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Lex Machina a Smash Hit in Law 2050

This week my Law 2050 class has been all about Lex Machina, and to quote one student at the end of the two sessions: “I can’t imagine being a patent law firm and not wanting to purchase that!” [Note: I have no connection whatsoever with Lex Machina other than having them appear in my class, nor, I believe, did this student.] That sentiment was widely shared.

I contacted Lex Machina early in the semester to explore how I could give the class a deep dive in their technology. Jeremy Mulder, Lex Machina’s Director of Customer Success, worked closely with me to make the site available to the students, design an exercise for us to complete in one class, and guide us through the site and the company’s vision over a JoinMe link the next day.

My reactions:

First, the Lex Machina product is a truly awesome example of turning Big Data into a useful, user-friendly legal analytics product. The depth and breadth of data contained in the site, particularly for patent law, was astounding. For example, pick any federal district judge and within a few seconds the site provides an array of data, including outcomes at granular levels, patents handled, time to case termination, lawyers appearing in  the court, and many more. The site display and navigation is a breeze. The class started to tackle the questions together at the beginning of the first class, and within about 10 minutes, with no instructions from Lex Machina, we had begun to navigate the site with ease and, over time, learned how to tap into one after the other of analytic tools. The site is a model for other law+tech developers.

Second, as the exercise progressed I began to wonder how I would describe Lex Machina within the “disruptive technology” space. Disruption comes in many forms, and whether good or bad depends on the beholder. Lex Machina strikes me as disruptive primarily by providing an additive function—it makes possible what a lawyer could not have imagined he or she could do, at least without a tremendous amount of effort, time, and cost. It adds a tool, but it does not necessarily replace lawyers, or suck away billable hours, or “commoditize” a lawyering function; indeed, by giving lawyers more power over how to analyze patent law’s expanse, it may do just the opposite. More on the “disaggregation” of the disruptive legal technology concept into more descriptive and refined categories in an upcoming post.

Don’t Cry for the Global 100

The October 2014 issue of The American Lawyer includes its annual rundown of the Global 100 – the top 100 law firms around the world based on revenue – and I must say there’s quite a bit of legal spend going on out there! My ballpark estimate of the total revenue of the top 100 firms is close to $100 billion. Profits per partner at the Global 100 averaged $1.61 million in 2013, which is up (yes, up) 5.3 percent over 2012 (which was up 0.7 percent over 2011), with 70 firms averaging over $1 million. As expected, US firms took the biggest share of profits. Interestingly, some of the largest firms in the world in terms of revenue and/or lawyers fall below the $1 million PPP mark, including Jones Day, K&L Gates, Norton Rose Fulbright, Squire Sanders, CMS Legal, and Dentons. In some cases that may be a tradeoff between stability and profit, and in some cases the verein structure could result in uneven PPP across the firm’s offices.

As one might expect, the lion’s share of all that legal spend goes to firms with their largest number of attorneys based in the US. Of the top 50 firms in the world, 42 find their largest number of attorneys in the US. For the top 100 firms the number is 78, with the UK a distant second. In some cases, however, the US share, while the largest for the firm, is still relatively low. Overall, though, over 97,000 of the lawyers working for the Global 100 work in the US. The UK comes in a distant second with 6900 and China is third with just over 2500. But the number of lawyers working for AmLaw 200 firms in offices outside of the US, and the number of offices outside the US, has expanded steadily since 1998, primarily into the UK, but also significantly into China, Germany, France, Australia, and Canada.

The bottom line: Global Big Law seems to be doing just fine and spreading its wings. Is news of its death premature?

Is the 21st Century Going to Be One Ginormous Long-Tail Event?

In Book of Extremes: Why the 21st Century Isn’t Like the 20th Century, Ted Lewis builds the case for defining the 21st century as likely to become a morass of extreme events unlike any prior century in terms of magnitude and frequency. The core theme of the book is that the world has entered an era of unprecedented network scope and connectedness, which, while offering us all sorts of advantages like social media and global trade (if you think those are benefits), exposes society to massive cascading failures.

