 It's all the same to be uncharitable to disagree with the introduction that's meatier than talk. But I should say in my book, the new book is called End of Lawyers' Question Mark. And the question mark's all important there, otherwise I'd do it at the end of my consulting career exclamation mark. I want to cover eight subjects with you today. I want to talk a little bit about the future, how to think about the future, the kind of mindset that might be useful for you to have and thinking of the future of the legal market, talking about the market itself, turn to the vial concept of commoditization as a vial word, at least as a vital concept, speak about information technology, which in many ways has been my passion over the last 25 years or so, how it would impact in the legal world. I want to suggest to you that the shape of law firms is changing and reflects on what that new shape might look like. See a little bit about access to justice and how it can be enabled and increased through information technology and other techniques. And ultimately say something about whether or not lawyers actually do have a future against the question mark and finally comment on law schools what their role might be in the new world as I envisage it. So let's start off with the future and with the tale of Black and Decker, one of the world's leading manufacturers of power tools. It said that Black and Decker, when they recruit new executives, they take them off on a course and they sit them in a room, I suspect, not much like this, but the recruiters slide up exactly like the one behind me and say to the assembly executives, this is what we sell, isn't it? And the new executives would rather be surprised by this and say of course that's what we sell, we're Black and Decker, we're the leading manufacturers of power tools. The trainers say with some satisfaction, this is not what we sell because this is not actually what our customers want. This they say is what our customers want and it's your job to find ever more competitive and imaginative and creative ways of giving our customers what they want. And I think there's a marvelous lesson here for lawyers everywhere for thinking about the future because lawyers tend to be of power dual mentality. They tend to think well what do we do today and broadly that one-to-one consultative advisory service delivered through documents and meetings and often on an already building basis. And I think how can we streamline that, how can we improve it? Not often enough I argue to lawyers to stay back and say what actually are we doing in life? Why isn't the major or minor organizations paying large amounts of money for our services? What isn't that we actually by the value add to the world in which we live? What is the whole of the wallet for lawyers? It's a question I've been asking for 15 years and I found two answers to that question not directly but two answers that I think we might find useful. The first is from KPMG and if you look at KPMG second at one stage their global mission statement ran something like this KPMG said we exist to turn our knowledge into value for the benefit of our clients. We exist to turn our knowledge into value for the benefit of our clients. Isn't that a superb way of capturing what we all do as professional advisors or for people who aspire to be lawyers? We acknowledge, we have expertise, we have insight, we have experience and ideas which we apply in our client circumstances. That's what we do as lawyers. The premise here of course is that we're not necessarily in the business of delivering our knowledge in a different way. KPMG don't say we exist to provide one-to-one consultative advisory services on an hourly bidding basis. What they say is that we exist to transfer our knowledge and my argument is this if knowledge management or knowledge is the volume, the whole of the wallet and the legal world we have a couple of options. We can be rigorous and systematic about the way we capture and nurture and reuse our knowledge or we can be haphazard and unstructured and unsystematic and the latter is how we are generally going about our manipulation of knowledge in the legal world. The fundamental point here is though that clients are not after one-to-one advisory service the way we currently work as lawyers lawyers are after something more fundamental and that's to tap into the knowledge of lawyers the strategic challenge therefore is are there different, new, better, quicker, cheaper less costly, less forbidding ways of delivering our knowledge that's the challenge the profession faces. Another response to what the whole of the wallet and the legal world comes down to different clients I do a great deal of work, research with general counsel, secret in-house lawyers within companies and they say to me again and again one thing they say this that law firms are far too reactive they simply wait to respond to our instructions to them they don't anticipate our needs clients general counsel say to me we're not really in the business of dispute resolution we don't want dispute resolution we want dispute avoidance we don't want legal problem solving we want legal risk management or to put it more graphically what clients tell me is they would prefer our fence at the top of the cliff rather than an ambulance at the bottom and a great deal of legal service as is being improved today is about equipping that ambulance a little bit better or getting that ambulance to the scene of the problem a little bit quicker which is client's say to me to miss the lines to help clients want is at the top of the cliff senior lawyers within major businesses want to avoid problems they want to anticipate problems they want to identify risks and control risks and if ever the legal profession has fallen short it's in this area every in-house counsel I interviewed will say to me I'm in the business of legal risk management and hardly a law firm in the world provides the kinds of proactive legal risk management services that these clients are actually wanting so just to recap the hole in the wall I'm arguing is two things why the market sustains lawyers the value lawyers bring seems to me is two fold because lawyers acknowledge expertise in sight that clients do have and secondly looking more to the future because lawyers potentially can help clients avoid legal problems and not just resolve them let me say a little about automation and innovation when most people think about information technology and its impact, not just law generally they tend to have automation in mind which is taking some kind of process or task or activity, computerizing it systematizing it, streamlining, optimizing all these kinds of words over the years the fundamental point here being that that to which the computer technology the information technology applied exists, pre-exists and somehow technology improves the position now you can look at marvelous examples in law and elsewhere of the use of automation but if I look at other sectors that have done right across the world the most dramatic and impressive applications of information technology are not actually instances of automation at all the instances of what I call innovation and innovation in my terms at least is using information technology to allow you to do things that previously weren't possible that's the real excitement of technology because in so many law firms despite what people think many of the processes are actually already quite efficient the work is already done to a high standard the scope for simple automation is quite limited the excitement for media information technology in the legal world is allowing us to do different and new things that weren't possible when there was only manual techniques in our fingertips now many people are very dismissive of this they say Richard Holland Earth computer technology ever give rise to innovation and I use this information technology as an example the ATM one of the most successful information technologies of the last 30 or 40 years now if you're with an automation mindset that's to say if you think information technology can do nothing else but computerize something that already exists I put down this challenge what did that computerize? what pre-existing process did that systematize? wasn't the case that 30 years ago in the middle of the night when you needed money you went down to the local bank in this large hole in the wall of the bank and some poor bank teller sitting the other side you bent down and said could I have $50 please and out came a hand clutching the notes you required of course not it wasn't that process that existed and some bankers got round the table and said come on chaps this is rather inefficient and often quite chilly why don't we do differently of course not it was the information technology gave rise to a fundamentally new way of delivering the domestic banking service and so too in law the challenge is not simply to say how do we