Has technology really disrupted the legal world? That is the question, and it’s formulated in terms of how pioneering economist Clayton Christensen saw things: i.e. that disruptive technology is a development that largely replaces the previous approach.
The simple answer is: yes, there has been some disruptive change. The more complex answer is: yes, but only in certain areas, and often not in the way one might expect.
Building on December’s piece about disruptive change vs incremental innovation, Artificial Lawyer explores where there really has been significant disruption and where it’s a picture of partial change.
The Biggest Disruptions Happened in the 1990s
If we are going to think in terms of X displacing Y, then the truly major disruptions in the legal world – at least those driven primarily by technology – happened a long time ago. They were also not necessarily ‘legal tech’, but more often simply the application of what quickly became tech that was broadly adopted across all of society. But even there, the disruption was rarely total.
- Email replaced a lot of physical letters and faxes, but letters remain in use. Faxes, at least in the US and US, have generally disappeared.
- Digital libraries replaced the vast majority of physical law libraries held within law firms. Some books still remain, but they are clearly a tiny portion of all accessible legal material now.
- Filing cabinets got replaced by document management systems and early contract lifecycle management platforms – but not all, and certainly not for all lawyers, even today.
Law got swamped by systemic changes going on around it, i.e. the digitisation of information, that was happening in every developed country at that time. If you want to point at something and say: there is something that truly got disrupted, it’s areas such as those.
Beyond that, the changes have been partial, or what one could call ‘hybrid disruption’, which may be a departure from Christensen’s core ideas, but this approach seems to fit the legal world.
The reality is that if you want pure, 100%, absolute disruption where X replaces Y and then Y dies off, i.e. of the Netflix vs Blockbuster variety, then you won’t find much in the legal world. Not yet anyway – although Artificial Lawyer is a site founded on hope.
What we do see an increasing amount of is hybrid disruption, where one part of a legal process is quite significantly changed by tech, but a large amount of good old-fashioned manual labour remains firmly entrenched. In part this is because this is not about new type of tech A making old type of tech B now redundant, it’s that prior to a certain tech-based approach there was little or no tech involved in that process.
- NLP-driven contract review for due diligence – as lawyers soon realised – this pioneering part of the ‘legal AI’ segment of legal tech did not mean replacing themselves. Lawyers were needed for training, quality control, deal management, and of course to still do plenty of manual review as well. But……it was a leap. If firms say let’s just do this incrementally, let’s just improve manual review a little bit every few years, then those firms using NLP tools will leapfrog them, i.e. they will get disrupted.
- Doc automation – a tech that is far from new – and also one that has partially disrupted the creation of some types of legal document, but in very few examples aside from ‘retail DIY’ download sites for very basic documents have lawyers been cut out of the process entirely. In reality many commercial firms use this tech (at least in the UK top 50), but it’s meant a hybrid outcome. The tech gets the lawyer part of the way there. It’s not a total replacement by a long shot. Again, its disruptive aspect is with the broader means of production, i.e. to not use this approach is less efficient, and for law firms it can helpfully soak up sometimes unbillable or low value time.
- Deal management tools – again, they help a lot, and were not there before. Again they don’t totally replace the junior lawyers who normally have to handle the bureaucracy of a transaction. Once again it’s a hybrid approach that impacts more on a market competition basis as it improves efficiency. I.e. firms that embrace this approach can perform better, and that can have a small, but noticeable impact on lawyer-client relationships.
The conclusion is that if you’re looking for total disruption, i.e. the ‘Bye-bye Blockbuster’ kind of change, you’ll not find too much in the legal world. What you find is partial, or hybrid disruption.
The Real New Means of Production
If you’re looking for a significant change to the means of production, you often see it in relation to the combination of new types of specialised legal labour and the use of technology, primarily to drive efficiency.
The most significant sign of this is the Alternative Legal Services Provider model or, a better way of putting it: the process-focused legal business, (as opposed to the traditional law firm that has an advisory-focused business).
