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I previously balked about the staggering cost of $100,000 per law review article:

$100k? $25k? Seriously. I wrote 9 law review articles for free. No one paid me a penny. In fact, I did them while working at a full-time job that didn’t pay me to write. I never really understood why professors needed funding for articles. Unless you are doing research that requires some rare archives, or hiring research teams, shouldn’t your salary cover your writing?

Professor Ribstein, a prolific writer of deeply insightful scholarship has is take at TOTM:

Well, I guess I should show these stats to my dean, since they make me look cheap.  I’ve written over 160 articles in my 36 years, more than four a year, with increased production in later years roughly correlated with my pay.

As a producer of law review articles, of course I have an incentive to defend them. Legal academics have been the main source of legal ideas in the U.S.  Walter thinks, with some basis, that many of these have had pernicious effects.  This, of course, is in tension with the idea that legal academics labor in obscurity.  In any event, even if many articles fall on deaf ears, this is no different from the many books not read and the many inventions never manufactured.  Given the difficulty of predicting which ideas will take hold, a robust market for ideas must produce losers as well as winners.

Ribstein further opines on his views about the future of the legal profession, and the academy in general.

My article Practicing Theory sketches the market for legal education that might emerge once these constraints are lifted.  I don’t discuss law reviews specifically, but in general I can see some student-edited law reviews in top schools fitting with my overall vision of law schools as legal information producers.

I doubt, however, that the current system of hundreds of student-edited law review could survive legal education’s loss of the monopoly power conferred by licensing and accreditation.  Special purpose training programs would emerge that could not begin to support professors who spend most of their time researching and students immersed in cite-checking rituals.

Research would continue in the full-fledged law schools that remain.  However, the outlets for research would be peer-reviewed web-based journals as well as the legal information products, including privately produced laws, that Bruce Kobayashi and I discuss in our Law’s Information Revolution.

In short, the problem isn’t student edited law reviews as such, but regulation that sustains this system without respect to its value relative to alternative mechanisms for creating and disseminating legal ideas.

Amen. I couldn’t agree more.

Larry Ribstein (whom I’ve linked to before on legal education) has an interesting post about the future of the billable hour, and how the legal profession will evolve.

First, he links to an ATL post on the death of the billable hour:

Jay Shepherd writing on ATL thinks the billable hour is “a dying business model. . . because it focuses on selling the wrong thing. * * * [N]o client in the history of the planet has ever wanted to buy time. * * * It’s what you can do for them during that time.”

Shepherd says lawyers sell knowledge of the law and judgment.  The latter, he says, “will keep us from being replaced by Watson the computer.”  The price of that knowledge depends on its value in solving the client’s problem. He concludes that if small firms can figure out how to value their knowledge they can “get a jump on their BigLaw counterparts,” and “we will be practicing law differently in the future.”

Shepherd has a good point, but Ribstein does not think he is looking far enough into the future.

I think Shepherd isn’t looking far enough into his looking glass.  He’s seeing a future for law practice that continues the centuries-old model based exclusively on services that are customized to individual clients.  My own view is that much of law’s future isn’t in how to price one-to-one customized legal services, but in the development of legal information products.  Computers like Watson will help create this industry, beginning by displacing a lot of what lawyers do now — whether it’s sold by the hour, foot or pound.

I have made a similar point before. More and more legal jobs can be replaced by computers (reviewing a document  and researching really isn’t that hard). That is why I have proposed such a bold vision for the future of legal education. We need to change how lawyers think and learn in order to allow them to compete in the digital economy.

In Ribstein’s draft article, co-authored with Bruce Kobayashi, titled Law’s Information Revolution, he writes about the evolution of the legal information industry.

These developments set the stage for the growth of new markets for law-related information and advice. One-to-one legal advice could yield to a legal information industry in which legal information factories replace the sole proprietors and worker cooperatives that traditionally have delivered legal services.

