The Rise of Lawyer 2.0

Editor’s Note: The author of this post is the founder and CEO of Legal Mosaic, a strategic consulting firm and a regular contributor to Big Law Business.

By Mark Cohen, Chief Executive Officer, Legalmosaic

The future of lawyers is a hot topic these days. Some suggest that technology — especially the rise of artificial intelligence (AI)— will render many obsolete. Others point to the incursion of other professional groups — notably the Big Four and consultancies — into what was once the “legal” space. There’s no end to the “evidence” marshaled to support the death of lawyers.

Prophesying lawyers’ future has become a cottage industry. It has made Richard Susskind famous; drawn institutional money and entrepreneurs into the once-static legal space; and created a ripple effect on the legal Academy.

The discussion of lawyers’ future usually focuses on the survival vs. extinction question, not the 1.0 vs. 2.0 version of issue. Law is a $650 billion dollar global industry. It’s not going to disappear anytime soon. And neither will lawyers.

But their roles and delivery structures will change, however.

The real story in legal delivery change is the ascent of new providers coupled with the precipitous uptick of corporate work now performed in-house.

There is no longer debate whether legal delivery is changing is. The 2016 Georgetown Law Center Report on the State of the Legal Market notes the pace of change has accelerated markedly since the financial crisis of 2008. A small group of predominantly New York based corporate law firms has established itself as law’s “one percent,” raking in huge profits and distancing themselves from other firms in what they do and how much they can charge for doing it. Translation: the AmLaw 200 is no longer a relevant term. It’s the super-rich/super-elite firms and everyone else. And for the 175 or so remnants of the AmLaw 200, it’s time to come up with a “Plan B,” because mergers alone won’t solve the long-term viability challenge.

But the real story in legal delivery change is the ascent of new providers coupled with the precipitous uptick of corporate work now performed in-house. And there is also the increasing willingness of corporate legal departments to outsource work to service providers, not law firms.

Once relegated to the margins of market share, service providers are becoming a force. And while aggregate revenue of large firms still far eclipses service providers, law firm market share is declining while, according to Thomson Reuters, in-house spend is up substantially and provider revenue is increasing at a 30 percent annual clip.

This has significance, of course, not only to clients but also to lawyers, many of whom formerly toiled at law firms. Lawyers are not becoming extinct. But they are increasingly working outside law firms. So perhaps the biggest shift underway is the decline of law firm hegemony over legal delivery.

That means different corporate structures, price points, compensation, and skill sets for the lawyers who work under their aegis.

The Quinn Emanuel Case and Legal Practice

A very recent case involving Quinn Emanuel addresses the lawyer 1.0 vs 2.0 issue. InHenig v. Quinn Emanuel Urquhart & Sullivan, LLP, 13-CV-1432, NYLJ 1202746080732, at *1 (SDNY, Decided December 30, 2015) Plaintiff, a contract lawyer, filed suit against Quinn Emanuel alleging entitlement to overtime pay arising out of a first review of documents in a litigation matter. Plaintiff sought relief under New York Law because, although he is a licensed New York attorney (and so exempt from overtime benefits), he was allegedly not functioning as an attorney during the review. The gravamen of his claim was that he was not engaged in the practice of law while performing the review assignment.

U.S. District Court Judge Ronni Abrams applied New York law (interpretation of “engaging in the practice of law” is a state matter) and found Henigwasengaged in the practice of law during the document review. She noted that while Henig may not have been involved in the loftiest of legal tasks, hewaspracticing law because he was exercising legal judgment.

The key takeaway: engaging in legal practice turns onwhattask is being performed, notfor whomthe lawyer works.

TheHenigcase throws into high relief that lawyers — even those relegated to lower-value tasks — are not apt to go the way of buggy whips and Kodak any time soon.

Which begs the question: would Henig have filed his claim had he been doing the same work as an associate instead of a contract attorney? Answer: undoubtedly not. But since he was working all those hours doing “grunt” work for a staffing company instead of an elite law firm — and earning a fraction of the remuneration for doing so — he maintained his claim for overtime eligibility.

TheHenigcase throws into high relief that lawyers — even those relegated to lower-value tasks — are not apt to go the way of buggy whips and Kodak any time soon. While artificial intelligence and other technological advances might one day alleviate certain tasks now performed by lawyers, they will not be a wholesale substitute for the exercise of professional judgment — even lower value discretion.

Henigalso reminds us that being a lawyer is not always (or perhaps often) glamorous. And while a high salary is a palliative for boredom, it is increasingly rare for today’s lawyers to pull in big bucks for performing low-level tasks. And, with sympathy for those paying off hefty student loans, that’s as it should be.

A recentNew York Timesarticle, “E-Discovery Means the End of Lawyers? Not So Fast” (January 4, 2016 at B4) examines the impact of artificial-intelligence-derived technologies on lawyers and the “jobs-pocalypse” issue. It cites a recent McKinsey study that concludes adding technology is more likely totransformrather than toeliminatejobs. And this plays into the distinction betweentasktransformation andjobautomation.

And this process is underway and accelerating in legal delivery. Not long ago, lawyers like Mr. Henig would have been working for a law firm, not a staffing company. He would have been performing a first review at a much higher billing rate to justify his higher salary. Now, he is doing that work for a service provider, not a firm. And while his billing rate is dramatically lower, so too is his remuneration. The task transformation is underway- same task/different provider. And a far lower lawyer compensation.

Lawyers should take comfort in the McKinsey study’s finding that less than 5 percent of jobs can be completely automated within the next three to five years based on existing technologies. And while some erosion of labor-intensive work that passes for “legal” might occur, it’s a safe bet that therewillbe plenty of legal work left. And let’s not forget the tens of millions of unrepresented individuals and businesses in need of legal services. Those potential, untapped clients can pay for legal services- just not at current rates. More opportunities for lawyers-not to mention society.

Even more encouraging is another study cited inThe Timespiece. James Bessen, a BU School of Law researcher, found apositiverelationship between the degree of computerization in a particular job category and employment growth. A good example of this for lawyers is e-Discovery. It has created more document review work for lawyers. At the same time, it has also accelerated the disaggregation process and has ushered in the age of legal service providers.

Finally, there is David Autor, an M.I.T. labor economist, who found that automation just as frequently complements labor as replaces it. And this creates new jobs. Take LegalZoom, for example. Their automated legal forms have spun off consultative and additional client representation work for a large network of lawyers. And they have created new customers/clients — as have other technology companies like Rocket Lawyer and AVVO.

Conclusion

Lawyers are not going to become extinct any time soon. But just as doctors’ tasks, delivery structures, and employers have changed in recent years, so too will it be for lawyers. Technology is already reconfiguring legal delivery. But this is hardly a surprise given its impact on hospitality, car hire, retail, communications, and a slew of other industries.

Do lawyers really believe that self-regulation can stem this global tide?

Extinction occurs in the absence of adaptation. It’s time that lawyers accept this. What’s the alternative?