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Impact Scores for Disruptive Legal Technologies

This will date me, but I remember a day when law was practiced without computer-based Westlaw or Lexis, when legal technology consisted of the five essentials: a land line telephone, Dictaphone, IBM Selectric, light switch, and thermostat. Westlaw and Lexis were, from the late 1970s until 1986, accessed only via phone modem. I recall using the modem in law school, and then at my firm in the mid-1980s experienced the miracle of using a computer to run simple searches. Life after that was not the same.

So this is not the first time legal practice has faced “disruptive technology.” But what exactly does that mean—disruptive technology? And how do we apply a metric to “disruptiveness”?

As many readers will know, the origins of the term stem from Harvard Business School Professor Clayton Christensen’s theory of disruptive and sustaining innovations. A disruptive innovation helps create a new market or industry and eventually disrupts an existing market or industry. In contrast, a sustaining innovation does not create new markets or industries but rather evolves existing ones to achieve better value.

Much of the commentary on new legal technologies has focused on the disruptive side of the equation, whereas many have a sustaining quality as well. Overall, however, I don’t find that dichotomy very useful for purposes of understanding and teaching how the new wave of legal technology will affect the practice of law and thereby affect the demand for lawyers. So this fall in my Law 2050 class my students and I disaggregated “disruptive” and “sustaining” to get more under the hood of how new technology platforms like Lex Machina, Legal Zoom, Ravel Law, and Neota Logic will change the way law is practiced. (We did so purely intuitively without dipping deeply into Christensen’s detailed theory or other business theory and commentary on the topic—so he and my colleagues at Vanderbilt’s Owen Graduate School of Business Management might cringe at what follows.) Modifying somewhat the typology we developed in class, below I use the introduction of Westlaw and the current play of Lex Machina to explain our typology and impact scoring system.

What is disruptive (and sustaining) about disruptive legal technology?

One way of thinking about how new technologies change the world is to ask a “technology native”—a person who has only known life with the technology—what his or her world would be like if the technology disappeared. For example, while I actually was able to get by years ago without Google (I am a Google “technology immigrant”), I can’t imagine my world without Google now, but I can remember one. So just think about a Google native—someone who has never seen life without Google! Ironically, with Westlaw and Lexis this is becoming increasingly less scary, as Google alone has supplanted them as the first search engine of choice for many legal searches. But let’s envision Westlaw and Lexis coming on line in the 1980s or disappearing in the 2010s and ask, so what, who cares, and why? In what ways is the world of lawyering different with or without them? I come up with five effects, each of which has a 20-point impact scale:

Quality enhancing impact: In the do it better, faster, and cheaper trilogy dominating the legal industry today, quality enhancing technology works on the delivery of better service. For example, Westlaw and Lexis vastly improved the accuracy of search results, such as “find cases from the federal courts in the Fifth Circuit that say X and Y but not Z.” Sure, a lawyer could have run key number headings in the books and read through legal encyclopedias, but the miss rate simply went down when Westlaw and Lexis came on line. So to, with its deep database of IP cases and filings and assessable research design, does Lex Machina improve accuracy of searches about IP litigation, though at present it does not run broad substantive research searches. Scores: Westlaw and Lexis 18 (like Russian skating judge, leaving room for some later contenders); Lex Machina 12

Efficiency enhancing impact: Anyone who has ever run key numbers in hard copy digests or Shepardized a case using the books will appreciate the efficiency enhancement Westlaw and Lexis provided—the “do it faster” component of today’s client demands. Similarly, although one could use the brute force of Westlaw or Lexis searches to assemble the results of a Lex Machina search about the IP litigation profile of a judge or patent, it’s a heck of a lot faster using Lex Machina. Scores: Westlaw and Lexis 18; Lex Machina 18.

Demand displacement effect: Assume a world in which the number and scope of client driven legal searches does not change. In that case, the introduction of a new legal technology that has quality and efficiency enhancement effects is likely to displace demand for service in some sectors of the legal industry if the technology is a cost-effective competitor. For example, Westlaw and Lexis allowed better and faster legal searches, but unless priced to be cost-competitive with the old lawyer-intensive ways of doing legal searches, they won’t penetrate the market. Bottom line, there are fewer billable hours to go around. Given the success of Westlaw and Lexis in establishing their markets, one has to assign them the potential for this displacement effect. It’s much harder to tell with Lex Machina, because it’s not clear what the demand was for the information its type of searches provides prior to its availability. Scores: Westlaw and Lexis: 15; Lex Machina 8

Transformative effect: The opposite side of the coin is the potential a new technology has to open up new markets for legal tasks not previously possible or valued. For example, other than paying for a bespoke lawyer’s judgment about the profile of a particular court for IP litigation, I find it hard to believe many clients would have paid lawyers to perform the kinds of hyper-detailed big data litigation information searches Lex Machina makes possible about lawyers, courts, and patents. Even more so, some of the search techniques Westlaw and Lexis made possible would have been virtually impossible to replicate the old fashioned way with the books. To the extent these new capacities are valued—e.g., they lead to better litigation prediction and outcomes—they will increase demand for service. Hence the transformative effect can work to offset the displacement effect, meaning a new legal technology might increase the pool of billable hours. Scores: Westlaw and Lexis 15, Lex Machina 12

Destructive effect: All of the above discussion has assumed it will be lawyers using the new technology, which clearly will not always be the case—the new technology might reduce or eliminate the need for a lawyer at the helm. Some new technologies will provide user interfaces that do not require an attorney to operate. The rise of paralegals conducting research on Westlaw and Lexis is an example. Even more destructive are technologies like predictive coding, used in e-discovery to vastly reduce the need for lawyers, and online interfaces such as Legal Zoom, which sidesteps the Main Street lawyer altogether. My sense is that Westlaw and Lexis did not have so much destructive effect outside of pushing some work down to paralegals, and the same will hold true for Lex Machina. Scores: Westlaw and Lexis: 8; Lex Machina 8.

Total Impact Scores: Westlaw and Lexis 74; Lex Machina 58.

Of course, this is all meant to be a bit provocative and poke some at the overuse and misuse of the “disruptive technology” theme in our current legal world. As I said, it is not informed by formal business theory, nor do I have any empirical evidence to back up my scores. But the categories of effects seem on point and relevant to the discourse on impacts of new legal technologies, and the scores strike me as decent ballpark estimates. At the very least, I’ll have a model the students can use to dissect the legal technologies they choose to study in next fall’s Law 2050 class!

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.

Learning from My Students in Law 2050

My Law 2050 class has moved into group presentations (format explained here), the first round being their assessments of new companies and business models emerging in the “new normal.” In two days of presentations, so far we’ve heard about a wide variety of fascinating developments: Axiom, QuisLex, Neota, MetricStream, Yusin & Irvine, Pangea, CEB, Clerky, Onit, MyCase, and Legal Outsourcing Partners. Also, one of my students, Christine Carletta, wrote an insightful description and assessment of Lex Machina as a post on the JETLaw blog for Vanderbilt’s Journal of Entertainment and Technology Law. I couldn’t be more pleased with how the students are engaging with their projects and the class in general!

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