Nov 10, 2013

More on Axiom and Rule 5.4

Bill Henderson has a post asking if Axiom is the Bellwether for disruption in the legal industry. Bill writes on how Axiom gets around Rule 5.4.

Over at the E-Lawyering Blog back in April, Richard Granat did a very careful job trying to answer this question, and concluded that the answer was “no.” In fact, Axiom is a Delaware C-Corp with nonlawyer investors as equity shareholders.

So, how is Axiom getting around the Rule 5.4 ban on fee-splitting with nonlawyers?  The answer to this question has a lot to do with the nature of outsourcing and managed services within legal departments.   A general counsel for a corporation controls the legal functions of the company. Because he or she can’t do all the work themselves, they hire in-house legal staff and outside counsel.  In recent years, legal departments have also contracted directly with LPOs, particularly on matters related to e-discovery and M&A due diligence. When it comes to non-law firm options, such as LPOs, the general counsel and his or her staff are “supervising” the work within the meaning of the legal ethics rules.

When a general counsel of a corporation uses a managed service provider, such a Axiom, they are diverting a tranche of work they control.  The value of the managed service provider is process expertise plus economies of scale and scope.  Axiom, through a contract with the legal department, manages some of that legal workflow that supports in-house lawyers in their counseling and compliance roles.  Yet, the buyer of the managed services is himself a lawyer, and that lawyer is ultimately responsible for advising the corporation on legal risk.

On one level, Axiom is a niche business.  As Granat notes, “If you don’t have an in-house counsel, then you can’t use Axiom’s services. Not being a law firm, Axiom cannot provide services to the public (individuals or organizations) directly.”  Yet, this niche accounts for a huge proportion of the entire legal services market.  In this American Lawyer article, one of Axiom’s venture capital investors, opined “With a worldwide legal market that is a trillion dollars each year, there is plenty of running room to build a successful business.”

In the case of Axiom, however, the person making the buying decision is a highly sophisticated lawyer who is struggling to manage his or her organization’s legal needs within a budget.  Stated bluntly, the GC of a multinational corporation does not want the kind of consumer protection that a formalistic construction of Rule 5.4 would provide.

Recently the Houston Business Journal profiled Axiom, which has a growing office here in town.

Update: More from the ABA Journal:

Early on, Axiom was described as a high-end temp service for legal departments, Henderson says. It was said to be staffed with disaffected BigLaw lawyers looking for more autonomy and better work-life balance. But now the fastest growing part of Axiom’s business could be its managed services practice, in which lawyers work with technology and other consultants to manage entire projects, according to this ABA Journal Legal Rebels article.

Axiom’s CEO Mark Harris says his company isn’t a legal process outsourcer, and it’s not a law firm. The company doesn’t give legal advice and its structure allows it to accept money from nonlawyer investors, he told Bloomberg Law. He also said an initial public offering isn’t being considered right now, but it’s an option in the future, the Legal Whiteboard previously reported in a summary of the interview.



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Sep 30, 2013

Bill Henderson on LPOs eating Law Firms Lunches

Bill gave a lengthy interview with the ABA Journal on his recent front-page feature, on how Legal Process Outsourcers (LPO) are supplanting much of what law firms do. I blogged about the article here and here.

Here is a snippet on what law firms should do:

So there’s a proliferation of different companies that are using technology and big data and process to try and do traditional legal work traditionally done by law firms better, cheaper, or faster. So if I’m a law firm, and this is eating away at some of the bundled services that I’ve traditionally offered; I’d have to ask myself: can I really do this better than these upstart companies? Or is it better to develop strategic alliances and to basically piece together a kind of re-bundled service where the law firm is acting as a general contractor and it knows the best vendor in e-discovery. It knows the best vendor to come up with market standard transactional documents. It knows the vendor to help price high-end IP cases. And there’s a trench of trusted advisory or advocacy work that the law firms are going to keep.

But in the meantime, they’re putting together–kind of quarterbacking the whole transaction or the whole litigation matter. There’s an opportunity for law firms to do that, but if they steer clear of these vendors and they try and keep the work in house using inefficient methods, then they’re really kind of telling their clients when their clients find out that they really have their economic best interest above their clients’ best interest. And I think that will come back to harm them, long term. So if I was a law firm, I would go out and learn what these vendors are doing and ask yourself: what can we do and what should they be doing, and try to put together the best package for your clients.

And on what law students should do:

Bill Henderson: I would advise them to get a great, traditional legal education. But at the same time, moonlight and learn an area about, let’s say, law and technology, law and process; some sort of a new-edged angle to the legal market. Something where they’ll have some intrinsic interest or passion. And moonlight and learn that, invest in themselves, and become a specialist in that area.

But the students aren’t going to find an employer that’s going to equip them with all the skills they need to prosper in this area. They’re going to have to invest in their own personal human capital. And so go out and moonlight and go out and work for free. Go out and shadow somebody that’s in this interesting sector that you find interesting and invest in yourself, learn something about it. And when you see an opportunity, leap at it.


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Sep 29, 2013

No Legal Services v. Non-Lawyer Legal Services

A common refrain I hear among alternate-legal service supporters, is that it is better for a person to have less-than-perfect legal services (that is, not provided by a lawyer) than to have no legal services at all. Is this the case?

A friend who works in the area told me that in most cases, it is better for poor people to die intestate, and let the state’s intestacy statute take care of the estate, than to have a will that does not accurately describe all of a person’s property, or messes up who gets what. He noted that a will with errors would lead to much litigation, that could dissipate smaller estates. Distributing according to the intestacy statute would be cheaper.

I pose this question to readers out of curiosity. How often will it be the case that a person, who could not afford a licensed lawyer, will be better off having no access to legal services, rather than obtaining legal services from a non-lawyer (this could be LegalZoom, a form book, or maybe a “limited-licensed technician“)? I’m not talking about criminal matters. Rather, I am focusing on the sets of smaller, civil matters that people often try to obtain through self-help (or think could be performed by non-lawyers). Wills are usually the most common example. What other examples are there?

