The Influences and Advantages of Legal Tech

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Transcript

Law Technology Now

The Influences and Advantages of Legal Tech

12/08/2016

Intro: You are listening to the Legal Talk Network.

[Music]

Bob Ambrogi: Hello. I am Bob Ambrogi.

Monica Bay: And I am Monica Bay.

Bob Ambrogi: We have been writing about law and technology for more than 30 years.

Monica Bay: That’s right. During that time we have witnessed many changes and innovations.

Bob Ambrogi: Technology is improving the practice of law, helping lawyers deliver their services faster and cheaper.

Monica Bay: Which benefits not only lawyers and their clients, but everyone.

Bob Ambrogi: And moves us closer to the goal of access to justice for all.

Monica Bay: Tune in every month as we explore the new legal technology and the people behind the tech.

Bob Ambrogi: Here on Law Technology Now.

[Music]

Monica Bay: Hi. I am Monica Bay. Welcome to Law Technology Now. We have a great guest today who I’ve known for quite a while, Mark Cohen, and one of the things about Mark and I is that we both have great stories about rock-‘n-roll. So we may even get into that in a little bit but first I want to ask Mark to tell us a little bit about his background and how he got involved and started Legal Mosaic, and then we’ll go from there.

Mark Cohen: Great to be with you Monica. So I was in my prior life a civil trial lawyer. I tried over 60 bet the company type cases representing Fortune 500 companies, and five foreign sovereign governments, not including our own when I was an Assistant U.S. Attorney.

Early in my career I did a stint as a partner at large law firm, Finley Kumble, known more for its cataclysmic fall than its meteoric rise. But it was in many ways I think the forerunner of today’s international firm, and they did a lot of things that were in its day and perhaps still today rather cutting edge and very much precursors to what we’re seeing today.

I am thinking specifically about rating other firms who are at times top and at times overpaid talent. I then started a national boutique law firm, and when I had put in about 28 or so years of legal work and was in the happy position of not needing to financially do it any longer I decided that I wanted to try my hand at something different.

But I learned quickly that law is a little bit like the Mafia in that you’re never really completely let go and free. And so I found myself at lunch with Tom Friedman soon after he had done ‘The World Is Flat’, I had been doing some business with a company that was prominently featured in a chapter in his book, hence the opportunity to have lunch with him, and we began to talk about legal process outsourcing which at that time didn’t have the name, and I asked whether he thought that it might be doable and he said, well, why don’t you try and let me know.

So I was one of the early legal process outsource movers and combining technology with document review in the Caribbean Basin and in India. After that I saw that that was just a part of the puzzle and I felt that actually more tasks could be done differently than the way Biglaw was doing it.

And so with the assistance of a friend of mine who was a Harvard Business School alum and also had started a very large legal staffing company so knew a bit about the legal industry, we decided that we were going to launch a company called Clearspire.

Clearspire sadly I guess there are some parallels that Finley Kumble known better for in some ways, its fall then its rise but I am very proud of a lot of the things that we did at Clearspire in terms of melding technology with a new law firm delivery structure.

Monica Bay: And I am going to stop you for a second because I want you to tell us a little bit more about what was that? I remember it when it came out but for some of our audience who may not be familiar at all, can you tell them first of all, a little bit more about you mentioned the new approach to it? Can you give us a little bit more for the folks who might be brand new to this, and then tell us a little bit more about how you built that company?

(00:04:55)

Mark Cohen: Sure! Well, for regulatory reasons as you well know Monica, we were unable to combine the legal service component of Clearspire with the law firm because the legal service company raised outside capital although my partner and I put in a substantial portion of the Clearspire capital ourselves but we could not — as my partner was not a lawyer we could not finance the law firm that way and so we had to create a two company model. This was the first time that such a two company model had ever been constructed here in the United States.

Of course, if we had been across the pond in England we would not have had to go through those kinds of machinations because the alternative business structure allowed by the Legal Services Act of 2007 allowed just the sort of thing that we wanted to do here in the States.

