9 ms·

"The legal profession is undergoing a massive structural shift"

152 points by grellas 15y ago

tomjen3 15y ago
I hope so - lawyers are way, way too expensive.
- guelo 15y ago
  Tell me about it, I just had an associate at a big SF law firm quote me $510/hr.
gamble 15y ago
The problem is that law school is an absurdly expensive exercise that, incredibly, doesn't actually teach graduates how to practice law. How else can you explain the fact that there are tons of unemployed JDs out there, and yet the average citizen can't afford basic legal services?
- chopsueyar 15y ago
  Would allowing non-JD degree holders to take the bar help?
  - lionhearted 15y ago
    Yes, but the legal profession has incredible sway and power, so that won't happen. It would absolutely be possible for someone to specialize in just a single specific kind of law, become very knowledgeable about it, and make normal skilled professional money in the $25 to $75 per hour range. This is prohibited by regulation and licensing which amounts to a huge windfall for the legal profession. But it's unlikely to change, because the last thing any legislator wants is to be on unfavorable terms with the legal profession.
    - a3camero 15y ago
      The thing you're talking about is actually done already by embedding non-lawyers in legal groups or having non-lawyers on payroll at law firms.
    - deleted 15y ago
      [deleted]
  - Bobby_Tables 15y ago
    Depends on how you define "help". The reason there are so many unemployed JDs is that there are too many lawyers, and allowing people who didn't go to law school to take bar exams would make that problem even worse. On the other hand, if people could become lawyers without taking on $100,000 in not-dischargeable-under-any-circumstances debt, they would be able to make a living at a much more reasonable salary than is currently necessary, which would allow the market for legal services to start correcting itself. What really needs to happen is that the bar pass rate needs to be lowered significantly in markets that are over-saturated (pretty much any big city). It should probably even be lowered to zero (ie stop offering the bar exam) for a couple of years in states like New York.
    - lhnn 15y ago
      High barrier to entry and costs are part of the cause of the problem: If more people were allowed to qualify to practice, lowering rates and expanding the search for a better business model, the legal industry would be more flexible, cheaper, and accessible for the public.
      - joshuaheard 15y ago
        That's a good point. In law school, a whole year was spent taking classes on subjects I would never use, like criminal and family law. Maybe they should break down the legal education to allow a degree in a certain topic and limit the law license to that. Or, allow certifications in certain topics that non-lawyers could receive, like divorce.
    - mnutt 15y ago
      Somehow I think you'd get into a pretty big fight with the New York law schools. Not to mention how much it would suck to have taken on $100,000 in not-dischargeable-under-any-circumstances debt and then not be able to get a job because you aren't allowed to take the bar. How would this help anything?
  - sixtofour 15y ago
    Something like this is already established practice. In some states you need a lawyer involved with every real estate transaction, because it's considered "practicing law." In some other states, like Colorado, a lawyer does not have to be involved in a real estate transaction. In these states real estate agents have been granted the right to practice this very limited segment of law. They don't take the bar, they just go through real estate school (easy and minimal), take a test (easy), and keep up minimal continuing education. So that's a very narrow slice of law, practiced by non-lawyer specialists. In these states you can, if you want, still involve a lawyer, and in some cases it's probably a really good idea. In most suburban lot/block transactions it's probably not necessary, but IANAL.
chopsueyar 15y ago
Khan Academy Law School?
- sunchild 15y ago
  Law School doesn't really teach what lawyers need to practice law. I've been tempted to do some videos on open source compliance, basics of contract negotiations, etc. but I just don't have enough time to do everything I want to! Maybe if someone else wants to collaborate, I would make it more of a priority.
  - ovi256 15y ago
    Those would be extremely useful, thanks for thinking about them.
praptak 15y ago
Shrinking market for legal services is good news to me. People becoming less litigious? It is actually possible to do anything without a highly paid expert to tell you whether you're not breaking some complicated law? Does not sound like something to worry about.
- Robin_Message 15y ago
  The market is not shrinking; the problem is access to justice for ordinary people who cannot afford $500 an hour. Also, perverse incentives like "No win, no fee" encourage settlements and litigation without helping those who have been genuinely wronged or have an actual case that needs to go to trial.
  - gjm11 15y ago
    How does no-win-no-fee do that? If you haven't been genuinely wronged and don't have an actual case that needs to go to trial, you can't realistically expect to win, so NWNF doesn't make much difference. What NWNF is supposed to do is to make it possible for the not-rich to afford to defend themselves when wronged (either by taking legal action, or by declining to settle unfavourably when threatened with legal action). That doesn't seem terribly perverse, it's the opposite of "encouraging settlements", and it does help those who have been genuinely wronged. The downside is that lawyers operating on a NWNF basis may be unwilling to take on any case whose prospects for success are poor. I suppose that might count as "encouraging settlements" -- in cases where you're not very likely to win and can't afford to pay the legal fees. I have trouble seeing why that is a bad thing. What am I missing?
