‘Times are a-changin’: Disruptive Innovation and the Legal …docs.manupatra.in/newsline/articles/Upload/4DAAB6C8-7259... · 2019-09-19 · ‘dormant’ and predicts that ‘the

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Manupatra Intellectual Property Reports July 2017

‘Times are a-changin’: DisruptiveInnovation and the Legal Profession

By Anurag Bana*

The report seeks to investigate Professor Christensen’s ‘disruptive innovation’ theory asapplicable to the legal profession. It provides a brief analysis of various changes occurringwithin the legal market, their potential consequences for both buyers and sellers of legalservices, and the drivers and barriers to innovation.Of particular interest is the evolution of legal services from the purely bespoke to thecommoditised. The report highlights three main drivers of such a change. First, the‘more-for-less’ challenge, which refers to the growing number of clients demanding moreefficient legal services for less money. Secondly, the gradual liberalisation of the profession,referring to the alternative business structures model. Thirdly, the vast improvements ininformation technology and, in particular, ‘big data’ and artificial intelligence, whichoffer significant efficiencies for the profession.Executive summaryThis report seeks to investigate Professor Christensen’s ‘disruptiveinnovation’ theory as applicable to the legal profession. It provides a briefanalysis of various changes occurring within the legal market, their potentialconsequences for both buyers and sellers of legal services, and the driversand barriers to innovation.Of particular interest is the evolution of legal services from the purely bespoketo the commoditised. There are three main drivers of such a change. First, the‘more-for-less’ challenge, which refers to the growing number of clientsdemanding more efficient legal services for less money. Secondly, the gradualliberalisation of the profession, referring to the alternative business structuresmodel. Thirdly, the vast improvements in information technology and, inparticular, ‘big data’ and artificial intelligence, which offer significantefficiencies for the profession. Other drivers include growing competitionfrom the ‘big four’ accounting firms and the spread of legal service providersusing alternatives to the traditional law firm business model.Innovations – particularly those transforming legal services into standardisedor packaged services – are likely to yield significant benefits for consumers interms of cost, quality and access to justice. They also offer substantialopportunities for those firms who are able to deliver real value to consumers.For traditional law firms seeking to become market leaders or stay atop theirmarket they must overcome the conservative, risk-adverse culture that seemsto pervade the profession, and may need to deconstruct their structure andpricing models.

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* Details of author – Senior Legal Advisor, Legal Policy & Research Unit, International BarAssociation. The author can be reached at [email protected] – The article was first published as a report of the IBA Legal Policy andReserach Unit

Published in Articles section of www.manupatra.com

Manupatra Intellectual Property Reports (MIPR)F–50 [Vol. 2


IntroductionThe legal profession1 is undergoingsignificant disruption.2 So much so, thatSusskind3 predicts ‘the emergence of alegal industry that will be quite alien tothe current establishment’.4

The Law Firms in Transition Survey,5

conducted earlier this year, revealed that72.4 per cent of law firm leaders in theUnited States believe that the pace ofchange within the profession isincreasing.6 Law firms face mountingpressure from clients to deliver moreefficient services at lower cost. At the sametime, they must compete with legal servicesproviders who operate under alternativebusiness models. These providers canleverage new technologies to createefficiencies and drive down overheadcosts, which they generally then pass onto consumers. This enables providers toserve those consumers who, for costreasons, were previously underserved orunserved by the profession.Another key feature of many of thesealternative providers has been driven bythe current trend of unbundling legalwork and separating those parts that canbe performed in-house, by theclient/related entity or outsourced to otherproviders.7 In this way, many aspects oflegal work are evolving from purely‘bespoke’ towards ‘commoditised’services. Indeed, Susskind writes thattraditional face-to-face lawyering is now‘dormant’ and predicts that ‘the way inwhich lawyers work will changeradically’ in the future.8

Commentators9 have described suchchanges as ‘disruptive innovation’, aterm coined by Professor Christensen inhis critically acclaimed book, TheInnovator ’s Dilemma.10 Disruptiveinnovation is a term that:

‘Describes a process by which aproduct or service takes root initiallyin simple applications at the bottomof a market and then relentlesslymoves up market, eventuallydisplacing established competitors.’11

Arguably new alternative legal servicesproviders might become the disruptiveinnovators of the legal market.The proliferation of start-ups andalternative legal services providers isunderpinned by the gradualliberalisation of the market, which isoccurring in various countries includingthe United Kingdom and Australia.Additionally, revolutionary technologiessuch as ‘big data’12 and improvementsin artificial intelligence (such as, IBM’s‘Watson’)13 offer unparalleled efficienciesin the delivery of certain aspects of legalwork. This environment is encouraginginnovation to flourish but may spelldoom for those unwilling to moveforward.Bob Dylan once wrote:14

‘If your time to you

Is worth savin’

Then you better start swimmin’

Or you’ll sink like a stone

For the times they are a-changin’.’There is some wisdom in these lyrics fortraditional law firms: reform yourstructure and business model or facepotentially bleak consequences.The purpose of this report is toinvestigate various changes occurringwithin the profession and the forces thatmight be driving, or obstructing, thesechanges. It also analyses the potentialconsequences of innovation forconsumers and legal services providers,particularly law firms. It makesrecommendations for law firms, namelythat they commit to innovation tomaintain market share or become marketleaders. This report is not intended to bean exhaustive paper on this topic.

Disruptive innovationIn The Innovator’s Dilemma, ProfessorChristensen sought to explain ‘the failureof companies to stay atop their industrieswhen they confront certain types ofmarket and technological change’.15 He


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theorised that there are two types oftechnical innovations: sustaininginnovations and disruptive innovations.A sustaining innovation is a technologythat improves the performance of aproduct or service on the market. Suchtechnologies ‘can be discontinuous orradical in character, while others are ofan incremental nature’.16 Companiesrefine their products by inventing orcapitalising on new technologies, with aview to boosting their sales to the highertiers of the market. However, ‘[a]scompanies tend to innovate faster thantheir customers’ needs evolve, mostorganizations eventually end upproducing products or services that areactually too sophisticated, too expensiveand too complicated for many customersin their market’.17