Somewhat related, is the study that showed that people who relied on legal aid from Harvard Law School were actually worse off in certain circumstances:

Specifically, the offers of representation came from a law school clinic, which provided high-quality and well-respected assistance in administrative “appeals” to state ALJs of initial rulings regarding eligibility for unemployment benefits (these “appeals” were actually de novo mini-trials). Our randomized evaluation found that the offers of representation from the clinic had no statistically significant effect on the probability that an unemployment claimant would prevail in the “appeal,” but that the offers did delay proceedings by (on average) about two weeks. Actual use of representation (from any source) also delayed the proceeding; we could come to no firm conclusions regarding the effect of actual use of representation (from any source) on the probability that claimants would prevail. Keeping in mind the high-quality and well-respected nature of the representation the law school clinic offered and provided, we explore three possible explanations for our results, each of which has implications for delivery of legal services.

I should caveat this post with an obvious point–there are plenty of bad lawyers. Plenty of lawyers draft wills that are defective. What the impact of driving down the cost of legal services has on the quality of legal services is an important question. And whether limited-licensed lawyers would provide systematically worse services, compared to full-lawyers, is an even more important question.

Update: This article by I. Glenn Cohen on rationing legal services is also on point.

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Sep 28, 2013

Limited Licensed Lawyers, Technology, and Access to Justice

Everyone agrees that there is an access to justice problem in the United States. Not everyone agrees on how to fix it. There are several different proposals.

The ABA’s new Report and Recommendation on the Future of Legal Education suggests the creation of so-called “legal technicians.” These limited-licensed non-lawyers would be permitted to perform certain basic legal tasks, and would not have to go for the full three years of law school, and not have to sit for the bar exam. One of the rationales behind this move is to create a new breed of quasi-lawyers who are better suited to handle some of the more basic tasks. Presumably, because the costs of entering the profession are less, they will be more content to accept the low-paying jobs that those without means require. This would improve the access to justice problem.

Of course, what happens to solo practitioners who previously performed many of these tasks (and  I should add, an increasingly large number of solos, graduating from more law schools, who have to hang their own shingles because they can’t find employment elsewhere). Richard Granat highlights a number of concerns about how this would impact solos. If a client was forced to pick between a quasi-lawyer and a real lawyer, for roughly the same price, the client would probably pick the latter.

Another approach to improving access to justice focuses on technology. New data-based tools can allow people to access legal services without a lawyer, or perhaps with less of a need for legal services. I address elsewhere when, and how legal services will reach the point where people can be fully served without a lawyer. We are not there yet (and we won’t be for a while), but we will get there during my career. So at the present moment, technology by itself can be a tool lawyers use to make legal services more available and affordable.

But, let’s consider the segmentation of the legal market. The overwhelming majority of tech legal startups and LPOs are not focusing on the low-cost segment. Most of the investments in these companies focus on high-end discovery disputes, intellectual property litigation, and other matters that only corporate lawyers can avail themselves of.

Plus, these tech LPOs almost always work for lawyers. A lawyer is always involved in the chain (this obviates most, but not all UPL issues). Companies like LegalZoom, which target those at the bottom of the segment, do not have lawyers in the chain.

Here, the access to justice problem improves in a very specific way. The wealthy people before who could afford lawyers before, can now avail themselves of much cooler tools, but with lawyers, at lower costs. The people at the bottom of the ladder who could not afford a lawyer before, still can’t afford a lawyer, but can use LegalZoom forms. I agree with those who say that LegalZoom forms are better than nothing. Dying with a bad will is probably better than dying intestate.

Technology can play a role. To the extent that technology can be focused on the bottom of the commercial market, and can improve the process by which these documents are generated, or by finding a way limited license non-lawyers to help them, then the access to justice problem would be improved. This is a point often lost in discussion. It’s not just about providing technology. It’s about providing quality legal services. But technology by itself will not be enough to effect a meaningful change in our needs for access to justice.

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Jul 18, 2013

When is a law firm not a law firm?

Lee Pacchia of Blomberg Law held a fantastic interview with Mark Harris, the CEO of Axiom Law. Much of the interview, Pacchia was trying to pin down Harris about what Axiom was–a law firm, a legla process outsourcer, or something else. Harris resisted every urge to characterize his company, though repeated over and over again that it was not law firm, though it engages in large-scale transactional work for clients. And it has raised $25 million–something a law firm could never, ever do.

At 10:00 Pacchia asks Harris directly, what can Axiom not do, as it is not a law firm. Harris offered a very carefully worded answer (based on my rough transcription):

Axiom itself, cannot give legal advice, and cannot interfere in the independent judgment of our attorneys, and their provisioning of legal advice. What we do is surround the delivery of legal advice with disciplines and methodologies and best practices that we have borrowed from other industries . . . that just fundamentally improve the service experience for the client, and deliver a completely different level of value.

His answer focuses on Axiom as the institution, and the attorneys working separately. Keep an eye on alternate providers of legal services, and how the Bar aims to regulate, or shut them down.

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Jun 21, 2013

Texas Supreme Court (Finally!) Approves Uncontested Divorce Forms

For years, the Texas Supreme Court has been sought to offer do-it-yourself forms for uncontested divorces. To the surprise of no one, the family law section of the Texas Bar has opposed this change vociferously. I was recently talking with a friend who is a judge in Texas. He suggested that a small part of this opposition was based on a realistic concern that these forms may oversimplify things, and elide potential pitfalls couples may fall into. It is impossible to encapsulate all of the possibilites into a single, pre-printed form. However, the judge noted that most of the opposition comes from the simple fact that this change will eliminate business for the family lawyers.


Now, at long last, the forms were approved. Mary Flood reports:

From the it’s-about-time department – the Texas high court has OKd revised forms for folks who want a divorce and have no kids or real property holdings. It’s the quicky, no-lawyers divorce. Some would argue it should be available to even more folks. But this is what we have so far.

From the Texas Supreme Court June 18, 2013:


In an order posted Tuesday the Texas Supreme Court issued revised do-it-yourself divorce forms deigned for poor couples without real-property holdings and children and without contested issues in their divorce.

The revised forms establish a section for a divorcing couple to identify retirement accounts each may hold and possibly to divide retirement in the final divorce decree. Any division of a retirement account, the forms note, must be enforced by a qualified domestic-relations order that should be prepared by an attorney.