    - rfrey 15y ago
      If you haven't been genuinely wronged and don't have an actual case that needs to go to trial, you can't realistically expect to win The premise that only deserving cases win isn't self-evident to me. With increasing awards and settlements, the expected value of a spurious case might be quite high.
    - stonemetal 15y ago
noonespecial 15y ago
“The biggest problem,” says Ury, “is that ordinary citizens cannot afford to hire a lawyer. The bread and butter of small firm practices are criminal defense work, wills and trusts, leases, closings and divorces. Yet in Connecticut, 80 to 85 percent of divorces have a self-represented party because most families can’t afford to hire one lawyer, let alone two. Nearly 90 percent of criminal cases are self-represented or by a public defender because families can’t scrape together a retainer.” I'd call that a 100%, red-line, sirens-blaring, system failure. "Less people are hiring us for $500/hour! What shall we do?" might not be the right question. "Why did anyone ever do so in the first place?" might be closer.
- swampthing 15y ago
  I hope you don't take this as a flippant comment, because it isn't meant to be, but the answer to your latter question is - it's what the market bears (or did bear). There's plenty of lawyers out there - but, like in programming, there are a lot fewer good ones. In general, people are willing to pay $500 / hour because they can't find one of similar quality for a lower price.
  - sunchild 15y ago
    Quality is very, very difficult to measure in this context. It's a bit like measuring the quality of a doctor or other professional whose advice you need to trust beyond a shadow of a doubt. In the end, law firms tend to trade on longstanding reputation, which is a fine, but imperfect, way of handling this problem. These days, there is no reason to assume that high rates == quality, or vice versa. The market will sort this out eventually: right now clients are making pricing demands on big law firms that are cutting their margins significantly. As a result, firms are ditching costs in a kind of emergency sale. My own opinion is that many firms are gutting their best assets (their new, young lawyers) in order to preserve the partner profits, and that will be their downfall. Meanwhile, the next generation of lawyers will be free to charge much less, and will actually make more money.
    - Vivtek 15y ago
ph0rque 15y ago
What would be really nice is if law was machine-readable (and interpretable). But that would probably require computers being able to understand language.
- noonespecial 15y ago
  That'd be a neat trick. Not even the humans can understand legal language. Perhaps the singularity begins with an expert system suddenly grokking the entirety of law, resolving the paradoxes and contradictions, and then suing all humanity for infringement. Hard-takeoff trolling...
  - thret 15y ago
    If that isn't already a science fiction short story, it should be.
    - ph0rque 15y ago
      And a research project, a partnership between the law school and the CS department of a university... EDIT: just saw swampthing's comment below, such things exist.
    - jgfoot 15y ago
      Asimov's "I, Robot" stories cover this territory well. The robots must follow three laws, which are simple enough on their surface, but in application prove tough to predict. The humans begin to see that the laws have unintended and undesirable consequences.
    - thwarted 15y ago
      I just recently finished Accelerando, where corporations are composed of and contracts are carried out by software agents (the story starts out with them just being expert systems). It's not the main topic, but a major supporting background.
- swampthing 15y ago
  There's projects on this - one of the best known ones (to my knowledge) is the Stanford IP Litigation Clearinghouse Project: http://www.lexmachina.org/ http://www.lexmachina.org/
wooUK 15y ago
I've spent the past 10 years working in global corporate law firms as a software developer and have witnessed this change first hand. The legal profession is based around chargeable hours. This is not a good deal for the consumer of legal services. Billing by the hour does not encourage lawyers to work more efficiently or effectively, in fact it rewards the opposite. Recently larger clients have started to stand up to the legal firms and demand that work should be done on a fixed fee basis or a shared risk/reward basis. Suddenly lawyers are beginning to to act like business people and are looking at improving their own internal efficiencies now that their fees are capped. One example of this are lawyers trying to empathise more with their fixed fee clients' business strategy and point out legal pitfalls before they happen - wow a proactive lawyer! Observing how much money law firms are currently investing on improving their efficiencies then I think what we are witnessing is a shift to a new model and not just a blip.
- sunchild 15y ago
  Based on your experience, I'd love to chat with you offline. My law firm (together with another firm in London) is building software for deal lawyers. If you're interested in meeting, you can reach me via the email address on my firm's page: http://yusonirvine.com/ http://yusonirvine.com/ If nothing else, I'd like to introduce you to my UK counterparts.
  - VanL 15y ago
    Interesting - I would be interested in chatting with you too. I am a lawyer at a Big law firm. One of the things that I have been doing (which clients love) is writing software to automate or enhance parts of what I do.
    - sunchild 15y ago
      I used to do this, too. It drove me crazy that my firm owned my work, though. Perhaps you have a more favorable arrangement with your employer?
      - 15y ago
swampthing 15y ago