These circumstances create a gap in themarket: catering to those customers whomay be unwilling and/or unable to affordthese more ‘sophisticated’ or‘complicated’ products or services. Thatgap can fuel the development ofinnovations that transform a product orservice to serve those consumers on thefringes of the market who might beovershot or underserved by thesophisticated or complicated productofferings, or non-consumers.18 This iswhat Professor Christensen calls‘disruptive innovation’. Suchtechnologies (products or services) aretypically ‘cheaper, simpler, smaller, and,frequently, more convenient to use’.19 Atthis stage, disruptive technologies are notembraced by ‘established firms’20 becausethey do not initially satisfy the demandsof wealthier consumers and so do nothave such attractive profitabilityprospects.21 Moving into these newmarkets would involve those firms’resources being diverted elsewhere, ratherthan being used to deliver better qualityproducts to existing customers.22

Eventually however, disruptiveinnovators improve their products untilthey reach a point at which they satisfy

the needs of a majority of customers,thereby displacing incumbents.23

Professor Christensen summarises thepattern of industry disruption thus: ‘Newcompetitors with new business modelsarrive; incumbents choose to ignore thenew players or to fee to higher-marginactivities; a disrupter whose product wasonce barely good enough achieves a levelof quality acceptable to the broad middleof the market, undermining the positionof longtime leaders and often causing the“flip” to a new basis of competition.’24

The following discussion focuses on thetheory of disruptive innovation whilerecognising that other definitions of‘innovation’ have been used to explainthe changes occurring within the legalprofession.25

The evolution of legal servicesIn Tomorrow’s Lawyers: An Introductionto Your Future, Susskind appliedChristensen’s theory to the legalprofession. He said that disruption isoccurring within the market in a numberof ways, in particular, that legal servicesproviders are transforming legal workfrom purely bespoke to commoditization.26

‘Bespoke’ services refer to legal workprovided in a highly personalised orcustomised manner. Susskind describesoral advocacy in the court room as the‘quintessential bespoke legal service’.28

Another example is where a lawyer maydraft a legal document for a clientwithout some pre-existing form orstandard document.29

‘Standardisation’ is where lawyers relyon tools such as checklists or proceduresthat prescribe good practices, standardform documents or previous workproducts.30

‘Systemisation’ involves lawyers usingIT systems internally for more efficientand consistent legal work. Such systemsgo beyond the storage of standard formdocuments and, instead, encompass ‘avariety of enabling technologies [that]automate legal activities’.31

‘Times are a-changin’: Disruptive Innovation and the Legal Profession




‘Packaging’ involves lawyers makingthose IT systems available to their clients,usually over the internet. Susskind givestwo examples: first, when law firms offertheir clients access to their internalknowledge systems; secondly, when lawfirms provide access to documentassembly systems so that clients canproduce their own legal documents.32

The final step is ‘commoditisation’,which refers to ‘legal work that is socommonplace and routinizable that itcan be made available in open-sourcespirit on the web’.33

that ‘legal work can be decomposed andsourced in new and different ways’. Thusthe question lawyers must askthemselves when receiving a legal taskis: ‘What is the most efficient way ofundertaking this work …?’36 The answermight involve outsourcing or offshoringlegal work ‘not deemed within thecompetence or strategy of a firm’.37

As Spangler points out, clients can takethe same approach to their legalproblems. Current innovations allowcorporate general counsel to‘disaggregate their legal needs andchoose a provider that gives the best valuefor different components of a deal ordispute’. Their solution might involveinsourcing work such as discoverycompliance;38 big data analytics;‘“value” firms’ (firms that are focusedon providing value to their clientsinstead of billable hours); legal processoutsourcing firms; content managementsolutions such as e technology, legalsearch technologies, work flow systemsand automated document assembly; andorganisations that assist corporatecounsel to retain appropriate legal talentfor specific matters.39

The drivers of changeThe evolution of legal services isunderpinned by three main drivers ofchange: the ‘more-for-less’ challenge; theliberalisation of the profession; andinformation technology.40

The ‘more-for-less’ challengeThe ‘more-for-less’ challenge refers to thegrowing number of clients who cannotafford legal services when they aredelivered in the traditional, bespoke wayand, not least, because of the hourly billingmodel.41 Corporate general counsel forlarge organisations, managers withinsmall-to medium-sized businesses andindividuals are increasingly demandingmore efficient legal services for lowercost.42 Mottershead labelled this trend the‘Uber-fication’ of the law as clientsdemand easy-to-use services that delivervalue.43 44

The evolution of legal servicesis underpinned by three

main drivers of change: the‘more-for-less’ challenge; the

liberalisation of theprofession; and information

technology.

Susskind argued that clients and othercompetitors are pushing law firmstowards commoditisation. This is becauselegal work towards the right-hand side ofthe spectrum tends to be offered on a fixed-fee basis, which brings greater certainty.Clients also expect efficiency gains andgreater performance by advisers who areable to draw upon the organisation ofprocedures, knowledge and expertiseacross the firm.34 Law firm leaders seemto be aware of this movement; the LawFirms in Transition Survey revealed that89.4 per cent of law firm leaders think thatmore commoditised legal work is apermanent trend of the market movingforward.35

Importantly, Susskind is not saying thatcertain types of legal services must fallwithin one of his five categories. Rather,a legal task can be broken up into itsconstituent parts and distributed acrossa number of categories. His key point is


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Some commentators theories that it wasthe 2008 financial crisis and thedownturn in the world’s economy thatwas the catalyst for this change;45 whileSusskind and Christensen argue it isgreater transparency within the legalprofession that is fuelling it. On this latterpoint, Spangler commented that thepower balance between lawyers andtheir clients has shifted: ‘Legal serviceshave been demystified, and legal serviceconsumers are more knowledgeable,sophisticated and connected than everbefore’.46

Christensen claims that it was thecreation of corporate general counsel 25years ago that delivered ‘[t]he firstsignificant blow to law’s opacity’,followed by the Am Law 100 ranking. Itis a widely accepted fact that generalcounsel have increasingly been partnersprior to going in-house and already havean idea of the extent to which legal advicehas been ‘padded’ or ‘gold-plated’, andtherefore know how to reduce costs.Technology has also enabledtransparency. For example, manycorporate and law firm clients leveragebig data applications that allow them tocompare and monitor law firm rates andlegal spend.47 Law firms use these sametechnologies to benchmark themselvesagainst the industry and competitivelyprice their services.48 There are alsostart-ups, such as JustiServ inMassachusetts which matches lawyerswith prospective clients based on theirlegal needs and financial means.49

Similarly, Lexoo an online platformbased in the UK, operates as a mediumbetween lawyers and potential clients.50

Susskind argues that corporate generalcounsel continue to be at the forefrontof change.51 Similarly, Campbell saysthat ‘the dominance of the GeneralCounsel’s office has created apotentially disruptive opening fornon-lawyers and ‘non-solution shop’52

vendors to sell their products andservices to the General Counsel’soffice’.53 Generally, they are innovating

by unbundling legal work, insourcing,working creatively with a number of lawfirms and taking advantage of newcompetitors that offer less costly, moreefficient services.54