The Court approved the initial divorce forms in November. They were immediately effective, subject to public comment. The revised forms become effective immediately. Order on revised divorce forms


I really have no speciality in Texas divorce law, other than the small unit I teach on Texas marital property. I blog about this development as an example of how the entrenched bar opposes developments to innovations to promote access to justice, that eliminate the need for lawyers. Some of the concern is valid (a point that technologists all-too-easily overlook), but much of the concern is motivated by self-protectionism. This year-long struggle over something as simple as forms is a preview of things to come as new forms of technology facilitate the practice of law.

Kudos to the Texas Supreme Court for persevering and offering this service to Texans.

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Apr 18, 2013

High Costs of Barriers to Entry to Disruptive Technology

Historically, one of the biggest barriers to entry to disruptive technologies is not the technology itself, but various regulatory hurdles that incumbent providers have instituted to stifle competition. These laws have only the most faintest relationship to the health, safety, and welfare of the people.

Uber, for example, is an awesome service that allows users to request a livery cab pick them up wherever they are. It is a revolutionary idea that renders obsolete the process of hailing a cab, or scheduling a car service. So what’s the problem? Why isn’t this in every city? Well, many Taxi Commissions have opposed Uber, as it provides competition. And who wants competition in a regulated industry, right? The District of Columbia, among other places, has been one of the most egregious opponents of Uber.

In the past, Uber has simply entered markets, and let the chips fall where they may. This has proven to be quite expensive, and not too successful. In response to the high cost of litigating in these closed markets, Uber has changed course:

The company is tired of that fighting just to maintain its business, so it’s defining its expansion policies through a new white paper. Deployments will occur in regions where Uber sees “tacit approval” from regulators — in other words, areas where there hasn’t been direct legal action against competing services for at least 30 days. Just in case authorities change their minds, the company plans to go “above and beyond” commercial licensing requirements, including a $2 million insurance policy on trips and more stringent background tests. While Uber would much rather have explicit permission to operate as it sees fit, the strategy could have the firm venturing into territories where competitors with unlicensed drivers have (seemingly) free rein.

Uber’s white paper recognizes the high costs of barriers to entry for disruptive technology.

In most cities across the country, regulators have chosen not to enforce against non-licensed transportation providers using ridesharing apps. This course of non-action resulted in massive regulatory ambiguity leading to one-sided competition which Uber has not engaged in to its own disadvantage. It is this ambiguity which we are looking to address with Uber’s new policy on ridesharing:

  1. Uber will roll out ridesharing on its existing platform in any market where the regulators have given tacit approval;
  2. In the absence of regulatory leadership, Uber will implement safeguards in terms of safety and insurance that will go above and beyond what local regulatory bodies have in place for commercial transportation.

In the face of this challenge, Uber could have chosen to do nothing. We could have chosen to use regulation to thwart our competitors. Instead, we chose the path that reflects our company’s core: we chose to compete.

Elon Musk, the Chief Executive of Tesla Motors–those cool electric vehicles I saw on every corner in Palo Alto–is taking a different approach to regulatory barriers. Under Texas law, Tesla can’t sell any vehicles without any franchised dealerships in the state (and obtaining such a franchise is extremely onerous). Musk is going the rent-seeking route, and trying to pass legislation to benefit his company:

Musk testified Monday before a committee of the Texas Legislature in support of HB 3351 and SB 1659, bills  that would allow U.S.-based manufacturers of 100% electric- or battery-powered vehicles to sell directly to Texas consumers.

Musk reiterated his contention at a news conference Wednesday. “The ability to sell cars through Tesla-owned stores is important for sustainable transportation and is the best chance a new electric car company has of succeeding,” he said.

Of course, the dealers of Texas have strenuously opposed this new technology, not because it is dangerous or anything, but because it will undercut their profits.

So what does this mean for the disruptive industry I am most closely involved with?

Recently, I was talking with a friend at a legal tech startup about what the high costs of the barriers to entry are to products that disrupt the legal marketplace. Specifically, I was talking about technology that can offer legal advice, which borders on the unauthorized practice of law. For some time, I have feared that the first huge wall that legal-technologists will encounter is the entrenched bar using regulatory hurdles to stop the development of this technology. We have already seen the early traces of this battle in suits against LegalZoom.

I conveyed these thoughts to my friend, and he said that they were plausible but he wasn’t concerned, for a few reasons. First, he noted that these technologies will likely benefit attorneys directly, rather than benefit nonlawyers, right away at least. This is a distinction between something like LegalZoom, which is already in court defending against UPL suits. Thus, UPL suits are unlikely because lawyers will be using the products.

Second, he  noted that if this technology can gain enough of a foothold before the regulators catch on, it will be too late for them. I am dubious about this one. Regulators only take notice when a product begins to disrupt. Flying under the radar only works for so long.

Third, he closed with what I think is the most ominous thought–he was prepared to fight it in court if the challenge comes. He said he has funding, and that this industry has a lot of potential, and can attract money. This, I think, is the most troubling aspect.

While Tesla can go to the people, and champion the benefits of an electric car, or Uber can champion the benefit of revolutionizing transportation, legal tech will have a harder fight. If these are products just for lawyers, there will hardly be a groundswell of support to take on the regulatory barriers. Lawyers will be fine to limit the use of this technology to licensed attorneys. But this defeats the entire purpose of the disruption.

To the extent that non-lawyers want to use these tools, but can’t due to UPL laws,  they will likely be the very people too poor to hire lawyers in the first place–the least likely movement to oppose a regulatory barrier. The entrenched bar will have all the power.

What makes this most difficult–and is a point I didn’t fully pursue with my friend–is how would they challenge it. Courts are unbelievably deferential to defining UPL. You think the Taxi and Limo Commission has some clout, wait till you go up against the state bar! Unless there is some kind of due process or First Amendment challenge here (something I am writing about elsewhere), these challenges will continue to fail.

I will pursue this topic more in my article, Robot, Esq, which I will be presenting in several spots this summer, including at Law & Society, and perhaps at ReInvent Law 2013 (voting is now open).