This article is spot-on (I'm one of the few on HN that have worked as an attorney in biglaw). One theme it barely touched is that, like any other technology, legal innovations inevitably get commoditized. Fundamentally, law firms have been unable to properly adjust to this commoditization due to a lack of technology (outsourcing is a short term solution). The only solutions they come up with are to cut overhead costs, which only gets you so far. The big picture for the legal industry, is that you have extremely bright young people fleeing the industry because this lack of technology forces them to do this mundane commoditized work. And like any commoditized product, the basis for competition ends up on price, which ends up just forcing these people to handle intense amounts of mundane commoditized work. This is obviously not sustainable, if you want to maintain a law firm with the best and brightest legal minds. It's my observation though, that most partners in a position to do anything either do not see this or do not care (because they'll be gone by the time things fall apart anyways).
- sunchild 15y ago
  Exactly! What I've learned, though, is that there is always a need for a human being at the end of the process. That's where lawyers will always be needed: to exercise nuanced judgment that just cannot be systematized (yet). The trick is to be a lawyer who can work as part of a bigger process that includes smart technologies and less expensive (and perhaps, less skilled) labor.
  - VanL 15y ago
    This is right - there is always a need for humans at the end of the process. The problem is, though, that in traditional law firms many things that can be done by computers are done by humans. This has a couple of effects: 1. Soul-sucking work. Want to know why so many lawyers hate what they do? Because they are doing stuff that computers can do better and faster. It kills initiative, creativity, and any sense of joy. 2. Higher bills for clients. This is all done by the billable hour, so having humans do lots of soul-sucking work is extremely lucrative. We recently had a massive all-hands-on doc review that needed to be done over the course of about three days. For those three days with everyone (and I do mean everyone) doing it, the firm billed $MM/hour in aggregate.
sunchild 15y ago
I live and breathe this topic. After 12 years at big law firms in NYC, myself and a collection of our best and brightest broke off and founded our own firms (mine in NYC, another in London). This is actually very relevant to the HN community, because it's all about how to run a business. The problem with legal services begins and ends with poor business practices. Law firms are addicted to covering their own lack of spending discipline by raising their hourly rates and pushing attorneys to bill clients more for less value. The "solutions" that they're undertaking now (cutting associate salaries, etc.) are equally wrong-headed. Four years ago, I was making $400K+ at a top law firm. When I became eligible for partnership at my firm, I decided to leave instead. Why? Because I did not want to own a tiny amount of equity in a poorly-run business. Down the hall from me were several men in their mid-eighties who were drawing $1MM+ pensions and turning up for work two days a week. They had teams of secretaries who printed off their email and read them a digest each morning. I watched the firm spend, spend, spend to recruit "the best and the brightest" from Ivy League schools. After those new lawyers were hired, they would be put to work doing tasks that any decent temp worker could do. Young attorneys were being billed out at $500+ per hour and pressured to make their minimum hourly quotas every year. Our offices were expensive. Our parties were expensive. The I.T. support was expensive because it had painted itself into vendor lock-in and a huge (and useless) support staff. I flew first class everywhere. I stayed in the Four Seasons for months on end. Sounds great, right? Nope – not when you're considering becoming an owner of that company. I saw the writing on the wall. Clients were bailing. They were getting better at doing my job with in house people. They were pressuring firm management to write off big bills and compete in RFPs. So I got out, and I've never looked back. I did it because I think I can run a business better than they do. I did it because I actually care about whether my clients feel like they've gotten their money's worth. Also, I did it because I wanted to build an IT platform for lawyers that wasn't hampered by incompetent IT staff and poorly-chosen, expensive solutions. Today, I have many of the same clients that I had back then. My clients are some of the biggest names in their field, and they stuck with me instead of sticking with the big name law firms. When my clients ask me to quote a fixed price for my work on a project, I give them a reasonable fixed price because I can afford to do that. I have low overhead (ridiculously low, actually). I can provide better service than ever before, because I have better tools at my disposal. I don't waste time fighting my way through clumsy solutions like Sharepoint, Deltaview, Worksite, or whatever other POS is in vogue at big law firms today. I could go on about this forever, but suffice it to say that this article and the phenomenon behind it is extremely interesting to me. I also think it's a great case study for entrepreneurs. Think of it this way: what if your target market was dominated by companies that charge way too much, are extremely inefficient, and are carrying a huge, ever-growing cost basis? Sounds like a good opportunity, right? Well, it is!
deleted 15y ago
[deleted]
maxxxxx 15y ago
I am waiting for the day when there are laywers in single practice who charge rates of less than $100/hr like many other professionals do. I know some laywers who are complaining about tough times but they still think they are worth $250/hr.
- a3camero 15y ago
  To play devil's lawyer: lawyers have very high fixed costs due to insurance + bar fees. In Ontario they're about $6k a year. Database subscriptions are also very pricey. The expenses are considerably higher than that associated with programming.
