The American Lawyer has a lengthy feature of legal disruption, leading off with a cool sketch of IBM’s Watson, trained not for Jeopardy! but Debate. Yes, legal argumentation.
In June, Robert Weber, the senior vice president and general counsel of International Business Machines Corp., traveled to San Jose to watch a demonstration of the Watson Debater. In contrast to the computer that bested its human competition on “Jeopardy” three years ago, this machine doesn’t just come up with likely answers to questions. It synthesizes information to develop arguments on different sides of an issue. Weber watched Watson debate whether violent video games predispose young males to be more aggressive.
In an interview soon after that trip, Weber extolled Watson’s potential. “It’s developing the ability to put forth arguments in a logical way,” he says. “It will have lots of implications in the law.”
Weber, a former litigation partner at Jones Day, says Watson won’t replace the judgment of a senior law firm partner, but it could eventually handle tasks of senior associates. He sees it researching and writing a memo summarizing the law and suggesting the most persuasive arguments and precedents. Or it might quickly review stacks of contracts, looking for differences in indemnification clauses. “It would have encyclopedic knowledge and an inexhaustible work ethic,” says Weber.
General counsel Weber says IBM won’t be rolling out legal applications in the next quarter, but he believes they aren’t far off. To encourage innovation, IBM has opened up the technology to private equity firms and small entrepreneurs. Ferrauiola says Watson won’t replace lawyers, at least not most of them. “Folks who don’t understand the technology could be afraid of it,” he says. “This is not displacing, it’s enhancing.”
In talking about Watson, Weber at times sounds like a proud parent bragging about his gifted child’s potential. “I think Watson could pass a multistate bar exam without a second thought,” he says.
The article addresses whether whether technology can in fact disrupt law.
Perhaps Watson and LegalZoom will one day serve as case studies for how Big Law was upended by disruptive innovation, a popular theory developed by Harvard Business School professor and author Clayton Christensen. Or, perhaps large law firms will continue to do fine by following the model that’s served them well for decades. Prognosticators have long predicted earthshaking change for big law firms, and so far they’ve been wrong.
But not all the speakers jumped on the disruption bandwagon. Sarah Reed, the general counsel of the venture capital firm Charles River Ventures, bemoaned that the legal field is “uniquely impervious to change.” She also pointed out that the only law-related business that Christensen ever used as a disruption case study no longer exists. That company, eLawForum, helped clients arrange fixed-fee deals with outside counsel.
There is a lengthy discussion of LegalZoom, with the important caveat that its operation is limited by UPL laws.
One obvious impediment to LegalZoom’s expansion are restrictions by state courts and state bar associations prohibiting the unauthorized practice of law. While they vary by state, all these rules prohibit nonlawyers from sharing fees with lawyers, a rule that has stopped law firms and other legal service groups from accessing investor capital. All but a few states prohibit nonlawyers from doing even the most routine legal tasks.
Some states, in fact, are fortifying the barriers. The State Bar of Texas announced in May that a nonlawyer can’t even be the chief information officer of a law firm, or hold any other title that contains that word “officer.” In July, the North Carolina State Bar opposed a bill that would allow nonlawyers to offer the public self-help legal materials, and the bill was pulled from a vote by the state senate.
Suh, who has been CEO of LegalZoom since 2007, is not a lawyer. He’s a graduate of Harvard Business School who previously ran other Internet businesses. His company has battled lawsuits in four states claiming it’s engaged in the unauthorized practice of law. Two of the cases have been resolved largely in LegalZoom’s favor, while two are pending.
The American Bar Association has resisted recommending that states liberalize these rules. In 2012, the ABA’s Ethics 20/20 Commission concluded there was no compelling need to let nonlawyers play a bigger role in funding and providing legal services, as has happened in the United Kingdom and Australia. Gillian Hadfield, a professor of law and economics at the University of Southern California School of Law, who sits on LegalZoom’s Legal Advisory Council, has criticized the profession for protectionist behavior that stifles innovation. She faults the commission for neglecting the needs of ordinary people. “When the 20/20 Commission concluded there was no compelling need for reform, it didn’t research the public interest,” she says. “The only research it did was to survey lawyers and ask them if they wanted rule changes. That’s not defensible.”
Suh believes the U.S. will inevitably adopt reforms like those in the U.K.’s Legal Services Act, which was passed in 2007 and has opened up that legal market to the capital and talent of nonlawyers. But he realizes it may not be soon. “I’m optimistic, but not holding my breath,” he says.