Dissing Disruption

Dissing Disruption

Somewhere along the road from the start of ReInventLaw Silicon Valley on March 8 to the end of the ABA Tech Show on April 6, part of the law futures blogotweetosphere has come down with disruption fatigue. Examples here and here.

A measure of fatigue, or at least skepticism, is understandable, to be sure. Pep rallies at which we all shout and wave flags to pump ourselves up for the next game are not real work or progress in themselves, though they are fun and good for the spirit, especially in this slow-moving legal profession. (Been to a ReInventSoftware conference lately? Nope—there’s plenty of action without a rally.)

Nonetheless, here at Neota Logic we’re quite cheerful about disruptive innovation, so we’ll join in to comment on a few points made in the recent discussions. Those we agree with are of course right and true. Those we disagree with are … otherwise.

Law + Tech + Design + Delivery. These are the ReInvent Law Laboratory’s “four pillars of innovation for the legal services industry.” Dan Katz and Renee Knake have that architecture right, and are fomenting terrific—and, yes, potentially disruptive—experiments at MSU.

As are Tanina Rostain at Georgetown, Ron Staudt at Chicago-Kent, Andrew Perlman and Marc Lauritsen at Suffolk, Oliver Goodenough at Vermont, Phil Malone at Harvard, Brian Donnelly and Conrad Johnson at Columbia, the CodeX Crew at Stanford, Steph Kimbro at Dayton and Larry Farmer at BYU (and, we hope, others we haven’t heard about yet).

Neota Logic’s collaboration with Georgetown University Law Center gives us great confidence in an emerging generation of lawyers who will take up the challenge to build a new model of legal services—not only in the not-for-profit sector but also in the consumer, government and corporate sectors.

Although Clayton Christensen counsels that “disruption is a process and not an event … in some industries it might take decades for the forces to work their way through” (The Innovator’s Solution, Ch. 2, fn. 15.), we agree with Richard Susskind that for this profession “the time has now come.” LTN, April 1, 2013.

Are LegalZoom and RocketLawyer disruptive? Opinions differ. We come down on the side of Yes.

First, those companies are serving people who would otherwise have gone to their friendly neighborhood lawyer for a will or contract—thus displacing, or at least changing the market structure of, solos and small-firm lawyers who have traditionally done much of the kind of work that LZ and RL now do, via both their automated forms and their lawyer-matching businesses.

Second, LZ and RL are serving people who otherwise wouldn’t have had any legal guidance at all.

That sure sounds to us like what Christensen had mind: “A disruptive innovation transforms a product that historically was so expensive and complicated that only a few people with a lot of money and a lot of skill had access to it. A disruptive innovation makes it so much more affordable and accessible that a much larger population can have access to it.” Clayton Christensen, March 30, 2012, http://www.youtube.com/watch?v=qDrMAzCHFUU.

In the same way, Georgetown University Law Center students and other students in the Legal Services Corporation’s Apps4Justice Project are creating applications with not-for-profit legal services providers that meet an otherwise unmet demand for affordable, practical, accessible legal guidance. Pro Bono Net’s Law Help Interactive delivered more than 500,000 documents last year.

Serving people who otherwise wouldn’t have had any legal guidance at all is a problem in the corporate world as well. Every day in every big company hundreds of business decisions that have potentially significant legal implications are being made without legal guidance. Getting advice is expensive, time-consuming and often organizationally (or even geographically) difficult. For these relatively routine, relatively straightforward legal questions, general counsel are too busy and outside counsel too expensive.

Is this disruptive innovation? One might say No, because in neither the not-for-profit nor corporate sector is there an immediate disruptee. But have a look at this diagram from The Innovator’s Solution, Ch. 2—

two kinds of disruption copy

Note down there in the lower-left corner the New-Market Disruption, competing against “non-consumption.” And remember the other key lesson of disruptive innovation—that disruptors start low and then move up the curve, eating the incumbents’ margins and eventually their businesses.

One can, and many law firms surely do, view Axiom through that lens as it moves into “end-to-end management and delivery of complex legal processes.

When Jordan Furlong described Neota Logic as disruptive technology, one commentator complained that our technology cannot “read between the lines … [or] hold hands and wipe away tears.” You will surely see a press release when we can.

But that’s a straw person. A useful fraction of what clients need, and what lawyers actually do, can be done by software—we know that because we do it. And when software can’t (or shouldn’t) give an answer, it will send the client along to a lawyer. It is every lawyer’s professional responsibility to know what he doesn’t know, and guide the client to competent counsel when he’s not it. Professionally responsible software does the same thing.

On the hard question that Jordan poses—“Can law firms employ disruptive innovation?”—Clayton Christensen’s research counsels pessimism but not despair.

Hewlett-Packard jumped the disruption curve from laser to inkjet printers by creating “a completely autonomous organizational unit” in a different state and then “let the two businesses complete against each other.” The Innovator’s Dilemma, Ch. 5 at Fig. 5.4. Before counseling a managing partner to adopt HP’s strategy, one should, in fairness, note that Christensen titled HP’s story “Survival By Suicide.” Managing partners lives are hard enough.

Intel responded to the threat of low-end chip manufacturers by learning how to beat the disruptive competitors at their own game—a rough ride, but in the end successful. Clayton Christensen, March 30, 2012, http://www.youtube.com/watch?v=qDrMAzCHFUU.

The initiatives by Seyfarth and Littler that Jordan Furlong describes follow this line.

Millions of TurboTax users certainly hope the program is “an improvement from an inexperienced” tax lawyer. In fact, I will wager it is an improvement over most experienced tax lawyers—in its proper domain, which is most tax problems of most people most of the time, not hard cases for people with complex business affairs.

Even at higher levels of tax challenge, most accountants (including the Big 4) use software to solve most problems—from the Intuit Pro Series on up to Vertex and Big 4 proprietary programs. These programs are better than any one—or two or five—tax lawyers, because they encode the collective expertise of dozens of specialists, and because they neither forget what they have learned nor wilt from fatigue as April 15 approaches.

Even the IRS uses expert systems—not only to advise taxpayers but also to coach the IRS employees who answer taxpayers’ questions on the phone. Have a look at http://www.irs.gov/uac/Interactive-Tax-Assistant-(ITA)-1.

As Jon Busby wrote, the players who matter most are the clients. But we see more client activity in this arena than evidently he does. Is that a US/UK difference? Initiatives like the Association of Corporate Counsel’s Value Challenge and Legal Services Management Workshop, and the changes that many general counsel have made to outside counsel management and fee structures, have created a field on which innovation is possible, indeed essential.

J.B. Ruhl’s blog may be named Law2050, but we don’t need to wait 37 years to see “embedding legal compliance”, or in Richard Susskind’s phrase “embedded legal knowledge.” We don’t expect our cars to know the traffic laws any time soon, nor would we want them to, but software systems in government and business already have lots of law written into their code.

With conventional software tools—programming languages, databases and the like—that’s a very hard slog, the resulting rules are invisible or opaque to those affected, and keeping up with changes is expensive. Purpose-built tools for law and compliance make the task feasible.

And, to close on a commercial note, it happens that our technology, the Neota Logic Server, does exactly that.

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