  - maxxxxx 15y ago
    Somehow I doubt that these fixed costs justify $250/hr vs $100/hr. But I am not 100% sure.
    - a3camero 15y ago
      True, but there are a number of other costs associated with being a lawyer. Various professional courses you're required to do in some jurisdictions and clothes that make you look like a lawyer instead of a programmer. Carrying costs of your $125k + living expenses education on top of undergrad @ $X... I'm with you, but it is an expensive profession.
grellas 15y ago
Having been in Big Law myself, I have previously set forth my thoughts at some length on this topic (see http://news.ycombinator.com/item?id=1648342 http://news.ycombinator.com/item?id=1648342). Fundamentally, law remains a guild system, with the governing licensing restrictions severely limiting the ability to innovate. Only licensed persons can be owners of firms and only licensed persons can provide the key services. No fee-splitting or profit sharing is permitted with any person who is not licensed. Even one who is licensed is limited is performing services other than in the locale for which he is licensed. All of this may be well and good for "maintaining standards," as the bar associations say, but it means this is and will remain a closed profession that remains remote and removed from average people. This is not a knock on professionalism. A really good lawyer is well worth the price, even at high rates, for many business transactions. But making services broadly affordable remains a challenge. Technology can help as long as the laws bend enough to allow firms to adopt innovative business models taking advantage of it - how far this can go will ultimately depend on the rules of the guild.
- sunchild 15y ago
  This is a great comment, but one nitpick: "No fee-splitting or profit sharing is permitted with any person who is not licensed." I believe this is no longer the case the UK and some other places.
  - lhnn 15y ago
    Fair enough, and perhaps your comment is a sign of change. However, though this is a global forum, the source article is from the American Bar Association.
JoeAltmaier 15y ago
A model of circuitous legal babbling. It took until the 34th paragraph to spit out the crux of the argument. Save you time, here it is: 1) More sophisticated clients armed with more information and greater market power to rein in costs. 2) A globalized economy, which increases the complexity of legal work while exposing U.S. lawyers to greater competition. 3) Powerful information technology that can automate or replace many of the traditional, billable functions performed by lawyers.
asr 15y ago
This article correctly points out that pricing for legal services is undergoing a shift toward the true marginal cost for the service. So the law firm business model where much of partners’ profits are markups on simple, repetitive work done by junior associates is on its way out. That said, the doom and gloom of this article (and much of the profession) is overblown. Maybe it’s because law is such a conservative profession, but any change is greeted as if it were the coming of the Four Horsemen. It’s as if the entire software industry spent its time worrying about how the internet was going to put Windows programmers out of business, instead of being excited about the opportunities it presented. Major law firms are filled with smart and experienced lawyers who actually provide a lot of value to their clients. That value is still worthwhile--as the article points out, the rule of law is not going away. As a law school student, I'm not (unduly) worried about this. Sure, there will be some winners and losers, but that’s what happens in business--and basically what this is about is that law firms are looking more like businesses. Why should I expect anyone to feel sorry for me because of that?
ahi 15y ago
JACK CADE. Be brave, then; for your captain is brave, and vows reformation. There shall be in England seven half-penny loaves sold for a penny: the three-hoop'd pot shall have ten hoops; and I will make it felony to drink small beer: all the realm shall be in common; and in Cheapside shall my palfrey go to grass: and when I am king,- as king I will be,- ALL. God save your majesty! JACK CADE. I thank you, good people:- there shall be no money; all shall eat and drink on my score; and I will apparel them all in one livery, that they may agree like brothers, and worship me their lord. DICK. The first thing we do, let's kill all the lawyers. JACK CADE. Nay, that I mean to do. Is not this a lamentable thing, that of the skin of an innocent lamb should be made parchment? that parchment, being scribbled o'er, should undo a man? Some say the bee stings: but I say, 'tis the bee's wax; for I did but seal once to a thing, and I was never mine own man since.- How now! who's there? http://www.spectacle.org/797/finkel.html http://www.spectacle.org/797/finkel.html
- ahi 15y ago
  I wonder, not relevant enough or is the liberal arts education of hackernews so lacking we don't know Shakespeare when we see it?
- civilian 15y ago
  "The first thing we do, let's digitalize all the lawyers."
DrManhattan 15y ago
Well I fucking hope so.
RMZahorsky 15y ago
We're enjoying the substantive conversation this story has generated over at the ABA Journal! I've been jotting down future story ideas based on some of the comments and invite anyone to send insights and tips to Rachel.Zahorsky@AmericanBar.org. - Rachel M. Zahorsky, Legal Affairs Writer
arihersh 15y ago
This is an absolutely fascinating thread-- thanks to Rachel Zahorsky for the original article, and to sunchild and other commenters for thoughts and inspiration. Am very interested in contacting others on this list with an interest in both law and code. I recently wrote about version control and law on quora: http://b.qr.ae/kRgGyk http://b.qr.ae/kRgGyk, and about 'open sourcing' access to the tax code here: http://blog.tabulaw.com/2011/06/open-source-tax-code.html http://blog.tabulaw.com/2011/06/open-source-tax-code.html.

