Wednesday, August 26, 2009

Richard Susskind on "The End of Lawyering"

Legal innovator and passionate speaker Richard Susskind spoke in a "super session" this morning at ILTA. He is also spoke on a panel titled "Technologies That Will Disrupt Traditional Legal Practice."

His point of view is "radically different" from that of other lawyers.

Post revised September 11 to link to later post and fix a typo or two.

The Future
Black & Decker doesn't sell power tools. It sells something customers use to make holes in the wall.
Lawyers deliver 1:1 consultative services now. But what is the real value we bring? For what are we paid?
"We exist to turn knowledge into value." We bring insight to bear on customer's problems.
By avoiding discussing the means of service delivery in defining what lawyers do, you open yourself up to new methods of providing service.
You bring knowledge and experience to the situtation. Methods of capturing and sharing knowledge are therefore critical. KM has had pockets of success but has not changed the whole profession.
He finds that general counsel "don't want dispute resolution, we want dispute avoidance." They want a fence at the top of a cliff instead of the ambulance at the bottom.
Knowledge capture and management and legal risk management are really important.
Automation v. Innovation
Automation is systemetizing some aspect of your work. Applying technology to preexisting processes is automation. The most dramatic impact of technology is where it has allowed you to do things that previously weren't possible. We're just warming up in legal technology.
We have to look at ways in which IT can change the way we do things.
The ATM is an example of an innovation. It was a very different way of delivering that service.
Our challenge is to change the way legal services are delivered.
The Client's Three-Part Dilemma
In-house lawyers have been asked to reduce internal head-count and external spend as well at a time when compliance pressures and changes in the law are raising the complexity of their challenges.
Clients Want More For Less
It is simply not the case that clients will be going back to the old ways, at least with respect to "shareholders at a board meeting."
How Can This Be Done?
Susskind belives that the two paths to providing more for less are the efficiency strategy and the collaborative strategy.
Efficiency Strategy
He believes that routine and repetitive legal work can be done differently. It doesn't need expensive lawyers.
In 1996 he said that email would be the primary way of communicating in law firms.
"Bespoke" services are those customized and tailored to the particular situation just as a spoke suit is tailored to the wearer.
Lawyers project the idea that most problems are bespoke. But clients come to you because you've faced similar problems before.
There are five levels on the path to commoditisation.
Bespoke / Standard / Systematised / Packaged / Commoditised.
Pckaging is a radical step. Packaging is the delivery of a system that lets the client come in and produce the solution or document required themselves.
Another example is the term sheet generator by Wilson Sonsini and Allen Overy.
Deloitte's tax practice lets their clients come in and use their tax system on a licensed basis. "We exist to turn knowledge into volume." Not the way we learned to practice but clients will go for it. Deloitte has 70 of top 100 clients using their tax software.
There is a red line in his diagram before commoditisation. The costs of commoditised work rapidly drop towards zero. The marginal costs of delivery are reduced as you move towards commoditisation. There are huge opportunities in the standardization level.
No decent firm is not standardizing.
Work can be "chunked up"
The clients want to move towards commoditisation because it enhances certainty of cost. Some clients want certainty of cost even more than lower cost.
Standardization can be of very high quality.
He's predicting a fundamental move of the amount of work towards commoditisation.
Collaborative Strategy
You can divide litigation into different chunks. It's hard to argue that a law firm is uniquely qualified to source all of them.
There are many ways of sourcing the work:
  • Multi-sourcing
  • in-sourcing
  • de-lawyering
  • relocating
  • offshoring
  • outsourcing
  • sub-contracting
  • co-sourcing
  • leasing
  • home-sourcing
  • open-sourcing
  • computerising
  • no-sourcing
Rio Tinto is requiring external counsel to work with *their* junior lawyers and is not paying for junior lawyers at firms. Axiom in the Netherlands is providing services at a 40-50% discount to typical costs as compared to 10-15% of most efficiency or cost-cutting approaches.
He recommends Ray Kurzweil, "The Singularity is Here." We have an exponential curve in technology. Kurzweil claims we are in the "knee" of the curve.
By 2050 the average desktop machine has more processing power than all of humanity.
Web 2.0 and Disruption
Technology is now changing the way we relate and work. We've seen this most in social networking.
We're no longer passive recipients of news. We're now participants. He knows general counsel who are on Twitter. Half of the people in most firms are on Facebook (just not the partners).
A hundred thousand doctors on-line, sharing knowledge in a cross of Facebook and Wikipedia. Clients and in-house lawyers are sharing costs in a similar way. These resources (Legal OnRamp?) may become the first place in-house lawyers go.
There are dispute resolution mechanisms on eBay. Why won't they spread?
Outsourcing different kinds of work to English-speaking India or South Africa may be a real challenge to Western law firms.
85% of their external spend is fixed fee. When they negotiated the deal the external lawyers wanted to start attending meetings that involved legal risk. Cisco said that was what they wanted--to have the lawyers participate in managing risk and avoiding the disputes.
What is the profitability model?
Huge amounts of lawyers' work can be done more cheaply and effectively.
We can be confident that some lawyers are going to be adopting the new ways of doing business.
In this room, there are significant advances in technology that would already change the practice of law. These are just not evenly distributed yet.
"The best way to predict the future is to invent it." It's up to lawyers to fashion their own future. The message today is to legal technologists. We typically support existing strategy. But now information technology can change the very business model that underpins law firms.
We live in a time of flux and pressure for law firms. Technologists can help our firms adapt. "Our time has now come."

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