 Welcome back to Building Tomorrow, a show that is, among other things, about cool new tech and innovations that could drastically change our daily lives in the near future. I'm your regular host, Paul Matzko, and there's no better place to get a sneak peek into the near future than at TechCrunch Disrupt, an annual conference in San Francisco that I attended the first week of September. There are other major tech conferences, of course. MIT does a really cool one with tech in the medium term horizon, but what sets TechCrunch apart is that the goal of the conference is to match up Silicon Valley investment firms with tech startups, which means that much of the tech on display is very close to being ready for mass market. So as I talk about some of the interesting startups I saw and some of the founders I spoke to in San Francisco, I'm not just talking about hypothetical distant future applications of technology, this is stuff for which there's a high probability that you'll see the tech implemented in a grocery store on a road or even in your ear over the next year or two. Now this is a departure from our usual format for Building Tomorrow episodes. I recorded these interviews with startup founders in person on the floor of the Startup Alley exhibition hall, so you'll hear more background noise than usual, but I hope you get from that a taste of how exciting it is to go to a conference like TechCrunch. Each of the next three episodes features one or two interviews with a startup founder and is organized around a different theme or cluster of technology. One good sign that tech is nearly ready for mass adoption is when multiple startups are competing in the same space and attempting slightly different solutions to a similar problem. Our theme for today is job automation. The robots are coming. Well, they're already here, of course, as anybody who works in manufacturing will tell you. But whereas the wave of robotization in the 1980s, 90s, and aughts primarily displaced blue-collar jobs in manufacturing-based industries, this next wave is coming for folks with traditionally white-collar jobs that we thought were immune from displacement. And instead of robots, this next wave of automation is going to be a function of artificial intelligences. A robot can build things more quickly and precisely than a human ever could, but an AI can think through things more quickly and precisely than a human can. Now our first interview is with the founder of a startup that is applying AI technology to the drudge work previously done by young, bright-eyed, bushy-tailed lawyers fresh out of law school who spend many, many, many, many hours engaged in document review, which is the bane of their existence. So listen in. I'm standing here with Nick Whitehouse, who's the co-founder of McCarthy Finch, which is coming to take your legal job away from you. Future lawyers. Oh, no. The automation apocalypse is upon us. Tell me why that's not true, Nick. Hi, Paul. It's not true because I think AI isn't at this point where it's this major threat to us as people. I think it's much more on the augmentation space. And so what we've found is you're always going to need a lawyer, give the example of Brexit, give the example of privacy in the United States at the moment. Law is an incredibly topical subject in America at the moment. I don't think you can go to any newspaper without seeing something about the law on the front page. And these are really, really complex situations that are really perfect for people based on the relationships that they have, based on the really creative thinking that they have to go into to navigate through laws. But where AI plays a really big part is in the drudgery, that the work that is really, really repetitive, that we don't, as consumers of law, don't necessarily value. And that also goes for in businesses, massively big in business in the sense that all of these changes have really pushed the pace of business further, faster, faster, faster. And the risk appetite of business has dramatically changed because of that. And so the value that they place on this mundane sort of legal stuff has decreased. And so where AI plays that part is picking that up and really helping lawyers get through that quicker and focus on valuable things. So I think it's a really complementary approach and a complementary future at the moment for lawyers in AI. So now, just for the nitty gritty, for those of our listeners who don't know about the world of document review, this is, I guess if you've ever seen an episode of Better Call Saul and they're down in like a windowless basement room. Oh yeah. Behind the nail salon. Yeah, behind the nail salon there's boxes of documents that they, you know, you're fresh out of law school, you get hired by a big law firm and you just spend hours and hours and hours for your first couple of years combing through basic legal documents, looking for errors in wording, a missing clause here, a missing article in the contract. And it has to be done, but it's incredibly boring and tedious work. Is that what you're kind of focusing on that McCarthy Finch that tried to replace that work with? Yeah, I think it's a little bit broader, but so in that scenario yet discovery and litigation is massive. It's really hard work. If you're a junior lawyer, you're coming into law firms and you're not trusted, you're not able to do