…

There is room for more radical developments in using computers to create legal knowledge.  This could involve reengineering the underlying idea of what legal research entails.  Instead of the conventional method of relying on courts’ holdings categorized in treatises or “tagged” via West Key Numbers, lawyers might analyze facts in extensive databases of cases or court records available through PACER (Public Access to Court Electronic Records) to predict case results.  These predictions might be refined using theories based on economic analysis, psychology, sociology, decision theory and political science to determine relevant variables. [JB: Or FantasySCOTUS] Lawyers might collaborate with computer scientists to develop new computer prediction algorithms. [JB: Like FantasySCOTUS]This would be analogous to the techniques already used to predict consumers’ tastes in films and music.   Computers already can provide the correct Jeopardy question “Who is Eddie Albert Camus” for the answer “A ‘Green Acres’ star goes existential (& French) as the author of ‘The Fall.’” They ought to be able to answer a question like “can a lawyer copyright a complaint?”

I’ll have more on this soon. I am trying to put my epic blog post on the future of legal education (over 3,000) words into outline form. Hopefully I can get this into an article soon.

Interesting, and important piece from the Professor Ribstein, titled Practicing Theory: Legal Education for the 21st Century, on how law schools should evolve in the 21st century to meet the demands of the market. In short, law schools should encourage students to be “creators,” and not mere “mechanics.” Here is the abstract:

Law practice and legal education are facing fundamental changes. Many assume that these changes will force law schools to give up on theory and focus more on training students for the practice of law. However, this essay shows that the future may be more uncertain and complex. The only thing that is certain is that law schools may face, for the first time, the need to provide the type of education the market demands rather than serving lawyers’ and law professors’ preferences. Legal educators must respond to these demands by serving not just the existing U.S. market for legal services but also a global market for legal information. This may call for training in some, but not all, of the theories and disciplines that have been developing in law schools.

From the intro:

This essay shows that, contrary to the long-accepted wisdom, law schools do notface a choice between ―theory‖ and ―practice.‖ Rather, they face for the first time theneed to provide the type of education the market demands instead of serving lawyers’ andlaw professors’ preferences. Legal education must respond to these demands byproviding not just practice skills suited to the existing market for legal services, but alsothe knowledge and skills that enable law graduates to function in the new legalinformationmarket. Ironically, this calls for the application of many theories nowdeveloping in law schools. In other words, to some extent law schools and markets havebeen moving independently in the same direction. Market pressures may now lead to agreater convergence.

From the final section:

Lawyers and law professors have a shared visionof the future based on lawyers doing pretty much what they have done for over a centuryand mainly disagree over who must prepare law students for this work. The most radicalproposals include one law school’s reshaping its third-year curriculum to devote it to―moving students out of the classroom and into the real world of legal practice.‖55However, the developments discussed above may force more radical changes. Fewer ofthe traditional law jobs for which students used to be trained may be available while newopportunities open up for which law schools need to prepare their graduates. Lawgraduates may have to be trained to compete with other types of service and informationproviders rather than just with traditional practicing lawyers.

The key implication of these developments for legal education is that althoughlaw students formerly practiced law made primarily by a relatively narrow group ofpolicymakers, future lawyers may be more directly involved in creating laws and otherbasic legal materials. Law practice traditionally involves applying recognized principlesto the facts of particular cases in advising and litigating for clients. This workoccasionally requires practitioners to have a deep understanding of the policiesunderlying cases and statutes. However, most applications of readymade law are routine.In these cases, understanding particular facts and circumstances and crafting strategy andarguments matter more than fundamental policy analysis. In other words, practicinglawyers are usually more like mechanics than designers. . . . In contrast to lawyers’ traditional roles, legal experts competing in the new legalmarkets described in Part II may be more like designers creating legal materials thanmechanics using them.