152 points by grellas 15y ago

tomjen3 15y ago

I hope so - lawyers are way, way too expensive.

guelo 15y ago
Tell me about it, I just had an associate at a big SF law firm quote me $510/hr.

gamble 15y ago

The problem is that law school is an absurdly expensive exercise that, incredibly, doesn't actually teach graduates how to practice law. How else can you explain the fact that there are tons of unemployed JDs out there, and yet the average citizen can't afford basic legal services?

chopsueyar 15y ago
Would allowing non-JD degree holders to take the bar help?
- lionhearted 15y ago
  Yes, but the legal profession has incredible sway and power, so that won't happen. It would absolutely be possible for someone to specialize in just a single specific kind of law, become very knowledgeable about it, and make normal skilled professional money in the $25 to $75 per hour range. This is prohibited by regulation and licensing which amounts to a huge windfall for the legal profession. But it's unlikely to change, because the last thing any legislator wants is to be on unfavorable terms with the legal profession.
  - a3camero 15y ago
    The thing you're talking about is actually done already by embedding non-lawyers in legal groups or having non-lawyers on payroll at law firms.
  - deleted 15y ago
    [deleted]
- Bobby_Tables 15y ago
  Depends on how you define "help". The reason there are so many unemployed JDs is that there are too many lawyers, and allowing people who didn't go to law school to take bar exams would make that problem even worse. On the other hand, if people could become lawyers without taking on $100,000 in not-dischargeable-under-any-circumstances debt, they would be able to make a living at a much more reasonable salary than is currently necessary, which would allow the market for legal services to start correcting itself. What really needs to happen is that the bar pass rate needs to be lowered significantly in markets that are over-saturated (pretty much any big city). It should probably even be lowered to zero (ie stop offering the bar exam) for a couple of years in states like New York.
  - lhnn 15y ago
    High barrier to entry and costs are part of the cause of the problem: If more people were allowed to qualify to practice, lowering rates and expanding the search for a better business model, the legal industry would be more flexible, cheaper, and accessible for the public.
    - joshuaheard 15y ago
      That's a good point. In law school, a whole year was spent taking classes on subjects I would never use, like criminal and family law. Maybe they should break down the legal education to allow a degree in a certain topic and limit the law license to that. Or, allow certifications in certain topics that non-lawyers could receive, like divorce.
  - mnutt 15y ago
    Somehow I think you'd get into a pretty big fight with the New York law schools. Not to mention how much it would suck to have taken on $100,000 in not-dischargeable-under-any-circumstances debt and then not be able to get a job because you aren't allowed to take the bar. How would this help anything?
- sixtofour 15y ago
  Something like this is already established practice. In some states you need a lawyer involved with every real estate transaction, because it's considered "practicing law." In some other states, like Colorado, a lawyer does not have to be involved in a real estate transaction. In these states real estate agents have been granted the right to practice this very limited segment of law. They don't take the bar, they just go through real estate school (easy and minimal), take a test (easy), and keep up minimal continuing education. So that's a very narrow slice of law, practiced by non-lawyer specialists. In these states you can, if you want, still involve a lawyer, and in some cases it's probably a really good idea. In most suburban lot/block transactions it's probably not necessary, but IANAL.

chopsueyar 15y ago

Khan Academy Law School?

sunchild 15y ago
Law School doesn't really teach what lawyers need to practice law. I've been tempted to do some videos on open source compliance, basics of contract negotiations, etc. but I just don't have enough time to do everything I want to! Maybe if someone else wants to collaborate, I would make it more of a priority.
- ovi256 15y ago
  Those would be extremely useful, thanks for thinking about them.

praptak 15y ago

Shrinking market for legal services is good news to me. People becoming less litigious? It is actually possible to do anything without a highly paid expert to tell you whether you're not breaking some complicated law? Does not sound like something to worry about.

Robin_Message 15y ago
The market is not shrinking; the problem is access to justice for ordinary people who cannot afford $500 an hour. Also, perverse incentives like "No win, no fee" encourage settlements and litigation without helping those who have been genuinely wronged or have an actual case that needs to go to trial.
- gjm11 15y ago
  How does no-win-no-fee do that? If you haven't been genuinely wronged and don't have an actual case that needs to go to trial, you can't realistically expect to win, so NWNF doesn't make much difference. What NWNF is supposed to do is to make it possible for the not-rich to afford to defend themselves when wronged (either by taking legal action, or by declining to settle unfavourably when threatened with legal action). That doesn't seem terribly perverse, it's the opposite of "encouraging settlements", and it does help those who have been genuinely wronged. The downside is that lawyers operating on a NWNF basis may be unwilling to take on any case whose prospects for success are poor. I suppose that might count as "encouraging settlements" -- in cases where you're not very likely to win and can't afford to pay the legal fees. I have trouble seeing why that is a bad thing. What am I missing?
  - rfrey 15y ago
    If you haven't been genuinely wronged and don't have an actual case that needs to go to trial, you can't realistically expect to win The premise that only deserving cases win isn't self-evident to me. With increasing awards and settlements, the expected value of a spurious case might be quite high.
  - stonemetal 15y ago

