Data-Driven Legal: Part II

Allow me to begin with a personal story. In the late 1980s, a few years after I was called to the Bar, I remember being asked by a US client for something that required an order from the Ontario Securities Commission. When I spoke to my securities law colleague, he called in an articling student, explained the situation, and asked the student to find three recent precedent orders from the regulator that generally matched our circumstances. He told the student these orders were published by the commission, but it would probably take him ...
Data-Driven Legal: Part II
Allow me to begin with a personal story. In the late 1980s, a few years after I was called to the Bar, I remember being asked by a US client for something that required an order from the Ontario Securities Commission. When I spoke to my securities law colleague, he called in an articling student, explained the situation, and asked the student to find three recent precedent orders from the regulator that generally matched our circumstances.

He told the student these orders were published by the commission, but it would probably take him a day and a half to rummage through all the recent OSC bulletins and other materials to find appropriate ones, given that all of these orders were only available in paper. He pointed the student to our library, where these materials could be found in various stacks and piles. Before the student got to work, my colleague made it clear to him that finding the right OSC precedent orders (like finding a needle in a haystack) was a rite of passage for every budding securities lawyer.

After the student left, I stayed with the securities lawyer to plan the next steps for the matter. About 15 minutes later, as I was about to leave, the student returned. My securities law colleague was somewhat annoyed, thinking that his instructions were very clear and that supplementary questions from the student were not a good sign — it meant the student didn’t grasp what was going on.

Instead, to my surprise – and to the securities lawyer’s utter astonishment – the student handed him the three required precedents. The senior lawyer looked at the decisions. He slowly shuffled each decision to the top of the pile, and then looked up at the student. He was, quite literally, speechless. Finally, he quietly uttered five words: “How did you do this?”

The student, who it turns out was a techie, beamed a wide smile: “No problem at all, the OSC decisions just recently were put on an electronic database system. You can keyword search for them now. Do you need anything else?” he asked cheerfully.

My colleague did not (could not?) answer; his eyes looked down, back at the orders in his hands that had been found in a ridiculously short amount of time. For him, it was one of those moments when your world shifts, and you realize things will never be the same again.

Accounting magic, too

This episode also reminds me of a deal I did a couple of years earlier. I was helping a company sell itself. It had some 300-odd shareholders. The CFO of the company had created a large chart (composed of several sheets of paper taped together) that contained a handwritten list of all the shareholders, and then about 10 columns, one showing the gross proceeds of purchase price to be received by each seller, the next showing their deduction for the liability escrow, another column showing withholding tax, and so on. All figures had been entered in pencil, so changes could be made by an eraser.

As we were discussing the information on this sheet, a young member of the investment bank advising the CFO came into the room, and indicated that the per-share price had changed, but only slightly. Not a problem, the CFO replied, as he began to erase the pencil entries on his chart. To which activity the young banker replied, “You know, you don’t have to do that anymore, not if you have one of these,” and he led us to his office down the hall, where he had an early version of an electronic spreadsheet open on his brand new personal computer.

The CFO (nor I) had ever seen one of these spreadsheets before. The CFO (and I) marvelled at it. Then came the conjuring part. “You see,” said the juvenile banker, “you simply change one cell,” and he did so, to the new per-share number, “and all the other figures change, automatically”

I thought this was very cool. I glanced over at the CFO. He was, like my aforementioned colleague, speechless. And his eyes, I kid you not, were welling up. Everything that he had done laboriously by hand over the many years of his long career (with changes requiring his trusty eraser) could now be done in a fraction of the time and effort with the push of a button on a newfangled electronic data-processing machine. What magic indeed!

More, not fewer, lawyers

What I’m trying to illustrate with these stories is that the IT revolution has already affected a number of processes that support what lawyers and accountants do. But IT has not replaced lawyers — far from it. In 1961, in Canada, there were 12,068 lawyers for a population of 18.2 million people. In 2013 (the latest figures available), this figure had increased to about 90,000 lawyers for a population of about 35 million. So, the population between 1961 and 2013 roughly doubled, while the number of lawyers grew exponentially.