This seems to fit neatly into my earlier post about the future battle royale between computers and lawyers. As I previously noted:

What isn’t written here is that the nature of legal jobs will change. No longer will attorneys make their way by doing menial doc review. Attorneys will have to think of how to create value, either through assembling good transactions or engaging in smart litigation. Technology will certainly make this easier, but even so, not all attorneys can do this. Even if the aggregate of legal jobs does not decrease, certain types of positions will no longer be relevant.

The future value of attorneys will be creating, not merely futzing with something someone else created. We need more “designers” and less “mechanics.” Document review and other rote tasks can easily be replaced by computers/outsourcing/non-attorney services like LegalZoom. Our comparative advantage is, to put it in Lockean terms, mixing labor to create value-innovating, creating, inspiring.  For that reason, I’m not really concerned that Google will create some supercomputer to write better articles than me. Ain’t gonna happen.

I think my insight applies equally to legal education, as it does to the needs of the legal workforce. As Ribstein argues, the market of the latter should dictate the approach taken by the former.

What does Ribstein recommend?

Well for one, in order to teach law, one would need a doctorate (SJD, or some equivalent):

A possible solution is to require a doctoral law degree to teach law, as is the casein countries outside the United States. The U.S. equivalent might be to adapt the SJDdegree, currently largely reserved for foreigners seeking to enter U.S. law teaching, as ageneral requirement for all law professors. Study for this degree could include the variousacademic disciplines that have been brought into legal academia.79

What about the mix between teaching theory and practice?

All of this is not to say that law schools should give up training students fortraditional lawyers’ work such as litigation and transactional work. Law schools likelywill continue to have clinical and skills courses. But perhaps these courses should betaught with a view toward integrating even traditional lawyer work with the latest theory,either by practice/theory teams or by practitioners who have advanced degrees.

The key is abandoning uniformity. Ribstein focuses on the strategy of Dean Henry G. Manne, who helped my alma matter enter the upper echelon of law schools by thinking outside the box.

The solution to this problem must lie in law schools’ abandoning the uniformitythat has gripped legal education since the ABA first promoted licensing and accreditationrules almost a century ago. Law schools face barriers when they attempt to stand out fromthe crowd. A prominent example is Dean Henry G. Manne’s experience at George MasonUniversity School of Law.80 At a time when schools were only just beginning to teachlaw and economics, Manne sought to establish an entire curriculum based on thisanalysis. He replaced much of the existing faculty and spearheaded the establishment of arigorous specialty-track system, replacing the standard generalist program at other lawschools. Instead of students freely choosing courses after the first year, track studentstook a structured system of courses in which each built on earlier courses, culminating ina thesis course. In the first year, instead of focusing on how to read judicial opinions,students took a required ―quantitative methods‖ course providing instruction ineconomics, finance, and accounting. Instructors in upper-class courses could then assumethat all students had this knowledge and build on it. Manne’s innovation, however, metresistance from one of law schools’ two accrediting agencies, the AALS.81 A key AALS 27committee was concerned that the law school’s need for instructors who could teach thesophisticated economics its program entailed would not meet the organization’s implicitracial and gender diversity standards.

Ribstein also considers offering different types of law degrees, rather than the single J.D.:

One possible compromise is toretain the general-purpose law degree, but create alternative professional classificationsthat allow legal experts to be accredited by public or private agencies in specialties with acore (say a year) of legal training plus a year or two of training in the specialty. Thisprocedure could be a hybrid of licensing and certification. It would combine a mandatorycore with a permissive certification in the specialty area. The specialty training couldcombine theoretical training with externships, internships, and clinical or laboratorywork. Some possible applications of this approach could be degrees in such new fields as―trial engineering‖ or ―transaction development.‖

No doubt entrenched interests will be opposed to removing barriers to entry, but Ribstein suggests market forces may help usher in this change.