The Law Firms in Transition Surveyfound that 67 per cent of law firm leaderswithin the US believe that they are losingbusiness to corporate counseldepartments that are insourcing work,and 24 per cent perceive this as a potentialthreat. Another survey conducted byAdvanceLaw in 2013 revealed that 74 percent of corporate general counsel (at 88major companies) would prefer ‘to use agood lawyer at a non-pedigreed firm forhigh stakes (though not necessarily betthe company work) assuming a 30 percent difference in overall cost’ over a ‘goodlawyer at a pedigreed firm’. Moreover,only 11 per cent of corporate generalcounsel surveyed felt that most lawyersat pedigreed ‘white shoe’ firms were moreresponsive than at other firms.55

Notably, AdvanceLaw is a company thatconnects corporate general counsel withlaw firms that ‘exhibit strong quality,expertise, efficiency, and innovation’.56

Key to AdvanceLaw’s business model isits performance evaluation system,which aims to bring transparency to theprocess of law firm selection.57

These results show, as the authors of theLaw Firms in Transition Survey Reportstated: ‘Clients may not be asking forchange – but they are showing law firmsthat they can and will take alternativemeasures themselves to achieve greaterefficiency and economy’.58

In contrast, Brandon, a strategy directorat Overture,59 argued that corporategeneral counsel are ‘light years away fromcreating the kind of disruption theindustry needs’. The reason being, ‘toomany companies still recruit in-houselawyers who are as junior (cheap) as theycan get away with, who are thensteamrollered by their law firmsuppliers’.60 Moreover, Campbell statedthat corporate general counsel can beconstrained by the established resources





processes and values of organisations,which may involve, for example, retaininglaw firms who bill by the hour.61

In any case, Susskind warns that, soon,corporate general counsel: ‘Will havelittle choice but to overhaul theirdepartments and working practices. Themore for less pressure will built to analmost intolerable level and they willhave to recalibrate if not reengineer theway they working internally and howthey source external legal services’.62

Liberalisation of the professionThe liberalisation of the profession refersto the process of campaigning for ‘arelaxation of the laws and regulations thatgovern who can offer legal services andfrom what types of business’.63 This isdistinct from the deregulation of theprofession.64

Susskind points to legislative changesin the UK that permit non-lawyers tocompete in the legal market.65 He predictsthat this liberalisation will give rise toalternative business structures (ABS) thatwill better meet clients’ more-for-lesschallenge and, consequently, ‘will havea ripple effect around the world’. Heargues that within ten years ‘most majorjurisdictions in the West and manyemerging jurisdictions too will haveliberalized in the manner of England’.66

The Innovation in Legal Services Report67

suggested that the adoption of ABS lawshas already had a positive effect oninnovation in the UK. The report foundthat ‘[a]ll else being equal, ABS solicitorswere 13–15 per cent more likely tointroduce new legal services’. They arealso more likely to engage in innovationin relation to strategy and organisationalstructure.68 The authors deduced fromthese results that wider adoption of ABSstatus would likely increase the range oflegal services available to consumers.69

In the US, Campbell noted that there hasbeen ‘a creeping de facto deregulation oflegal services provided to corporateclients’ that ‘has allowed innovation toflourish’.70 However, in the individual

client part of the market, consumer classactions brought by private attorneysagainst innovators such as LegalZoom(discussed further herein), often allegingunauthorised practice of the law, hasworked to slow entry of new services andproducts.71

Information technologySusskind listed 13 innovativetechnologies expected to ‘disrupt andradically transform the way lawyers andcourts operate’:72

• automated document assembly;• relentless connectivity (refers to

technologies that allow immediateaccess to lawyers by their clientsand colleagues);

• electronic legal marketplace (refersto online reputation systems thatallow consumers to compare lawfirms);

• eLearning (refers to technologiestransforming law firm training andlaw schools);

• online legal guidance;• legal open sourcing (refers to

‘sustained online masscollaboration which is a form ofcommoditization’);

• closed legal communities (refers tolawyers collaborating and sharingknowledge online);

• workflow and project management(information systems);

• embedded legal knowledge (refersto laws and regulations beingembedded within systems andmachines, such as cars);

• online dispute resolution;• intelligent legal search;• big data (which refers to the

enormous amount of data collectedby technologies and requiringanalysis); and

• artificial intelligence problem-solving.

Brandon is sceptical about the effects oftechnology. He claims that:

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‘The technology to warp, destroy andremake the legal profession has beenaround for years. And yet the numberof lawyers hasn’t been reduced, the costof Big Law services has only increasedand the use of so-called Big Data bylaw firms seems to be non-existent’.73

On the other hand, these new technologiesseem to be engendering an entrepreneurialspirit within the profession. For instance,in the US, pop-up innovation labs calledlegal ‘hackathons’ have appeared. Theseinvolve ‘attorneys, developers, designers,marketers, and entrepreneurs comingtogether in a room and deciding to buildsomething that will have a positive impacton the legal industry’.74 These legal‘hackathons’ are contemporaryinnovation labs for the legal industry, andare now generating business; Rodriguezobserves that several legal technologycompanies have launched months afterlegal ‘hackathons’ have taken place.75

AngelList has also listed 997 legal start-ups, operating globally since 2011, whichare worth an average of $4.3m.76

This environment is set to continue asthe power of computers acceleratesexponentially. According to Moore’sLaw,77 the number of transistors that canbe fitted onto a computer chip doublesevery two years.78 These developments inhardware capability mean improvedprocessing power and energy efficiencyat a lower cost to the end user.79 Researchhas confirmed that Moore’s law remainsaccurate and that ‘a similar exponentialgrowth occurs in the telecommunicationand storage of information’.80 On the50th anniversary of his Law in 2015,Moore predicted it might hold true for atleast another five to ten years.81

There have also been substantialcomputational capacity improvementsthrough developments in softwarealgorithms, and the increasinginterconnectedness between computersand human intelligence enabled by theinternet.82 These advances were behindthe creation of Watson, the IBM cognitivecomputer, which competed and won the

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game of Jeopardy in 2011.83 Recently, agroup of University of Toronto studentsdeveloped ROSS, an ‘artificiallyintelligent attorney’, built on top ofWatson. It has the capability to answerlegal questions by reading ‘the entire bodyof law and return[ing] a cited answer andtopical readings from legislation, case lawand secondary sources’. It also monitorsthe law and will notify the lawyer of newdecisions that might affect their case.84