stuff and be creative, you're told to do research, you're told to find things, you're told to print things and you're charged out for that. But as a human, you don't necessarily understand how you fit into that process and you don't necessarily learn that fast either because it's not an environment to learn in. Where we see McCarthy Finch playing a role is we're virtualizing that lawyer with cognitive services and that goes right across from a law firm to an in-house team through to consumers through different legal tech providers to take those repetitive, highly transactional legal tasks and apply AI to that so that they happen fast, instantaneous. And examples we showed on Battlefield Stage, we completed a contract approval in under two minutes. When we gave that to lawyers to do, it took them 75 minutes just to read the contract, not to go through all the different points. And so you can understand how that's a massive shift in kind of how you would actually approach transactional legal services. As a client, I just want the outcome, right? And I need the outcome as fast as I possibly can, as cheaply, as cost-efficiently as I possibly can. And this is a real paradigm shift for me as a consumer of law. So is this in part a tool meant you're a lawyer's office. This is a complementary tool that you can pay for that will allow you to move through this material more quickly. So if you're, I don't know, a real estate attorney and you're used to combing through this real estate contract, it'll take you an hour or two hours. You can put it through the system, it'll spit out here's areas you should maybe review more closely, here's some conflicts you need to resolve. It'll speed up your workflow, meaning you're spending less time per document, which in theory will lead to cost savings that you can pass on to consumers as well. So I think at a base level that's where people are focusing on is reducing costs. I'm not a big believer in commoditizing services. I think I'm a big believer in creating value. And so, yeah, we can absolutely do that. But I think about health care. When I think about how do you disrupt an industry? And I look at health care and it wouldn't be great if you and I, if we have a health problem, can self-diagnose and heal ourselves, right? That's utopia. And when I look at law, that's the same sort of thing, right? And a law firm shouldn't feel like they're excluded from that or a lawyer shouldn't feel like they're excluded from that. What a lawyer does is transfer their expertise, transfer their knowledge to you as a consumer of that. At the moment they do that through billable hours predominantly and everything has to be inefficient because that's how they get their money. But if they can provide services, and we have a service called Author, right? They can create, they can take that author service and they can sell that and they can transfer that expertise and enable you to do what you need to do without having to play a part. But it's a service. They're still transferring their expertise. A completely new way of serving clients. So if that's in conversational AI that you can go to on a website, if it's built into your contract so you can ask your contractor a question without having to go to the lawyer. So all of that sort of stuff is an amazing new experience for clients that clients value because you're getting what you want out of it and a lawyer is still transferring their expertise. It's just a different way of doing it. And I think that's where you create value. That's where you drive, I guess, much more empowerment of the consumers of law. And I think that's a really good thing. The more we're empowered to consume law, the more we'll protect our rights and the more we'll want to consume law more because ultimately you're being pulled into to understand there's a value and benefit of doing it. So let's say I'm just an ordinary consumer. I'm looking for a will, want to write a will. I'm starting to realize, oh, I don't have anything in place in case myself or my partner dies. Someone has to look after the kids. How would this software make it easier for me to interact with the lawyers, legal expertise, ease that process? How does this look on the ground? Yeah, so on the ground, I think will is a really good example because when you talk to anybody who is just a consumer of legal services, you go all the way three times in a life. When you get married, when you've got a will and when you're buying a property, right? Or maybe when you die as well. You're not going to the lawyer at that point. And so from the will perspective, it is really about taking, that's very much a conversational AI approach, right? Understanding all those really complex different ways that a will could best suit you and allowing the AI to do the interaction to find those concepts and connect you to the right things that should be in a will. And so where we see our product helping in that space is with those providers who are providing those services around wills. And that could be a legal zoom or a rocket lawyer. That could be the local legal office or it could be another legal tech product that comes out. But really shifting that focus, absolutely the lawyer needs to be involved in this at some point. But there's a whole bunch of work that you don't have to pay $400 an hour to do to inform them to help make that will better for