work today as lawyers and how can we streamline that through technology the challenge is to think how can we change the way lawyers work how can we work differently using information technology so much about the future and the mindset one might usefully have let's talk about the market and for me the market actually can be quite simple to summarize and this is again feedback I'm getting unanimously from the senior in-house lawyers within my consultant and through my new research and it seems to me you can summarize the current state of the market in this way I think major clients face a dilemma in three parts the first part is that you will find every in-house lawyer almost without exception under pressure to reduce their internal headcount companies in these difficult economic times are simply saying we have to make cuts across the door and the legal function is no exception so there's pressure on in-house lawyers to reduce internal headcount at the same time and vitally for law firms there's huge pressure on internal lawyers on general counsel to reduce the amount they spend on external law firms this is unarguable this is just coming back 95% of the in-house lawyers speak and at the same time and this is very much an and yet what they're also saying to me is they get more legal compliance work to do than ever before and much of it's riskier but all of this should resonate economy is tragic less resource for internal lawyers less to spend on external law firms more regulation coming through more difficult legal situations and it seems to me we can see that something has to give we cannot continue working this week because that's the other factor and at least until this year almost every year lawyers are putting up their fees every year I summarise this by saying clients want more for less and I think this is just the freeze that captures the spirit of the meetings I have with the client community and so do governments incidentally in relation to services that are supported by the publicly linked there's another thing in England that's relevant that I think will have a ripple effect across the global community and that's the possibility of external investments in legal businesses under the Legal Services Act 2007 in England it will now soon be possible in not as much as two years the dates are not quite certain but it will now soon be possible for external investments to be made in law firms privately venture capital it will be possible for non lawyers to be partners in law firms it will be possible for non lawyers to hold the top management position within law firms this will radically change it seems to me the way at least some legal businesses operate and many people say well that's not relevant for the US because we don't have that kind of position but I think it might be because what you'll see is a number of private equity houses venture capitalists other external investors imaginative new managers from different disciplines coming in and showing that legal services can be delivered in a different wage showing that disputes can be resolved at less cost perhaps less confrontation showing that deals can be managed more effectively showing that advice can be delivered more quickly and painlessly and the point is not whether or not external investment is limited to the English legal system the point is will new business models new ways of delivering legal services embarrassed from these investments and I'm involved with a board an advisory board network I'm probably equity firm that's investing in the legal market I'm learning a huge amount from this but the chances of these external investors taking an existing offer about tweaking it a bit are almost non-existent they're not committed to hourly billing or pyramidic structures and expensive buildings and expensive cities they think a bit entirely new is of delivering legal services but whether or not that's restricted to England in terms of external investment in the sense that the genie will be out of the bottle then we'll be seeing that legal services might be delivered in different ways let's go back to the more for less theme because it's the underpinning theme with my talk today clients require more for less I think there are only two broad strategies that law firms and their clients can adopt and respond into this I call these the efficiency strategy and the collaboration strategy the efficiency strategy intuitively is what one might think one needs to cut to the costs of legal service if you need more for less how do we take some of the costs out of legal service now the important point here is this is not simply asking law firms to reduce the number of support staff or maybe cut the marketing budget a little this is about the cost of legal service the cost of lawyers delivery and advice handling deals, resolving disputes the reality is it's too costly today for most organizations to afford a lot of this and it's a running theme again of what I've got to say is that routine and repetitive legal world at work the legal world over is being undertaken by quite junior lawyers at very high costs and so the challenge of efficiency strategy is how do we take some of the costs out of the routine and repetitive work in the legal market this takes me along a path towards what I call commoditization I'll turn to that in a few minutes and it also leads me to a notion that I termed multi-sourcing that's due to the obvious one we need more for less to have to cut the cost of legal service the more ambitious and radical strategy is what I call the collaboration strategy and this is the idea that clients don't simply cut costs but actually share the costs and the premise here is that many legal clients in the world over again actually have similar legal problems and isn't there some way that they can club together and share the costs so say a regulatory review or share the costs of some kind of drafting activities or share the costs of some kind of investigation or monitoring that they're all conducting at the same time so huge amounts of regulation coming through how's one actually master that how's one put to place procedures common challenges across many businesses what I'm suggesting and frankly this is not science fiction last year I was working with a half a dozen general counsel that Fortune 50 companies that kind of side were thinking of this precisely they share common legal tasks they're not competitive but I can't really share the costs here and I believe this will be enabled to fuel through emerging technologies broadly with 2.0 technologies on my community harnessing the collaboration part of technology so this in a nutshell is what I see the profession has to do to meet the more for less challenge where they have to cut the cost of legal service and or they have to apply in convenient ways of clients to share the cost of legal service so let's really take the first one and talk about commoditization I'm conscious in my new book I use this term to spoke I'm conscious I know that now the spoke is not a term that's particularly well used in North America if you came to London however and you had money unlikely in this particular climate to have a hand made suit made in a sour roll we in England would call that a bespoke suit or if you came to England to have software developed for you it's not clear why we wanted to choose to do that in this current climate but again if it was developed specifically for you it wasn't off the shelf we'd call that bespoke software and I believe by analogy a lot of legal work is highly bespoke and one of the I think great tragedies of law school not just here just all over the world is we are I think encouraged to regard almost all legal problems as requiring bespoke solutions we're encouraged to think of almost all legal difficulties as well they might reach in your case the Supreme Court or in my case the House of Lords but the reality is huge amounts of legal work do not involve the starting of the black sheet of paper and the bespoke solution or the bespoke approach when you're drafting an agreement you start with an action to fake when you craft it from scratch but a great deal of legal work isn't like that at all a great deal of legal work is routine and repetitive but what do we do with that well it seems to me you stand your eyes and I'll touch that in a second but right at the other end of the spectrum there's something called commoditization and most lawyers who talk about commoditization if they're prepared to allow the work in their models will tend to say simultaneously in a dismissive way with the right hand which means fundamentally we can't make money out of that anymore the commoditization of legal services suggests that it's a filthy concept but some legal work is actually so commonplace so simple for the lawyer that in some way we can make that available as a commonplace really available and not just widely available available at no cost at all and that's