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Feb 7, 2013

May The LegalForce Be With You

Accessing legal services is often a difficult, expensive, and time-consuming endeavor for most people. Raj Abhyanker is looking to change that.

LegalForce BookFlip is a brick-and-mortar legal services store in the the heart of downtown Palo Alto. In addition to selling legal self-help books and other tech products, like tablets, LegalForce allows people to schedule to consult attorneys. It is very similar to scheduling an appointment with a Genius at an Apple Store. A 15-minute consultation is a flat-fee of $45, and you can meet in person, on the phone, or over Skype. LegalForce conducts a conflicts check before consulting with before providing services.

The store is centrally located in the heart of Silicon Valley. I can envision Stanford students and graduates, and other Techies, who need legal advice on patents, trademarks, or start-up issues, who cannot afford a retainer at a big firm, trying this service.

This provides an easy way to get simple questions answered. If the questions are more complicated, I’m sure Raj’s firm will be ideally suited to continue the representation. Unlike LegalZoom or RocketLawyer, which are impersonal, and cannot provide actual legal services, Raj’s shop offers people direct access to licensed attorneys.

I could not attend the big grand opening last night (coverage in TechCruncheLawyeringBlog, and MyShingle) though Raj gave me a tour of the store a few months ago before it opened, and it was very impressive endeavor.

I look forward to seeing how this business model develops.

Update: Here is a video of Raj’s talk.

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Sep 13, 2012

Consumer Reports Finds That Do-It-Yourself Legal Service Sites Are Not A Match For Hiring A Real Lawyer

Consumer Reports purchased four documents–a will, a car bill of sale for a seller, a home lease, and a promissory note–from LegalZoom, Nolo, and Rocket Lawyer. A panel of expert law profs reviewed the documents in a blind test.

The verdict?

 Using any of the three services is generally better than drafting the documents yourself without legal training or not having them at all. But unless your needs are simple—say, you want to leave your entire estate to your spouse—none of the will-writing products is likely to entirely meet your needs. And in some cases, the other documents aren’t specific enough or contain language that could lead to “an unintended result,” in Silber’s words.

At first I thought that the experts did a blind test to compare the documents prepared by the online sites to documents prepared by attorneys. But they didn’t. They simply analyzed the forms based on their own knowledge of what forms should contain.

I wonder what would happen if they added to the blind analysis forms created by attorneys who bill somewhere on the gradient from $50 to $75 to $100 to $200 to $300 an hour. That would make for a more valid comparison. Isn’t that what consumer reports aimed to show? How a will created by an internet site compares to a will created by a real lawyer? If so, that should’ve been the comparison.

H/T LawSitesBlog

Update: Also, why did Consumer Reports ask law professors and not attorneys practicing in the fields to evaluate the documents. On the one hand (not to delve too much into the academic/practice debate), practicing attorneys who write these documents all the time would probably be more in tune with what clients want and what courts look for, as opposed to professors, who may be aware of more broader trends in how courts look at these matters. But, on the other hands, I am fairly certain that practicing lawyers–who view online sites as direct competition–would not look favorably on any online form, even if they blindly review forms from three online companies (they would know none were drafted by lawyers). That is, unless, you threw into the mix documents also drafted by lawyers who charge different rates, and all of those documents were judged blindly. That would be better than taking the Pepsi Challenge!

Now, I suppose, the ultimate test would be to see how courts construe these documents. I don’t think there is any conceivable way to assess this ex ante, or even ex poste. I guess you could do a survey of people who engaged in litigation based on their documents, and ask where the docs came from, but such a test would be fraught with errors.

In any event, I don’t think this consumer reports piece proves nearly as much as it conveys.

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Sep 8, 2012

Oldfather, Bockhorst, and Dimmer on Automated Content Analysis of Judicial Opinions

For some time, I have been researching and developing what I call “Assisted Decision Making” (see this presentation I gave at LawTechCamp London, and this article I authored about the future of FantasySCOTUS). Assisted Decision Making is a system in which technology can understand how courts resolve cases, and offer advice to potential litigants.

I am very pleased to see that Chad Oldfather, along with Joseph Bockhorst and Brian Dimmer, have authored an article in the Florida Law Review that explores this area. Here is the abstract of Triangulating Judicial Responsiveness: Automated Content Analysis, Judicial Opinions, and the Methodology of Legal Scholarship:

The increasing availability of digital versions of court documents, coupled with increases in the power and sophistication of computational methods of textual analysis, promises to enable both the creation of new avenues of scholarly inquiry and the refinement of old ones. This Article advances that project in three respects. First, it examines the potential for automated content analysis to mitigate one of the methodological problems that afflicts both content analysis and traditional legal scholarship — their acceptance on faith of the proposition that judicial opinions accurately report information about the cases they resolve and courts‘ decisional processes. Because automated methods can quickly process large amounts of text, they allow for assessment of the correspondence between opinions and other documents in the case, thereby providing a window into how closely opinions track the information provided by the litigants. Second, it explores one such novel measure — the responsiveness of opinions to briefs — in terms of its connection to both adjudicative theory and existing scholarship on the behavior of courts and judges. Finally, it reports our efforts to test the viability of automated methods for assessing responsiveness on a sample of briefs and opinions from the United States Court of Appeals for the First Circuit. Though we are focused primarily on validating our methodology, rather than on the results it generates, our initial investigation confirms that even basic approaches to automated content analysis provide useful information about responsiveness, and generates intriguing results that suggest avenues for further study.

Much of the article focuses on judicial responsiveness–that is, how do courts react to things that litigants do.

Using a set of briefs and opinions from the First Circuit, we have investigated two automated measures of judicial responsiveness both of which avoid the practical difficulties associated with manually assessing responsiveness, both of which employ a notion of the similarity between briefs and opinions. The first involves assessing document similarity through analysis of textual content of briefs and opinions. The second utilizes a similar methodology applied to citations to authority; that is, we assessed the extent to which opinions cite to the same legal authorities as relied upon by the parties in their briefs. In order to test the validity of these measures, we also undertook the sort of full-scale assessment of a set of cases outlined in the preceding paragraph, reviewing the briefs and opinions in depth and coding them for responsiveness.

More importantly, the article assesses how this information can benefit litigants.