Two factors account for this increase. First, while the work of “finding the law” has been increasingly automated, as illustrated by the anecdote above, the exercise of applying the law to specific facts has not been computerized. And second, the fact patterns that lawyers are wrestling with are becoming ever more complicated, and also they are becoming more numerous.

This is not surprising, partly because the Canadian economy has also grown immensely since 1961. In that year, Canada had a $40-billion economy; in 2013, Canada had a $1.8-trillion economy. So, even controlling for inflation, as a nation we are many times richer than 50 years ago; therefore, it is not surprising that we require many more lawyers to help manage the multifaceted legal issues kicked up by the expanded economy (and civil society, etc.)

This point can also be made with regards to accountants. In a very interesting study regarding the impact of information technology on employment generally, Deloitte recently pointed out that in the UK, in 1981, there were about 100,000 accountants, while in 2011 the number had grown to just over 215,000. Therefore, in those 30 years, the IT revolution did not cause a loss of accounting employment — it partly drove the explosion in such jobs.

Exercising judgment

That the demand for professionals in this country has grown over the past three decades does not surprise me. Laws have multiplied, businesses have gotten more numerous, the complexities of our society have grown alongisde all of this. A country that prides itself as governed by the rule of law needs a lot of lawyers.

Moreover, consider what the essence of lawyering is — in my view, it has to do with exercising judgment under intense time constraints. Whether one is undertaking advocacy in real time in a courtroom, or advising on a transaction that closes at month end, or imparting wise counsel to a board of directors, time is typically of the essence. Thus, it’s great news that some of the more mundane elements of “finding the law” has been automated, and accelerated through IT support (coupled with smart research lawyers and librarians making sure the right questions are asked of the legal databases).

Expediting this research function allows lawyers more time to exercise judgment. That is not to say that IT will not impact lawyering judgment activities as well. There is a point where the law finding function morphs into legal judgement, as when there are conflicting cases in diverse jurisdictions. In such circumstances, intelligent IT systems will become ever more helpful — witness the recent legal research computer built by Ross Intelligence on top of the IBM Watson platform.

This system, referred to by some commentators as a “legal robot,” has been implemented by (among others) the bankruptcy group at Baker & Hostetler, a large law firm in the US. But I wouldn’t call this a robot — it is simply a next-generation research tool that is even more efficient at finding the relevant law. It still does not, however, apply the law — that remains the exclusive preserve of the human lawyers who use this tool.

Advice to stay effective

IT and computer systems are, of course, getting smarter and faster every day, and so perhaps one day they will start to crimp onto the judgment function. So what’s a lawyer (and especially today’s younger lawyers) to do? Put succinctly, there’s much they can do to improve their “judgment under intense time constraint” skill set. I would make two suggestions.

Learn to sell. Whether you are a legal advocate or a negotiator, you need to be able to sell. And an important subset of selling is negotiation. Being able to understand the “needs and greeds” of the relevant parties (your client for sure, but also the other side, and all other relevant parties) is a key first step, and then being able to engage with all of them in a negotiation that results in win-win (or multiple win) solutions. This is a significant part of what successful lawyers do, and effective negotiation techniques – which can definitely be learned – will be difficult for silicon chips and software to emulate in the foreseeable future.

Finally, collaboration. Law school should begin the process of making the lawyer a collaborator par excellence. Currently, business schools are much better at this; law schools need to catch up. The key is that a project with a legal dimension of any meaningful size or importance today requires multiple members of a team to work together to bring the effort to fruition. This includes working with a legal robot, for sure, but also with other people in a wide array of circumstances.

Learn this skill – along with selling and negotiation – and you’ll never be replaced by a computer.


George Takach is a senior partner at McCarthy Tétrault LLP and the author of Computer Law.

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George S. Takach