Evolution 4: Firms Will Tap New Talent and Enable New Pathways to Practice

The study found that “all kinds of companies are coming to grips with how they will acquire the skills and abilities they need in a workforce of unprecedented demographic and cultural diversity. Many organizations are also faced with the challenge of rapidly developing capacities they never needed before. Law firms will need to figure out how to hire new kinds of minds and address ongoing value concerns from clients.”

This is one of the evolutions that is already clearly visible. Traditionally, law firms consisted of lawyers, assisted by some administrative aids. Larger firms could have paralegals, accountants and an IT department. Now, it is not uncommon to also find project managers, client service managers, programmers, business analyst, industry advisors, etc. in law firms.

Another new tendency is to find lawyers who no longer are ‘just lawyers.’ On the one hand, there are e.g. scientists, engineers and mathematicians who are switching to the legal sector, and combine their fields of expertise. On the other hand, we are witnessing the emergence of what some call the “T-shaped lawyer”. Traditionally, lawyers had a deep knowledge in one discipline or ‘vertical’ market, i.e. the Law. A T-shaped employee, however, has a wide breadth of knowledge across multiple disciplines that allow them to bring new and innovative ways of thinking to their job. Some Law Schools already offer a curriculum for T-shaped lawyers.

As a result, individuals with a deeper understanding of technology and data, as well as the law, are changing the way the law is done. We can find some examples of that in the fields where AI is being integrated into the law.

Millennials are also changing the legal workplace. They grew up in an ‘always online’ paradigm, where services are available 24/7. More flexibility is required because the work can be performed at any place and at any time. So, they approach their work differently, and that affects the way law firms operate:

  • They prefer to work independently
  • The prefer assignments that can be done from home
  • They don’t care much for the traditional meaning of “work/life balance”
  • They value constructive coaching/mentorship relationships
  • Leadership and professional development opportunities are important
  • They give back

In short, in the office of the future, the employee gets more freedom, but also more responsibility. Law firms that adopt more flexible work practices and pay structures will be best prepared to compete with other industries for the capable people needed to fill these new jobs.

Evolution 5: Information Access/Transparency Will Push Firms to Seek Hyper-Specific Markets

The study found that “clients will have much more access to objective information about the effectiveness of firms and individual lawyers. Public companies in particular will face increasing pressure to rely on firms with the best track records.”

Increased competition on the legal market already pushed law firms to explore niche markets and to build greater expertise in specific fields. What we are witnessing now is that clients get access to all kinds of extra information about law firms like their success rates and effectiveness. This will force law firms to “define and dominate niche markets in which they can credibly claim to be the best. As with other industries, changes to legal markets will increasingly be driven by organizations’ collective ability to produce disruptive innovations, in addition to individual lawyers’ skills and experience.” Which leads us to the next topic.

Evolution 6: Firms Will Launch R&D Departments to Create New Offerings

The study found that “the variety of demands on law firms will lead to a new diversity in the way legal solutions are conceived, packaged, sold and applied. Some of these novel legal products will immediately find vast markets; others could take years to catch on or turn out to be false leads.”

Technology is changing the way that law is being practiced. It is to be expected that law firms will start creating their own R&D departments, either to take the lead or to keep up with the pace in a certain field. These R&D departments may focus on products, services or methodologies, which respond not only in changes in technology on the market, but also to shifts in industry needs and client preferences.

Evolution 7: User/Anthropological Research Will Shape Client Experience of Legal Products

The study found that “a deeper understanding of users’ experience is increasingly becoming the driving force behind the offerings of all kinds of companies. Companies are using data and design to predict consumers’ desires, aiming to appear in their lives before they even know what they want.”

The role of the clients’ experience when dealing with the law firm is becoming an even more important aspect of great customer services than it was before. Just like online retail shops can keep track of what you and other people buy to give you recommendations, technologies are being developed to anticipate the clients’ future needs. This may lead to greater understanding of entire industries, which in turn will allow law firms to approach their clients with new opportunities instead of simply reacting to their problems.