Measures of judicial responsiveness are potentially valuable in at least four broad respects regardless of one‘s preference for judicial passivity . . . .  Third, this line of research might yield payoffs to advocates. To the extent that it becomes possible to know specifics about what triggers greater responsiveness— such as, for example, whether the filing of a reply brief has an effect— lawyers will be able to adjust their efforts accordingly.16  . . . .

Finally, this line of research may yield insights that are useful to practicing lawyers, and to those who teach advocacy. One can imagine, for example, large-scale analysis of the relationships among briefs and opinions generating information about the relative utility of briefing practices and approaches. It may tell us something about whether reply briefs matter, or whether response briefs should place relatively greater emphasis on engaging with the opponent‘s arguments or developing their own. It could also facilitate quantitative assessment of lawyering skills, such as enabling assessment of the relative quality of public defenders and private counsel in criminal appeals, or comparisons of specialists and non-specialists.

Also, the article reaches a conclusion that I think will rock most of empirical legal studies–that computers coding and predicting cases is enormously more efficient and more accurate than humans doing so.

Our final aim, then, is to explore whether computational methods can overcome these barriers. Enlisting computers rather than humans to ―read‖ and code opinions and other documents will enable researchers to analyze large amounts of information in short periods of time, and to do so with no need to worry about consistency from one reader to the next.

You should not fear your legal robotic overlords.

The article describes the methodologies here:

We investigated two types of automated approaches for quantification of responsiveness. These methods differ in the types of evidence considered. One approach uses the textual content of a case‘s opinion and briefs. This method estimates responsiveness by the cosine similarity between opinion and brief documents. This widely used document-similarity measure has been successfully applied to document classification, information retrieval, and other natural language processing tasks.180 The second approach is based on citation patterns in the opinion and briefs. Both methods involve measuring various aspects of the overlap among the documents.

H/T Legal Informatics Blog

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Jun 23, 2012

FastCase Advance Sheet eBooks

Some more disruption from Ed Walters and FastCase. More from LawSiteBlog.

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Jun 20, 2012

In Washington, “licensed legal technicians to help civil litigants navigate the court system.”

The rule takes effect Sept. 1, according to a Washington courts press release. The rule allows persons who are trained and authorized by a new Limited License Legal Technician Board to help civil litigants:

• Fill out legal forms.

• Inform clients of procedures and timelines.

• Review and explain pleadings.

• Identify additional documents that might be needed in court.

The rule was recommended by the Practice of Law Board, created by the supreme court in part to recommend ways in which nonlawyers can improve access to law-related services.

The Washington Supreme Court order (PDF) approving the rule notes a “wide and ever-growing gap” in legal services for persons with lower incomes.

Seems like a win for access to justice.
But, not everyone was happy:
The court acknowledged concerns that the plan poses a threat to the practicing family law bar. But “protecting the monopoly status of attorneys in any practice area is not a legitimate objective,” the court said. The order also points out that the technicians won’t be allowed to negotiate with opposing parties and says the new rule “is unlikely to have any appreciable impact on attorney practice.”

The new rule is narrowly tailored, incorporates ethics requirements and includes “appropriate training, financial responsibility, regulatory oversight and accountability systems,” the court said.

Three justices dissented. “During my years on the Washington Supreme court, I have not once authored a dissent to an administrative order of this court,” Justice Susan Owens wrote. “I depart from that custom today because I have very strong feelings that our court’s decision to adopt the new [rule] is ill-considered, incorrect, and most of all extremely unfair to the members of the Washington State Bar Association.” Owens expressed concern that lawyers will be forced to underwrite the costs of the new licensing program.

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Jun 14, 2012

The New Normal “Mishpoche”

A Who’s Who of Big Data and Big Law.

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May 17, 2012

Who will technology replace in the legal profession?

I don’t think the rise of virtual practice will replace the paralegals and trained support staff of a firm. I hate to say it, but I believe it will replace the entry level associate positions instead – unless those new lawyers have acquired some form of practical training in the use of technology and are comfortable working alongside the support staff in the maintenance of the systems and in the delivery of online legal services. (I won’t reiterate the four models for legal businesses that Richard Susskind lays out in End of Lawyers?, but he goes into much greater detail of the restructuring of the firm and it’s worth a re-read.)

Intelligent document automation and assembly programs provide the experienced lawyer with what he or she needs without having to ask a junior associate to create a new draft of a legal pleading. Intelligent systems can suggest provisions, cases and statutes that the firm has used in similar cases. The wheel does not have to be reinvented each time. The experienced lawyers can focus on the more recent case law, analysis and new arguments. Paralegals may be relied upon to provide them with updated case law and support as needed. Maybe a firm hires a couple new lawyers out of clerkship who come from top-tier law schools, but the number of hires will stay limited.

Interesting take from Stephanie Kimbro.

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May 12, 2012 files for $120 Million IPO, and Potential Risks from Unauthorized Practice of Law Challenges

TechCrunch has the story. What is interesting is their S-1 form, and how they address the specter of lawsuits for unauthorized practice of law:

Our business and services subject us to complex and evolving U.S. and foreign laws and regulations regarding the unauthorized practice of law, or UPL, legal document processing and preparation, legal plans, privacy and other matters. These laws and regulations may result in claims, changes to or discontinuance of some of our services, potential liabilities or additional costs that could have a material adverse effect on our business, results of operations, financial condition and future prospects.

Our business involves providing services that meet the legal needs of our customers and, as a result, is subject to a variety of complex and evolving U.S. and foreign laws and regulations, including the following:

•Our business model includes the provision of services that represent an alternative to traditional legal services, which subjects us to allegations of UPL. UPL generally refers to an entity or person giving legal advice who is not licensed to practice law. However, laws and regulations defining UPL, and the governing bodies that enforce UPL rules, differ among the various jurisdictions in which we operate. We are unable to acquire a license to practice law in the United States, or employ licensed attorneys to provide legal advice to our customers, because we do not meet the regulatory requirement of being exclusively owned by licensed attorneys. We are also subject to laws and regulations that govern business transactions between attorneys and non-attorneys, including those related to the ethics of attorney fee-splitting and the corporate practice of law.