the idea of commoditizing and the mindset often of many petitioners when thinking of the future of legal services to think well either it's one or two it's either we handle that or it's this bespoke stuff so I'm going to stay with the bespoke kind and I argue it's more sophisticated than that and in fact there's a spectrum we can see of bespoke that leads to commoditization of legal services and the red light there is for lawyers amongst you who are conservative the profitability of firms because you don't actually want to move across that final red line if you're a lawyer if you're a client that's where you want to be but let me talk to you as I say very often when we watch Retina Repetitive we don't approach it in a bespoke or customized or highly tailored way we standardize we standardize in two ways we standardize in terms of process and we standardize in terms of substance in terms of process we use checklist we use procedure manuals if we're in the consulting world we use methodologies but basically we are particularly we are pre-articulary the steps that we need to to walk through to undertake a particular piece of work we don't think out from scratch and in terms of documents in terms of substance we don't as it happens start with a blank sheet of paper we might use templates or standard form documents or we might use previously negotiated agreements but we usually have something to start with and that's what we call standardization now many law firms don't stop there they move to the systematization so let's use a concrete example the drafting of employment contracts for example historically perhaps there's a handcrafted bespoke service firms that do a lot of that kind of work and seek to standardize and have their standard forms for different categories of the employees in different circumstances but then they might go further and think well why not we're systematized and we're having a discussion this morning and having a further one this afternoon at the Birken Center about automatic document assembly a technology that's been around at least since the era of 70s but the idea there is rather than metaphorically or actually cutting and pasting from an original document to create a new one we simply answer a series of questions on screen and over simplification here but hiding behind that screen that asks the question is like a decision tree with standard bits of text hanging off each of the leaves so if you answer question A in this way inserted with that paragraph against that question in that way even goes this particular clause and automatically assemble a pretty polished first draft technology is well established if you speak to business people with no insight particularly into law but know about efficiency of process we'll think it's suitable of course that must be the case it cannot be that every piece of legal work out there is so unique that one needs to start to fresh surely we can bring together past legal clauses words, phrases, documents and so forth so we systematize and we also might use automatic workflow to carry legal processes efficiently through an organization we need to stop there a little this law firm that I'm suggesting that is automatically generating employment contracts for clients might go a step further they might actually package their knowledge and experience and actually provide that software essentially to HR department to personnel specialist and client organizations because clients will say if you're actually using quite junior lawyers to answer the questions why can't we answer the questions and this is a huge step this is the taking of your knowledge of the law firm and packaging it essentially licensing it for clients to use for many lawyers I've got a step too far I'm suggesting this but let's go back to KPMG we exist to turn our knowledge into value for the benefit of our clients why shouldn't we if we can see we can both improve productivity and perhaps reduce cost for clients and increase our own profitability take the step of packaging my biggest client over the last decade has been Deloitte the tax practice in the new cave and they're happy for me to talk about this project they have gone in the process of tax compliance from what used to be a highly handcrafted process right to the stage of packaging the compliance process every company in the newer world just jurisdictions has to take information from their accounting system they have to apply the relevant tax rules they have to produce documentation of the described form they have to submit that to the tax authority as I say it used to be handcrafted before Deloitte in fact it was Anderson in the new cave who developed the system they went from bespoke to standardised where they had procedures and standard documents and formats and so forth then spreadsheet technology came along and they began to systematise and then they built a highly impressive tool embodying many experts inside and essentially suck the information out process it, produce a report in a form that could be submitted to the tax authorities they used that internally a number of Anderson people left Anderson to work in companies and came back to the firm and said we'd like to be able to use that software we used to use when we were working within you can we choose strategic decision on the one hand some people say we shouldn't give away our crime jewels on the other hand we actually hang on a second this is a new business model why don't we actually licence our knowledge and that actually was the approach we took and now they make money while they sleep as I say 70 to 100 companies in the UK licence that knowledge of Deloitte don't think of it as software don't think of it as something purely process based it's a rich sophisticated body of many hundreds of tax experts that clients can out tap into without direct consultation with them the process is cheaper and quicker and easier for them in Deloitte for making serious money out of that not all of that they have electronic presence within their client organisations if you look at firms like Lake Latres and Allen and Overade in London both these firms and they're amongst the largest and most successful global law firms have produced term sheet generators what are term sheets? term sheets very broadly speaking are the documents that indicate from a financial institution of the condition under which they're at this stage thinking they'll make finance available they're often the basis of later loan documentation term sheets by and large drafted by banks not drafted to the quality that specialist banking and finance lawyers would do the problem is that many many deals never actually come to fruition and so they can't afford most banks to give the term sheet work to law firm so what do these firms do? they actually produce an automatic term sheet generator so clients people the banks, the banks are safe information out comes a brilliant polish first draft that's packaging for me the final stage inspection is the commoditisation I'm going to be careful with this term commoditisation it is of course a metaphor because when we're thinking in the physical world with commodities such as sugar or silver or coal or whatever it is often undifferentiated other than the issue of price but a commonplace a commodity sometimes can be traded so I believe the analogy in the information world the world of law is the information world physical commodities is online service and eventually what one will see is it very interesting if you look at the Alan Roeberry and Linklater's model the difficulty when you get more than one law firm or provider providing an information product the price tends very quickly towards you there's no, the marginal cost of producing that service that offering to another client is very low and you'll just see that economics in the information world is such that when you have competing products or offering like packages in my term they become commodity so this is the idea of broadly speaking that actually, and it would be the same in employment contracts in another firm where on a similar suite of employment contracts that were packaged again when there's more than one available the price goes quickly down so the fight is aware of your commercial and minded and the law firm is to have features in your system which differ from others so you can continue to have it more often than package billing models change across the spectrum to the left by large when it's bespoke and standardised work it's dominated by hourly billing when it's fixed fee work you'll find there's a lot of systemisation and package involved hourly billing, quick ending goes about my daughter at the time this story was 12 one summer she wanted a summer job and I asked her to put all my business cards and showed her how to do it and she said how much are you going to pay me and I said I thought I'd pay you by the hour and she's 12 and she thinks of this for three seconds and