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The Law Practice of the Future – part 1

Law firms are going through a phase of intense transformation. The way law practices are run has changed more in the last two decades than in the entire century before. One such change is that law firms largely have become corporate entities, and consequently are being run as such. Other changes are the result of the Internet and the emergence of new technologies. This has led to virtual practices, paperless offices, Artificial Intelligence assistants and even some robot lawyers. We work with digital devices, and we need to be aware of cybersecurity. On these devices, files and information are digitized, and as a result, evidence often is digital evidence, which in turn led to eDiscovery. Lawyers and clients find each other online, and interact through social media. Because of the cloud, traditional employment relationships are also disappearing. Most young people opt for self-employment and prefer to take assignments that can be performed at home. The need for a fixed workplace and fixed working hours seem to be obsolete.

These changes raise the question of what the future will hold for law practices. Will robots take the place of lawyers? Will offices disappear as everything moves to the cloud? How will the way lawyers work change? We will be looking at the law practice of the future in a two-part series, which is largely based on the Law 2023 Study (www.law2023.org). This study projected what a law firm will look like in 2023. For these two articles that information has been updated and complemented by more recent findings.

The Law 2023 Study predicts that law practices will evolve in seven ways:

  1. Technologies Will Enable Lawyers to Bill for Real Value
  2. Firms Will Develop Offerings That Transcend Jurisdiction
  3. Demand for Responsive Institutions Will Create New Markets for Accountability
  4. Firms Will Tap New Talent and Enable New Pathways to Practice
  5. Information Access/Transparency Will Push Firms to Seek Hyper-Specific Markets
  6. Firms Will Launch R&D Departments to Create New Offerings
  7. User/Anthropological Research Will Shape Client Experience of Legal Products

 

We will focus on the first three evolutions in the first part of this article, and the other four in the second part.

Evolution 1: Technologies Will Enable Lawyers to Bill for Real Value

The study found that “many lawyers are already experimenting with digital tools to enhance their practices. But the most powerful new technologies will likely be developed by innovators outside the traditional legal industry who are incentivized to offer basic legal services for radically lower costs.”

We are, in fact, already witnessing this with, e.g., the arrival of legal chat bots that offer legal assistance (often for free) with regard to parking tickets, damage to luggage claims, applying for refugee status, and even on divorce. A recent study found that approximately 23 % of the work lawyers do at present can be automated. Eager to seize that opportunity, there are dozens of startups that want to offer AI-driven services that offer very specific legal solutions.

It is perfectly possible that law firms will start integrating these new technologies in their offer. They would be wise to do so, as it will reduce their costs. And they may even start developing their own such tools (cf. evolution #6). But the main effect of these new technologies is that lawyers will have to start focusing on what brings real value to their clients. Often this will mean specializing in specific fields of expertise. Another effect of these new technologies is that they will lead to entirely new forms of practice, like computer-assisted law, that can only be pursued in this technological environment.

Evolution 2: Firms Will Develop Offerings That Transcend Jurisdiction

The study found that “as the pace of globalization quickens, the nature of jurisdiction will change. It’s not just that corporations and other institutions will need to navigate dozens or hundreds of sets of rules and regulations — they’ll also have a significantly greater need to choose among them. These clients will expect their counsel to keep up.”

Globalization creates a demand for global legal services, which creates new challenges and new opportunities. Proactive firms will develop methodologies and employ technologies to compare and assess how legal issues related to products or services are solved in different jurisdictions.

Evolution 3: Demand for Responsive Institutions Will Create New Markets for Accountability

The study found that “enabled by technology, citizens are demanding greater transparency and responsiveness from corporations, government and other institutions — which very frequently seem caught off-guard. In a world where a WikiLeaks is around every corner, institutions will need more than just good PR; they’ll need new tools to fortify their credibility and maintain public trust.”