Lewis is clearly wired into complexity science, network analysis, and data science. He’s held a variety of positions in academia, industry, and publishing, and spins out a fascinating account of how all those and other disciplines are necessary to even begin to understand what is happening in the world today. He pulls from the internet, marine shipping, climate change, the financial system, and wealth concentrations to argue that we have gone well past the “tipping point” of exposure to black swan events and worse (see my prior posts on systemic risk and dragon kings). Although I disagree with Lewis’s assessment of prior centuries as essentially flat, linear, and relatively free of global networks and extreme events – anyone who thinks so should read Distant Mirror and 1493 – the evidence he amasses regarding the breadth, tightness, and impact of today’s interlinked social, economic, political, and technological networks is impressive. These networks of networks, while robust in one sense, are fragile in others—fragile in ways that can lead to extreme outlier failures. One example Lewis offers is the global shipping trade, which is a complex network linking lanes and ports and which depends disproportionately on just three ports (Hong Kong, Shanghai, and Los Angeles), so much so that failure of any one of those ports can bring down the whole network (which then cascades to other networks such as finance).

These massive networks also can produce behaviors that appear unusual and counter-intuitive. For example, although social media networks theoretically connect everyone around the world and should produce convergence and harmony, there is evidence they are more an agent of fragmentation. Consisten with LEwis’s theme, for example, Curtis Hougland explains in a post today on the Wharton School’s website how social media allow people that have been assembled according to conventional ordering (nations, religions, employment, education) to reassemble according to other personal affinities, thus cutting across traditional boundaries such as nation states. “Social media provides both an organizing tool through its ability to structure and facilitate communication and an organizing principle in the way people gravitate toward the extreme. In this way, social media accelerates political unrest like a giant centrifuge, sinning faster and faster and spitting out those who disagree.”

Book of Extremes provides an excellent, albeit fast and furious, tour through networks analysis, complex adaptive systems, data science, and an array of other disciplines. Lewis uses metaphors such as waves, flashes, sparks, booms, bubbles, shocks, and bombs to tie the science to real-world contexts with scads of historical and modern examples. His bottom line is that governments and individuals need to start taking big “leaps” to avoid continuing down the spiral leading to cascade failures, including more instances of private initiatives not waiting for government to lead, the way SpaceX has launched itself (pun intended).

So, what does this mean for law? For starters, if Lewis is right, get ready for a century of unprecedented demand on the legal system. Law students and young lawyers, watch trends, anticipate disruption, and think hard about what pressures these will place on the legal system to produce solutions, protect rights, and adapt new legal doctrines. You can help shape how law responds, and you can be the first to “jump on it” with thoughtful analysis and reasoned proposals for legal action. In short, think Law 2025!

Nicola Lettieri on the Big Data Deluge

Head to this Computational Legal Studies site post for an excellent Prezi by Nicola Lettieri of the University of Sannio on legal and other issues flowing from the “Big Data Deluge.” One part of the presentation dives deep into the field of law and computational social science, which IMHO is the future of legal research and scholarship.

Network Analysis In Law 2014 Conference

The second Network Analysis in Law conference will take place in Krakow, Poland, December 10-12. The call for papers outlines intriguing lines of research about legal networks:

We invite papers and demonstrations of original works on the following aspects of network analysis in the legal field:

  1. Analysis and visualization of networks of people and institutionslaw is made by people, about and for people and institutions. These people or institutions form networks, be it academic scholars, criminals or public bodies and these networks can be detected, mapped, analysed and visualised. Can we better study institutions and their activities by analysing their internal structure or the network of their relations? Does it help in finding the ‘capo di tutti i capi’ in organized crime?
  2. Analysis and visualization of the network of lawlaw itself forms networks. Sources of law refer to other sources of law and together constitute (part of) the core of the legal system. In the same way as above, we can represent, analyse and visualise this network. Can it help in determining the authority of case law or the likelihood a decision will be overruled? Does it shed light on complex or problematic parts of legislation? Is it possible to exploit networks visualization to support legal analysis and information retrieval?
  3. Combination of the first and second aspects: people or institutions create sources of law or appear in them: Research on the network of one may shed light on the other. Two examples: (1) Legal scholars write commentaries on proposed legislation or court decisions. Sometimes they write these together. These commentaries may provide information on the network of scholars; the position of an author in the network of scholars may provide information on the authority of the comment. (2) The application of network analysis techniques to court decisions and proceedings is proving to be helpful in detecting criminal organizations and in analysing their structure and evolution over time.

I wish I could go!

Internet Millionaires: How Crowdfunding’s Viral Popularity Foreshadows a Future Need for Regulatory Compliance

Guest Post by Law 2050 Student Alex Nunn

As social media membership rates continually push to record heights, an emerging new trend is now seeking to turn your friends list into a pool of potential investors. “Crowdfunding,” as the movement has been coined, is the practice of raising capital by appealing directly to a large group of potential investors via the Internet. While the viability of such a trend might initially be met with skepticism, the equity-raising potential of crowdfunding has proven substantial. For example, in October 2012, Cloud Imperial Games pitched Star Citizen, a space combat video game, to the public and sought to raise the necessary capital for the game’s production through online crowdfunding. The idea quickly went viral, and by August 2014, the developer had raised $52 million dollars for its project, with over five hundred thousands individuals chipping in. On the more comical side, one individual used a crowdfunding site to raise $55,492 to help in his quest to make himself potato salad, while another start-up has raised £8,016 towards its mission to manufacture and sell giant inflatable sculptures of Lionel Richie’s head.

Undeniably, crowdfunding is attracting a significant amount of attention from prospective investors and commentators alike. Recently, however, the trend has caught the eye of a much more influential force – the United States government. Over opposition from the Securities and Exchange Commission, Congress passed the Jump-start Our Business Start-ups Act, or JOBS Act in 2012, which mandated regulatory support for crowdfunding. While the ability to quickly raise capital spurs on the current administration’s drive to bolster small business, the SEC remains wary of the movement due to the certain dangers that accompany crowdfunding.

For one, venture capitalism (the more formal method through which new businesses raise start-up funds) is an extremely risky endeavor for financial experts, with over eighty percent of start-ups failing in their first year. If even these seasoned financial professionals struggle to effectively predict the potential success of future start-ups, how much more vulnerable might crowdfunders be? Despite their enthusiasm, there exists a great potential for loss.

More importantly, crowdfunding is ripe for fraud. Through their crowdfunding campaigns, individuals can raise substantial sums without providing any identification, disclosure, or transparency with their plans. For example, despite its seemingly obvious unrealistic nature, an individual raised over $18,000 to manufacture his proposed “home quantum energy generator.” Predictably, his initial promise of free energy has yet to be fulfilled.

As crowdfunding grows out of its infancy, the movement’s stakeholders will increasingly demand legal aid. As one commentator notes, potential issues include questions over whether a crowdfunded start-up will be required to provide audited financial statements, and whether the funders, or even the funding portal, may share in any potential liability caused by the prospective campaign. Ultimately, the soaring popularity of crowdfunding will see a significant increase in the demand for regulatory compliance, especially as the SEC works towards issuing its final crowdfunding rules. As unassuming individuals find themselves on the receiving end of millions of dollars, their very first need, even before they begin to construct inflatable Lionel Richie sculptures, will be for sound advice on how to manage their funds in a safe, legal manner.