smiles and said well I'll take my time then now it seems to me if a 12 year old can see the fundamental problem of hourly billing why is not one of the most generated professions in history not seen similarly frankly when I'm retaining laws in various capacities and verbal laws and open check as you want to contain the problems there are a very limited number of circumstances where you can see hourly bailing with defendable otherwise fixed fees for most clients just increasingly make sense so when you move from left to right you move hourly billing to fixed fees what do law firms say about this well the average managing partner of a law firm if he or she has a red marker to hand we'll put a red ring around the spoke and say this our firm does mainly bespoke work and that's how it should be and I say two things to that I say A that's factually incorrect and B strategically misconceived well I don't actually say it in that way but that's the thrust of my response especially correct because I continue to enumerable world-class firms but of course I've gone well beyond bespoke they're already standardizing the system of television in fact more than that the reason clients often choose one law firm or another is precisely because that law firm has been experiencing particularly earlier in law the idea that the work comes in and thinking God remember that we wanted these before and what we started from scratch would be horrific for many clients so I can take you as I say today to enumerable firms where standardization and systematization is commonplace the more important point why is it strategically misconceived well because what I'm finding when I speak to clients about this is there's a very strong pool from left to right now why would that be from left to right well just before I go on to explain that I just want to say we have to rethink client work for a second what I'm not saying is you take any dealer dispute and you think into which one of these boxes is it set what I'm saying is and I'll say a little more about this in a second you can decompose legal work you can break it down into particular chunks and each of these chunks of each of these chunks you can ask the question into which of these particular boxes does it fit so don't think of laws or other lithic laws of work to be done you can identify some tasks that are almost any legal project and some of what needs to be done in the sport we have other work to be done in different ways now with that said I want to move from left to right quite simple three reasons one is you move from left to right and the price was done secondly is you move from left to right the cost becomes more predictable you move part of the dealer to the extreme and if you move from left to right if you get it right the quality goes up because in the left you might be benefiting from one extremely expert person who can handcraft a solution but you take the delight example their package is actually the distillation of the collective experience of many experts so it's not just one expert as you move from left to right it's many experts now if you're a client and you hear the price goes down the price becomes more certain you can see why clients might want to move from left to right to give me a sense of where I think the legal market at major firms are in the United Kingdom just now I think we see that kind of spray in three years time I think you'll see an emphasis change this is very approximate but just gives you a flavor of hot I think the emphasis will change within seven years I'll look like that fairly even division right across each area and within ten years I think it will look like that that's a transformed legal's value as a market to be enabled by a whole bundle of technologies in a whole different set of ways but I think over the next decade we will see some pretty clear transformation I call this incremental transformation it doesn't happen overnight decomposing and multi-sourcing I've hinted at this, what I'm saying is that legal matters aren't indivisible blocks of stuff you can actually break down any kind of dispute into constituent tasks and you can allocate each of these tasks along the spectrum I presented to you and then you can think of each of these tasks what's the best way to source that what's the best way to resource that individual piece of work and what I'm saying is and I know this might sound terribly unusual but actually legal services might become a bit like producing a manufacturing of a computer or a car that we know all the various components come from various places and we pull them together and what I'm saying is there are many different ways you can source legal work so just you see 12 or 40 let's just take a couple of them this is their idea now of outsourcing legal work it might be for example document review and litigation why should that be done by expensive junior lawyers in expensive cities where in India there are very bright law directors who can actually have to pay that review at a fraction of the price or what about subcontracting I know many leading firms who are now subcontracting legal work to English qualified lawyers in other jurisdictions in New Zealand and South Africa and elsewhere or what about the leasing of lawyers yesterday the good fortune to hold a seminar with the chief executive in front of a firm called Axiom you may have heard of Axiom but they're a firm that essentially leases lawyers what they do what they have in mind is the general council that has legal department that has a study by the work and when a peak arrives that legal department requires external legal expertise the conventional law firm will deliver to an hourly and hourly basis at a high cost what essentially Axiom and many other firms are beginning to do what they actually do is lease a lawyer in they'll contract a lawyer it's like a very upmarket temp agency at a fraction of the price what I'm saying here whether it be outsourcing or offshoring or computerizing or homesourcing or leasing there are new ways of handling routine repetitive work ways that will actually greatly reduce the cost of legal service and what will happen if a big deal of dispute is you'll chunk it up into constituent tasks you'll farm the tasks out to the most efficient source that can actually meet each of these tasks you'll pool them all together and then you'll deliver it to some integrating service interesting job there for someone which is to do the analysis of constituent tasks to do the allocating to do the quality control to brand and actually to in some sense ensure the quality so will that be enhanced lawyers or will that be external project managers that we don't know yet let's talk about technology there are many ways as a guest for the Burton Center is appropriate that I do so lawyers buy in large and there are of course exceptions but lawyers buy in large are not tremendously excited about information technology and I find a tendency amongst many leading lawyers really to think this that they've got their blackmailing machines and they've got Google but as far as legal works concerned that's probably just about the end of the road we're not going to see fundamental transformations in the legal service now just to take your step back in 1996 I wrote a book called the future of law and in the future of law and in the presentations I was giving around that time I was explaining the great potential of email that is sometimes absurd now but I was claiming that the dominant way that clients and their lawyers would communicate the future will be by email and I kid you not we're senior people in the legal profession saying that I shouldn't be allowed to speak in public but that might be true actually but they were saying that I didn't understand safety security I didn't understand confidentiality that lawyers would never give up paper communicating with clients and they're a very small number of years that have changed radically so some of my suggestions they seem to be right now landish they're not nearly as outlandish as they are in 1996 that lawyers and clients would email one another but nonetheless what you'll find is a kind of rationalization amongst lawyers that okay I accept my communication habits have been entirely transformed through email I concede that my information seeking habits have been revolutionized by the world by web but legal service itself will be untouched by technology and in any event as the internet has had its day at it's uh isn't it just tailing off of it with the comm bubbles and the kind of thing I'm hearing and I've been terribly impressed responding to how technology is changing by this book now there's much of this book by Ray Kurzweil that you might want to prove to one side he's talking about the integration and the collective impact of nanotechnology robotics genetics and information technology and looking to a world that sometimes suggests when humans will actually try to send biology