Law firms who to tap into this new market must adhere to a ‘triple bottom line,’ evaluating their success using metrics beyond profits:

  1. Is your law firm the preferred place for the most profitable clients to do business?
  2. Is your law firm the preferred place for the most talented people to work?
  3. Is your law firm the preferred place where the most inspired leaders want to serve their communities and the larger world at hand?

Smart firms already understand how important the element of trust is to their long-term viability. This in turn creates a new market for lawyers who can help other institutions achieve transparency, accountability and responsiveness, by crafting the necessary policies and practices.

The demand for greater transparency and responsiveness will not only come from clients but also from the people who will work for the law firm: millennials prefer to work in companies that inspire, and that display a commitment to philanthropy and social responsibility. This ties in with evolution #4, which describes how law firms will tap in to new sources of talent. That will be one of the items discussed in part 2 of the article: The Law Practice of the Future – part 2.

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Lawyers and Tech Competency

Lawyers and technology often have a strenuous relationship, with many lawyers displaying a distinct reluctance to familiarizing themselves with new technologies. Still, tech competency not only provides a competitive edge, but, by now, for most lawyers it also has become an ethical requirement.

In the US, e.g., the American Bar Association’s House of Delegates formally approved a change to the Model Rules of Professional Conduct in August 2012. The new text makes it clear that lawyers have a duty to be competent not only in the law and its practice, but also in technology. Following this change, a lack in tech competency could lead to disciplinary action for misconduct.

The new text of Comment 8 to Model Rule 1.1, which pertains to competence, now states (emphasis added):

To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject.

The rule requires lawyers to keep up with the wide range of technology that can be used in the delivery of their services. This means they must stay abreast of the potential risks and benefits associated with any technology they use. It applies, e.g., to Word processing software, email services, security, including safeguarding confidential information, and practice management tools. In some cases, it may even apply to e-discovery or metadata analysis. Casey Flaherty gives the example that a lawyer should probably know how to convert document to PDF, or at least know how to create a document that is completely ready to be converted. In another example, he mentions that a lawyer who is working on a contract with numbered clauses and delegates it to another lawyer should know how to use automatic numbering and cross-referencing.

The competence clause adopted by the American Bar Association is a model rule, which means it must be adopted in a state for it to apply there.  By now, 26 States have done so, and impose an ethical duty of legal tech competence.

As a model rule, each state can implement the rule as it sees fit. In Florida, e.g., this implies, as of 1 January 2017, that all lawyers as a part of their Continuing Legal Education, are required to spend a minimum of three hours over three years in an approved technology program. California, on the other hand, requires lawyers to have knowledge of e-discovery. Indeed, in an age when any court case can involve electronic evidence, every Californian attorney who steps foot in a courtroom has a basic duty of competence with regard to e-discovery.

The rule does not require lawyers to become a technology experts, as they can use the assistance of advisors who have the necessary knowledge. Florida’s competence rule, e.g., states that “… competent representation may involve a lawyer’s association with, or retention of, a non-lawyer advisor with established technological competence in the relevant field.”

Coming back to the example with regard to California and e-discovery, it means that a lawyer in California could face disciplinary action for not properly handling the e-discovery aspects of a case. Robert Ambrogi, in Above the Law, puts it as follows:

That is the key: You need to know enough about e-discovery to assess your own capability to handle the issues that may arise and, if you lack sufficient capability, you can effectively “contract out” your competence to someone else. That someone else could be another attorney in your firm, an outside attorney, a vendor or even your client, the opinion says, provided the person has the necessary expertise. (You cannot, however, contract out your duty to supervise the case and protect your client’s confidentiality.)

By now, two courts have already confirmed that tech competency is required for lawyers. One judge stated that “Professed technological incompetence is not an excuse for discovery misconduct.”

Because of the growing demand for tech-savvy lawyers, several Law School Deans are pushing to add tech to the curriculum. They generally agree that “law schools are a bit remiss in not offering more technology-based training to law students and that they should include legal technology training in the current law school curriculum. The roundtable concluded with the collective position that all law schools in the U.S. owe it to their student bodies to introduce technology-oriented topics into the curriculum in some form or fashion.”

 

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