noonespecial 15y ago

“The biggest problem,” says Ury, “is that ordinary citizens cannot afford to hire a lawyer. The bread and butter of small firm practices are criminal defense work, wills and trusts, leases, closings and divorces. Yet in Connecticut, 80 to 85 percent of divorces have a self-represented party because most families can’t afford to hire one lawyer, let alone two. Nearly 90 percent of criminal cases are self-represented or by a public defender because families can’t scrape together a retainer.” I'd call that a 100%, red-line, sirens-blaring, system failure. "Less people are hiring us for $500/hour! What shall we do?" might not be the right question. "Why did anyone ever do so in the first place?" might be closer.

swampthing 15y ago
I hope you don't take this as a flippant comment, because it isn't meant to be, but the answer to your latter question is - it's what the market bears (or did bear). There's plenty of lawyers out there - but, like in programming, there are a lot fewer good ones. In general, people are willing to pay $500 / hour because they can't find one of similar quality for a lower price.
- sunchild 15y ago
  Quality is very, very difficult to measure in this context. It's a bit like measuring the quality of a doctor or other professional whose advice you need to trust beyond a shadow of a doubt. In the end, law firms tend to trade on longstanding reputation, which is a fine, but imperfect, way of handling this problem. These days, there is no reason to assume that high rates == quality, or vice versa. The market will sort this out eventually: right now clients are making pricing demands on big law firms that are cutting their margins significantly. As a result, firms are ditching costs in a kind of emergency sale. My own opinion is that many firms are gutting their best assets (their new, young lawyers) in order to preserve the partner profits, and that will be their downfall. Meanwhile, the next generation of lawyers will be free to charge much less, and will actually make more money.
  - Vivtek 15y ago

ph0rque 15y ago

What would be really nice is if law was machine-readable (and interpretable). But that would probably require computers being able to understand language.

noonespecial 15y ago
That'd be a neat trick. Not even the humans can understand legal language. Perhaps the singularity begins with an expert system suddenly grokking the entirety of law, resolving the paradoxes and contradictions, and then suing all humanity for infringement. Hard-takeoff trolling...
- thret 15y ago
  If that isn't already a science fiction short story, it should be.
  - ph0rque 15y ago
    And a research project, a partnership between the law school and the CS department of a university... EDIT: just saw swampthing's comment below, such things exist.
  - jgfoot 15y ago
    Asimov's "I, Robot" stories cover this territory well. The robots must follow three laws, which are simple enough on their surface, but in application prove tough to predict. The humans begin to see that the laws have unintended and undesirable consequences.
  - thwarted 15y ago
    I just recently finished Accelerando, where corporations are composed of and contracts are carried out by software agents (the story starts out with them just being expert systems). It's not the main topic, but a major supporting background.
swampthing 15y ago
There's projects on this - one of the best known ones (to my knowledge) is the Stanford IP Litigation Clearinghouse Project: http://www.lexmachina.org/ http://www.lexmachina.org/

wooUK 15y ago

I've spent the past 10 years working in global corporate law firms as a software developer and have witnessed this change first hand. The legal profession is based around chargeable hours. This is not a good deal for the consumer of legal services. Billing by the hour does not encourage lawyers to work more efficiently or effectively, in fact it rewards the opposite. Recently larger clients have started to stand up to the legal firms and demand that work should be done on a fixed fee basis or a shared risk/reward basis. Suddenly lawyers are beginning to to act like business people and are looking at improving their own internal efficiencies now that their fees are capped. One example of this are lawyers trying to empathise more with their fixed fee clients' business strategy and point out legal pitfalls before they happen - wow a proactive lawyer! Observing how much money law firms are currently investing on improving their efficiencies then I think what we are witnessing is a shift to a new model and not just a blip.

sunchild 15y ago
Based on your experience, I'd love to chat with you offline. My law firm (together with another firm in London) is building software for deal lawyers. If you're interested in meeting, you can reach me via the email address on my firm's page: http://yusonirvine.com/ http://yusonirvine.com/ If nothing else, I'd like to introduce you to my UK counterparts.
- VanL 15y ago
  Interesting - I would be interested in chatting with you too. I am a lawyer at a Big law firm. One of the things that I have been doing (which clients love) is writing software to automate or enhance parts of what I do.
  - sunchild 15y ago
    I used to do this, too. It drove me crazy that my firm owned my work, though. Perhaps you have a more favorable arrangement with your employer?
    - 15y ago

swampthing 15y ago

This article is spot-on (I'm one of the few on HN that have worked as an attorney in biglaw). One theme it barely touched is that, like any other technology, legal innovations inevitably get commoditized. Fundamentally, law firms have been unable to properly adjust to this commoditization due to a lack of technology (outsourcing is a short term solution). The only solutions they come up with are to cut overhead costs, which only gets you so far. The big picture for the legal industry, is that you have extremely bright young people fleeing the industry because this lack of technology forces them to do this mundane commoditized work. And like any commoditized product, the basis for competition ends up on price, which ends up just forcing these people to handle intense amounts of mundane commoditized work. This is obviously not sustainable, if you want to maintain a law firm with the best and brightest legal minds. It's my observation though, that most partners in a position to do anything either do not see this or do not care (because they'll be gone by the time things fall apart anyways).

