New from the ABA, “Automating Legal Services” will help lawyers understand how to use automation to reduce costs, cut fees, and remain profitable, all while making justice more accessible. Author Hugh Logue reveals how rather than posing a threat to the legal profession, automation will allow lawyers to do more of what they enjoy and access a latent market. Automating Legal Services: Justice through Technology can be purchased at shopABA.org.
A February 2016 Deloitte report, “Developing Legal Talent: Stepping into the Future Law Firm,” predicted that 114,000 jobs in the UK legal sector are likely to be lost to automation by around the year 2020.[1] In my view, while the report correctly states need for change in the legal services sector, I disagree that automation will lead to overall net job losses. Deloitte’s hypothesis, echoed by many others, assumes that all the legal needs in society are currently met by the legal services industry, and that as artificial intelligence and other technologies continue to grow they will take this work away from legal professionals.
Like the other industries that went, or are going, through automation, there is a latent demand for legal services that is not currently being met. The largest-ever survey of legal needs of people in England and Wales, published in May 2016, revealed the scale of the latent market for legal services, with only 30 percent of people with legal problems obtaining formal legal advice.[2]
Other commentators cite job losses and decline in revenue in the solo and small law firm market in recent years and attribute this to the rise of low-cost legal self-service websites such as LegalZoom and believe further automation will only lead to more job losses. However, in my view, those job losses have more to do with the toxic mix of the oversupply of lawyers in the U.S. market, coupled with the fact that current law firm business models do not allow them to increase demand by using automation to reduce costs and cut client fees without damaging profit margins.
A report in 2016 by the American Bar Association (ABA) found that 80 percent of the civil legal needs of lower-to-middle income individuals in the United States went unmet.[3] This broadly fits with studies by the World Justice Project, which estimated in 2018 that 77 percent of people in the United States and 93 percent of people in the United Kingdom did not seek support of an authority or third party to help them to resolve a legal problem.[4] A separate ABA report published in 2014 found that two-thirds of a random sample of adults in a midsize American city reported experiencing at least one of twelve different categories of civil justice situations in the previous 18 months.[5] When respondents were asked how they handled their civil justice situations, 16 percent did nothing, 46 percent took action on their own without any assistance from a third party, and 16 percent had help from family or friends. Of the 22 percent of people that did seek help from an adviser or representative, these seldom included a lawyer and were more likely to be a social worker, police officer, city agency, religious leader, or elected official.[6] Studies in Australia, Canada, and Germany all paint a similar picture—around 70 percent of people of people with legal problems are unable or unwilling to engage lawyers.
The latent market is driven by the fact that for many transactions, the cost of engaging a lawyer is prohibitive in relation to the value of the transaction. Although cost was factor reported by many respondents, another factor was the practical barriers to hiring a lawyer, such as unclear pricing and confusing processes. Growing demand for unbundled legal services is also increasing the need for law firms to assemble their knowledge in an automated self-service platform for their clients to pick à la carte where they need manual legal advice and where they just need to be pointed in the right direction by an authoritative source.
Law practices try to do too much. They are reluctant to accept that they need to realign their services to focus on their strengths and allow the delivery of some services via automated methods. Technology can make the delivery of some legal services a lot simpler. Clients do not always need personal one-on-one delivery; indeed, manual delivery can actually slow things down. If lawyers currently only meet less than a third of society’s legal needs, there is plenty of scope to leverage AI and other innovative technology to serve the other two-thirds. While there will be realignment between the tasks that are completed by technology, manually, and a combination of both, ultimately the new jobs will more than offset by those lost to technology.
Instead, law firms can split legal work into two piles. Offer high-quality manual legal services for fees that keep the firm sustainable and secure and offer work that is automatable as a completely new proposition for a fraction of the cost of manual work, while still retaining a decent profit margin. Once law firms bring clients into their firm with automated services, there will be legal tasks where the client can self-serve while there will be other areas where a lawyer is still needed. The key to upselling more complex legal work is to make the self-service platform really high quality to bring in as many prospective clients as possible and to provide good impression of the law firms’ expertise. Law firms need to be experts on different ways their clients can pay for more complex legal work that comes to the surface through automated legal services. For example, contingency fee arrangements, public funding, or legal expense insurance.
About the Author: Logue is the Lead Analyst for Legal & Regulatory technology at Outsell, a Silicon Valley-headquartered research and advisory firm that tracks market performance and trends in the data, information and analytics economy. His clients include the world’s leading legal publishers and legal tech companies. He has delivered talks and written extensively on legal tech, the business of law and the automation of legal services. Hugh was called to the Bar of England and Wales in 2007.
[1] Deloitte, Developing Legal Talent: Stepping into the Future Law Firm, Feb. 2016, https://www2.deloitte.com/uk/en/pages/audit/articles/developing-legal-talent.html.
[2] Legal Servs. Bd. & Law Soc’y of England & Wales, Online Survey of Individuals’ Handling of Legal Issues in England and Wales 2015, May 2016 (survey carried out by Ipsos-MORI polled 8,192 adults, followed up with in-depth interviews with a smaller panel of respondents).
[3] ABA Comm’n on the Future of Legal Servs., Report on the Future of Legal Services in the United States (ABA, Aug. 2016).
[4] World Justice Project, Global Insights on Access to Justice: Findings from the World Justice Project General Population Poll in 45 Countries (2018).
[5] Rebecca L. Sandefur, Accessing Justice in the Contemporary USA: Findings from the Community Needs and Services Study (Am. Bar Found./Univ. of Ill. at Urbana-Champaign, Aug. 8, 2014).