•Regulation of legal document processing and preparation services varies among the jurisdictions in which we conduct business.

•Regulation of our legal plans varies considerably among the insurance departments, bar associations and attorneys general of the particular states in which we offer, or plan to offer, our legal plans. In addition, some states may seek to regulate our legal plans as insurance or specialized legal service products.

In addition, any failure or perceived failure by us to comply with applicable laws and regulations may subject us to regulatory inquiries, claims, suits and prosecutions. We have incurred in the past, and expect to incur in the future, costs associated with responding to, defending and settling such proceedings, particularly those related to UPL, and the provision of our services more generally. We can give no assurance that we will prevail in such regulatory inquiries, claims, suits and prosecutions on commercially reasonable terms or at all. Responding to, defending and/or settling regulatory inquiries, claims, suits and prosecutions may be time-consuming and divert management and financial resources or have other adverse effects on our business. A negative outcome in any of these proceedings may result in changes to or discontinuance of some of our services, potential liabilities or additional costs that could have a material adverse effect on our business, results of operations, financial condition and future prospects.

We are involved in several litigation matters that are expensive and time consuming, and, if resolved adversely, could harm our business, brand and reputation, financial condition or results of operations.

We are involved in several lawsuits brought by customers alleging that we engage in the unauthorized practice of law or otherwise violate the law. The plaintiffs in these actions generally seek disgorgement, monetary damages, penalties, and/or injunctive relief. For example, class action lawsuits were filed against us in California state court in September 2009 and March 2010 alleging, primarily, that we failed to comply with the California Legal Document Assistance Act, engaged in unfair business practices and made misrepresentations in our business operations. Between the cases, plaintiffs sought to have all contracts between LegalZoom and its customers for the prior four years declared void, a return of all revenues generated from these customers, punitive damages, penalties and injunctive relief. A statewide class action lawsuit was filed against us in Missouri state court in December 2009, alleging that we were engaged in the unauthorized practice of law and had violated the Missouri Merchandising Practices Act and seeking damages of five years of fees charged to Missouri customers with the fees from the two years immediately preceding the complaint trebled and an injunction enjoining us from continued operation in Missouri. While we have denied and continue to deny all of the allegations and claims asserted in these lawsuits, without admitting liability, and to avoid additional legal costs to defend these matters, we signed settlement agreements to resolve the claims in the California cases in June 2011 and the Missouri case in August 2011. The maximum possible aggregate loss for these matters is approximately $16 million. The ultimate cost of these two pending settlements are dependent on a number of factors, including the resolution of any appeals of the approved settlements, and actual claims made by, and the resulting payments to, the class members. We have reasonably estimated the collective range of aggregate probable losses for these matters to be between approximately $5.4 million and $7 million and, in accordance with GAAP, have accrued $5.4 million, the low end of the range. The ultimate resolution of these matters could result in an estimated loss of up to $1.6 million in excess of the amounts accrued based on the range of reasonably estimated probable losses. The range of loss has been estimated based on an analysis of numerous factors, including possible claim amounts within the class, whether the claim amounts are payable in-kind or in cash, the date when the services subject to the class were sold, comparable, class action settlement and redemption rate statistics and experience available from other companies for similar types of settlements, and the claims rates to date. The determination of the probability of loss and the range of loss requires significant judgment.

We anticipate that we will continue to be a target for such lawsuits in the future. Any litigation to which we are a party may result in an onerous or unfavorable judgment that may not be reversed upon appeal, or we may decide to settle lawsuits on unfavorable terms. In addition, defending these claims is costly and can impose a significant burden on management and employees, and we may receive unfavorable preliminary or interim rulings in the course of litigation. Any such negative outcome could result in payments of substantial monetary damages or fines, adverse effects on the market price of our common stock or changes to our products or business practices, and accordingly our business, brand and reputation, financial condition, or results of operations could be materially and adversely affected.

In light of regulations, their entire business may be shut down:

 Our business and the services we provide subject us to complex and evolving U.S. and foreign laws and regulations regarding UPL, legal document processing and preparation, legal plans, privacy and other matters. We do not purport to be a law firm and we do not engage in the practice of law, whether authorized or not. We provide self-help at our customers’ specific direction and general information on legal issues generally encountered. Licensed attorneys provide services to our customers through our legal plans, and we rely on third parties to provide certain of our other services.

Our business involves providing services that meet the legal needs of our customers and, as a result, is subject to a variety of complex and evolving U.S. and foreign laws and regulations, including the following:

•Our business model includes the provision of services that represent an alternative to traditional legal services, which subjects us to allegations of UPL. UPL generally refers to an entity or person giving legal advice who is not licensed to practice law. However, laws and regulations defining UPL, and the governing bodies that enforce UPL rules, differ among the various jurisdictions in which we operate. We are unable to acquire a license to practice law in the United States, or employ licensed attorneys to provide legal advice to our customers, because we do not meet the regulatory requirement of being exclusively owned by licensed attorneys. We are also subject to laws and regulations that govern business transactions between attorneys and non-attorneys, including those related to the ethics of attorney fee-splitting and the corporate practice of law.

•Regulation of legal document processing and preparation services varies among the jurisdictions in which we conduct business.

•Regulation of our legal plans varies considerably among the insurance departments, bar associations and attorneys general of the particular states in which we offer, or plan to offer, our legal plans. In addition, some states may seek to regulate our legal plans as insurance or specialized legal service products.

Additionally, we are required to comply with laws and regulations related to privacy and the storing, use, processing, disclosure and protection of personal information and other customer data.

Our business operations also subject us to laws and regulations relating to general business practices and the manner in which we offer our services to customers subjects us to various consumer laws and regulations, including false advertising and deceptive trade practices.

The scope of these laws and regulations are often vague and broad, and their applications and interpretations are often uncertain and conflicting. Compliance with these disparate laws and regulations requires us to structure our business and services differently in certain jurisdictions. Any failure or perceived failure to comply with applicable laws and regulations, or if our services are considered to constitute UPL, could cause us to modify or discontinue some of our services or incur significant expenses.