Here we have seen the marriage of specialised legal labour and tech, coming together to genuinely disrupt the work that junior lawyers at large firms once did.
ALSPs, i.e. a wide variety of process groups that operate independently from law firms, cover everything from eDiscovery, to M&A due diligence, to contract negotiation, to contract data collection and dashboard building, to compliance reviews and more. They are literally replacing the older way of doing things that used a pyramidal, time-based, up-or-out group of junior legal labourers, (AKA associates).
That has been genuinely disruptive – in some areas, mostly for very large projects or where there are continual flows of very similar work needs – to the point that a growing number of large law firms have ‘disrupted themselves’ and built their own process groups. The Big Four have also seen a huge opportunity here and are going for it.
Tech is a key part of this. But, the tech is not the sole disruptive factor. It’s tech + specialised legal labour that makes this disruptive to prior business models.
The Innovator’s Dilemma
So, how does this fit together with Christensen’s famous ‘Innovator’s Dilemma’? For Artificial Lawyer, what it says is that the battle between incremental innovation and disruptive innovation in the legal world has really only just got started. This is because the incoming tech is very often not pushing out ‘old tech’, it’s simply taking up some of the manual process from the lawyers. I.e. this is the very beginning of the innovation cycle for certain types of work streams.
Also, when we think about incremental change and AI, there are some interesting considerations there. For example, legal AI tools that help you to review docs are already here. But, now they will likely enter a long and incremental journey, becoming better and faster at learning. They will be slowly improved, and perhaps even disrupted by new far more intelligent language models.
For example, if someone could come up with a 100% guaranteed NLP model that had a ‘total understanding’ of a text – and it’s not certain that even GPT-3 can do this – and return 100% accurate answers to literally any question you had, and importantly did this with NO TRAINING AT ALL…..then we’d have a massive disruption in that segment of the market. If the price of that tech became basic table stakes then it really would shake things up and make the entire review world a different place. I.e. review would be as simple as saying: ‘Show me everything I need to be aware of.’ And the system would do it, and you’d be 100% sure it had got it right, and without the slightest need to train or check anything. Of course, we are very far away from that.
In short, multiple legal tech journeys have started now that will play out over the next decade or two, with streams of incremental change, occasionally marked by truly disruptive change.
The legal world has been disrupted by tech. But the new wave of legal tech, such as legal AI tools, have only really just begun their journey if you look at things from a long-term perspective.
This is primarily because this is not tech making redundant an entire manual process, or totally replacing a previous tech solution, but rather becoming part of the mix in a way that can positively disrupt the economic model of legal production and also provide competitive advantages to those that take up this technology.
In short, this is just the beginning.
By Richard Tromans, Founder, Artificial Lawyer, Jan 2021
Book reference: ‘The Innovator’s Dilemma’ by Clayton Christensen – 1997, Harvard Business Review Press.
An excellent piece, Richard. I have worked in the legal profession through the 1980s, 1990s, 2000s, 2010s and now the 2020s: your perspective is spot on!
A provocative question is a great way to start 2021, Richard 👏. My work suggests it’s the NewLaw business models, many of which employ tech as a substitute, rather than a complement, for labour that are the Christensen disruptors. NewLaw New Rules published in 2013 crystallised and anticipated the trend you describe. It’s on Smashwords https://www.smashwords.com/books/view/388258.
Great article Richard. When I started my journey in the NewLaw space back in 2014 I had assumed tech was going to be thing that would get the dramatic efficiency gains which I thought should be possible. Fast forward and I’ve learned that tech mostly helps bank incremental improvements (because as you mention they often relate to a small part).
What surprised me was that the largest efficiency gains we’ve experienced for our commercial contracting solution (i.e. reducing time spent end-to-end by more than 50%), didn’t come from tech, they came from process improvements. If I had studied lean manufacturing/Theory of Constraints a bit more before we started I could’ve maybe seen that coming!