So we engaged very much in workaround regulatorily speaking. But we did actually once we got underway, we did have clients across the globe and I think the one enduring contributions of Clearspire besides the fact that we worked on a fixed price basis besides the fact that we allowed lawyers to work on a mostly remote basis without the need for expensive real estate, besides the fact that we had just as many or more senior level female — we didn’t have partners but we did have female lawyers who are very senior in terms of their experience levels and input these were all things that were pretty cutting edge and we ended up basically delivering the product not only on a fixed price basis but at roughly 50% of the cost of what it would be for a comparable service at a traditional large law firm.

So basically we were the first ones to establish proof that an alternative structure to the traditional law firm partnership, one that allowed people to work in a much more agile basis was viable and marketable.

Monica Bay: So what happened that made it go away?

Mark Cohen: Yeah, well, it’s a combination of things. We basically had developed this technology, the centerpiece of which was a web-enabled platform called Coral, like a coral reef that enabled our lawyers basically to have the platform operate as their office. Regardless of where they were around the globe, it enabled lawyers to not only to work remotely but also to capture their work product and to share it with clients. We had three portals; we had a lawyer portal, we had a client portal and then we had a public-facing portal.

To answer your question directly what happened was we spun off the technology from the law firm and decided that we would help to relocate our lawyers on the theory that really we were interested in trying to recapture the investment as well as basically to devote our attention to other things. And that really is what led to my creation of Legal Mosaic.

Monica Bay: And tell us what Legal Mosaic is and what you’re doing these days?

Mark Cohen: Well, Legal Mosaic is essentially two things; it is a repository for the writing that I do and speaking that I do and the privilege to talk to smart people like you, as I am doing right now. It is also a place where a company that enables me to take on interesting projects for different actors in the legal ecosystem and to do consulting projects of different types and sizes.

Monica Bay: Going back to the other organization if you had it to do over again, what would you have done differently?

Mark Cohen: I think that we would have in terms of selling our legal services to the legal marketplace, we would have, as I had suggested to my partner, we would have led not with the technology but with the legal talent and the different structure that we use to deliver legal services. That would be one big difference.

(00:09:51)

Another big difference is that we kind of had our Waterloo in a conversation we had with the general counsel of Walmart, who asked us if we would consider providing staffing services as opposed to functioning for them as a law firm.

One would think that when the general counsel of a company the size of Wal-Mart asks that sort of loaded question, the obvious answer would be yes; especially, when it was prefaced by a tremendous amount of praise for what we had done as well as a great desire to become the customer.

Unfortunately, my partner and I who as it turned out did not always see eye-to-eye on big decisions had a bit of an agreement. My theory was kind of ironic for the lawyer in the pair, was let’s give the client what they want. His was, let’s be true to the orthodoxy of our model to operate as a law firm, not as a staffing company. And so those are a couple of things Monica that in retrospect, we would have done – I would have done very differently.

Monica Bay: And we’ll get off this topic in a moment but the American Bar Association has always been protective of lawyers. They would certainly say that themselves I’m not saying anything that everybody doesn’t already know but the whole and this is a complicated issue we could talk hours on; the whole difference between — in the organized bar of the mandatory bars like California and I think New York versus some of the states that do not require you to be in the bar association of the state, there’s just been so much work historically about protecting the lawyers, much more so than protecting sometimes the clients. Did that whole arena of that was that part of what you were dealing with, with the whole who owns it kind of situation.

Mark Cohen: Yes. Well, just as I guess in divorce law, there is the issue of whether or not certain funds were commingled so to — from the perspective of state bars, who as you know we’re the ones that determine the rules and a given jurisdiction and then the ABA kind of secondarily looking over things, yes, we were very, very careful to set up as lawyers would say juridically independent entities between Clearspire, the service company and Clearspire, the law firm. They were both Clearspire companies but we gave great care to ensure that they were kept separate and distinct with separate bank accounts, etc.

So from that perspective Monica, we felt that we had created a structure that would allow us freely to operate in any state. I would just say in terms of the ABA and in answer to your prior question, which I’d like to come back to some of the other things I’m doing now, I’m doing a piece it’s going to come out in Forbes for whom I write a weekly column as you know, it’s coming out this Sunday, it is on the ABA and it deals with some of these kinds of questions. And I would just simply say that from my perspective, I think that the ABA would be wise particularly in these times to focus more on the profession and the public rather than just their members.

