...innovation is critical to the survival of the legal profession, just like it is to every other profession.
360,000 hours is a lot of time. It’s 15,000 days, more than 2,100 weeks, more than 40 years. And – in terms that lawyers and legal professionals understand – it’s $180 million at an average billing rate of $500. Why does it matter? Because that’s the amount of lawyer time that JP Morgan claims it can replace each year with its new COIN (for Contract Intelligence) artificial intelligence software, which, explains Hugh Son at Bloomberg, “does the mind-numbing job of interpreting commercial-loan agreements.”
It’s a significant development, and one that all lawyers – not just banking & finance practitioners, but everyone – should understand. Assuming it works, this is a major step forward for the “replacing workers with robots” machine that has devastated other industries, and any lawyer and law firm that doesn’t see it as a sign of things to come is only fooling themselves.
But the lessons aren’t that the sky is falling and that lawyers will soon become obsolete … that law firms need to invest millions in A.I. to avoid being left out in the cold … that we all need to bow down to our robot overlords, who will decide whether to take this or that case to trial, whether to hire 15 or 25 new associates in the class of 2035, whether to open an office in Mumbai or Moscow, whether to invest time and money filling out the Chambers & Partners listings.
The real lesson is that innovation is critical to the survival of the legal profession, just like it is to every other profession. The real lesson is that lawyers cannot continue to do things the exact same way they’ve always done things because that’s what has worked so far.
The real lesson is that lawyers and their firms have to figure out what’s important to each client – for JP Morgan, it’s automating an automatable process (you don’t really think their plan is merely to eliminate lawyer time, do you?) – and how they can adapt to these objectives.
Fortunately, that lesson is not completely foreign to lawyers and firms. You’ve done this before. You’ve incurred the costs of replacing typewriters with desktop computers without driving partners out the door in search of bigger paychecks. You’ve invented creative billing arrangements that satisfy ever-more-stringent client requirements. You’ve moved back-office personnel to Nashville and Belfast and Manila and Manchester. You regularly offer new services to meet client needs, expand into new practices and geographies, show non-performing lawyers and staff and entire practices the door. Sure, change is hard. But it is intrinsically no harder for lawyers than for, say, bankers.
...[J.P. Morgan's automation] gives lawyers an opening to move away from billing their clients for the hours they spend.
No, the sky isn’t falling for lawyers. On the contrary: JP Morgan’s automation of the analysis and interpretation of commercial-loan agreements gives lawyers an opening to move away from billing their clients for the hours they spend. From time as a measure of value. From effort-based measurement to results-based measurement. Of course it won’t be easy and of course the stakes are high. But this warning shot over the bow presents a great opportunity for lawyers and firms to rethink the future of the services they provide clients – not tomorrow’s future or that of next year or even the year after that, but the one in which we’ll find ourselves five and ten years from now – so that they can position their firms to be one of the few that succeed.
Embracing change is likely to be one of the hardest things you ever do. But somebody’s going to be successful doing it, and it might as well be you.
[Lance Godard is a practice group and industry team manager at TerraLex. Connect with him on LinkedIn and follow his new work on JD Supra.]