The Third Wave of Legal Technology Transformation: Changing What Lawyers Do, With Structured Data

Law.Com

11 January 2021

To better understand this new, third wave of legal technology transformation, it is helpful to look back at the first two waves: the How and the Who.


Several years ago, after selling my legal tech startup, I delivered a series of talks entitled “The Third Wave: Using AI and NLP to Create Legal Analytics from Language.” The theme of these talks was that natural language processing had made important and practical advances such that we could begin to teach computers the meaning of words—and perhaps even some context. These advances have the potential to significantly narrow the gap between human reasoning and computer processing and, with that, transform the legal profession.
As Hubert Dreyfus, a professor of philosophy at UC Berkeley, argued in a 1972 book called What Computers Can’t Do, many human tasks require a kind of instinctive intelligence that cannot be captured with hard-and-fast rules. Instead, these tasks require contextual synthesis, the ability to take large amounts of information into account at the same time. The incongruity is that despite our talent at understanding meaning through context, “[w]e [humans] are terrible at computing with huge data.” The reverse is generally true of computers—they are excellent at processing big data but weak at gleaning context.

But what if we could teach computers to process context?
The How, Who and What of Legal Technology
While teaching computers context is certainly the most promising aspect of this new wave, what it is fundamentally about is changing What lawyers do.

By turning legal text, expressed in cases or contracts, into structured data, attorneys can begin to analyze legal data much like financial analysts analyze financial statements—with a quantitative lens. To unlock this potential will require teaching computers some level of context, or at the least to know when a question requires context to loop in humans to provide that contextual layer. It will also require teaching lawyers certain quantitative skills, the ability to analyze and digest large data sets, to drive decisions. In so doing, we are opening a new era of legal tech innovation, which when successful may very well help change What lawyers do.


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To better understand this new, third wave of legal technology transformation, it is helpful to look back at the first two waves: the How and the Who.

Mapping Legal Innovation to the Technology Adoption Curve
In Crossing the Chasm, Geoffrey Moore developed the concept of the Technology Adoption Curve, positing that technology products and companies get to mass adoption by jumping the chasm from the early adopters to the early majority (see chart below). Using this framework, we can effectively map the last 20 to 30 years of legal-technology innovation based on its adoption and ubiquity in the market.

It arguably looks something like this (note that the How is found on the right-hand side of the graph as it has already become common in the market and hence crossed the chasm first).

Starting in the late 1990s (and maybe even going back to the late 1970s, when the first legal research terminal was launched), technology companies—innovators—began introducing tools that changed how lawyers work. Moving from books to CD-ROM to online search, from file cabinets to document management and even e-discovery, technology helped lawyers do what they have always done, in more efficient, scalable, and timely ways.

This was the first big wave of legal technology transformation and was clearly focused on changing How lawyers do what they do, by optimizing the legal workflow. These kinds of tools are completely commonplace now; in fact, some of these tools are so ubiquitous that you learn the building blocks even before law school (as a college freshman, I was introduced to tools to search online for news and journal records that are now commonplace). The How has not just crossed the chasm, even the laggards are using it!

The next wave involved taking full advantage of the internet changing Who was working in law. Companies used technology to replace the people doing legal work, driving down costs, putting pricing pressure on the traditional law firm model, moving parts of work away from law firms, to corporations, or even to networks of attorneys online or overseas. This change required technology and the internet to be successful, leveraging near instantaneous communication via email, data sharing across networks, websites that could match attorneys to projects, and tools that made information review at scale possible such that lower cost humans (as compared to law firm lawyers) could do at least parts of what had been traditionally reserved to the firm (e.g., document review).

This second wave led to offshoring companies like Pangea 3, the rise of ALSPs, and even the entry of the Big Four into legal review. This second wave has also safely crossed the chasm and may arguably be making its way to the late majority (a recent study suggests that over 30% of the Am Law 100 law firms have some sort of captive ALSP like services built into the law firm).

And then, the third wave started to appear…

Where the second wave leveraged the internet, the third wave began with advances in cloud computing. Beginning in November 2004, when Amazon Web Services first launched, cloud computing became increasingly affordable to the masses, enabling small teams of researchers and innovators, in schools, at startups, and in big companies, to run experiments on large data sets, quickly and often. This allowed us to learn, and test ideas at a pace that was unprecedented and at a cost that allowed small teams to unlock a new type of innovation in legal technology.

Combined with open-source libraries that allowed for the manipulation or structuring of language, using NLP and other data mining techniques, a new kind of legal technology appeared. As noted in a recent Economist article on AI, “the excitement began to build in academia in the early 2010s, when new machine-learning techniques led to rapid improvements in tasks such as recognizing pictures and manipulating language.”

In the law, using these ML based techniques, we started turning unstructured or semi-structured legal data (e.g., SEC filings, dockets, and eventually cases, briefs, and now contracts) into structured data, that could be managed in data bases and turned into analytics such that lawyers could draw insights across larger and larger sets of legal documents. And with this wave, AI-based tools began finding their way into the law.

These tools take advantage of modern computing to transform how lawyers understand and interact with legal information, allowing lawyers to begin a transformation from purely qualitative reasoning to truly quantitative analysis—arguably from predominantly reactive, risk mitigation, to a more proactive role, involving trend identification and value creation. This is the third and current wave of legal technology development and will fundamentally change What lawyers do.

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