Riley Might Help: New Technology Aimed to Detect Texters Raises Privacy Concerns

Guest Post by 2050 student Catherine Moreton

Tech company ComSonics announced in September that it is developing a new type of radar gun that detects not speeding, but texting. ComSonics specializes in handheld radar devices used mostly by cable companies searching for emission leaks in broken wires. But at the second annual Virginia Distracted Driving Summit, ComSonics revealed that the same technology is being adapted to track radio frequencies emitted when a driver sends a text message. According to spokesperson Malcolm McIntyre, the device can distinguish between frequencies emitted by text messages and those emitted by phone calls or emails.

In a year that included the National Highway Traffic Safety Administration (“NHTSA”) launching its first-ever national advertising campaign against distracted driving and AT&T’s “It can wait” campaign going viral, overdue public awareness of the dangers of texting and driving has increased dramatically. This is wonderful news for road safety and the 44 states (plus D.C.) that have banned texting while driving. But at what cost should we allow police officers to enforce those statutes more directly?

While McIntyre says the radar gun is “close to production,” technological concerns range from how to pinpoint whether the driver or a passenger was the one texting to what to do about automatic response messages. The technology is also currently limited to SMS messages and cannot yet detect texts sent over Wi-fi between iOS devices. Absent a safe harbor, the government might eliminate this boost for smartphone owners using the Communications Assistance for Law Enforcement Act (“CALEA”) to require providers to enable detection.

Once those kinks are worked out, privacy law will take center stage. McIntyre insists that the technology cannot decrypt the content of the messages, and under conventional Smith v. Maryland wisdom, this distinction would limit the government’s Fourth Amendment liability. But in a 2012 concurrence, Justice Sotomayor began to poke holes in the applicability of Smith to cell phone cases, calling the third-party doctrine “ill suited to the digital age.”

Plus, even though a cell phone user never reasonably expects her metadata to be private, the best evidence that a driver was texting is the time-stamped text itself. And if police want a driver to hand over her phone and incidentally reveal its contents, two June 2014 Supreme Court rulings suggest they’re going to need a warrant.

This summer, Riley v. California and companion case United States v. Wurie made huge advances for individual data privacy rights regarding cell phones, requiring a warrant for police to search essentially any kind of cell phone. With those opinions, the Supreme Court granted digital devices full Fourth Amendment protection absent exigent circumstances.

It is yet to be seen how Riley will affect other privacy arguments that could challenge the radar guns. Kyllo v. United States (while distinguishable in that it had to do with a home, which carries the strongest expectation of privacy) could require a warrant until the radar guns are “in general public use.” Independently of Fourth Amendment causes of action, the Stored Communications Act (“SCA”) could provide a remedy for phones searched without a warrant, and the Pen Register Act could require a court order before the radar guns may be used at all.

The good news is that the Court, after some resistance, seems ready to embrace the challenges of the digital age by beginning to agree with Justice Scalia’s 2010 view that “applying the Fourth Amendment to new technologies may sometimes be difficult, but when it is necessary to decide a case we have no choice.”

Law 2050 Student Projects on Trends in Law and Law Practice

Given how much time we spend in law school covering what the law was and is, one of the goals of my Law 2050 class is to get students to think about what the law will be and how they can help shape it’s future. I have students identify examples of two kinds of trends. The first is an “inside law” trend, such as new technology and new kinds of service providers, that will influence how law is practiced. The other is an “outside law” trend, such as developments in health care, technology, and the economy, that will influence how law evolves in response.

Last year I had students work in groups to present “pitches” in a shark-tank setting, with the pitch being an assessment of whether to invest in the trend (e.g., put money into a new legal practice technology or devote firm resources to developing a new practice area). This year I have used this phase of the class to develop some practical, practice-oriented writing skills: a blog post, a client alert letter, and a bar journal article. As was the case last year, once again I am thoroughly impressed with the topics the students selected, and their blog post assignments were top-notch. Watch for several of them in coming days as students serve as contributing bloggers!