reading that to one side is one component to the work that fascinates me and I follow Kurzweil's work since the mid-eighties when I was doing a doctorate in artificial intelligence and I found many of his predictions on the AI to be fascinating how it's happened what's interesting is his theory about the evolution of technology and it's actually supported by a whole bunch of other people thinking of technology many people go about the words of all the garden word in 1965 we developed this rule on law very approximately every 18 months or two years processing power we've got that we've constantly had and many people said that last three or four years it's still going strong and most people who pay attention will be able to see that all manner of it investments in technology and all sorts of conventional paradigms will keep that going for many many years what Kurzweil does is he looks at evolution of technology not just in terms of processing power the number of internet users the number of transistors that ship hard disk capacity a whole bundle of different headings and what he's suggesting and I think the detail doesn't matter it's the thrust that's important far from supporting lawyers who the technology is tailing off or perhaps even increasing steadily he suggests it's going to be an exponential increase in the power of technology and memorably he says two things he says by 2020 and again there are others who agree with him and even if it's not right the general thrust is important by 2020 if one follows more of law and other developments the average desktop machine will costing maybe about a thousand dollars in today's terms will have the processing power of the artificial brain 10 to 17th calculations per second it's not saying this machine is over artificial intelligence it's just giving a flavour of the increase in power by 2050 if one follows the curve the average desktop machine will have more processing power than all of humanity put together now if you can see the day or even discuss the day that the average desktop machine will have more processing power than all of humanity put together it might be time for lawyers to rethink some of their working practices it seems to be absurd to the legal profession to think that all other sectors and all other markets will be radically transformed from technology and their legal practice will remain much to see of course it won't happen we're going to see transformations and it's a few of these transformations I want to talk to you about just to give a flavour of something that's moved on so rapidly the developments in broadly what I would call online community over the last few years in communicating instant messaging over 100 million users blogging, I concede that 100 billion people out there who blog very few of them who work hard to see but the important and interesting phenomenon seems to me is that there are new ways of communicating of communicating in mass on mass that we just inconceivable a small number of years ago mass collaboration itself the formation whether it be of an online encyclopedia of a Wikipedia of an operating system of a Linux this idea that people are managed unfinanced, unedited come together and create these remarkable artifacts a challenge of fundamental business thinking and shows there's just a new world out there of communication with 1.25 billion people connected to one another strange things are going to happen social networking, Facebook, many people when speaking to students dominates their social lives but don't see the business dimension but this seems to me entirely predictable in 1996, during a few years Facebook like technology will connect lawyers to their clients and my job and myself appointed is thinking what if, what if that happened what if all law firms and their clients were owned something like Facebook how would that change the way that what was undertaken the way that what was competed for the way in which services were delivered I argued and changed it quite radically I went over to Twitter, I did a conference recently in Chicago during which there were over 200 tweets and I spoke and that wasn't there a few years ago this emerging technology that allows people real time whatever one thinks of it to notify friends in contact of what they're doing and what they're thinking and just don't know what would happen if two or three general counsel of the largest corporation in the world started tweeting and twittering all the time what would that mean, how would law firms monitor that nonsensical most law firms would say today and as I say while a little more predictable the email was in 1996 and for those who are skeptical I point to online peps 220 million people sorry 150 million people of online peps 70 million people have more than one online pep and what's more or less likely an online pep to an online lawyer I ask you what does all of this mean for lives I follow the thinking of Claire Christensen who is a professor of business school here where he distinguishes between sustaining and disruptive technologies sustaining technology has been most of the sustain and support in the way a particular business works in the way a particular market functions disruptive technologies are technologies that come around and fundamentally change the challenge of business or market or sector and my belief is that we've seen over the last decade for example very great impact of sustaining technologies in law firms there will be accounting systems or processing systems electronic mail systems they haven't fundamentally challenged the way laws work the next decade for me will see the emergence of I argue 10 disruptive legal technologies that's the main theme of my new book I'm saying individually these technologies are pretty fundamental together they will entirely transform the legal landscape let me give an example of four I'll give you four examples online are close client communities have a look at sarahmoor.com that with our last look since probably a change but it's 50,000 doctors in the United States no pharmaceutical companies no patients 50,000 doctors online exchanging ideas and thoughts and insights and experiences and medications and fairways on patients conditions and so forth a cross between Facebook and Wikipedia in many ways what has been built up there is a massive resource insight into medical conditions I saw that and I thought what if that happened in the legal world what if law firms, not a chance law firms are not going to come online and share and collaborate in this way that is what's going to happen clients of law firms will come online and will share experiences that have already happened I can point you to in 2003 when the banking legal technology group was set up in London now you invest in banks, that's five law firms to collaborate, they set up a close community for the storage of know-how this is not science fiction, it will happen it's fundamentally disruptive for conventional law firms if one client meets a multitude jurisdiction review of a particular area of law why shouldn't these clients share the cost of that amongst one another traditionally what would happen is a law firm would advise one client to review if they go from that client to that client that's called knowledge management recycling of knowledge the sharing of knowledge is going to happen at the market level soon amongst communities, clients will say how do you do this work but do know that I'm going to be sharing that with another 10 banks and other 10 pharmaceutical companies you're not interested in doing it we have buyers marketing legal services law firms will irresistibly be drawn as supporting online or close client communities online dispute resolution, we have the world's leading specialist who knows far more of this than I do but this idea that we have disputes that would physically congregate together to set our differences this Court of Service, or a place where I was asked seems to me it could be a service the whole bundle of techniques that allowed people to resolve disputes with the support of technology and not necessarily complicating together in a traditional way. What about invaded legal knowledge? What do I mean by that? Imagine if you couldn't drive your car, unless you had your seatbelt plugged in or inserted. Not that there was a rule forbidding it, but the car wouldn't start. The rule would be invaded and insisting. When you play solitaire, as I'm sure we've all done on our personal computers, you're the card game. If you tried to put a rate five under a rate six, it unceremoniously flicks the card back to the pilot game. When we used to play with atoms, with cards, I don't know why you want to do this, but you could do it. You could put the rate five under the rate six. You might get into doing the next round, but you could do it. You could break the rules. In the electronic version, you can't break the rules. The rules are embedded in the system. And