LegalTech in a Flat World

In Rules for a Flat World – Why Humans Invented Law and How to Reinvent It for a Complex Global Economy, Professor Gillian Hadfield argues that our legal infrastructure is failing to keep pace with the complexity of our modern, digitised world. In this post, I note how legaltech is beginning to address some of those concerns – namely the twin problems of reducing cost and complexity. Although those legaltech solutions are currently concentrated in the corporate legal services market – a narrow slice of the legal infrastructure that Hadfield invites us to consider – it ought nonetheless to be encouraged, as innovations in that sector are likely to trickle down into other parts of the legal infrastructure spectrum.

Legal Infrastructure

“Rules for a Flat World” is ambitious. It is not about ‘rules’ or ‘the law’ as we would normally conceive them – the content of statutes, the wording in our rules or the phrasing of our regulations. It concerns a concept of far wider scope – ‘legal infrastructure’. Legal infrastructure, Hadfield suggests, includes legal education, the court systems, dispute resolution, regulation and regulatory bodies, professional legal regulatory framework, research, technology, lawyer mindset and culture, and legal services markets. It is about how we decide on the rules, how we communicate them, how we adjudicate disputes about them, how we enforce those decisions and who is involved at each step along the way.

Hadfield argues that the modern landscape of legal infrastructure in the West (consisting, for instance, of a legislature, state regulatory bodies, state courts and licensed lawyers), although highly successful in the past, is unable to handle the ever increasing complexity of the digitised, global world of the 21st century. She calls for reform across the spectrum of legal infrastructure to tackle the rising cost and complexity of these existing systems.

Justified concerns over cost and complexity

Hadfield is justifiably concerned with the cost and complexity of existing legal infrastructure. Although the assertion that accessing legal services is expensive will come as no surprise to most readers, Hadfield gives a more objective basis for that intuition. She also explores the ever increasing complexity of the modern legal landscape, the result of an ever more diverse global economy which encourages the production of more legislation, more regulatory bodies and longer contracts. That complexity in turn requires more specialisation, further increasing the costs of legal services.

Legaltech is addressing some of these problems

In my view, the twin challenges of cost and complexity that Hadfield identifies have begun to be addressed in the ‘legaltech’ world. There has been an explosion of start-ups in legaltech in the last few years, including many since the book was first published in 2017. Older players on the scene have continued to grow. Most of these legaltech firms have at the core of their value proposition the ability to reduce the cost and complexity of existing processes in corporate law. Contract management platforms, contract review software, eDiscovery tools, practice management platforms, case search and predictive tools – each one promises to reduce the cost to the law firm and enterprise clients of that particular work stream.

Concentration of legaltech in corporate legal services

The recent advances in legaltech, although promising and more than welcome, appear to be concentrated in corporate legal service – only a small slice of the broad legal infrastructure which we are invited by Hadfield to rethink. These legaltech firms aim to make the life of a corporate lawyer easier by providing point solutions within a framework of existing legal practice and procedure: Need to review documents for discovery – here’s an eDiscovery platform; Need to do case law research for upcoming litigation – here’s a new case search tool; Need to streamline the production of contracts for a client’s portfolio – here’s a contract production tool.

Legal Infrastructure Graph

As we move outside of the corporate space into wider components of legal infrastructure, in my observation the level of interest and investment in reform, innovation and design appears to tail off quickly. For instance:

– There are some access to justice and consumer-facing legaltech products being developed (such as LegalZoom, RocketLawyer, DoNotPay), but they are few compared to corporate legaltech (as I observed of a recent legaltech conference);

– There appears to be a growing interest in innovation and legaltech in university legal education, with many universities adding elective courses and ‘hackathons’ to their curriculum. However, I query the extent to which those are substantively more than introductory coding bootcamps sold to law students, and the extent to which they can make a difference to legal practice where the professional regulatory bodies still require students to graduate with a full suite of classical, academic legal units before they are permitted to practice;

– There is some interest in Court reform, such as the work by the UK Courts on accessibility, digitisation and online courts. Although very welcome, it remains one monopoly provider working with finite funding subject to political whims;

– The emerging field of legal design provides very promising ideas about how to rethink legal services with a much wider lens in line with what is advocated in the book. For now, however, the movement is relatively small and unlikely to have the purchase required to promote substantive change.

The presence of a burgeoning market in legaltech in the corporate legal space is unsurprising – that is where the money currently is. If you can offer firms and corporate clients a way to do what they already do, but quicker and cheaper, then they’ll be willing to pay for it. (Subject, of course, to the disincentive effects of the hourly billing model – but that’s a whole other discussion.)

The corresponding absence of investment in other areas of legal infrastructure is also unsurprising. There is no obvious profit opportunity in addressing the structural issues in legal education, regulatory reform or research, for instance. Funding for such endeavours therefore needs to come from the public purse, university endowments, not-for-profits or crowd-sourcing – all good institutions, but not as nimble, responsive or well endowed as private capital. This is not unlike the challenges in reforming any complex public policy which is deeply embedded in our society – health, education and physical infrastructure, for example. Although it does not mean that these reforms will never be achieved, it does mean that reform may be slow and patchy. Raising awareness and creating a more robust academic justification for reform are vital first steps – Hadfield’s book is a commendable contribution to that end.

Corporate legaltech will have positive impacts on other legal infrastructure

Although there is an imbalance between corporate legaltech and the other components of legal infrastructure, investment and interest in new technologies in corporate legal services should be encouraged, as changes there will ultimately trickle into the other parts of the infrastructure.

As tools such as AI assisted search, document management platforms, legal project management and client communication tools mature, they will become more powerful, more intuitive and cheaper. I can envisage a market developing for cheap, powerful legaltech at affordable prices for sole practitioners serving individuals and SMEs, and for digital platforms providing legal services to individuals directly. Those tools will be built upon platforms similar to those being incubated currently within the corporate world and led by the developers, VCs and users of this new suite of legaltech products. That cascading effect will, hopefully, lower the cost and increase accessibility to the law for individuals and SMEs. It will accentuate any differences between private legal solutions and antiquated public court or regulatory systems, providing the political capital to change those public systems to keep pace, and it will broaden the exposure of more of the legal industry to the importance of new technologies, encouraging cultural change across the industry.

In other words, although it may seem unfortunate that most of the attention in legaltech is focused on the existing corporate legal market, the innovations currently being incubated there are likely to cascade down into other parts of our legal infrastructure and, to that end, are welcome. However, Hadfield’s call to arms for others across the legal infrastructure spectrum – to lawyers, judges, politicians, academics, students, clients and legal service users – must be heard and acted upon in parallel with the innovations in corporate legal services in order to effect the substantive changes she says are necessary.

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