you. And I think that's really real power is is that you can go on and you on that journey in your own time at your own pace to understand what options are available to you to be informed that so when you are paying $400, $500 an hour for a lawyer, you're getting the best value out of that time. Well in theory I can imagine this should increase the pool of people who right now are intimidated by the prospect. Oh yeah. Right? Like it's I'm in my mid 30s. I'm starting to think about this, I mean I mean this literally not just metaphorically. I have a will in place. I should have one but I want to go talk to a lawyer and go to an office and pay lots of money but if there was a way for me to start exploring the options that could then later be validated by an actual attorney. Well that expand, you know there are people who want legal services but find that barrier intimidating or too expensive or just for whatever reason they're not taking that plunge. Absolutely. We should expand that pool. Right? Yeah and so when you look at the numbers, America spends about $437 billion on legal services again. 49% of the global's legal spend is in America. Wow. Yeah. We've done market research. When we go to consumers of law we see that 88% of people would rather go to Google or talk to a friend than ever go to a lawyer if they have a legal problem. Not just exploring. No. If they have a legal problem I don't want to go to a lawyer. Trust Google instead. Right. People often find law as expensive, intimidating and really, really kind of slow and that's one of the things that we see. By all meaning lawyers you actually create, you scale the legal services and I, as a consumer of law, have experiences. I bought a house, had a terrible experience with my lawyer, hated it. They were really, really slow. I had to chase them up for settlement. It was a really bad experience and I walked away from that thinking what's the point of a lawyer? I paid $1,000 an hour for somebody to do what and then I bought my next property and that was with, not that I'm a really rich guy, I already think, but New Zealand residential market's great but when I went down that path I went with the law firm that I was working with at the time and the experience was entirely different. They negotiated the contract for me really hard. I got a bunch of stuff from that that I just didn't think was possible and that was where I found that the real value was. It wasn't the reading of the contract, it was understanding what I wanted and then going into battle for me to get what I wanted and that is where the value of a lawyer really lies. It's that negotiation and if I can consume and understand and be empowered and then know what I should be getting from my lawyer and where a lawyer plays and really serves me with value, that's an entirely different buying experience that I think actually brings lawyers back into relevance in everyday life. It'd be like imagine if in healthcare we required doctors to do everything that takes place in the doctor's office. They had to do the blood draws, they had to fill out the paperwork, they had to well that would be a crazy way of constructing a system because what makes a doctor valuable is the specialized expert service they provide which is diagnosing what's wrong with the patient. It would be wasted if we made them do something that could be done by someone else just as if not more effectively. Same thing kind of in law. Why should we be having people go through three years of training, internships, etc. Just to read documents that could be done by an AI more quickly, more effectively and allow lawyers to spend their time on the real value added service. Yeah and I mean when was the last time you went to a doctor and you hadn't gone to Web Nd and figured out what was wrong with you before you went to the doctor. Over the last 15, 20 years we've all become far more empowered when seeing medical professionals. We're not empowered to see lawyers and you're absolutely right. You've got these incredibly smart people and they have very, very smart people who come out of law schools and go into law firms. Some of them do move up fast but they're not necessarily given the hard task and we pay a lot of money for them. And so we talked a lot about the consumer side of things and we definitely are working with legal tech providers to change that space but we're also working with the businesses and those businesses have just as many of these problems if not more trying to navigate that space as well. And that's a big cost to us as a cost in different ways. One is obviously cost to regulation or that does get passed on to us as consumers but risk and fear slows down innovation, slows down how quickly products get to market, slows down businesses in general and so this is kind of malaise that you can cut through by creating clarity and getting through the mundane legal stuff so that lawyers can focus on being creative and actually moving these businesses forward quickly as well. Now have you gotten any push back from or any, I guess any reaction at all from like the American Bar Association or any of the, you know. No, no, no and we play in a specific space so we don't believe that the AI should be giving legal advice. We believe it should be empowering people much like Google would but in a much smarter and more specific way and so from the legal side of