In a world where information technology is hugely disruptive in so many markets, do you ever wonder what impact IT will have on the legal profession? (Is that nervous laughter I hear?)
When I ask how the Internet, artificial intelligence, big data and other state-of-the-art IT developments will affect lawyers, I’m not asking an academic question. There is virtually no sector of the economy that isn’t being buffeted today by the harsh winds of IT-induced change. One major Canadian bank, for example, just announced that it is increasing its IT spend to $2.4 billion annually, and that in a decade it expects only 10 per cent of its business to be generated through its physical branches. Could it really be that the business of banking will go through such a dramatic transformation … and lawyering will remain unchanged?
Some in the legal profession argue that what they do is so reliant on human judgment that being replaced by IT would be unimaginable. I assume the world’s best chess and GO players said the same, until IT systems recently beat human world champions in both pursuits. Clearly, putting one’s head in the sand is no way to deal with the threat. After all, the IT threat is also a huge opportunity for those who think about IT proactively and with an open and creative mind.
Short- and Long-term Impact
We tend to overestimate the short-term impact of technology — just as we underestimate its long-term effects. So, it’s probably overblown to say that lawyers will be disintermediated by IT overnight; but on the other hand, certain paradigm shifts are already crystallizing that will indeed have a pronounced impact on what lawyers do, and how they do it. Consider what is happening already in “save the company” litigation, high-stakes commercial negotiations, and “bet the company” M&A deals.
If you deconstruct what goes on in a large, complex litigation file, you can break it down into two buckets of activity. Advocacy in a courtroom, while a critical element, is really like the tip of the iceberg. Lying beneath the water’s surface is the massive activity of “litigation support,” a huge part of which is document review.
Without good document review – now focused ever more closely on the parties’ respective internal email traffic – the advocacy piece simply cannot be done well. And IT is having a huge impact on document review. The raw, paper-based records (although more and more of them are originally electronic) can be scanned, indexed, reviewed and more. Conclusions can be drawn, or at least working hypotheses generated — and very quickly, for way less money than by the traditional army of juniors at the law firm.
And if human review is still found useful, those human eyes may well be in suburban offices half a world away, with the offshore activity buttressed and made efficient and cost-effective through IT. (Oh, and down the hall from the document reviewer, in the legal processor’s outsourced facility in India or South Africa, is a young, US-trained paralegal preparing a first draft of a patent application for a senior intellectual property lawyer in Toronto, Palo Alto, New York or London). Welcome to leading-edge law practised in a 21st-century globalized IT environment.
Worldwide Delivery
I recently had a negotiation across from an IT services supplier, where they were responding to my client’s RFP. As usual, we had included a draft Master Services Agreement in the RFP, and the supplier had revised and marked up the MSA as part of its proposal. So there we were, negotiating their changes to the MSA.
When we took a break, I chatted one-on-one with the lead lawyer for the supplier. I said to him I noticed there were quite a few typos in his handiwork, which was no big deal because we could catch them all, but I did inquire why he hadn’t used his computer’s spell-check feature.
He looked at me and smiled. He said he wasn’t the author of their changes to the MSA. He said it had been done by their office in South Asia and that it only arrived in Toronto a few minutes before it had to be submitted as part of the proposal. Fact is, he was reading it for the first time that morning as we were negotiating it.
This isn’t meant as a criticism of the supplier — quite the contrary. Whether you’re impressed or not by the supplier’s global delivery model, this is leading-edge commercial lawyering in 2016. Documents are crafted by persons all around the world, with the supply chain being internationalized through ubiquitous IT and modern communications.
Global Support for the Deal
A similar trend is sweeping M&A blockbusters. Sure, negotiations require an expert Bay Street partner with loads of black-letter legal experience, and even more tact, judgment, savvy and a visceral sense of the human condition — such as what makes senior corporate people comfortable and uncomfortable. But just as the crack litigator requires an army of support specialists, and the lead commercial negotiations lawyer is backed by an army of drafting staffers in Bangalore, the M&A magician requires platoons – nay, divisions – of legal foot soldiers to slog through documents to undertake quick but illuminating due diligence.
Like IT-driven litigation support, today’s modern deal-oriented due diligence is buttressed by the virtual data room — fully digitized, indexed and online. Target companies can even review the digital trails left by various bidders, to learn what areas are of interest to the prospective buyers; to understand which of the potential suitors is a serious bidder; and to glean valuable insight from the digital breadcrumb trails.
At the same time, the prospective acquirer is conducting a rigorous analysis of the key representatives of the target based on their LinkedIn profiles and other social-media activity. By understanding who among this group is posting what on the Internet, and how frequently, the stalker company can (legally) reverse-engineer valuable insight into what the target is up to, what they are planning and, frankly, whether they are in economic trouble. This is not, however, industrial espionage — it is merely sensible use of today’s modern digital information infrastructure.
These three examples share a few key factors in common. In these high-stakes settings, huge reams of disparate data have to be organized and marshalled quickly — and the essential messages garnered from the data have to be distilled in record time. Knowledge is power, and today, to be able to unlock the power of information so that it can generate real value in a legal setting, you need to harness global-services supply chains. If you fail to do this, you will languish — you’ll be like the horse carriage maker looking ruefully at the new automobiles some 120 years ago.
Disintermediated by IT
If you’re a great litigator, or a superb commercial negotiator, or an expert deal-maker, I believe you will continue to see a rosy future for your legal career. If you are corporate counsel and you bring significant value to your organization by being able to predict and manage risk, then I also think you have a bright future ahead of you.
Where lawyers in Canada are at risk, in my view, is where the traditional “legal activity” they perform turns out to be more document management, or even project management, because the world is chock full of people who can draft agreements, and provide project-management services, at low salaries, and with higher rates of efficiency. Lawyering, therefore, becomes all about adding value, and thereby becoming a trusted advisor to your client.
The Future of Legal AI
Another area worth keeping an eye on is artificial intelligence, and whether an IT platform like IBM’s Watson (of Jeopardy! fame) can eventually be architected to help consumers of legal services — for example, someone needing a basic will. I believe the potential is certainly there.
Take a look at Watson’s development in a few short years. It has a range of applications built around it, which span from medicine, to wealth management, to big data analysis. And once you have a growing ecosystem around a computing system like Watson, the applications get better exponentially, as the participants in the community mutually assist each other.
Perhaps Watson will not be quite ready in five years to draft a will for a high-net-worth couple with a very sophisticated estate, but if it can do even 50 per cent of today’s “standard wills” for most middle-class couples, that’s already a huge impact on the legal profession. If your legal practice is based on preparing relatively simple wills, I’d suggest you start thinking about your situation in a post-Watson-enabled world.
AI will not infiltrate every Canadian law firm and in-house legal department next year. Again, we tend to overestimate the short-term impact of IT. When I first started teaching my Computer Law evening course at Osgoode 25 years ago, I included some material on AI that argued the technology was just around the corner.
Well, in that sense, it’s been a “long corner.” But the AI base technology is getting much more powerful (witness Watson and its many applications), and people generally are much more comfortable now using their smartphones as an extension of not only their data-retention capabilities (i.e., memory), but also cognitive skills (i.e., thinking). So, for the first time, I think we can fairly talk about AI systems with compelling applications for lawyers in terms of single-digit years rather than decades. And when we hit the inflection point, watch out — adoption will be swift and impressive.
These and other IT impacts on lawyers are only just beginning to be felt. But woe betide the lawyer who ignores them. Next month: how to take practical advantage of these IT trends.
George Takach is a senior partner at McCarthy Tétrault LLP and the author of Computer Law.
