THE BLOG

Legal Technology 3.0

02/04/2015 08:20 am ET | Updated Apr 06, 2015

The impact of technology on law is moving forward with all the subtlety of a charging rhinoceros, transforming traditional practice and spawning new forms of "legal service" delivery. Surprisingly, many expect that the swirling events will just enhance the existing system, leaving it essentially intact, but with certain processes improved. If the experience of other fields undergoing the effects of technological innovation serves as a guide, however, systemic change is around the corner.

The course of technological change for an industry can be broken down into three stages. The now clichéd, but still useful, terms of 1.0, 2.0 and 3.0 can apply. In 1.0, technology empowers the current human players within the current system. Applications here include computer assisted legal research, document production, practice management and early e-discovery. Surprisingly, these often create more legal work, as an arms race of deployment rages. Powerful search tools prompt more extensive supporting citations, not less work. Similarly, the proliferation of discoverable data necessitates more associates pouring over the record. While tech companies are still providing new versions of tools like these, the system has pretty fully digested 1.0.

In 2.0, technology replaces an increasing number of the human players within the current system, becoming disruptive. In e-discovery, for instance, machine learning approaches are subtracting the document review jobs that the 1.0 stage created. Companies are marrying word processing with expert systems to create contract document assembly systems that allow sales reps to "paper" deals themselves without review by the dreaded (and expensive) "suits" in legal.

At an individual consumer level, technology-enabled interfaces empower many who can't (or won't) afford traditional legal representation. As Clayton Christensen points out, disruptive innovation first flourishes at the "bottom" of the marketplace. For example, LegalZoom and Rocket Lawyer provide cheap legal help. Nonprofits and government are also in this game, often for free. Lawyers are still available through paid help desks built into both Rocket Lawyer's and LegalZoom's platforms, but whether the expanded market actually makes up for the diminished role is an open question.

A logical extension of 2.0 is that law can become a free utility in a larger service platform. Good expert systems are expensive to set up, but they are cheap to run. Google offers its search system to users for free in order to bring them to a platform where the company makes money in other ways - principally by selling access to the eyeballs of those users to advertisers. Law invites similar treatment. The legal elements of a domestic real estate transaction can appear as a "free" software service of the broker handling the sale.

In this world, traditional notions of the law as a professional activity, carried on by licensed attorneys, lose their justification. Existing disciplinary rules bend and break while a new category of "legal service provider" comes of age. Principles such as competence, trustworthiness and confidentiality remain important; the means for accomplishing them look very different.

Just as Uber and Lyft disrupt the taxi business, legal tech 2.0 frightens incumbent providers and cheers consumers. Desired or not, however, it is still embedded within the existing system. The current web of natural language laws, courts and the regulatory state remain largely intact. Our system of justice evolves but does not radically shift.

We are, however, fast approaching 3.0, where the power of computational technology for communication, modeling and execution permit a radical redesign, if not a full replacement, of the current system itself. If the Internal Revenue Code were enacted in computer code rather than natural language, a good technological parsing engine (rather than the limited biological parsing engine of a lawyer's brain) could give tax advice quickly and cheaply. Indeed, regulatory compliance could be built directly into computational objects such as a share of stock built as a "smart security," keeping track of ownership and applicable trading rules. Online dispute resolution looks significantly different from current courts, as the offerings of Modria already demonstrate.

Aspects of 3.0 sound a bit like science fiction, but so did the functionality of a smart phone a few years ago. The conceptual and technological pieces for radical redesign are falling into place; even law will innovate when the world changes. The shape of innovation can be relatively graceful or clumsy, however. If we anticipate the more radical changes and design safeguards into these processes with intelligence and attention to the public good, maybe we can improve the outcomes. We can help a system intended to create justice do just that.

Practitioners who anticipate and adapt to change can prosper in the new world of law. That's a far better outcome than letting the rhinoceros trample its way through the legal profession.

CodeX, the Stanford Center for Legal Informatics (http://codex.stanford.edu), is leading two panels and an exhibitor showcase during ALM's LegalTech New York conference being held Feb. 3-5 in New York City.