this stuff we talk about augmentation. We don't talk about replacement of lawyers and no way would I ever advocate that people should go down the path of when they have a legal problem just relying on an AI. AI is not at that point. You should definitely always if you believe you have a problem seek advice from an actual lawyer but what we aim to do is empower people through different processes. You're kind of the web MD of the legal profession, not a replacement but an augmentation. Yeah absolutely so you as a consumer are empowered so that you're not spending your money unwisely so you spend your money on the right things, you're getting the right results and you know what you should be pushing for. So you come from New Zealand, how did you end up in this place in the US with a start up in Silicon Valley? How did this happen for you Nick? Yeah so it's been a really fun journey so I was a chief digital officer, a very large law firm in New Zealand, about 3,000 lawyers in the legal group so between Australia and myself we had teams and I was tasked with looking at innovation from the New Zealand perspective and we looked at both sustaining and disruptive innovations and this really was an idea that came out of this disruptive innovation phase. How do you serve the world differently in law and so that ended up I was on an innovation mission to Silicon Wadi in Israel and I met a couple people who were actually from New Zealand. Well like this sounds a really cool idea, why the hell is a law firm sending somebody to think about innovation and so we actually ended up meeting with a VC and took the law firm and the VC invested and we found a bunch of PhDs and actually I've been travelling the world for the last year talking to large law firms, talking to consumers, talking to large businesses, legal tech providers, really understanding the market and the reason we're in the US is because from the US is an incredibly innovative place, as I said it's 49% of the world's legal spend, it's the most litigious space in the world and I think there's a real need here with the cultural trade of innovation and trying new things and taking risks and so it's perfect for us to be here. Yes, American litigiousness for the win. Well that's great, well thanks for taking the time to talk to me Nick, I appreciate it, I think our listeners will enjoy hearing what McCarthy Finch is doing and we'll be sure to put a link to you to your website in our show notes. While Nick says that McCarthy Finch's goal isn't to replace lawyers with artificial intelligences, rather they want to provide lawyers with an additional tool for their legal toolbox, the net effect of this tech, if it works well, will be to depress the hiring rate for new lawyers. However, even the smartest AIs aren't anywhere near capable of replacing the entire legal profession, much of what lawyers do is customer service and human relations, the human facing side of the profession, dealing with unique demands of clients and persuading recalcitrant juries, that can't be automated or at least not anytime soon, that work is safe, which means that established lawyers with dense relational networks between clients and other attorneys, they're not going to be hurt by this new tech, indeed if anything they'll be helped since it gives them a tool to lower labor costs at their firms and cut some of the drudgery out of their own work routines. Who this tech potentially harms the most are those currently in or freshly out of or at least even considering going into law school. Imagine that you spent three years in law school, accumulated say $200,000 of debt, you go on the job market and you can't even find an entry level position at a major law firm because they're only hiring a fraction of the new JDs to do the basic document review that they used to. You hunt, you hunt, you hunt, finally you have to sell for something temporary in an adjacent job field that pays a fraction of what your legal job would. It doesn't have really the same future career or career earning potential given that your student loan debt is, thanks to the George W. Bush administration not dischargeable and bankruptcy, it's going to follow you the rest of your life. You can just barely meet the basic interest payments. You may never pay off those loans in your lifetime. And so this basic career miscalculation as the future supply and demand of legal labor impacts how soon you'll be able to afford a home, how many kids you can afford to have. Whether you can afford to take any financial risks to start a new business or to move to a new region and how soon you can retire. But what if you could avoid that fate? If there was a better way of assessing the risk that the career you are considering will be automated in the next five years or so. That's the promise of our next startup interview. Listen in. I'm here with VC who's the founder of a startup called Sixfigure.com. And we're going to talk here about a new trend. I mean it's actually a website and a program that helps deal with something that's an increasing issue here over the next decade which is white collar job loss. Jobs like analysts and lawyers and even some doctor, medical related fields are being taken by AI. I mean they're being automated. They're being routinized in the modern economy which means job loss for people who previously thought they had a job guarantee lined