The Law Firms in Transition Surveyasked law firm leaders in 2011 and in2015, whether they could envisage a law-focused ‘Watson’ replacing any‘timekeeper’ roles within the next five toten years (Figure 20. The resultsindicated ‘a growing recognition of thecapabilities of artificial intelligence’.85

McGinnis and Pearce highlighted fiveareas of the law that will dramaticallychange with machine technology: ‘(1)discovery; (2) legal search; (3) documentgeneration; (4) brief and memorandageneration; and (5) prediction of caseoutcomes’.87

DiscoveryArguably machine intelligence is mostadvanced in the area of discovery.Technologies are moving from basickeyword searches to predictive coding,which involves algorithms that predictwhether a document is relevant. Manylarge law firms have already establishede-discovery departments, and new serviceproviders, such as Modus, are emerging.88

Legal searchOnline legal search has been used bythe legal profession to improve theprovision of existing services. In thatway, as Campbell argues, 89 it is asustaining innovation. For example,LexisNexis – which provides asearchable directory of online resourcesfor lawyers and other professionals,and consolidates most of theinformation they need into a singledatabase – is currently used by themajority of top-and mid-tier law firms.90





However, online legal search has thepotential to become disruptive. McGinnisand Pearce envisage two phases of futuretechnological change in this area. The firstphase, which is expected to come in thenext 10 to 15 years, involves perfectingsemantic search technology that ‘will allowlawyers to input natural language queriesto computers, and the computers willrespond semantically to those queries withdirectly relevant information’.91 Computerswill also be able to assess the strength ofprecedents based upon how they aretreated in subsequent case law. The secondphase involves technology that is able toidentify issues within a given set of factsand then suggest relevant authorities thatmight apply to those issues.92

Ultimately, McGinnis and Pearce predictthat, in time, machine intelligence willreplace the legal search function oflawyers.93 Judicata is a start-up in thisarea that uses ‘open source text analytics,search and cloud computing tools andbodies of knowledge’ to structure dataand provide lawyers a smart interface tothat data.94 Another example is theApplied Cognitive Engine (ACE)programme, developed by RAVNSystems, which boasts the capability toautomatically read, extract andsummarise information held withindocuments.95 Berwin Leighton Paisnerhas become the first law firm to sign upto ACE, which will be rolled out withinthe firm’s fagship real estate departmentand to other practice areas.96

The trend for developing computer toolsto improve legal research is not reservedfor the Western societies. According to areport produced by the Lebanon-basedSader & Associates firm:‘In the Middle East, legal databases andother such innovations are alreadyavailable and even governmentinitiatives to provide legal informationto the public are underway.’97

In 2013 Sader launched its new ‘ArabicPlatform’ in Lebanon, which featureslegislation, case decisions, legalconsultation and legal studies, whereas,

as early as 2008, it had beguncollaborating with LexisNexis to providea Middle East database to its clients.Asia has also progressed in terms of thevarious analytical tools that are beingused to improve legal services, so far thatit probably cannot be considered merelyan emerging market in relation to the legalprofession. Baker & McKenzie’spharmaceutical and healthcare MapApp,which was developed by the firm’sbranch in China, is a good example of asuccessful marriage between content andtechnology. The tool, a round-up ofcommercial and legal updates in the lifescience industries, allows the firm’s clientsto access this information in real-time andon-the-go. It also has a jurisdiction filterand can push notifications to clients.98

Document generationAutomated document assembly works byautomatically generating a legaldocument in response to a questionnairefilled out by a consumer. LegalZoom andRocketLawyer are two providers thatallow consumers to create their own legaldocuments online, catering primarily forsmall businesses and individuals.99

Arguably, this technology is disruptivebecause it provides useful services toconsumers unable to afford a lawyer andis therefore capable of unsettling the waylegal services are commonly provided,namely through the employment of anattorney.100 Although, as Brescia et al.pointed out, it ‘could just as easily serveas an example of a sustaining technology’if lawyers use it to improve their efficiencyand lessen their workloads.101

It is expected that, as technologiesprogress, automated documentassembly will become far moreadvanced and applicable to a widerscope of legal practices, not merely basiccontracts or wills. McGinnis and Pearcepredict that ‘machine processing will beable to automate a form, tailor itaccording to the specific facts and legalarguments, and track its effect in futurelitigation’.102 They also believe that the

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automated generation of legal briefs ormemoranda will improve substantiallywithin the next 15 years, such thatcomputers will be able to deliver ‘veryuseful drafts’.103

Legal analyticsLegal analytics refers to the use ofalgorithms to analyse vast amounts ofdata (otherwise known as ‘big data’)104

to identify patterns and trends and makelegal predictions, including the likelyresult of litigation.105 This kind oftechnology is already in use for e-discovery purposes.106 McGinnis andPearce forecast that, over time, aspredictive technologies provide moreaccurate estimates, they may reduce thevalue of lawyers’ assessments of mattersand may encourage parties to reach asettlement more rapidly.107 Moreover,Rijmenam108 argues that big data, ifharnessed by technologies, cancontribute to the legal industry in fourways: first, by reducing costs andimproving the efficiency of courtprocesses; secondly, by drivingtransparency into the market; thirdly, todeliver new evidence in court; andfourthly, by improving the effectivenessof recruitment processes.109

Goodman points out that while big dataanalytics programs will free up lawyersto undertake more challenging work, itmay reduce the scope for training younglawyers who often learn by taking onstraightforward, routine cases.110 Lawfirms are also reluctant to ‘digitise’ theirdata because of threats to privacy andsecurity.111 Therefore, as Goodmansuggests, firms must ensure that clientdata is anonymised before it isanalysed.112

The threat of cyber-security breaches withregard to the data procession oflegally-related information, recentlydemonstrated by numerous examples ofhacking and malicious software, hasincreased clients’ reluctance to providelegal professionals with their personaldata. Even if it is anonymised, data

analytics has the power and capability todecode the source of information. The legalservices industry must improve its reflexesin the cyber-security to stay protected, butthis is something beyond the scope of thisreport.Notably, the public sector is alsocapitalising on big data. For instance, theArts and Humanities Research Councilis funding the UK’s National Archivesto undertake the ‘Big Data for Law’project, which was launched to researchhow legislation is developed and used.113