sunchild 15y ago
Exactly! What I've learned, though, is that there is always a need for a human being at the end of the process. That's where lawyers will always be needed: to exercise nuanced judgment that just cannot be systematized (yet). The trick is to be a lawyer who can work as part of a bigger process that includes smart technologies and less expensive (and perhaps, less skilled) labor.
- VanL 15y ago
  This is right - there is always a need for humans at the end of the process. The problem is, though, that in traditional law firms many things that can be done by computers are done by humans. This has a couple of effects: 1. Soul-sucking work. Want to know why so many lawyers hate what they do? Because they are doing stuff that computers can do better and faster. It kills initiative, creativity, and any sense of joy. 2. Higher bills for clients. This is all done by the billable hour, so having humans do lots of soul-sucking work is extremely lucrative. We recently had a massive all-hands-on doc review that needed to be done over the course of about three days. For those three days with everyone (and I do mean everyone) doing it, the firm billed $MM/hour in aggregate.

sunchild 15y ago

I live and breathe this topic. After 12 years at big law firms in NYC, myself and a collection of our best and brightest broke off and founded our own firms (mine in NYC, another in London). This is actually very relevant to the HN community, because it's all about how to run a business. The problem with legal services begins and ends with poor business practices. Law firms are addicted to covering their own lack of spending discipline by raising their hourly rates and pushing attorneys to bill clients more for less value. The "solutions" that they're undertaking now (cutting associate salaries, etc.) are equally wrong-headed. Four years ago, I was making $400K+ at a top law firm. When I became eligible for partnership at my firm, I decided to leave instead. Why? Because I did not want to own a tiny amount of equity in a poorly-run business. Down the hall from me were several men in their mid-eighties who were drawing $1MM+ pensions and turning up for work two days a week. They had teams of secretaries who printed off their email and read them a digest each morning. I watched the firm spend, spend, spend to recruit "the best and the brightest" from Ivy League schools. After those new lawyers were hired, they would be put to work doing tasks that any decent temp worker could do. Young attorneys were being billed out at $500+ per hour and pressured to make their minimum hourly quotas every year. Our offices were expensive. Our parties were expensive. The I.T. support was expensive because it had painted itself into vendor lock-in and a huge (and useless) support staff. I flew first class everywhere. I stayed in the Four Seasons for months on end. Sounds great, right? Nope – not when you're considering becoming an owner of that company. I saw the writing on the wall. Clients were bailing. They were getting better at doing my job with in house people. They were pressuring firm management to write off big bills and compete in RFPs. So I got out, and I've never looked back. I did it because I think I can run a business better than they do. I did it because I actually care about whether my clients feel like they've gotten their money's worth. Also, I did it because I wanted to build an IT platform for lawyers that wasn't hampered by incompetent IT staff and poorly-chosen, expensive solutions. Today, I have many of the same clients that I had back then. My clients are some of the biggest names in their field, and they stuck with me instead of sticking with the big name law firms. When my clients ask me to quote a fixed price for my work on a project, I give them a reasonable fixed price because I can afford to do that. I have low overhead (ridiculously low, actually). I can provide better service than ever before, because I have better tools at my disposal. I don't waste time fighting my way through clumsy solutions like Sharepoint, Deltaview, Worksite, or whatever other POS is in vogue at big law firms today. I could go on about this forever, but suffice it to say that this article and the phenomenon behind it is extremely interesting to me. I also think it's a great case study for entrepreneurs. Think of it this way: what if your target market was dominated by companies that charge way too much, are extremely inefficient, and are carrying a huge, ever-growing cost basis? Sounds like a good opportunity, right? Well, it is!

