November 27th, 2013

Insight Labs has an important interview with Dan Katz, the co-founder of the ReInvent Law Lab at Michigan State. If you are at all interested in the future of the legal profession, take the time to read Dan’s take. There is a lot of important stuff here.

Here are a few highlights.

What will the legal profession look like in a decade?

What would be the most interesting kind of firm to catch a glimpse of ten years from now?

Daniel Katz: It would be the next level down, the niche-building firms. It would be the AmLaw 200 below the top 50. A great deal of legal work will be subject to automation — that’s where that’s going to happen, that’s where the impact is going to be felt. They may be able to capture some of the top 50′s work because automation will enable them to compete on price. So I think it would be interesting to look at a firm of that size, because it could go really well but also go really badly.

There’s a generational factor too. A lot of those firms are run by people who by 2023 will not even be in the building.  They will be on a beach somewhere – perhaps in Florida. That raises questions about for whom these organizations are actually being managed. Is it being managed for the 44-year-old who is about to have a first chance to be an equity partner? Or is it being managed for the 57-year-old who in ten years is going to be getting a gold watch? I would say that almost exclusively, it’s being managed for the 57-year-old. The interesting question is what the 44-year-old is going to do about that. …

No one is good at admitting that they don’t know about something. It’s easier to say, “That stuff doesn’t matter. We’re doing okay right now.”

On why law firms should have R&D departments:

That’s right. You’re basically asking, “Why don’t law firms have R&D departments?” Some of them are getting those, but that’s a very recent development. And the reason they’re doing it is that they found some way to monetize it — they’ve figured out some innovation and they’ve found a way to sell that innovation, either through marketing or some sort of third-party arrangement. That’s probably the most interesting development in the market right now for me.

If you’re a partnership, you can’t really raise capital, not in the United States. Lawyers can’t share profits with non-lawyers. So if you have a good idea, you can’t really monetize it in the way you would in other industries. Because you’re stuck with your partners and your client list, your idea can never really achieve scale.

So this sort of thing is either coming out of firms that by some miracle have figured it out or who are startups themselves. They’re the ones who are saying, yes, we have a partnership and the partnership will deliver the actual legal services, but we also have a company that is owned by the partners that can raise capital and sell technology. So that company isn’t splitting the profits gained by legal services. … There are companies that are doing things like developing technological platforms first, raising money for that, and then only afterwards forming the partnership that provides the legal services.

On automation:

They could do it right now! There’s no legal impediment stopping them. But they don’t have the right attitude. They think, “I’m here to be a lawyer, not to do this other stuff.” They often don’t have an engineering bone in their bodies. When they have the same problem fifty times, they don’t say, “How can we solve this? How can we invest in a process so we only have to solve it one time?” It’s not how they operate.

We try to inculcate students with some of that perspective, with the idea that the repetitious use of time on something you could automate is silly. But it’s not so silly when you make your money off of it, when you have to cannibalize it today to prepare for tomorrow.

On the MIT school of law:

 There’s a lot of reasons for that. We like to ask if there is going to be math on the exam. There is the training and the socialization. There is a selection effect, a treatment effect, and ongoing treatment effect that encourages a humanistic take on everything. It’s this view that what we do is special, that it can’t be understood by metrics — eventually we start to believe those things. Start with the selection — the type of people who could be medical students don’t go to law school, as a general matter. Then there’s the training, which feels more like Swarthmore than MIT all the way through.

Having a lot of data would help so much in the law — you could train people to see the arc of experience through data, so they don’t have to go through it thousands of times themselves in order to understand it.

I’m currently writing a paper that imagines the “MIT School of Law” as a thought-experiment. Because people are always talking about how they’re going to reorganize law schools entirely around practical training. I think this is a bad idea and will not be successful. They need to realize that there’s already a better model out there — it’s called polytechnic. No one is going to accuse MIT of not being a world-class school. No one is going to accuse them of being insufficiently theoretical. They’ve just built a model where you spend your time asking, “What theories are relevant for what I’m trying to do in my profession?”  Less Foucault and more Claude Shannon – that’s for damn sure. …

I’m not against the humanities at all, especially for undergrads — I just want to make that clear. But we’re talking about professional education.

And on doing stuff:

But in 2014, we’re going to be teaching a class on legal analytics where students are actually going to be asked to predict things using machine learning. Because I’m less interested in talking and more interesting in doing stuff.

Bill Henderson comments on Dan’s amazing drive for change.

Fortunately, for Dan Katz, all of these factors appear to be in alignment. Katz is acutely aware of his timing and the myriad of factors that enable innovation to take hold.  He is also young (35 years old) and has the courage to place very large bets — the largest bet being that he is not waiting to get tenure before starting his life’s work.  He is doing it now in his third year of teaching.

But to mind, there is some additional secret sauce.  What makes Katz so disruptive is his 100% personal commitment to the growth and potential of his students. He is awaking the sleeping giant — hope and a sense of purpose for young people.  Specificially law students.  If you are in his ReInvent Law Labratory, you see a different legal landscape with a whole lot more options. But to tap into that hope, Dan makes you do the work.  You have to challenge yourself.  And you have to shed the bullshit phobia over basic math. He is building a community of interest that has the potential to morph into a movement driven by young lawyers and law graduates.

I couldn’t agree more. I’ve known Dan now for about two years, and there aren’t many other people so tirelessly committed to reforming and pushing the boundaries of this profession. I’ve been honored to speak at several of the conferences that he and Renee Knakee have put on, and am working on some cool analytics stuff with Dan now. Further, to Bill’s point about not waiting for tenure before doing cool stuff, I say amen to that. Being in this position in the academy is a powerful one. We have the ability to effect change, and make a difference.

Personally, I take a similar approach. More than one professor told me I was insane for writing a book during my first year of teaching. Wait for tenure they said. More than a dozen professors told me not to write about constitutional law. Take up tax, they said. I’m happy every day because of the decisions I made, because I know what I’m doing makes a difference. I can say the same for Dan.