In addition, any failure or perceived failure by us to comply with applicable laws and regulations may subject us to regulatory inquiries, claims, suits and prosecutions. We have been subject to, and currently are subject to, litigation and regulatory inquiries relating to UPL. We expect to continue to be subject to such litigation and regulatory inquiries, as well as potential investigations from other regulatory agencies as our business expands into new jurisdictions and we introduce new services.

And a list of all litigation they are involved in concerning UPL:

On December 17, 2009, a statewide class action lawsuit was filed against us by Todd Janson in Missouri state court, alleging that we were engaged in the unauthorized practice of law and violated the Missouri Merchandising Practices Act. The complaint was amended on January 15, 2010 to add plaintiffs Gerald T. Ardrey, Chad M. Ferrell, and C & J Remodeling LLC. It sought damages of five years of fees charged to Missouri customers with the fees from the two years immediately preceding the complaint trebled and an injunction enjoining LegalZoom from continued operation in Missouri. We subsequently removed the case to federal court in Missouri. While we have denied and continue to deny all of the allegations and claims asserted in this lawsuit, without admitting liability, and to avoid additional legal costs to defend the matter, we signed a settlement agreement to resolve the lawsuit. A fairness hearing was held on April 13, 2012. The court issued a Final Approval Order and Dismissal with Prejudice on April 30, 2012. We have accrued an estimated settlement liability of $2.5 million for this lawsuit as further described in Note 6 to the consolidated financial statements included elsewhere in this prospectus.

On June 10, 2011, a purported quo warranto action was filed in Alabama state court against us by DeKalb County Bar Association. The complaint generally alleges that LegalZoom engages in the unauthorized practice of law and requests injunctive relief, not damages. We have denied and continue to deny all of the allegations and claims asserted in this lawsuit.

On October 27, 2011, a purported statewide class action was filed against us by Christopher Lowry in federal court in Ohio, alleging that we engage in the unauthorized practice of law and violated the Ohio Consumer Sales Practices Act. The complaint seeks disgorgement of revenues, among other remedies. We have denied and continue to deny all of the allegations and claims asserted in this lawsuit.

On January 25, 2012, a purported class action complaint was filed against us by Jonathan McIllwain in Arkansas state court, generally alleging that we engage in the unauthorized practice of law constituting violation of the Arkansas Deceptive Trade Practices Act and unjust enrichment. The complaint seeks a refund of all monies paid to us and punitive damages, among other remedies. We have denied and continue to deny all of the allegations and claims asserted in this lawsuit.

On February 17, 2012, a complaint was filed against us by T. Travis Medlock in South Carolina state court, generally alleging that we engage in the unauthorized practice of law. The complaint requests declaratory relief, injunctive relief and disgorgement of revenues, among other measures. We have denied and continue to deny all of the allegations and claims asserted in this lawsuit.

I’ll need to track down the Ohio, Arkansas, and South Carolina cases. I’ve followed the California and Missouri cases.

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May 8, 2012

The End of “Bottom-Rung Lawyers”

New York Mag opines on Magistrate Judge Peck’s decision to require predictive coding, and how this may spell the end of drudgery of document review:

The Southern District of New York recently became the nation’s first federal court to explicitly approve the use of predictive coding, a computer-assisted document review that turns much of the legal grunt work currently done by underemployed attorneys over to the machines. Last month, U.S. Magistrate Judge Andrew J. Peck endorsed a plan by the parties in Da Silva Moore v. Publicis Groupe — a sex discrimination case filed against the global communications agency by five former employees — to use predictive coding to review more than 3 million electronic documents in order to determine whether they should be produced in discovery, the process through which parties exchange relevant information before trial.

The task of combing through mountains of emails, spreadsheets, memos and other records in the discovery process currently falls on a legion of “contract attorneys” who jump from one project to another, employed by companies like Epiq Systems. Many are recent grads who are unable to find full-time employment, or lawyers laid off during the recent recession.

Scan. Point. Click. Repeat. That’s the job. Contract attorneys are paid by the hour to sit in front of a computer and review a mind-numbing sequence of uploaded documents. There are cramped, sunless rooms in law firms throughout the city, with rows of computers piled one on top of the other, and constant uncertainty as to how long each particular stretch of employment will last. . . .

Using the technology, a senior attorney familiar with the intricacies of a specific case reviews and codes a “seed set” of documents. An algorithm then identifies properties among the manually reviewed documents to code and sort everything else. Each document is assigned a score to indicate the likelihood it’s correctly coded.

Proponents say predictive coding is not only more accurate than using human reviewers, but also more efficient. Yet many, including Jason R. Baron who previously co-chaired an influential think-tank called the Sedona Conference Working Group on Electronic Document Retention and Production, argue that human review is also necessary, at least in the short term. “I’m modestly hopeful that contract attorneys will still have a role for some time to come,” Baron says. “My glass is half full.”

There’s no escaping the fact that as predictive coding is used more widely, the technology will reduce the overall number of documents to be reviewed and the attorneys needed to review them. Judge Peck noted the technology will require human review of less than 2 percent of all documents in an average case. His stamp of approval means that the document reviewer ranks may be culled sooner rather than later.

Ken Anderson links to a comment by Mead about what types of lawyers will survive:

Software is getting smarter, and computers continue to grow more powerful. What we see now is only the beginning of a process by which the routine elements of legal work — and frankly speaking, that is where the bulk of the jobs have always been — can and will be automated. Not all young lawyers will be doomed. There will be some smart, entrepeneurial kids who figure out how all this computing power can allow a small, lightly capitalized firm to deliver high quality services at a breathtakingly low cost to selected clients. Those kids will do well.

Others will benefit from greater demand. Legal services are likely to get cheaper: there is a lawyer glut that is likely to grow, and the increasing capabilities of computers in the legal field mean that the amount of available legal brainpower will explode. Cheaper legal services mean that more people and firms will use the legal system and legal expertise in various ways: the lawyers and firms who figure out how to ride this wave will also do well.
Brilliant and creative lawyers will continue to do well. So will the marketers, the deal makers and the connectors. But law isn’t going to be the kind of safety play ticket to the upper middle class that it used to be.

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May 7, 2012

The Firm of Robot, Robot, & Hwang

Tim Hwang, who co-founded a mock law-firm, Robot, Robot, & Hwang, is interviewed about his goal of using technology to disrupt the legal profession.