up for them for the rest of their careers. And Sixfigure is designed to help mitigate some of that problem, help catch it earlier for students. So VC why don't you explain a little bit about your website for our listeners and describe how the system works. So thanks for having me. At Sixfigure we work on future of work. That is an Oxford study said 47% of the jobs existing white collar jobs are going to be taken over by AI by 2024 and it's coming in. So what we help with the users is any person who locks into our website, he knows what is the, we calculate what is the job risk associated with any title and then we say what are the skills you should be learning to make a transition to a safe zone where the person will still be employed. So and what are the variables which we use in calculating the risk associated with the job is to find out whether the job involves negotiation, persuasion, is a finger dexterity, is a creative intelligence to it, or a social intelligence to it. So on a research back study we are able to find out what are the jobs at high risk and what are the skills you should be learning to move to a low risk jobs and still be employed. For example when you're talking about, you might think like okay the lawyers and the doctors they were like the automation is only coming in tech but that's not true. The automation is coming even for something as complicated as medical and the automation risk for the radiologist is like 98%. 98% of the jobs are not going to be there for the radiologist. Imagine people are paying 500K to go get a medical degree and they're spending 10 years and at the end of it there's not going to be a job. There's not going to be a job which is going to pay as much in which they can recover whatever the investment which has been made. You've got six figures of debt now and there's no job at the end because instead of a radiologist looking at a cancer scan or now an AI can identify whether that's a tumor or a cancer just as effectively and a whole lot more cheaply for the hospital. Exactly so what the radiologist is doing is nothing but an immediate recognition problem and there's a ton of data out there the hospitals are opening up the data and there's open source of the data and it's a computer science problem and the automation is going to come after the jobs which are very highly, highly paid. A radiologist gets paid somewhere like 300 to 500K so an employer or the hospital will be like okay I'm going to just use this automation technology and I'm going to save like 300K. And I think the range of fields is quite fascinating. We've touched a few of them. There's a fresh out of law school graduates doing document review. Again there was actually a presentation here at TechCrunch Disrupt that was going to automate document review. Radiologist, healthcare professionals, I think one of the examples you showed on your system to me was financial analysts or credit analysts. Again it's a data crunching kind of story and it doesn't require necessarily especially if you're a radiologist looking at an x-ray or looking at some data or a credit analyst looking at numbers you're not actually interacting with a person which requires a level of social intelligence that's a lot that's kind of a bulwark against automation for now at least or at least during our lifetimes. So those are fields that are really vulnerable. So where do you see Six Figure being used? Like who's paying for this service? One thing we want to get it clear is the employer is not going to care about your job loss. So the employers do not pay for this. Who pays for this is the schools. So we partner with the schools to say these are the job titles which is not going to be there and these are the job titles which is possibly going to exist and how you should be designing your curriculum, what are the courses you should be teaching and to help schools think about what is that they should be teaching to the students and for the students to democratize communities. So if you look at right now we all pursue career paths which are known to us which is very limited to our friends and family like what is the path which they have gone through and we try to retrace the path but that's very limiting. So that's where we plug in our big data engine in which we say what is the best possible move given the choices I've made till date what is the best possible move from and you can visualize your career career is like a 40 year marathon so you can visualize it like a chess game and look at what is my end game and make moves according to it and we calculate in terms of odds and seeing like okay this is a dead end job if you go here you can never move out to any of the other jobs and we really look at like how can you make the moves in which your opportunities are wide or you can transition better or you can be in titles which is not going to be automated. And that's relying on I think your database of career changes that professionals have made in the last couple of years is that where you're getting that transition information from. Right so the data is actually for the last 12 years the data. Okay. So we have been live for the last two years but we also partner with job sites who also provide us with the data and using the data we add the intelligence on top of it. Ah okay so you know what for whatever reason people had to make a job transition I