Here’s a sample of the topics:

Inside Law Trends: lawyer coaching for pro se clients; IP prior art search outsourcing; third party litigation funding; Shake, the contract app; legal hackathons; legal fee analytics; Ravel Law; Mitratech’s software for in-house counsel; “low bono” law firms; legal project management firms; online dispute resolution; pricing consultants; Islamic finance practice; speech recognition programs for lawyers; Bryan Cave’s Rosetta project; legal knowledge engineering; telecommuting and the decline of the law office; Counsel on Call; Integron; business for lawyers training programs; legal solution engineers; Clerky; Axiom–is it becoming another BigLaw?; virtual courts; Legal Force; and compliance lawyering.

Outside Law Trends: digital signatures; commercial delivery drones; invisibility cloaking; Google Glass; neural implants; predictive policing; driverless cars; commercial space travel; e-money; The Internet of Things (embedded sensor networks); newsgathering drones; unmanned cargo ships; virtual patient consultations; 3D printing of guns and organs; apps to convert 3D iPhone photos to 3D printing; Apple’s fitness watch; automobile connectivity and privacy issues; texting detection technology for police; cloud storage issues; sea level rise; crowdfunding; negligent infliction of disease; ridesharing (Uber etc.); robotic surgery; renewable energy trends; extreme reality TV; fracking; human gene patenting; and police body cameras.

Needless to say, we are going to have some interesting class discussions!


Has All the Important Law Already Been Invented?

A few months ago the Wall Street Journal carried an article titled Has All the Important Stuff Already Been Invented? It was about a dispute between two Northwestern University economists over that very question. The basic gist:

Robert Gordon, a curmudgeonly 73-year-old economist, believes our best days are over. After a century of life-changing innovations that spurred growth, he says, human progress is slowing to a crawl.

Joel Mokyr, a cheerful 67-year-old economist, imagines a coming age of new inventions, including gene therapies to prolong our life span and miracle seeds that can feed the world without fertilizers.

Law 2050 being what it is, I had to ask the parallel question for law: Are the best days of legal innovation over, or are we entering a coming age of new legal “inventions”?

The first aspect of this to sort through is the difference between new law and new legal innovations. We’ll always be making new law—the question is whether any of it will be innovative. More to the point, what exactly is a “legal invention”?

My main field of research and practice, environmental law, has gone through several of what legal scholars suggest are “generations” of evolution. Each generation represents a significant innovation in the approach and content of the law. As my good friend Tony Arnold of The University of Louisville Law School framed it in a recent article, Fourth-Generation Environmental Law: Integrationist and Multimodal:

U.S. environmental law appears to have evolved from reliance primarily on common-law tort and property doctrines to government reservation and management of lands and natural resources to pollution control and prevention through command-and-control regulation, technology-based standards, and rule-of-law litigation. Some have characterized the latter collection of command-and-control statutes and regulations, administered with technology-based standards and enforced by rule-of-law litigation, as the first generation of environmental law. This generational classification is in contrast to what are often referred to as second generation environmental law methods that emphasize regulatory flexibility and the harnessing of economic incentives. These include compliance incentives, negotiated rulemaking (or “reg. neg.”), and market-based mechanisms. Some believe that the structure and practice of environmental law have now entered a third generational phase with the growing use of collaborative and voluntary processes, outcomes-based instrument choice, and reflexive law principles to achieve sustainable development and engage in ecosystem management. In each case, the new features of environmental law have simply been added to the existing features, making some modifications to the older structure but mostly just adding new generations to the family of environmental law.

He then predicts the emergence of a new, fourth generation:

Ecological and social forces of change—and the policy imperatives that they create—will move the next generation of environmental law towards integrationist and multimodal methods of addressing complex, interdependent, dynamic, and multiscalar environmental problems.

So the point is, legal inventions are new kinds of law, not just new law. And as Arnold suggests, it’s usually forces of change outside of and acting on law that spur legal innovation.

