Most of the ink on the topic of outsourcing by law firms has
been understandably devoted to back-office functions such as
HR and tech support desks. I view the trend to house these
functions elsewhere than in, say, midtown Manhattan, as eminently
sensible and economically inevitable. But how about outsourcing
what lawyers themselves do? Far-fetched? Or, at
least, far in the future?
I have news for you: If you believe that once The
Wall Street Journal reports a trend, it’s for real, then
today is your day. In "On
the Case" (subtitled "rising
legal costs may have finally met their match: technology"),
we learn that using secure extranets to create virtual deal
rooms is old news. For example, through a highly automated
patent-application processing system (built inhouse for an
investment "in the low hundreds of thousands") Cisco is now saving about $2.5-million per year, and that Dupont’s use of
far more generic technology (those extranets) has cut $5-million
per year from their outside counsel fees. You don’t even
need to outsource to India; try going about one time zone away,
to the midwest or southwest for hungry, low-overhead law firms.
Next up: Cisco and DuPont, together with FMC and Clorox, are
developing a "virtual lawyer" to provide automated online responses
to routine legal questions concerning, for example, human resource
policies. And lest you think they’re all alone out there
on the early-adopter curve, they plan to license this tool to
all comers.
For 2003 (the most recent year available), total revenue of
the AmLaw 100 was just north of $41-billion. What percentage
of that work could be supplanted by applications like this? More
interestingly, is it eternally possible to keep moving "up the
value chain" to produce work at an ever-increasing premium level
that cannot be eroded by technology? In prognosticating
about that to yourself, keep in mind that the arms merchants
on the technology side of this competition have Moore’s Law in
their camp, and we flesh-and-blood lawyers do not—indeed,
we have the non-negotiable ceiling of 24 hours in a day.
My
good friends Jeff Rovner
(Director of Knowledge Management for the Americas Region, Clifford Chance
US LLP) and Ron Friedmann (Prism Legal Consulting) recently
had a brief but enticing back-and-forth on
this question, with Jeff astutely analogizing the predicament
of law firms to that of firms overtaken by a "disruptive technology"
as described in Clayton Christiansen’s classic The
Innovator’s Dilemma. Can it happen here? Today
HR, tomorrow structured project finance? So long as we
aspire to being truly wise counsellors to our clients and not
anal document drudges, we’re not fungible with silicon. But
that leaves first-year associates in a tenuous spot.