looking ahead, I see great potential for the embedding of law and project management, business management, systems, and social processes of organizations. That this idea you have to look at what you're doing and evaluate it from a legal point of view, apply the law to it, will actually become rather bizarre. Legal compliance will be built in to the way we run our businesses, the way we run our life. Like the card game, it won't be an option to put the rate five under the rate six. And again, that embodiment of legal knowledge within organizations and their processes and their systems will actually be disruptive for law firms who used to be the people who advised on compliance, compliance will be an embedded process. What about the electronic legal marketplace? We're all familiar with EB, the auctioning of groups through EB. We're all familiar with reputation systems where you can go out and find out what other people thought of in the town. We're all familiar with price comparison systems. You can find out whether or not one insurance company is cheaper than another. Why should the legal market be immune from these very same techniques? That's the electronic legal marketplace. I can point you to examples of each. But very soon they'll be commonplace. For legal services, strong reputation systems online, price comparison. This asymmetry of information as between client and provider will disappear. It'll be far easier for clients to find out what legal services are available at the lowest cost and what reputation is attached. That will transform and again be highly disruptive for law firms who in many ways have relied in the past and not been able to know, or for clients to not be able to know what alternatives were available. There are a lot of law firms that went to change. The classic shape, this triangle, the expert trusted advisor at the top with the routine work being done by junior lawyers below. This is the fundamental, the gearing, the leading, the fundamental model that gives rise to profitability for law firms. The more junior lawyers, the more profitable the firm by and large. You have many junior lawyers who are paid but actually earn far more for the firm and that is actually swept off as profit. But the thrust of what I've had to say today is there's new ways of sourcing that routine work. We don't need expensive junior lawyers in expensive buildings, in expensive cities doing that routine legal work. And what will happen therefore I believe is that traditional triangle actually very much narrow in the way you'll see the side before you. That's a fundamental challenge for profitability to the business model underpinning almost every law firm over the size of a 50 large in this country. What about access to law and justice? In English, just as a case study, one million, and we're far smaller country in the year, they're 50 years size, one million civil problems go unresolved each year. It's a huge latent market, people who want legal advice who benefit from legal guidance but can't afford it today. The Ministry of Justice, economists, there's some research suggested that this unresolved legal civil problem phenomenon, cost of taxpayer and these people over 13 billion pounds in a three and a half year period. What we have in England and Wales and in many other jurisdictions I'm afraid very well off or the state supported receive a roll drive service while frankly most people are walking. That's not access to justice. It cannot be that the primary means of social control is actually not available to most of us. There's internet based solutions that were released out there. There's online document assembly. There's online legal advice. There's the open sourcing of legal materials which actually can be shared with one another. There's communities of experience that I'm very keen on this idea. There are one citizen that sorted out perhaps their boundary disputes. They go online and record their experiences because very often it's more convenient and less forbidding for the average citizen to speak to someone else, other citizen who's gone through a legal problem. I'll be track through how they sort of rather than meeting a lawyer. So for this huge body, I believe, communities of legal experience will build up is that I'm likely to look at so many other areas. Will there be reputations of hotels? Will there be insight into how to sort out related to PC problem? In the online communities we're building up there does seem that community spirit which is encouraging people to record their thoughts and in terms of people actually to benefit from that. They frequently ask questions, thought to our decision piece, why can't we use these tools to offer a clear navigation through complex law? In all of this remember of all time the best is the enemy of the good. Every lawyer will tend to say that's not as good as the service of a proper lawyer and by that might be right, that proper lawyers aren't in practice available to most people, to most citizens, to most small and medium sized businesses. We have to find ways to deliver legal service. So what then is the future for lawyers? The big question I ask and say it must be asked is what parts of lawyers work can be undertaken differently? This is just fundamentally, what parts of lawyers work can be undertaken differently by which I mean more quickly, cheaply, efficiently, or to a higher quality using alternative methods of working. That's the question, but you're handling it hard, living what you do decompose it into chunks, could that be done differently? And even if it was a lawyer think, I don't want to do it that way because it won't be as profitable, if you can identify a way that it can be done differently, I believe the market will find ways for it to be done differently. And what we're seeing, I think is the market doing stuff across law. We want to see new ways of delivering legal services, what used to be conventionally part of the law firm will actually be sourced in different ways. Jack Wells should, at the peak of the dot com period, the part you brought together, he says in his book, all his leading executives and said, I've looked at Amazon and I've looked at what it's done to Book Center and I want you to look at your individual businesses and see the way the internet might do to these businesses what Amazon is doing to conventional book shops. And if you can see these ways, he said, then we're going to defend ourselves against that. He called that two weeks later, he called that growyourbusiness.com at the time, he called it destroyyourbusiness.com Find ways that someone else could destroy the business to defend it. Two weeks later, growyourbusiness.com his mindset shifted that far by because he thought, wrong idea, if we can see ways that other people could deliver that service to the internet, we should be delivering services in that way. And I say the same to lawyers, it's not destroy your business, it's grow your business. If you can see ways that your service might be delivered, be entrepreneurial, be creative, you should be delivering it in that way. So for what will lawyers be needed, more fundamentally, once great efficiency is imposed, when clients of online resources and in-house departments can collaborate with one another, what's the conventional lawyer needed for? I think the answer is two things. Where deep expertise is required, firstly, or secondly, where complex intercommunications in human beings is required. Now I speak to most lawyers, I see a collective relaxation of shoulders with the slug as well. That's me, I have deep expertise and my communication is invariably complex. Well, not so fast as my view. Complexity can be modeled if I lend anything through the age of my work in AI and law, is that legal expertise is at least of two sorts. Sometimes legal expertise is nothing more than complex bodies of rules. That's what Deloitte showed through their tax system. The fact that it's quite hard to get your head around that it actually often means a computer can make it for a colleague at its head early. It can offer the path through this complex body of rules. A different sort of expertise is where creativity, judgment, experience is required. And I think it is terribly difficult often to model that by technology, but that's often exaggerated for a really honest mental artist to say, well, that requires it's intuition and knee-jerk to get the action. But I think often underpinning expert behavior is consistency of stuff that can be modeled. So I think it was Edison said that genius is 99% for inspiration, only 1% inspiration. I think it's true of an event area like him. It's probably true of corporate laws as well. We exaggerate the eccentricity of creativity is required very often. And as for complex communication, the reality is, if you speak to many law firms, direct face-to-face contact diminishing in many areas annually. Electronic mail, videoconferencing, in due course, social