One part in particular of Ribstein’s articular appeals to me, especially in light of FantasySCOTUS.net:

The increasing ability to make more accurate predictions of legal results providessignificant opportunities for lawyers as information engineers. For example, severalstudies have focused on making sense of the particularly amorphous law on piercing thecorporate veil.68 The availability of PACER (Public Access to Court ElectronicRecords)69 enables lawyers and scholars to determine how data in case records other thanfinal judicial opinions affect litigation results.70 Theories based on, among other things,economic analysis, psychology, sociology, decision theory, and political science, couldhelp determine relevant variables. Lawyers also might make predictions by acquiringcomputing skills or collaborating with computer scientists to develop new algorithms foranalyzing extensive databases.71 Policymakers might even choose to adopt some of theseprediction mechanisms for designing newer, more cost-effective legal systems.

Yep. I’m on it.

More from Professor Bainbridge.

My Lex Predict colleagues Daniel Katz and Mike Bommarito, along with Tyler Soellinger and James Chen, have published a fascinating study of how securities markets react to the Supreme Court. The authors find:

Across all cases decided by the Supreme Court of the United States between the 1999-2013 terms, we identify 79 cases where the share price of one or more publicly traded company moved in direct response to a Supreme Court decision. In the aggregate, over fifteen years, Supreme Court decisions were responsible for more than 140 billion dollars in absolute changes in wealth.

For example, here is the graph showing the abnormal returns in the stock for Myriad Genetics, before and after the Supreme Court’s complicated decision at 10:00.

You can see the spike right after 10:00 when the decision was released.The authors explain:

As displayed in Figure 1, the Court’s compromise decision initially confused the equity market. Fueled in part by media reports, would-be arbitrageurs interpreted the Court’s decision as positive to Myriad in the initial hours of trading. However, this view was ultimately displaced as more careful reading and subsequent understanding revealed that the decision was highly unfavorable to Myriad’s business interests. As a result, the stock began to trade down in the second half of the session. Media coverage following the initial trading day called it a “wild ride” and a “market whipsaw.”

As the dust settled, the Court’s decision was indeed detrimental to Myriad’s long-term financial value. Even after controlling for overall market trends, Myriad’s stock lost in excess of 20% of value over the two-day trading window. Attendant to this change in price, there was also a significant increase in volume as traders sought to shift their positions in light the Court’s decision. Specifically, on the date of decision, there was roughly a thirteen-fold increase in trading volume of the stock. The day thereafter witnessed an eighteen-fold increase in trading volume.

The article also highlights a number of SCOTUS decisions that yielded statistically significant movements on the market. For examples, these graphs illustrate what happened after 10:00 in four cases:

• Limelight Networks v. Akamai (2014): The Court held the answer was no and that decision was highly beneficial to Limelight Networks (LLNW). As displayed in Figure 5, the stock experienced an almost immediate gain of 5%, finishing the day up nearly 15%. The second day of trading saw LLNW continue to steadily rise into the afternoon of the session.
• Coeur Alaska v. SE Alaska Conservation Council (2009): “As displayed in Figure 5, within hours, the Coeur stock (CDE) traded up 10% and finished the day by posting S&P adjusted cumu- lative abnormal returns around 15%. The following day saw some small additional gains, but most of the returns had been established in the first trading day. “
• Altria Group v. Good (2008): “As displayed in Figure 5, following this Court announcement, Altria’s (MO) stock immediately trended down, followed by lateral trading for much of the balance of the date of decision. In the following day, Altria’s continued to decline relative to the S&P as the financial implications of the Court’s decision began to become more widely understood. Ultimately, at the close of the two-day window, the stock had experienced a negative cumulative abnormal return of nearly 9%. “
• Whitman v. American Trucking (2001):  “While the Court’s decision was somewhat mixed, Figure 5 reveals what appears to be a clear negative market reaction to the Court’s decision. The then largest automaker General Motors (GM) traded down over the next two sessions.13 ”
  

The portion of the paper that hits closest to home studies the impact of NFIB v. Sebelius on the leading healthcare companies:

Fascinatingly, the insurance companies surged during the initial reporting that the Court invalidated the mandate. (This counters the conventional wisdom that the insurance companies are happy with Obamacare…). But when everything settled, and everyone realized what happened, the insurance stocks tumbled. The only stocks that continued to grow was Hospital Corporation of America and Magellan Health Services. Aetna, Cigna, Humana, and Anthem all fell.