New models of legal practiceCampbell suggested that alternativebusiness models and ‘valueconfigurations’114 ‘have taken centrestage [in theorist’s work] as the realenablers of disruptive innovation’.115 AsSpangler stresses, disruptive innovation‘is not about mere technology, but abouta game-changing business model thatmakes new use of an existing technologyor takes advantage of a technologicaladvance’.116

In the same vein, Lamb states that‘technology is a tool, not an answer’.Speaking on the demise of ‘Clearspire’, aUS multi-disciplinary firm ‘once hailedas a disrupter that could upend thetraditional legal business model’, Lamblamented the firm ‘focusing too much onthe technology they had developed andnot enough on solving specific problemsof specific clients’.117

The ‘solution shop service’By reference to theorists Stabell,Fjeldstad and Christensen, Campbellargues that, traditionally, law firmswork as ‘solution shop businesses’. Thismeans that consumers frequentlyapproach lawyers with problems thatare uncertain or imprecise, precludingthe application of standardisedoff-the-shelf solutions in the firstinstance. The solution shop valueconfiguration demands that the solutionbe tailored to the problem identified, andwhile ‘components that have been

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produced through a value chain processmay be incorporated in the solutionshop service’ the service itself ‘remainsinherently individualized and directedat diagnosing and solving theconsumer’s problem.’118

In other words, typically lawyers providebespoke services to their clients becauseof the imprecise nature of their problems.Campbell argues that, as the solutionshop addresses a job several times, ‘thecontours of the problem become clearer,opening the way to standardized valuechain solutions’.119 Where standardizedsolutions can safely be provided toconsumers, firms using alternativebusiness models might deliver bettervalue at lower prices.120

Campbell also claims that there isgenerally no information asymmetrybetween in-house counsel and the lawfirms they retrain. Campbell thereforewarns that unless law firms becomespecialists in niche areas of the law topreserve some information asymmetry,the solution shop model may no longerwork in the corporate setting.121

Alternative modelsThe Disruptive Innovation New Modelsof Legal Practice Report (the ‘Report’)focuses on five types of businesses usingalternative business models primarilybased in the US (labelling them ‘NewModels’): secondment firms, law andbusiness advice companies, law firmaccordion companies, virtual law firmsand companies that encompass a varietyof business models (offering alternativebilling practices, greater flexibility for staffand women-friendly environments).122

The Report suggested that many NewModels have arisen from clients’ andlawyers’ dissatisfaction with traditionallaw firms and the way in which theydeliver legal services.123 In particular,many lawyers were frustrated with lawfirms’ emphasis on billable hours andlack of flexible work practices,particularly for women re-entering theworkforce after having children.124

A key feature of New Models is their use ofnew technologies. This includes cloud-based tools which allows them ‘to createseamless communication networks amongwidely dispersed attorneys and tooutsource everything from administrativework to office management’. Some NewModels operate virtually,125 or out ofminimal physical office space. Thesefeatures significantly reduce theiroverhead costs, which translate intoconsiderable cost savings for theirclients.126

The Report acknowledged that many NewModels actually ‘specialize in traditionalbespoke work; they just organize thelawyers who deliver it in a different way’.127

As such, these firms are probably not‘disruptors’; Brandon suggested that somemight not even be innovators:

‘Opening an office in Kettering, Corkor Quezon City is not innovative.Introducing a new client relationshipmanagement database or invoicingsystem is not innovative. Nor is fixedcollared, capped or value billing. Noris rebranding your bankingdepartment the Capital InstrumentsRisk Assessment Practice. Differentstaffing arrangements are hardlyinnovative if they’re doing the samework in the same way, just in acheaper location.’128

Examples of New ModelsTo illustrate the fact that the adoption ofinnovative methods addressing concernsof the legal market has developed from adomestic trend to a worldwide,identifiable pattern, it is useful to mentionspecific examples of corporate structuresthat embody the principles of disruptiveinnovation in one way or another.Axiom Law is a worldwide corporationwith over 1,500 employees. It provideslegal and business advice andinsourcing services to corporate generalcounsel.129 Axiom harnesses ‘IRIStechnology’ which is a ‘fully integrated,flexible and cloud based’ platform that

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was ‘designed to transform the end-to-end contracts process, from the portalenabled intake of support by businessusers, to contract drafting, negotiation,and execution, to the conversion ofcontractual terms to structured data thatcan be interrogated and analyzed’.130

Employees work remotely, onsite withclients or within Axiom’s offices.131

Notably, Axiom has experienced a 1,216per cent growth in revenues in the lastten years and was recently recognisedas one of the top-ten ‘game changers’ ofthe legal profession in the last decade.132

In an effort to address the more-for-lesschallenge and reduce overall costs forconsumers many firms and start-upshave changed the ways they do business.For instance, Smithline PC, a law firmbased in San Francisco, runs a‘subscription service’ for its clients. Fora monthly fee, Smithline handles allrelevant matters for their clients.133 Thismodel brings greater predictability andstrength to lawyer–client relationships.The firm also sets boundaries to ensureits employees work normal businesshours with little or no weekend work andreceive three weeks vacation ‘completelyunplugged from client demands’.134

Similarly, Employsure charges clients anannual fee to consult on employment lawissues in Australia. If clients follow thatadvice, they are insured for their liabilityand legal costs if sued under Fair Workand Work, Health and Safety legislation.135

Summit Law Group, a law firm based inSeattle has adopted a ‘Value AdjustmentLine’ billing approach, which‘empowers clients to adjust billing-upward or downward-within thirtydays of the invoice, based on theirperception of the value received’.136

Fenwick & West LLP (‘Fenwick’) is a full-service law firm with offices in SanFrancisco, Seattle and Shanghai. In 2010it introduced ‘Flex by Fenwick’ (‘Flex’),based in San Francisco. Flex steps in toservice Fenwick’s clients when they areno longer prepared to pay big law pricesfor day-to-day work, and then integrates

them back into Fenwick for major or morecomplex or transactions.Bliss Lawyers is a secondment firm thatoperates over a virtual platform. It has anetwork of more than 10,000 lawyersacross the US. Lower overheads meansthat Bliss charges substantially lowerrates than big law and typically, chargefat fees rather than billing by the hour.Also, Bliss is a certified majority women-owned business and over 65% of theirengagements are women.137

Alternative billing methods have alsorisen in Canada, where there is the caseof a website (www.lawyersforless.com)that offers a service based on an eBay-style model of lawyers tendering bids forclients’ cases.138