networking, I have no doubt. You can speak to many senior junior lawyers by which you can give me associates. Quite senior associates in, you know, partners and law firms who are doing huge amounts of valuable work. They never see the client. Do they really need to be, as I do by saying, in expensive buildings in expensive cities? And more than that, the next generation might feel differently. We cannot claim because our generation of lawyers has successfully conducted work in a face-to-face basis, but that should buy in future generations. If the Facebook generation, the net generation, as I divided people who can't remember a page in that world, if they think the idea of getting together physically to pass along legal advice is bizarre, we can't say, no, no, that's the way we've always done it. It has to continue that way. So, the argument that complex communication, my clients really want to look at the eyeballs, well, actually, many of them don't want to look at the eyeballs. They prefer to pay half the price and receive an email from you. And that's the reality that many lawyers have to face. Future job for lawyers is another talk, but just to give the flavor. The expert trusted advice, our variation of our current theme, but it's a more sophisticated beast. The legal knowledge engineer, who actually builds all these knowledge systems I'm talking about, that requires legal skill and knowledge. It's not what you expected or you expect when your training is a large law school, but that'll be a right to a legal job in the future. The hybrids, those people who are half a psychologist, half an iconomist, and many other skills brought together. Legal service work being delivered purely as black leather law advice. And that way, I believe, synthesized and presented as a broader package. The legal project manager, the people who actually identify and oversee the decomposing of legal work and it's farming out, it's bringing together the assembly in a manner I'm anticipating. But the legal risk manager, this fundamental role that actually has not really been invented yet, but this is what clients are wanting. These are different jobs. So when I'm talking with Andy Lawyer's question markets, they end up, to some extent, the traditional one-to-one consultation advisory role. They will do many shots together where deep expertise is required or where complex work is required. And that role will diminish considerably. What are we law schools primarily just for a couple of minutes? Big question here, what are we training young lawyers to become? If I'm even slightly correct, the curricula of most law schools at least at the very least has some serious gaps. Are we training our law to become traditional one-to-one face-to-face consultative advisors who specialize in individual jurisdictions? That's what we're training our law to become. Or are we training our law to be more flexible, team-based professionals able to transcend legal boundaries and willing to draw on modern techniques? I don't think we are, if we're really honest with ourselves. In most UK law schools, the law is taught as it was taught in the 1970s. I started law school in 1978. I still teach law schools. It's the same basic model. All of what I'm talking about, when I speak to and I spoke to some of the leading law firms in the world, I'm considered to be just a sideshow. When I advise the leading law firms in the world, they're saying, why are law schools not preparing lawyers or at least for warning them of the world that is, never mind what the world might be. Law schools focus on legal problems often, not often, I would speak for anybody, but most of them focus on legal problem-solving, legal reasoning and legal techniques who dominate in the 70s. I'm not even presenting a picture of the world today. When I speak to these major law firms, they say that many of the students have, when they arrive in day one, are surprised it was going on. It seems to me I'm a great believer in much legal studies to teach jurisprudence in Oxford. In my heart, I'm a legal philosopher. I went for a second and say, you don't teach fundamental legal subject. Is it not incumbent on us in some way as people evolve from the teaching of law to give some sense of what the world is today and what it might be in the future? We teach today with very little regard for globalization or commoditization for information technology or murder of business management and law on alternative sourcing and legal work. None of that in most law schools across the world is reflected on the curriculum. Most law graduates in England are ill-prepared for work, as I say, in major international firms. So the question I finish with is this, should we extend the reachment of law school to include other disciplines such as risk management, project management, legal knowledge management, disrupts legal technology. These are just some examples. Many, many traditional law professors will say that Britain is already busy enough. But I can't help feeling that at least the opportunity should be there for bright imaginative students who are interested in the next generation of lawyering, doing some groups of what the future might look like. And it's that groups I'm trying to offer today. Thank you. I really enjoyed your talk in most of it. I hear a butt coming off. A butt? A butt coming off. You really are thinking that kind of security and this is the idea of the code is locked to embed the legal knowledge into the infrastructure in which people work. This actually eliminates the ability to oppose law. To say, not a lot is bad and we should make it observable and try to change it. It makes law seem as a natural thing just like the solid one. And the question is if we do think of social justice perspective we seem to be interested in won't the use of automated tools be a counter position? I think it's a danger around that you're too firm with me in saying that actually it does restrict discussion of all the issues of the law. I think what depends on the culture of the development around embedding the law. I don't think, for example, your car doesn't start because there's some device that prevents it from starting with the seatbelts not inserted. I don't think that should discourage you from thinking I wonder if this is a good thing. I don't think in the card game it should discourage discussion and debate. A lot will depend on, as I say, the culture and environment that we create around debates about changes in our systems. There will be changes in our system about changes in the law. And a lot will depend on how explicitly we also record the law. The danger, I think I agree with you, is the danger if one embeds the law without articulating the law. So people actually don't know what to what it is their subject. They just know that certain courses of action seem not open to them. So in parallel with embedding one needs to express the articulate law and document the law. It's a different world altogether. I'm not saying I've cracked how to implement that. I'm saying that's one way we can achieve it. But you're absolutely right to point to the danger that in embedding law you potentially conceal law and you potentially discourage evaluation and change of law. Kevin, in the systematizing it's important to distinguish between routine situations and 10% that are unique and maybe require a special treatment or you've given us some examples from Deloitte and others of systematization. How do they handle it and has it worked out? Can they determine automatically what is routine and what isn't? I always thought this was the biggest unanswered question when I was involved in the law. They work in distinguishing between hard cases and easy cases. Easy cases, systems could solve hard cases. It's good. The different thing is when you've got a problem it's a hard question whether or not it's a hard case or an easy case. I always thought that's not really hard and I haven't actually sorted that without it. In practice people are just probably problematic about it. I suspect I've aligned this. When junior lawyers are faced with problems they too often mind to miss issues that are of greater complexity that are obvious from the face of it and systems too might be. In the systems, the best systems I see there are physical audit trails that can actually not be a particular system here but if I look collectively all the systems I've seen the best ones. Audit trails where there's actually human supervision and review. So it's not a question of shoving the information in and out comes the answer and there's no human intervention. There is a specifically rich audit trail that there's an opportunity for human experts to see what and I would say it's just been an alarm bell rings in your mind. Alarm bells do not ring in computer systems minds as they were. So I think the important thing is there's opportunities for human intervention and review. But I do think this is just to be pragmatic