And I note that in terms of their mission statement, they have a co-equal or they claim to have a co-equal interest in protecting and advancing the interests of all three, not just their members. Unfortunately, I think as you’re suggesting particularly in states with voluntary bars that is where people have to sort of opt-in and pay their dues; the ABA has very much taken a position of being more protective of lawyers than in my judgment, they should be to the extent that they are failing to protect the larger profession and the public.

Monica Bay: Well, that could take us on one of my favorite rants around, which I will only do very, very quickly because it’s a huge issue for me which is 80% of Americans can neither find a lawyer or afford a lawyer in civil matters and I’m very, very yakking all the time about the need to stop protecting the lawyers so much, start realizing that we are not meeting our requirements to be able to have — everyday people be able to get lawyering work when they need it.

(00:15:09)

But that would take us into many rants from me and I think we’re on the same plane. I will say though and so it’s a really interesting thing going on in Europe and I think you hinted to it in the UK because LegalZoom has actually bought, and I’m a huge advocate for LegalZoom, Avvo and for Rocket Lawyer because what they are trying to do to use tech and to be able to get the dirty little secret of it is, it’s helping the lawyers as much as it is the folks who are looking for help; because small firm lawyers often could not even pay their own bill rates on it.

So that’s a real hot period right now and the ABA did a very, very quick thing with Rocket Lawyer and it was shut down almost immediately. Again, this could take a whole another story.

Mark Cohen: Well if I if I may though Monica, just a couple of quick things.

Monica Bay: Yeah.

Mark Cohen: One, as we both know, you’re adverting to the so-called access to justice crisis.

Monica Bay: Yes.

Mark Cohen: And I would urge you to keep ranting on, as I will. Number two, I too am a huge fan of LegalZoom and not because they asked me to be the keynote speaker last May at their annual meeting but because I think that they are serving a very powerful and useful purpose.

And to your point about Beaumont Law, the conveyancing firm that they have just recently acquired in England, it’s interesting to note that just this past week they launched an app that allows people to not only to prepare wills but also to update them periodically. And I think that they are in my mind the future of the law and an organization which notwithstanding nine separate unsuccessful attempts by state bars to shut them down, are very much the path to the future as they combine technology, with new types of structures that make legal services much more accessible and cost-effective.

Monica Bay: And I completely agree with you and I think that all of these folks have to start realizing that to stop having a moat and I have great respect for the American Bar Association. I was one of the first women to be a national officer in the law student division. I covered the bar for – well, I still do.

So I do understand some of the nuances of it but I do think that the ABA is particularly with their report that came out about a year ago on access to justice and there’s a real problem with this and then I’ll get off this subject, which is the presidents come in and it’s a ladder and each president is there for a year and each one will have a special thing that they are doing. That’s great.

And the fellow who did a wonderful program that I think we both were at, at Stanford two years ago but once the year is over and the next president comes poof, it’s just gone and they’ve got to figure out at the ABA, a better way that if they’re going to start these initiatives that they have to be able to continue on. And that’s a major problem in my opinion on this because they’ll have all these great conferences and then 10 minutes later, it’s dead. So –

Mark Cohen: And Monica, just obviously your ties to the ABA run a lot deeper than mine but I would just say this that as you know in 2014, the ABA commissioned the Legal Futures Group designed to sort of address among other things the access to justice crisis and the better use of technology in driving more efficient legal services.

The good news is that they did it. The bad news is that in a 28-member commission, not a single member of that 28-person team had ever founded a legal tech company, managed a legal tech company or otherwise been involved with one.

So I think that the ABA really has to cast a much wider net to include not just lawyers but also others who are intimately involved now in the delivery of legal services.

(00:19:45)

Monica Bay: I will be off that rant now and turn because we are running out of time. I would love to have you talk a little bit more about what you see coming up in 2017. And one of the issues that I think we should at least briefly talk about is how corporate counsel is changing and how they are becoming much more aggressive in terms of not just saying yes to whatever lawyer pops in.

I know there is two big groups that have been working on them; one of them is Buying Legal Council and there is one in San Francisco — that one is in New York, and there is one in San Francisco, I think it’s called _______; you probably know it better than I.

Mark Cohen: Yeah.

Monica Bay: Tell us a little bit, because I know you are involved in this, and I think it’s very, very exciting. What’s going on and how are the general counsels changing the way it has worked for years and years and years?