As mentioned, the Asia Pacific region isalso keeping up in the arena of innovativebusiness models for the legal servicesindustry. Asia Pacific firms are alsocreating networks and competing with theinternational players by practising locallaw, offering lower rates and finding newways to raise funding. In the past year,forexample, Singapore-based ZICOlaw –whose network spans the Association ofSoutheast Asian Nations (ASEAN) –created a legal structure that allowed it topublicly trade shares through a holdingcompany.139

Another example is Hong Kong-basedlegal start-up Dragon Law, whichfocuses on the provision of fat-fee legalservices to other start-ups through cloud-based legal tools, with the aim tostreamline their businesses. Finally,inspired by the principles of trusteeshipand democracy and with a clear focuson technology, the Indian law firmNishith Desai Associates with offices inIndia, Singapore, the US and Germanyhas a ‘happiness billing programme’under which clients pay according totheir satisfaction with the service.140

Other factorsSusskind acknowledged that there areother forces driving change in the legal

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profession including globalisation, ashifting demography and competitionthreats by the big four accounting firms(Deloitte, KPMG, PricewaterhouseCoopers and Ernst & Young).141 The latterhave invested heavily in growing theirlegal teams, concentrating on areas thatcomplement their existing services andfocusing on high volume, repetitive tasks(i.e., those legal services that can bestandardised). While these firms mightinsist that they are not seeking to erodelaw firms’ business, some commentatorshave argued that it is only a matter of timebefore they steal market share from firms,particularly mid-tier firms.142

The Innovation in Legal Services Reportlisted other factors driving innovation,which included changing or increasingdemand for new services, the intensityof competition, availability of finance fordevelopment, staff recruitment andchanges in the strategy and leadershipof organisations.143

Potential benefits and disadvantages ofdisruptive innovationSusskind argues that, as legal servicesevolve away from being bespoke, pricestend to become more certain and are likelyto decline, along with the time it takes toprovide such services. Meanwhileservice quality increases.144 TheInnovation in Legal Services Report addsweight to this prediction: it found thatthe major effect of innovation145 withinthe UK’s legal services market ‘has beento extend service range, improvequality… attract new clients’ andimprove the tailoring of services’.146

Susskind states that many law firms fearthe commoditisation of legal services,firstly, for its potential to devalue thepractice of law and secondly, becausethe revenue derived from such servicesmay be low, with the long-term profitmargin failing to justify such investmentto partners accustomed to high incomes.He explains that an online legal serviceis effectively an ‘informationcommodity’ and that competitors tend

to drive the sales price downwards,towards the marginal cost ofreproducing and distributing suchproducts.However, Susskind is of the view thatdeveloping systemised or packaged legalservices that stop short of commoditisationmight produce substantial profits. This isbecause, if legal service providers deliverproducts that are:

‘Of such value and use to clients thatthey are prepared to pay serious feesfor its use, and there are no competitorproducts, then once the initialinvestment in the system has beenmade, all later sales yield funds thatare unrelated to the expenditure oftime and effort by lawyers’.147

Interestingly, the Law Firms in TransitionSurvey, conducted annually over the lastseven years, reports that there is a ‘clearcorrelation’ between those firms thathave reformed in the areas of pricing,staffing and efficiency and those that areenjoying greater economic success.148

However, it is not known what thoseinnovations involved.In any case, if the trend towardscommoditisation continues, it willarguably improve access to justice forthose who currently cannot afford legalservices, for instance, through providerssuch as LegalZoom, RocketLawyer, Noloand Riverview Law.149 There are, however,concerns that using such services may notentirely meet customers’ needs or mayproduce unintended results;150 Brescia etal. states that ‘[t]here is little dispute thatthe services provided by these disruptivecompanies are less than what an attorneymight provide’.151 Some commentatorshave nonetheless suggested that allowingconsumers to draft their own legaldocuments is better than them notreceiving legal services at all.152

There are also concerns that suchproviders are engaging in theunauthorised practice of the law and, inthe US, the threat of civil and criminalcharges hangs over these for-profit

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websites.153 For example, in a recent classaction fled against LegalZoom, theMissouri Federal Court held that theservice constituted unauthorised practiceof the law because it went beyondproviding documents to customers and:

‘Included having non-attorneyemployees check for completeness,spelling, grammatical errors andconsistency in the documents preparedthrough the site, and that the softwareprogramming selected the appropriateform based on information providedby the customer’.154

In June 2015, LegalZoom fled a US$10.5manti-trust suit against the North CarolinaState Bar for denying it permission to selllegal services in the state.155

On the same issue, Dzienkowski notesthe potential for lawyers working invirtual firms across jurisdictions toengage in the unauthorised practice oflaw.156 Other criticisms have been thatlawyers may practice without propersupervision and often will not ‘workside-by-side’, which can createrelationship and communicationproblems.157 Dzienkowski also warnedthat firms operating virtually and usingcontent management systems mustensure that such technology ‘does notexpose confidential client information tounreasonable risks of disclosure’.158

For legal service providers such asAxiom, which employ lawyers, andoutsource and insource lawyers toclients, there are risks for conflicts ofinterest to arise; could, as Dzienkowskipoints out, lawyers of Axiom ‘beoutsourced or insourced to corporationsthat are in competition with each otherin the same marketplace?’159

In relation to corporate clients, Dzienkowskiraises many potential other consequencesof legal services providers’ alternativebusiness models. He notes, for instance, thatthe practice of unbundling legal work issometimes left to the client, depending onthe particular New Model firm,160 andquestions whether these providers would

be appropriate for smaller companies orcompanies without in-house generalcounsel who are relatively inexperiencedin retaining legal services. He emphasisesthat clients must give informed consent tounbundling legal work and mustunderstand the consequences of limitedlegal representation.161

Sheppard theorises that the legal servicesmarket will undergo ‘incompletedisruptive innovation’, where disruptionhas occurred but a disrupter has notinnovated with respect to all of corefunctions of an industry. This haspotentially adverse consequences foroverall consumer welfare.162 Sheppardconsiders that, as disruption occurs, thereis potential for consumers in the legalmarket to undervalue bespoke services orcore functions of the profession and thinkthem unworthy of their high prices. Thisdrives down demand and, consequently,the supply of such services may fall, orfirms might continue to provide bespokeservices but of lower quality or at a higherprice. This may produce latent demandfor these services.163 An in-depth analysisof this economic argument is beyond thescope of this report.

