Appetite for Destruction: Of everything happening in the legal industry today, what will have enduring and sustained influence decades from now?

August 15, 2017

jamesallan

AFA, AI, ALSP, CLOC

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Thirty years ago this summer, Guns ‘N Roses released its debut album, the monstrous “Appetite for Destruction.” Earlier that year, U2 released its iconic “Joshua Tree,” which U2 is now touring on a sellout 30th anniversary tour. Love ‘em, hate ‘em, or just don’t care, the influence of those albums on music, and generations of listeners, fans, lovers, and haters, is undeniable.

Less well known, but no less impactful in its sphere: the American Lawyer’s inaugural Am Law 100 list, released in 1987. In the ensuing three decades, that list, including its now-ubiquitous Revenue per Lawyer and Profit per Partner metrics, has become the standard for how Biglaw measures itself, markets itself, and even how it thinks about itself. Thirty years on, the list that every managing partner claims “doesn’t matter” matters more than ever.

That makes us wonder: of everything happening in the industry today, what will have enduring and sustained influence decades from now? What product, company, trend, phenomenon, technology, or even group of people stands a chance of truly changing the face of the industry?

So, with apologies for leaving off many of the other great albums released in 1987, here’s a short list of possibilities for enduring influencers on the legal industry in the decades to come.

Enduring and Transformative

We think the developments below will have outsized influence in the years to come, long-term staying power, and ultimately become ubiquitous across the industry.

Artificial Intelligence. Earlier this summer, we wrote about emerging technologies, ranging from contract automation and analytics to natural language processing and contextual-search-based litigation document review tools. There, and again here, we refer to all of that as “AI” (because much of the legal community is calling all legal tech “AI” anyway, even though most of it is not).

While we believe that AI will not displace lawyers en masse, the effect of these technologies on the practice of law and the business of law is already being felt, and its influence will only grow. Already, areas such as contract drafting, contract management, legal research, litigation strategy, litigation management, patent prosecution and ediscovery have changed dramatically (for the better, we think) as a result of deployment of AI-related technology. These changes will become ubiquitous, and the adoption rate will accelerate. So, while we don’t see AI eliminating lawyer jobs, AI will fundamentally change what lawyers do and how they do it, in much the same way Westlaw and Lexis changed the way (and speed at which) traditional legal research was conducted.

CLOC/In-House Heads of Legal Operations. When we started Pangea3 in 2004, we met with many GCs, some of whom had chiefs of legal of operations or chiefs of staff, with varying degrees of expertise around legal operations. By the time we departed Thomson Reuters in 2012, our main in-house stakeholders were heads of legal ops. Today, it’s nearly unheard of to interact with a legal department of any size without encountering and working with a head of legal ops, many of whom have entire staffs at their disposal. GCs rely on them and empower them, and law firms and vendors continue to adapt, learning how to handle RFPs, bidding systems, pricing analyses, procurement cycles and the like. CLOC’s rapid rise from its launch a few short years ago is evidence of both its own strong leadership and of the rising influence of heads of corporate legal operations. Going forward, the only way to do business with a legal department of any meaningful size will be to work with heads of legal ops.

Blockchain. Blockchain, while far less understood, is poised to be as transformative to the legal industry as is artificial intelligence, if not more. Just as real artificial intelligence results in extreme automation of the way in which lawyers seek, retrieve and analyze documents, case law and data, blockchain enables extreme automation of the entire transaction process. (For a good explanation of Blockchain, see this IBM article.)

Recent blockchain protocols allow real-world concepts (e.g., stocks, bonds, cars) to be modeled as data objects. These data objects, which amount to digital representations of their real-world counterparts, can be enhanced by computer code, allowing participants to transact with them (e.g., transfer my digital bond to Bob when I receive digital license agreement). The effect of this in a decentralized network is a software-based set of rules — the terms, obligations, rights and responsibilities of the parties to a transaction — where those rules and every transaction that occurs under them are simultaneously shared among every participant in the ecosystem that engages in the governed transactions. This fact, and the ability of computer code to execute commands without further direction, creates a powerful platform that is secure, instantaneous, permanent, transparent, and that serves as an undisputable mechanism to conclude and implement transactions, eliminating the need for the traditional manual process of documenting, negotiating and interpreting many components of physical contracts.

Clearly, it’s too early to anticipate the many applications of blockchain to our industry. But we believe that, as blockchain becomes more ubiquitous broadly, legal will follow and deploy blockchain, especially in the areas described above.

Influential

In our view, the two below will influence various elements of the legal industry, with adoption in many areas and not in others. But we don’t believe that any of the below will create fundamental, transformational and sustained change.

AFAs, Value Billing, and Alternatives to the Billable Hour. Predictions of the demise of the billable hour have been around as long as we can remember. They’ve all been (mostly) wrong, and we believe they’ll continue to be wrong. Yes – alternative means of pricing legal services will continue to grow and evolve, and clients will continue to push for value billing and similar arrangements, with firms adapting and offering alternatives in certain areas, such as high-volume litigation, lower-value M&A, etc. But the fact is that the billable hour is well understood, and both buyers and sellers have lived with it for decades on end. Thirty years from now, it will still be the default pricing model for the vast majority of legal work in Biglaw, less so in small law – just as it is today.

Alternative Legal Service Providers. ALSP’s have proliferated in the last decade+, from LPOs to hybrid services/technology providers like Axiom and Integreon. All of these organizations have effected real and positive change since our days as GCs. We believe that their influence and role will continue, but not change materially over the years to come. Look for these companies to continue to grow apace and endure – but not to fundamentally alter the legal landscape.

By definition, we’ve left off trends that could develop into enduring change agents, or even just influencers, and anticipating what sticks and what doesn’t is art, not science. But these reflect our view of the most likely in each category. Let us know if you agree or not, and what we missed.

David Perla and Sanjay Kamlani are co-founders and managing directors of 1991 Group.

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