Mark Cohen: Sure. Well, I am going to try to tease out the multiple interesting questions that you posed, Monica, and just give short form answers to each, because as you can appreciate each one could basically take up an entire segment.

First of all, in terms of what I see in 2017, I see, and this is based upon my participation working at Georgetown Law School, where I have recently been given the title Distinguished Lecturer in Law, but what’s really neater than the title is the fact that I am working with the Dean and the Vice Dean to create so-called professional competency courses that do two things.

One, to imbue students with some of the crucial skills necessary to practice law today; things like project management, things like greater understanding of how technology is transforming the delivery of legal services, and also equally to better make them market-ready upon graduation. I see that as a very interesting development at Georgetown. I see not many schools, but a few other schools now beginning to become much more aggressive in expanding their curricula along these lines. So that’s one thing that I see and hope will continue.

I also am beginning to see a willingness on the part of different actors in the legal ecosystem to collaborate in ways that they haven’t done before.

So for example, I am thinking, and again, I don’t need to expose too much of a bias on behalf of Georgetown, but Georgetown has the so-called DC Affordable Law Firm that they launched, which is a partnership between and among Georgetown, a couple of large law firms, DLA Piper and Arent Fox, and also some corporate sponsors, and they are basically training some young graduates to do the kind of work that is, you referred to, that is responsive to resolving the access to justice crisis, but on much, much, much more cost-effective bases than the traditional $200-300 an hour fees that even solo practitioners now typically charge. And of course in major urban centers those numbers tend to be even higher. So those are some of the exciting things that I see coming down the pike.

In terms of in-house counsel, I think it’s now pretty widely known that demand for law firm services has been relatively flat over the last three plus years, whereas demand for legal services generally has gone up fairly steadily during that same period, and the question is then, how do you explain the delta. And it’s largely explained by two things.

One is the growth of in-house legal departments in terms of size, influence and market share. In-house legal departments now comprise almost 45% of legal spend in the US market, which is a marked, marked increase from what it was even five years ago.

Monica Bay: I am going to interrupt you, because I just got a memo today on exactly this topic. HBR Consulting did their annual department survey and it’s exactly what you said. One of them was that the continued push to control outside counsel cost has only seen a 1% change and that was an increase, a modest increase in compensation, and that one they said that the average increase in total compensation was 3.3. But the interesting one is the using technology to drive change. 39% of organizations are increasing their use of tech to handle increased legal demand.

But this sort of blew me away, which is participants marked median technology spending at $153,171, to me that’s like $0.05. If that’s all they are spending on tech, they are doing something really, really wrong in my book.

(00:25:15)

Mark Cohen: I totally agree with that. Again, I think that what you are seeing is that sort of in the traditional partnership model, which is based entirely on hours billed and rates, and where you have a pyramidal structure, that of course is inherently from the lawyers’ perspective inimical to the more efficient delivery of legal services by whatever means.

Monica Bay: Yeah, because it’s going to take money right out of their pocket. Why would a top senior person vote yes for tech if it means that he or she is going to make significantly less money. It’s so built into the structure. I love to say that I have been saying that the billable hour will be dead in five years; I have been saying that for 17 years.

I mean, I do think and I am curious what you think on this, I am a really big believer in blowups and I think we are starting to see it. I am very — and now, I am a fellow at Stanford in the CodeX unit, so I am drinking the Kool-Aid big time, but when I see all these incredibly smart, mostly young lawyers coming up with these great startups, I think we are going to hit a point, and I am not going to say when or how, but I think it’s coming faster than we think. I think it’s really exponential.

And I think that a lot more of big law, not as Aric Press always says, my former boss at ALM, the top part of the Am Law 100, they are not going anywhere, there’s always going to be a need for them and from clients who don’t care how big the check is.

But for the Am Law 200 and the smaller ones, it has to change, because the math just doesn’t work. I mean that’s — I think we are on the same point on that, but I just get so passionate about that, because the bottom line is, this can work for the lawyers and the clients and they will get more clients and they will be better.

And even with the self-help ones, if you get in and you do — you have a successful — as a client, you have a successful situation with a small routine matter, you are going to go, wow, that lawyer was great, I want to come and have them do something else for me.