Barriers to innovationMany commentators have argued that itis the profession’s conservative attitudesthat prevent it from innovating. Indeed,45 per cent of law firms surveyed by theLaw Firms in Transition Survey, citedpartner resistance as one of the reasonsfor their firms not doing more to changetheir practices.164 Rodriguez argues thatit is not so much lawyers as individualsbut rather ‘their training and traditionsthat are to blame’, particularly thedoctrine of precedent.165 This is becauselawyers are taught to look to the past foranswers or solutions to current or futurecases. Further, lawyers are also taught tomitigate risk and as such, tend to beparticularly risk adverse. As Rodrigueznotes: ‘pursuing innovation is almost theopposite of what the industry teacheslawyers to do’.166

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It is l ikely that fears about theconsequences of new technologies arestifling innovation. While manycommentators have argued thattechnological innovations such asautomated documentation have thepotential to make lawyers exceedinglyefficient, as Brescia et al. notes, lawyersare reluctant to adopt such systems dueto high development costs and fearsthat documents might contain errorsthat could lead to a malpractice claimagainst them.167 As afore-mentioned,there are also fears surrounding datasecurity.168

Another potential barrier to innovation isthe traditional structure of law firms andtheir hourly billing practices. As Spanglerstates: ‘Efficiency… is antithetical to thelaw firm business model, which is basedon charging clients for time spent, ratherthan on results or other measures ofvalue’.169 Similarly, Susskind argues that‘hourly billing is an institutionalizeddisincentive to efficiency’.170 Campbellnotes that it is difficult for firms to movefrom one business model to another asthey are typically constrained by their ownresources, processes and values.171

Moreover, he argues that a firm’s value issourced in its reputation, which dependson the legal matters it handles and itsemployees; he suggests that if a firmperforms low status work, its reputationmay suffer.172

Many law firms seem to be taking a laxattitude towards changes occurringwithin the market. Susskind observesthat firms are not significantly changingtheir practices for three main reasons:they are busy serving existing clients; thatthey are hindered by structural matters;and that there is general reluctance tobelieve there are reasons to change.173 Infact, 63 per cent of US law firm leadersurveyed by the Law Firms in TransitionSurvey said that their law firms were not‘doing more’ to innovate because‘[c]lients aren’t asking for it’. Leaders oflaw firms employing at least 1,000lawyers said that they were ‘not feeling

enough economic pain to motivate moresignificant change’.174

The Innovation in Legal Services Reportfound that 80 per cent of organisationsfelt ‘that they have a culture andleadership which is open to new ideas’,however, ‘only around 40 per cent oforganisations have put in placeorganisational procedures to supportinnovation’.175

Paradoxically, regulation is frequentlycited as both a driver and an impedimentto innovation.176 The Innovation in LegalServices Report found that between onefifth and one quarter of the 1,500Respondents saw legislation andregulation within the UK as being asignificant obstacle to innovation. Theauthors point out, however, that thismeans 75–80 per cent of Respondents didnot perceive it to be a major constraint.177

The report also found that, generally,solicitors take a more positive view of therole and effects of regulation oninnovation as compared with barristersand other legal services providers.178

In the US legal market, Campbell arguesthat State Regulations limit lawyers tothe solution shop model and obstructentities from entering the market andoffering services via other businessmodels.179 By way of example, Campbellpoints to the difficulties and ethicalburdens lawyers face in offering limitedscope or unbundled legal services.180

McGinnis and Pearce highlight rulesthat prohibit non-lawyers from providingpersonalised legal services as, arguably,a barrier to the application of machineintelligence, which produces documentstailored to clients’ needs. However, theauthors also state that the market forthese services has become ‘de factoderegulated’.181

The Innovation in Legal Services Reportlisted other barriers to innovation,including ‘lack of the necessary financefor innovation, limited marketopportunities, and lack of expertise inthe business’ each mentioned by under20 per cent of legal service providers

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surveyed.182 In contrast, other factors,such as ‘attitudinal barriers and lack ofcollaborators’, were perceived asrelatively insignificant.183

What’s next?Commentators continue to makepredictions about the future of the legalprofession.184 Many believe that big lawwill remain but that new innovations aresegmenting the legal market.185

Susskind believes that legal businessescan still be profitable, provided theyconsider how to undertake, and makemoney from, routine legal work.186 Heargues that mid-tier or second tier firmsthat undertake mid-market deals ordisputes in the traditional bespokemanner are most at risk because suchwork is highly price-sensitive.McGinnis and Pearce forecast that the‘machine invasion’ will have mixedconsequences for lawyers. They predictthat, as artificial intelligencecommoditises various aspects of the lawand information technology bringsgreater transparency to the profession,lawyers previously undertaking routinelegal tasks (e.g., wills, house closings,standard contracts and documentreview) will lose their market share.187

On the other hand, the McGinnis andPearce predict that the same technologywill assist two kinds of lawyers: the‘superstars’ of the profession, who willuse technology to extend their reach; andlawyers who change the way they workand capitalise on technologies to servethe lower ends of the market.188 They alsopredict that ‘those lawyers who are inhighly specialized areas subject to rapidlegal change… will be relativelyunaffected, because machines will workbest in more routinized and settledareas’. Lawyers who provide serviceswhere human relationships are criticalare also likely to continue to play a role.189

And machines cannot replace oraladvocates, although, the number ofdisputes that reach Court may be reducedwith the advent of online dispute

resolution technologies and emergingtechniques of dispute containment anddispute avoidance.190

Susskind wrote in 2005 that there werethree basic options for law firms to dealwith the climate for legal services:

‘First there is the option to lead, i.e. topioneer and play the role of the firstmover along the path, with all the benefitsand potential risks that this entails. Thesecond option is to invest enough to beready to respond, poised to driverightwards in the event that a competitordoes so or a new entrant jumps in at alater step. The third option is to resistany move to the right [towardscommoditisation]. In the medium to longterm, this third option, it seems to me, iscommercially suicidal.’191

Law firms wishing to be market leadersface the ‘daunting task’ of ‘identifying,developing and marketing potentiallydisruptive, [innovations] before theyovertake sustaining’ innovations.192 Theproblem is, as Professor Christensenaptly describes, ‘markets that do not existcannot be analysed’.193

Spangler suggests that to encourage thebehavioural change needed to driveindustry disruption, law firms couldexperiment in three areas: ‘Structure;Attorney-client relationship andCollaboration’.194

In terms of structure, Spanglerrecommends that law firms createseparate internal units or stand-aloneentities that can experiment and investin new ideas, thus ‘providing a spacewhere the participants can fail fast andoften, while allowing the firm to manageits existing business model as it works todevelop a different model for thefuture’.195 According to Dzienkowski,‘[i]nnovation depends upon ideas, trialand error, and corrective measures’.196

