'Assassins' Aim to Reinvent Law

The Corporate Law Center and the Stein Center in Law Technology News, March 20, 2013

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You would almost think Daniel Martin Katz was running for office, he's such a travelin' man these days. His blog, computationallegalstudies.com features his travel itinerary, aka "The Campaign Trail," with tightly-scheduled conferences across the globe. On December 10, 2012, it was the ReInventLaw Dubai 2012 Conference; then there were six events before the reprise of ReInventLaw in Silicon Valley on March 8. And so forth, and so on.

Monday night, Katz was at Lincoln Center in New York City — for an intimate program at Fordham University School of Law, on "The Impact of Technology on the Future of Law Firms." The event drew a capacity crowd of about 50 lawyers and students on a blustery snowy evening that may have deterred less hardy attendees. But the size was perfect for the program, moderated by Ron Lazebnik, Fordham clinical associate professor of law, and which included an unusually animated and interesting Q&A session after the speakers' presentations. The event was sponsored by two Fordham entities: the Stein Center of Law and Ethics, and the Corporate Law Center.

Katz was one of four evangelists preaching the "New Normal" — that corporate counsel are fed-up with the status quo of Big Law, and if Big Law doesn't get its act together, and start using technology to reduce costs, and acting more like a business instead of a tony club — and be transparent about bills, even more law firms will fail.

Larry Bridgesmith kicked off the discussion from Scotland via webcast, citing futurist Richard Susskind's new book, Tomorrow's Lawyers: An Introduction to Your Future, and reminding the audience about the U.K.'s landmark 2007 Legal Services Act, which allows non-lawyers to buy into law practices, and has made legal services for average citizens more accessible. Today, he said, "200 corporations buy 80 percent of legal services and 90 percent of the population cannot afford legal services." Bridgesmith is co-founder and the chief relationship officer at Nashville-based ERM Legal Solutions, which offers an automated legal project manager, and serves as of counsel to Tennessee's Bone McAllester Norton.

Silvia Hodges, director of research services, legal analytics, at TyMetrix and a Fordham adjunct professor, and Fordham alumni Suzie Scanlon, who practices banking law with virtual firm Berger Legal, gave fascinating presentations delving into cutting edge issues of non-traditional legal operations.

But back to Katz. Assistant professor of law at Michigan State University's College of Law, he teaches Quantitative Methods for Lawyers, Legal Information Engineering, E-Discovery, Entrepreneurial Lawyering, Law Practice Innovation & Entrepreneurship, Sports Law, and, oh yeah, Criminal Procedure. Co-director of the aforementioned "law laboratory," ReInventLaw," he earned a 2005 J.D. cum laude from the University of Michigan (and a Masters of Public Policy), and then went on to earn a 2011 Ph.D. in Political Science and Public Policy (His dissertation topic was "Modeling Law as a Complex Adaptive System.")

Katz stole the Fordham show at the two-hour panel, with his fast-paced presentation, "Innovation in the Legal Services Industry: The Future Is Already Here. It Is Just Not Evenly Distributed" (the title being a spin on writer William Gibson's famous quote). Katz launched into his talk by announcing that "I'm developing a group of assassins who are going to [reform] the profession." His talk was a love fest to California's Silicon Valley, with its fast-paced, impatient venture capitalists who are funding technology startups that are eager to improve legal processes. "It's game on in the Valley!" he declared enthusiastically.

A key challenge for Big Law, explained Katz, is what he calls "The Under-Investment Problem." Equity partners have "different time horizons" than associates and junior partners, and often aren't willing to defer compensation to underwrite technology projects. Especially if those projects "have significant upfront costs" and positive returns are on the far horizon. "Partnership is a business model with serious inherent weakness," declared Katz. At risk is not a company's money, but the partners' money, he observed. "There are strong incentives to under-invest in training, software, and marketing [and] a strong incentive to maximize in the present and trade away the future," said Katz.

Complicating the equation, once you get above the 147th Am Law firm, "are there really significant differences in the quality of lawyering?" he queried. Large firms, Katz suggested, "are primarily competing on one dimension — legal expertise." But if they expand the dimensions of competition, "law becomes law + tech + design + delivery," he argued, noting that the "law" part of the equation is the substance — the rest are process. While many firms brag about their processes as differentiators, firms aren't anywhere near typical modern manufacturing facilities, Fortune 500 company logistic centers, or data driven emergency rooms, he said.

Katz then addressed "historic barriers to real innovation," reiterating a very common theme of this decade, that corporate general counsel are getting increasingly sophisticated, a position fueled by the recent financial crisis when so many GCs were pressured to cut legal spending. The recession, he said, brought legal into line with other "C" level officers and divisions. GCs have become their company's "legal supply chain manager." Katz compared the situation to buying a bookshelf at IKEA — you can pay IKEA to come and set it up for you, or you can do it yourself and contend with the three left-over pegs.