Mark Cohen: No, I completely agree with you. I think with all due respect to Aric, who I think is one of the most thoughtful people in this arena, I think that probably it would be overly generous to say 100 firms in the Am Law 200; in fact, I rarely hear people say —

Monica Bay: Oh no, I would say the top 20.

Mark Cohen: I would say the top 20 and I think that the data is already sort of demonstrating a financial separation, if not a brand separation between the top 20 or so firms and everybody else.

It kind of reminds me Monica of — and lawyers have such hubris to think that their industry, our industry is unique from everybody else. I remember when many years ago British Medicine was socialized, but there remained a small cadre of so-called Harley Street physicians. These were sort of top, top physicians who did differentiated procedures and handled the really, really tough cases, and these were people who could continue, notwithstanding socialized medicine, to operate outside of that system, because what they did was of such great value to those few who could afford their services. I think we are beginning to see the same in law.

I think we are also beginning to see a lot of the urban myths that law has done such a masterful job of perpetrating for so long beginning to be exploded.

For example, the fact that most of what lawyers in large firms do is so-called bespoke work, that you can’t possibly, particularly with regard to things like litigation, engage in fixed price models or that technology cannot and should not turn what used to be legal services into legal products.

And I think all of those things are collectively going to conspire and more factors to bring about just what you and Aric are talking about.

Monica Bay: Now, we are running out of time, so I have two things for you to go quickly on. One is, give us three predictions about the upcoming year, 2017, I can’t believe it, and before we hang up we have to tell our audience about our favorite rock and roll event. So you are first.

(00:30:10)

Mark Cohen: Okay, sure. Well, three predictions are, one that my crystal ball, to the extent that I had one, cracked about the time that I co-founded Clearspire, so I am really not terribly good at prognosticating when things are going to happen, but considerably better at sort of whether they might. And I think we are going to see an acceleration of a lot of the changes that we have been talking about during this very enjoyable conversation.

Number two, by way of a prediction, I think what we are going to see is that if the ABA does not really begin to step up and to become a more forceful unified voice for the legal profession, especially at this time when respect for the rule of law is fast eroding, it is going to be irrelevant and marginalize itself and potentially the profession itself.

And the third thing in terms of rock and roll, I don’t know about an event, because my taste, I guess if you listen to my daughters, are antediluvian. But I for inspiration often watch a 2005 I believe it was, reunion of Cream, who gave a series of concerts at Royal Albert Hall, where I have had the pleasure of being many times, but not for that particular concert. And here are three guys who are in there, at the time, at their 60s; unfortunately, as you know, Jack Bruce, their brilliant bass player died and maybe a lot of people think that Ginger Baker, their drummer, should have.

But in any event, they played just magnificently in their 60s and I guess the connection I draw between rock and roll and that is here we are a miracle to relate in our 60s, but still I think have a lot of fuel in the tank and hopefully will be around to see a more vibrant legal profession that does a better job of servicing our entire population.

And I would just to end on a high note say that I think that this is really to touch on something you said, the Golden Age of the legal entrepreneur, and I think it’s a fabulous time to be a young lawyer, provided that the young lawyer can marry his or her skills in other areas with a legal background, and I think we are going to see more and more of that as time goes on.

Monica Bay: Now, you forgot to mention your wonderful experience on the East Coast rock and roll.

Mark Cohen: Oh, you are saying — yes, I was at Woodstock. I have witnesses, but unfortunately or maybe fortunately I have very little recollection of the particular events, and that’s probably the best evidence I can marshal for saying that I really was there.

Monica Bay: Well, I am sure you were, and my hall of fame was that I was at The Last Waltz in San Francisco, so we can certainly — both of us can look at the movie and the music, so proof that we were there.

Mark Cohen: Rock on Monica.

Monica Bay: Okay. So now, before I let you go, please tell for our listeners how they can reach you if they want to do so.

Mark Cohen: Sure. They can reach me by email at  HYPERLINK “mailto:[email protected]” [email protected] or on twitter at @legalmosaic.

Monica Bay: Well, Mark Cohen, thank you very much for a very exciting conversation and we certainly will have you again.

Mark Cohen: Thanks for the invite Monica.

Monica Bay: I am Monica Bay and thank you for listening.

[Music]

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