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maxxxxx 15y ago

I am waiting for the day when there are laywers in single practice who charge rates of less than $100/hr like many other professionals do. I know some laywers who are complaining about tough times but they still think they are worth $250/hr.

a3camero 15y ago
To play devil's lawyer: lawyers have very high fixed costs due to insurance + bar fees. In Ontario they're about $6k a year. Database subscriptions are also very pricey. The expenses are considerably higher than that associated with programming.
- maxxxxx 15y ago
  Somehow I doubt that these fixed costs justify $250/hr vs $100/hr. But I am not 100% sure.
  - a3camero 15y ago
    True, but there are a number of other costs associated with being a lawyer. Various professional courses you're required to do in some jurisdictions and clothes that make you look like a lawyer instead of a programmer. Carrying costs of your $125k + living expenses education on top of undergrad @ $X... I'm with you, but it is an expensive profession.

grellas 15y ago

Having been in Big Law myself, I have previously set forth my thoughts at some length on this topic (see http://news.ycombinator.com/item?id=1648342 http://news.ycombinator.com/item?id=1648342). Fundamentally, law remains a guild system, with the governing licensing restrictions severely limiting the ability to innovate. Only licensed persons can be owners of firms and only licensed persons can provide the key services. No fee-splitting or profit sharing is permitted with any person who is not licensed. Even one who is licensed is limited is performing services other than in the locale for which he is licensed. All of this may be well and good for "maintaining standards," as the bar associations say, but it means this is and will remain a closed profession that remains remote and removed from average people. This is not a knock on professionalism. A really good lawyer is well worth the price, even at high rates, for many business transactions. But making services broadly affordable remains a challenge. Technology can help as long as the laws bend enough to allow firms to adopt innovative business models taking advantage of it - how far this can go will ultimately depend on the rules of the guild.

sunchild 15y ago
This is a great comment, but one nitpick: "No fee-splitting or profit sharing is permitted with any person who is not licensed." I believe this is no longer the case the UK and some other places.
- lhnn 15y ago
  Fair enough, and perhaps your comment is a sign of change. However, though this is a global forum, the source article is from the American Bar Association.

JoeAltmaier 15y ago

A model of circuitous legal babbling. It took until the 34th paragraph to spit out the crux of the argument. Save you time, here it is: 1) More sophisticated clients armed with more information and greater market power to rein in costs. 2) A globalized economy, which increases the complexity of legal work while exposing U.S. lawyers to greater competition. 3) Powerful information technology that can automate or replace many of the traditional, billable functions performed by lawyers.

asr 15y ago

This article correctly points out that pricing for legal services is undergoing a shift toward the true marginal cost for the service. So the law firm business model where much of partners’ profits are markups on simple, repetitive work done by junior associates is on its way out. That said, the doom and gloom of this article (and much of the profession) is overblown. Maybe it’s because law is such a conservative profession, but any change is greeted as if it were the coming of the Four Horsemen. It’s as if the entire software industry spent its time worrying about how the internet was going to put Windows programmers out of business, instead of being excited about the opportunities it presented. Major law firms are filled with smart and experienced lawyers who actually provide a lot of value to their clients. That value is still worthwhile--as the article points out, the rule of law is not going away. As a law school student, I'm not (unduly) worried about this. Sure, there will be some winners and losers, but that’s what happens in business--and basically what this is about is that law firms are looking more like businesses. Why should I expect anyone to feel sorry for me because of that?

ahi 15y ago

JACK CADE. Be brave, then; for your captain is brave, and vows reformation. There shall be in England seven half-penny loaves sold for a penny: the three-hoop'd pot shall have ten hoops; and I will make it felony to drink small beer: all the realm shall be in common; and in Cheapside shall my palfrey go to grass: and when I am king,- as king I will be,- ALL. God save your majesty! JACK CADE. I thank you, good people:- there shall be no money; all shall eat and drink on my score; and I will apparel them all in one livery, that they may agree like brothers, and worship me their lord. DICK. The first thing we do, let's kill all the lawyers. JACK CADE. Nay, that I mean to do. Is not this a lamentable thing, that of the skin of an innocent lamb should be made parchment? that parchment, being scribbled o'er, should undo a man? Some say the bee stings: but I say, 'tis the bee's wax; for I did but seal once to a thing, and I was never mine own man since.- How now! who's there? http://www.spectacle.org/797/finkel.html http://www.spectacle.org/797/finkel.html

ahi 15y ago
I wonder, not relevant enough or is the liberal arts education of hackernews so lacking we don't know Shakespeare when we see it?
civilian 15y ago
"The first thing we do, let's digitalize all the lawyers."

DrManhattan 15y ago

Well I fucking hope so.

RMZahorsky 15y ago

We're enjoying the substantive conversation this story has generated over at the ABA Journal! I've been jotting down future story ideas based on some of the comments and invite anyone to send insights and tips to Rachel.Zahorsky@AmericanBar.org. - Rachel M. Zahorsky, Legal Affairs Writer

arihersh 15y ago

This is an absolutely fascinating thread-- thanks to Rachel Zahorsky for the original article, and to sunchild and other commenters for thoughts and inspiration. Am very interested in contacting others on this list with an interest in both law and code. I recently wrote about version control and law on quora: http://b.qr.ae/kRgGyk http://b.qr.ae/kRgGyk, and about 'open sourcing' access to the tax code here: http://blog.tabulaw.com/2011/06/open-source-tax-code.html http://blog.tabulaw.com/2011/06/open-source-tax-code.html.