Automating Law

DiligenceEngine is focused on a specific problem: improving legal due diligence.  But our work fits into a broader issue: making lawyers more efficient and effective.

My experience is in Biglaw, so will discuss the problem in the context of Biglaw.

Biglaw lawyers of all levels of experience, across different areas spend much more time than they should on unchallenging work that could be done better by (or with the assistance of) technology or others (i.e., in- and outsourcing).  This problem is especially acute among junior associates.  Four factors make many junior associate tasks especially appropriate for automation:

  1. Need for Accuracy.  Junior associates do a lot of work that really needs to be done right; the details of their work often must be perfect.  They need to ensure the right entity signs documents, all documents are signed, all relevant clauses are discovered in due diligence investigations, all topical cases and statutes are found in research, and much more along the same lines.  Mistakes can be a huge deal if and when they come to light (as they will if the deal goes south).  Unfortunately, the qualifications required to get a Biglaw junior associate job do not necessarily correlate with the skills necessary to do simple things error-free; good law schools generally evaluate more on high level thinking and writing abilities than on proofreading. Not only does graduating near the top of the class at Columbia Law not necessarily make you good at turning changes or reviewing documents for diligence-relevant provision, it might make you worse at it.  Someone with a much less impressive academic pedigree could be more focussed on the task at hand rather than focussed on how uninteresting the task at hand is.  Billing out at >$300 an hour and pulling in >$160k/year doesn’t make this work any better.
  2. Lack of Complexity/Highly Repetitive.  Many of the things junior associates spend a lot of time on are not very complex and are highly repetitive.  Not to say it is easy to, for example, create many, many signature pages error-free, rather that this does not require high-level thought.  That is a major reason why junior associates are given these tasks—given the choices of who to have do this work, makes sense to have the most junior people do it.  As above, junior associates (and fancy lawyers in general) are especially unsuited to this work.
  3. Large Volume.  Since junior associates are less expensive and more plentiful at their firms, they typically get tasked with sifting through large piles of information, including due diligence and document review materials.  Unfortunately, the needles in haystacks can be some of the most valuable pieces of information in the matter.  Many senior lawyers recognize how critical information sifting is, but the volume can be so big, more senior lawyers so busy, and junior associate skills so limited that junior associates generally take the first (and only) run through the material.  Sometimes junior associates find things, sometimes they don’t.
  4. High Cost.  Junior associates may be the cheapest lawyers at their firms but that does not make them cheap.  Junior associate billing rates at Biglaw firms can range from $300/hour, meaning small efficiency gains can be worth a lot of money to clients.  More efficient lawyers can still be more profitable for firms as well, even those who bill hourly (which we have covered in brief but will provide a full post on).

Software is fantastic at processing large amounts of information with high accuracy when the information has systematic characteristics.  This makes it potentially much better than people at many tasks currently done by lawyers, especially junior associates.  And while software can be expensive to develop, the high costs of lawyers doing these tasks can make development worthwhile.  While Biglaw associates currently use practice-specific software, there is room for much more automation of their jobs.  We are part of making that happen.

5 thoughts on “Automating Law

  1. I consult with corporate law departments on sourcing and operational issues, and came across your blog recently. I’ve been talking to the DGC for M&A at a large tech company about the same due diligence issues you’ve been blogging about so I found your comments extremely interesting. I think we see the world in a similar way on issues such as these, so I will look forward to seeing more about your product on your website.

  2. Thank you for the nice comment, Jim. Having looked-up your consulting business, I can see how what we’re doing will fit in well with how you help corporate law departments. Our product is getting close to ready and we will let you know when it launches so you can see more specifically how it improves due diligence. From my perspective, as an ex-Biglaw midlevel corporate associate, I think outside counsel can be hugely helpful and add a lot of value to matters they work on, but that there’s room for a lot of efficiency and quality improvements at the more junior levels.Thanks again.

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