One thing that got me intrigued about law was that industry-wide it has the same kind of structure as older industries that have been disrupted by technology: a small class of people that’s based on control of information, protected by regulations. Law hasn’t had its Napster moment yet, though everyone recognizes it’s an incredibly inefficient structure now and the legal profession is in incredible disarray. Part of it is because the industry hasn’t been innovative–not just in training lawyers but in practice. Lawyers tend to be sort of tech-adverse–I hear lots of stories like this one about the partner at a firm who gets his emails printed, writes responses in longhand, and has his secretary type the replies.

There’s already been a lot happening with consumer DIY services and e-discovery. In litigation, e-discovery, the practice of deploying smart search technologies to trawl through mountains of evidence, has been a really powerful technology. It automates a lot of what lawyers currently do, but it still leaves the overall structure intact in a way that’s not very progressive.

The idea of Robot Robot & Hwang is to experiment with computers and legal code to disrupt the norms of the industry and give way to something better and more innovative. I have in mind a different approach that brings the kind of big-data analysis we see being applied elsewhere to the law. An example of this is a company called Lex Machina, which does data mining on judges’ records and makes quantitative predictions about what they will do in the future. That sort of stuff is really powerful. It takes the responsibilities and talents attributed to lawyers and gives them to someone else as well. Also, the way forms are done now tend to be pretty flat–with online services you’re mostly just paying for PDF documents, but if it’s, say, a municipal complaint, you could add a tool to file it directly, in a really a simple way.

And on opposition from entrenched interests:

When I first launched Robot Robot & Hwang, it got picked up by the American Bar Association blog, and it’s been a bit polarizing. I meet a number of attorneys who cling to the idea that being a human in the system I provide some undefinable, abstract value. Some of these traditional attorneys have reacted with skepticism or outright hatred. Law students have also been less receptive, because the idea of Robot Robot & Hwang is adverse to their interests. They need to do mundane, simple tasks early in their careers, and this would take away that. It’s an empirical question–you put the technology in place and see who wins. Some things are better done by machines, some by humans.

The people who are pro come from lots of places–the community of entrepreneurs congealing around this stuff, for example. And the Stanford Center for Computers and the Law has been very supportive of what I’m doing. So are law schools who are second- or third-tier in the U.S. News & Word Report “caste system”–they’re trying to figure out how stay ahead of what’s going on.

H/T Legal Informatics Blog

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May 4, 2012

A Professor On The Con-Law List Serves Opines On The “Wikipedia Version” Of Law Students

I’ve noticed in the past two years that the students seem less able to dig out details from cases and the problem is exacerbated in a code course like copyright.  There have always been some who could not do it and it is one of the things we teach them to do, but there seems to be more difficulty with the last two classes on this attention to detail and close reading.  It is as though sound-bite law or at best the wikipedia version (summary of key points, no attention to nuance or fine (and sometimes even coarse) distinctions) satisfies them and they think that is good enough. Even those who start to “get it” have more trouble than in past years.

The part of class that I always disliked the most was going through the monotonous recitation of facts. The worst was when a professor would call on student after student after student to glean one small fact from the case that no one noticed, using so much class time, and losing everyone’s attention. And finally, when that fact was discussed (either by the professor, or one student who re-read the case and found it during the cold-calling), the payoff was slight. I tend to prefer discussing the facts myself, and then analyzing or applying the materials with the students.

I recognize remembering facts is important, but I don’t know if it is as nearly as important as it once was. For example, if I can’t remember the facts about that case with the wheat and the commerce clause, with about 2 seconds of searching I can find the facts. You could not do that in the past. I would rather focus on stuff you can’t find with 2 seconds of searching.

I am positive that I am in the vast minority of profs here.

Update: Another prof writes in:

Superficiality does not work for law, generally, including the topics discussed on this list, yet current cultural practices prize the 140-character tweet, the sound bite, the one-sentence retort, and other forms of shallow thinking. Today’s law students have been immersed in that sort of environment for enough time that their brains are far more comfortable dealing with generalities than with the sort of precise analytical digging that law faculty are trying to teach them to do . . . A generation of which rigorousness has not been demanded is coming of age. It’s not pretty. And it causes me (and, I suppose, others) to worry about the future of law.

I suppose this all assumes that the way law has been practiced for decades is the way it should be practiced in the future. I suspect that is not the case.

I suspect this thread will be lively.

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May 4, 2012 and Partner To Find Best Attorney

The story is here.

The lawyers comparison engine will allow users to:

  • Find attorneys in their area with a specific specialization
  • Narrow options with smart filters
  • Compare options side-by-side
  • View key stats (like average years of experience and average price per specialty) within a surrounding context so users can see if they’re getting a fair deal
  • Find answers to frequently asked questions
  • Contact lawyers with one click

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May 3, 2012

Will Predictive Coding Replace Lawyers?

Erika Birg says no:

Long ago we ceased using entry-level associates to man large-scale document review. Since at least the late 1990s and through today, we tend to employ a three-tiered approach to document review: (1) electronic collection culled by keyword; (2) first-level review by vendors or in-house contract attorneys with coding; and (3) final review by firm counsel for production.

There certainly are variations on this basic process, but it is one that works well to reduce a potentially large volume of documents to a manageable collection from which key documents can be highlighted and tagged, and responsive documents produced.

Where predictive coding is helpful is to replace keyword searching and to reduce the time, but not eliminate the time, spent on steps two and three. This is particularly important in cases where the collection of documents is in the millions — well beyond the size of what any normal conference room could hold in bankers’ boxes. Indeed, benefits of predictive coding may be felt most where relevant materials may be hard to identify by conventional means or may represent a very small portion of the culled set. Predictive coding is also likely to be used in combination with other tools to derive the most responsive set of documents.

Even with that benefit, the algorithms cannot ultimately replace the human element, particularly the lawyers’ responsibility to know the key facts and documents in play and to ensure a full and complete production. Ultimately, lawyers will not be able to abdicate their role to machines. Associates play a key role in ensuring that the team (in large cases) or the lead attorney (in smaller cases) has all the facts at their disposal.

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