mean maybe 12 years ago they were moving from radiologists to something else for well who knows why. So it doesn't really matter why they're moving it's what they were able to most easily move to like those alternate career paths and I think that's interesting I mean I can see the use case for like a career advising office or a professional advising office. I mean as it happens my partner works in the health professions advising office and this is the sort of information that would be tool kind of in the toolbox that would be useful for those offices. Right. What we also take into consideration is when you're making the career transition we also take into account does it pay as much as income as much as the salary which you're getting before. Right. So that is an important aspect of it in which we're not suggesting career paths where you still remain employed which is far less so. Yeah. Right. So often you know it comes into the ego of the person of like oh I was getting paid 300K I don't want to transition to a job which is like 120K in which I'll just be employed so that's why we plug in of saying that okay here are the real transitions which people have made. And we also try to connect like who's that person can he refer to you and you know pull you out of that abyss. So how about we plug one in and see how it works. Let's see what profession should we choose. I mean we did an analyst before and we could look at that. So you plug in analyst it gives a little job description here of what an analyst does prepares reports with credit information etc etc and then as you scroll down it gives a job risk number which is was that there. It's a probability of AI taking over this job title in the next six years and sorry analysts your risk is 98% does that mean 98% of the jobs or 98% likelihood that your job will be gone. 98% of your job will be gone. Okay so you got a 2% chance of keeping this six years from now. So maybe it's time to make a career change. Oh no the way I do I am doomed it tells me I'm doomed in no uncertain terms I like that automation risk doomed. Then what was your median salary before as an analyst $82,000 almost a year safe designation switches. So it gives some suggested career options that are relatively similar require relatively similar career sets or skill sets but have a much lower risk. So number one here is account manager in sales. That's because the sales engineers involves social aspect of it. It involves persuasion it involves negotiation. So these are the ones where the AI is still not good right right and so your odds in the next 50 years by then you're retired so it doesn't matter. And there your odds of losing your job in the next six years the automation is 0.41% so now you're safe. Now you're safe. Now you're very very safe. Yeah for your lifetime you're safe. You don't have to worry about it right right. A career is 40 years so no automation. Yeah that's great I mean if you know that in advance as a student you're not having all the transition costs of you know it helps you tailor what you're doing the internships you're taking the initial jobs you accept all of that then can be tailored because of of this kind of prediction engine. So one other thing in aspect which I wanted to highlight about is because we are taking the analogy of a chess game in the chess as soon as you're able to seize the middle your opportunity your chances of winning goes very high. Right right so that's what we try to do here with like the careers of saying like which is that company or which is that job type of way you should be transitioning as soon as possible so that your opportunities are unlimited. Yeah yeah well that's just fascinating. VC you want to thank you for coming on telling our listeners about Six Figure we'll put a link to to the website in our in our show notes when we air this so thank you so much for your time. Thank you so much it was a pleasure. I appreciate VC's attitude he combines a realistic sense of inevitability about the coming wave of white collar automation with an optimistic sense that he and his company can help lessen the pain and suffering of that transition indeed that's very much the spirit of TechCrunch disrupt as a whole disruption is there it's built right into the name of course but it's inspiring being around the very bright very competent people who are rolling up their sleeves and trying to solve social problems and make human lives better and they're so without having to appeal to government to do it for them there was no talk of here's why we need a hundred million dollars in job retraining funds to transfer people from one career to another now these are people who are anticipating in advance that there will be a social problem there will be an economic dislocation and are doing something now to try to fix that or to try to mitigate that damage and they're doing so through private means with private funds and trying to do so to turn a profit to to make a career and a living for themselves so I think it's a it's a lesson about the power of the private sector the power of free enterprise in addressing and anticipating future crises and that's all for this episode tune in next week for the next in our series of interviews from TechCrunch disrupt until then be well to learn about building tomorrow or to discover other great podcasts visit us on the web at libertarianism.org