about it that we will develop systems that will make mistakes. I suppose we need to balance that against the use of human beings and we do make mistakes and then we have to think well check some balances we put them in place. What I also do find is that often these kind of systems are preparing first drafts that were not final drafts. So it's taking a production process that needs to be undertaken. We used to need to be uncrafted that is then actually poured over by experts but it's actually just taking a lot of the cost of the final complexity out of our feasible project. Sorry. I'm from and I worked at the Japanese law firm and as a junior associate and I just looked up on my experience working for a company about these transactions. There are many of them there are standard I mean many of the contracts and what are the common features and there could be standardized but the one obstacle in doing that standardization was the systemization like that how to charge that kind of systemization or standardization you need to make a kind of initial upfront investment to do some kind of standardization by taking the system or you know collecting all the information and doing the transactions but upfront you need to do some investment and how you don't know how many transactions are going to come then you can copy for example if you have 10 transactions you can just put the investment for the first transaction that can come up with investment but you don't know and I think that's one of the things that might require the funds from ATV that kind of investment that tries to speak to in the sport. What you're saying is there's a disincentive for a variety of reasons of standardizing the incentive to read and to spoke is frankly it gives rise to a lot of money it's done in an early way there's no upfront investment and so forth just turning around the other way I think the markets are going to require standardization and both of them will have to respond so I think when you look at the construction of the engineering world the standard for our contract which is standardized much of the manufacturing of the machine tonight or if you look near the derivatives that is the standard quality so forth I think specifically in the market will create standard but just going specifically to you at your point isn't this quite like the product development which has almost every normal business cases that you think we're developing something new and we actually have to say how much of that upfront investment how would we imagine the market would be unlimited something like a consumer electronic market suitable company fascinatingly Apple or Sony do not know the products in five years time if they're making their money they don't exist yet so what is doing there's lots of clever people on R&D who come up with ideas and they made the decision they say well is there a market for that it's going to cost 50 million to develop how many are able to sell they make a business case and this is by law firms and we'll look back on it I think it's remarkable that the lawyer is just carrying on for change we're going to have to make business cases we're going to have to invest in R&D we're going to have to join the market to do that but what do you see as a tipping point when the law firm is going to make that structure or change from you know this book to do more R&D based rather usual for me it's all about the price it's playing I have to say we're moving to a market there are general kinds in house lawyers actually going to start being more demanding but I've got to reckon before I'm amazed that in house lawyers are firmer than law firms it just amazes me how profitable and congratulations how profitable some external law firms are and yet clients should say we're spending too much on legal fees how could it be that law firms are increasing their profitability maybe 15% per year and clients are putting the food down now the reality is there used to be more work around it was basically a seller's market in the virus market so you're driven by the clients just a couple more questions because we're going to need to break soon but we'll take you out in a few minutes several times you mentioned knowledge representation reasoning systems coming jobs legal knowledge engineers and so forth and you mentioned the semantic web and I just wondered if you'd like to make some more remarks about the semantic web components ontology I didn't mention semantic web and my book is something I mentioned I think a lot more work in the animal community precisely on this because the reality is that there are limitations in only a few years on maybe the conventional purely rule based approaches to legal problems like I see this as a I mean anyways just very quickly but during the 80s I devoted my life to expert systems and law and I used to say that there were two ways you could define these systems architecture at the same time architecture at the same time which had the type of techniques you knew full based systems of semantic web or I said you could define them functionally and my functional definition was that these were systems that made scarce expertise scarce expertise and legal expertise and knowledge more widely available and more easily accessible and that as a quite pragmatic and also scholarly guy was my was my perspective I want to develop computer systems that make serious legal knowledge more widely available and more easily accessible X years on 20 years on still doing that it's just enabling technologies of change whether or not one of us could call that a high expert systems and law I don't know but a lot of the work I do is about helping law firms to make scarce expertise and knowledge more widely available more easily accessible online legal guidance systems I would call them quite obviously I think embody that same kind of spirit but the reality is they're still pretty crude in terms of legal problem solving legal advice that we need and powerful tools that's why I think we need to move to richer representations of legal meaning rather than quite a high level rule the fact we're not involved doesn't mean it's important it's just to stop my feeling one more question should we say well we've got two here why don't we take the call okay fine probably separate that was a joke so I'm wondering who's going to win this new world because often when a new disruptive technology comes along it's not going to come you've been talking about law firms and I'm wondering is that are law firms going to be where the innovation is going to happen is there going to be something else is it going to happen in a different market segment than the big Fortune 500 companies is instead maybe going to target middle class or upper middle middle class consumers rather than the big firms because of this tendency for stasis in particular given that here in the states where we don't have that same ability to have external investments is it possible to happen in that it will just be overrun it will be overrun with British rather than American so we have I'd like to find what you said I think it's not just in case sometimes in companies most of the research is just in coming to almost all the states with disruptive technology because if you're a marketing leader the phrase I always use when I speak to law firms historically has been how do you convince a room full of millionaires that they've got the business model up that's the historical context and I understand that well for 20 years I've been in one or two years the good firms increase the profitability by at least turn it over at least by 10% each year some of me standing up and saying I believe it was by exchange rapidly again like the academics it's an interesting site show rather than some fundamental strategic the catalysts have changed I believe is the economic difficulties because we actually are seeing that the clients are under fundamental pressure my rough case is that if you take the top hundred law firms in England or rather the US a third will probably streamline re-engineering come through with the investment technology in 10 weeks I'm talking about come through very strongly indeed and two thirds I think will suffer and decline and I think to replace the two thirds well it's hard because they won't have a business and some of them will but you will actually see new service providers now whether or not as I said earlier whether or not you yourselves probably an external investment in new businesses as I guess by the way because I think about the multi-sourcing models will allow in matches of US businesses to source new services from a whole variety of different providers I don't think there's enough British either expertise or innovation to swamp the US market so I wouldn't worry about that for I have a question I was actually going to ask about the looks and vision as well I think you asked much more we're trying to many many thanks I'll take this to you very quickly