Certainly as much, and perhaps more than, any force of change, technology has rocked law over time into new configurations. So, going back to the Gordon-Mokyr debate, if Gordon is right then we can expect to see technology become less of a player in spurring legal innovations. But if cheerful Mokyr is right, we could be in store for new kinds of law we don’t even imagine today. Consider, for example, the increasing breadth and depth of information and knowledge being put at our fingertips through Big Data and machine learning. Could this lead to more than just new law, but also to legal innovation?

That’s the kind of question I put to my students in Law 2050. One assignment is to identify some economic, environmental, technological, or social trend and play with its potential legal consequences. What novel issues might it present? What legal responses will be appropriate? Do we need legal innovation to respond, or just new law? I’m looking forward to their projects and answers, and for now my strong hunch is that we have not seen the end of legal innovation, not by a long shot.

This Is a Relationship Business!

The second week of Law 2050 concluded with a panel of corporate general counsel, the day after the panel of law firm leaders. As a reminder, the participants, whom I thank profusely, were

Also participating on the law firms panel was Mike Duffy, King & Spalding’s first Director of Growth & Client Service, who added a fascinating dimension to the discussion. I think it is fair to say the students were riveted by the discussion and will have lots to work with in their reaction papers.

I have enough notes from the panels to fill pages, so I plan to break my own reactions down into several posts over the next few weeks. Today’s has to do with a theme the cut across both panels: As one of the GCs put it, “This is a relationship business!” Now, I am sure everyone gets that in general–lawyers have to forge a relationship with their clients and vice versa–but what does that mean today, six years after 2008 hit the reset button.  I’d have to say that the GCs panel was most emphatic about this, so I’ll start there:

  • It’s about the lawyer, not the firm. I have always maintained that the spike in lateral partner and practice group movement in the late 1980s, which I saw happen around me in my firm and which has not abated, was the beginning of the erosion of the “trusted firm” relationship. It has been replaced by what the GCs described as the “follow the lawyer” relationship, which places less weight on the firm and more on the individual.
  • Share the risk. The GCs want that individual to forge a partnership that involves new ways of sharing risk, as opposed to the old model of firms shifting all the risk to clients through the billable hour.
  • Help yourself by helping me. The outside lawyer also has to recognize that GCs and their in-house legal team “live with the client.” They are on call 24/7 and are under intense pressure to get answers fast and to perform like any other branch of the business. There is low tolerance in that environment for outside lawyers looking to make themselves look good–the real value comes in making the in-house lawyers look good to their C-suite colleagues and to have their back. Do that and it will work both ways.
  • Look around the room. One student asked how to begin to forge those kinds of relationships, and the best advice was to start by looking around the room–in other words, it starts in law school and continues into the years of associateship. All those GCs out there were once law students and associates too, so the person next to you in class or down the hall at the firm could very well later be in-house at one of your current or prospective clients.
  • Don’t fake it. The GCs also had low tolerance for outside counsel who go too far outside their or their firm’s wheelhouse to keep work. That costs clients time and money, and won’t help get return business.

My sense is that none of this would have surprised the law firm leaders panel, but that the harder question for them is how to forge and sustain this kind of relationship in a static market facing intense competition from within (other firms) and outside (new kinds of service providers). All the law firm leaders agreed it starts with firm differentiation, although if the “follow the lawyer” trend is real and growing, one has to wonder whether differentiation matters. The firm lawyers suggested it does if it achieves niche or strength differentiation, as that is likely to attract the best lawyers. But the most interesting angle on it came from Mike Duffy, a non-lawyer who came to King & Spalding from Ernst & Young. Among his many functions there, one practice he has instituted is to interview clients who retain the firm, but also those who decline to hire the firm, as in what did the firm not bring to the table. That practice has to lead to some insight about how to get the relationships up and running next time.

To drive this message home, Mike Duffy also revealed to the class what he believes, based on years of observation, to be the traits of the most successful lawyers (more on which later). High on the list was “relationship skills.” Those do not come naturally to all people and are hard to teach in law school, but if I got anything out of the two panels (and I got a lot), it’s that this world of lawyering is, now more than ever, a relationship business.

 

 

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