In Figure 6, we plot cumulative abnormal returns for a significant number of healthcare related stocks including Aetna (AET), Cigna (CI), Hospital Corporation of America (HCA), Health Net (HNT), Humana (HUM), Magellan Health (MGLN) and Anthem / Well Point (WLP). Over the two-day trading window, the Court’s decision drove down the price of a variety of health insurance companies while simultaneously increasing the value of one large hospital conglomerate (HCA) and a healthcare management business (MGLN). Interestingly, each of the stocks of the health insurance companies that ultimately trended downward experienced a significant short term uptick in the immediately aftermath of the Court’s decision. This is likely due to the widespread initial misreporting of the Court’s decision, which appeared to engender market confusion in the immediate aftermath of the Court’s ruling.14 However, unlike the Myriad case discussed earlier, the market quickly corrected itself in response to the subsequent accurate reporting of the Court’s decision. Collectively, among the stocks we evaluated in this study, the Obamacare decision was responsible for absolute changes in shareholder wealth in excess of 6.3 billion dollars.

Very cool.

In 2011, I noted that Ted Franks (who is now my attorney) made an investment decision based on his predicted outcome in Wal-Mart v. Dukes. He was so confident that the Supreme Court would reverse the 9th Circuit that he made a leveraged bet–of 10% of his net assets–that WMT (Wal-Mart’s symbol) will bounce. At the time, 76% of FantasySCOTUS members predicted a reversal. The great, and late Larry Ribstein suggested markets need greater sources of information to make these sorts of investments.

Unfortunately, Ted’s bet didn’t pan out. WSJ Law Blog reported:

No, unfortunately for the lawyer he was in court all morning, challenging the $3.4 billion settlement reached in 2009 in the high-profile Indian trust litigation, which claims the federal government mismanaged the revenue in American Indian trust funds. (Here’s an LB post on the settlement in that case.)

Frank told the Law Blog that by the time he got out of the Cobell settlement hearing, for a noon lunch break, he had missed the bump from the Dukes ruling.

“There were 90 people in the courtroom,” he said. “I couldn’t say, ‘can we stop the proceedings, because I need to engage in a stock sale.’”

Now, it seems Ted is not alone. Others are taking advantage of their SCOTUS predicting prowess.

Earlier this year I participated in a great conference at Georgetown Law Center, titled “Big Data and Big Challenges for Law and Legal Information.” West Academic Publishing will be publishing a volume, titled Big Data and the Law, compiling many of the essays of those who presented at the conference. My contribution will be titled “The Path of Big Data and the Law” (yes, playing on the title of the classic Holmes article).

My chapter, which summarizes several other pieces I am working on, highlights at a high level what it will mean for an algorithm to provide a legal service–with and without a lawyer–and what are the ethical, jurisprudential, and regulatory implications of this technology. I close by offering a preview into another paper I’m working on, Robot, Esq.

Here is the abstract:

Advances in artificial intelligence are transforming many aspects of our society, from Google’s autonomous cars to IBM’s Watson defeating the Jeopardy! world champion. The legal profession, as well, is evolving from today’s time-consuming, customized labor-intensive legal market to tomorrow’s on-demand, commoditized legal services market. Today, the legal services industry is standing at the dawn of what Professor Larry Ribstein referred to as Law’s Information Revolution. The promise of this revolution is the intersection, if not the collision, of the power of big data, and the law.

This essay opens the first chapter in this process, and sets forth an agenda of issues to consider as the intersection between law, technology, and justice merges. First, I break down the role of the lawyer, and posit how these familiar tasks can be automated. Next, I explore the ethical, jurisprudential, and regulatory implications of algorithms offering legal services. I conclude by offering a sketch of what the law offices of Robot, Esq. will be like.