Similarly, Susskind argues that law firmsshould have two businesses: an advisorybusiness and a process business. Thelatter essentially involves disaggregatinglegal work.197 An important aspect of this

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strategy is that firms continue to investin their technology infrastructure.198

The Innovation in Legal Services Reportpoints to the Portuguese law organisation,Vieira de Almeida, which created astructured programme to promoteinnovation to employees and embed itwithin the organisation’s core values.199

Another example is US-based BakerDonelson, which set up a subsidiary todevelop and invest in new ideas,partnering with technology companiesand other ventures. It sets aside US$1.5meach year to invest in the legal ideas of itslawyers. It has also established anothersubsidiary to work on law-departmentprocess-streamlining, which will beginoperating in January 2016.200

In terms of the lawyer–client relationship,Spangler recommends, in line withSusskind, that law firms seek to be moreefficient. This usually involves adoptingnew technologies and ensuring the rightperson is serving in the most appropriaterole. He suggests that there be greatercollaboration and knowledge sharingbetween lawyers and clients, which canbe facilitated by specialist workflowsystems and social media, amongst otherthings. He also encourages collaborationbetween clients to reduce legal costs201 and,lastly, recommends lawyers collaboratewith each other as well as other experts.202

ConclusionIt is difficult to argue that the legalprofession is not undergoing significantchange. The real question is whether

particular innovations within the marketamount to ‘disruptive innovations’ or arejust indicative of a major restructure ofthe industry. It is also unclear as to whateffects these changes might have for theconsumer, law firms and other legalservices providers.Some commentators, including Reed,lament the profession for its ‘unexcitingand un-impactful’ innovations, such asoffshoring legal work to India or providingstandard form documents online for freeor at low cost.203 This might be areasonable assessment, given that theseinnovations do not materially change theway law firms provide legal services.At the same time, start-ups and alternativelegal services providers are multiplyingand have the potential to revolutionise themarket. So too, do the big four accountingfirms. These market players are notshackled by traditional law firm structuresand are generally able and willing toinnovate. Those providers that are able todeliver a different type of legal service willbe the ones likely to succeed and producesignificant benefits for consumers in termsof cost, efficiency and access to justice.In this environment, commentators havewarned law firms that they can no longerafford to practice according to the statusquo.204 Those that choose not to competeon value are opening the door for otherproviders ‘to slip in and chip away at whatwe all once assumed were unassailablerelationships between the most pedigreedlaw firms and their clients’.205

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ENDNOTES1 The author uses the terms ‘legal profession’, ‘legal industry’ and ‘legal market’

interchangeably while recognising that there is a debate about whether there should be adistinction between these terms, and whether it is important. See e.g., Laurel S Terry, ‘TheFuture Regulation of the Legal Profession: the Impact of Treating the Legal Profession as“Service Providers”’ [2009] Journal of the Professional Lawyer 189.

2 Shannon L Spangler, ‘Disruptive Innovation in the Legal Services Market: Is Real ChangeComing to the Business of Law, or Will the Status Quo Reign?’ (American Bar AssociationAnnual Meeting, Boston, 7–11 August 2014), available at www.americanbar.org/content/dam/aba/administrative/litigation/materials/2014_aba_annual/written-materials/disruptive_innovation.authcheckdam.pdf. This and all other URLs herein last accessed 14April 2016, unless otherwise specified. See also Raymond H Brescia et al, ‘EmbracingDisruption: How Technological Change in the Delivery of Legal Services Can ImproveAccess to Justice’ [2015] 78.2 Alb Law Rev 553.


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3 Touted as ‘the proverbial Moses for the forward-thinking, modern law firm’, David J Parnell,‘Richard Susskind: Moses to the Modern Law Firm’ (Forbes 21 March 2014), available atwww.forbes.com/sites/davidparnell/2014/03/21/richard-susskind-moses-to-the-modern-law-firm.

4 Richard Susskind (2013) Tomorrow’s Lawyers: An Introduction to Your Future (OxfordUniversity Press, 2013) xv (hereinafter referred to as ‘Tomorrow’s Lawyers’).

5 The survey was conducted in March and April 2015. It polled managing partners andchairs at 320 US law firms employing 50 or more lawyers, including 47 per cent of the 350largest law firms in the US: Thomas S Clay and Eric A Seeger, ‘Law Firms in TransitionSurvey’ (Altman Weil, 2015), available at www.altmanweil.com/dir_docs/resource/1c789ef2-5cff-463a-863a-2248d23882a7_document.pdf.

6 Notably, 66.7 per cent of leaders thought the same in 2014: ibid 2.7 John S Dzienkowski, ‘The Future of Big Law: Alternative Legal Service Providers to Corporate

Clients’ (2014) 82 Fordham Law Rev 2995, 3015.8 Susskind, n 4, p 3.9 Ibid. See also Ray Worthy Campbell, ‘Rethinking Regulation and Innovation in the U.S.

Legal Services Market’ (2012) 9 (1) NYU J L & Bus 1, 11; Joan C Williams, Aaron Platt andJessica Lee, ‘Disruptive Innovation New Models of Legal Practice’ (University of HastingsCollege of Law, 2015), available at www.uchastings.edu/news/articles/2015/06/Disruptive-Innovation-New-Models-of-Legal-Practice.pdf.

10 Clayton Christensen (1997) The Innovator ’s Dilemma: When New Technologies CauseGreat Firms to Fail (Harvard Business School Press, 1997) (hereinafter referred to as ‘TheInnovator’s Dilemma’).

11 Clayton Christensen (2015) ‘Disruptive Innovation’ (Clayton Christensen, 2015), availableat www.claytonchristensen.com/key-concepts, last accessed 19 October 2015.

12 “Big Data may be understood as a more powerful form of data mining that relies on hugevolumes of data, faster computers, and new analytic techniques to discover hidden andsurprising correlations’, Ira S Rubinstein, ‘Editor’s Choice: Big Data: The End of Privacy ora New Beginning?’ International Data Privacy Law (2013) 3(2): 74-87 first published online25 January 2013, doi:10.1093/idpl/ips036.

13 ‘IBM Watson is a technology platform that uses natural language processing and machinelearning to reveal insights from large amounts of unstructured data.’ IBM (no date) ‘What isWatson?’ (IBM), available at www.ibm.com/smarterplanet/us/en/ibmwatson/what-is-watson.html, last accessed 20 March 2016.

14 Bob Dylan, ‘The Times They Are A-Changin” (Copyright 1963, 1964 by Warner Bros. Inc;renewed 1991, 1992 by Special Rider Music).

15 Christensen, n 11, viii.16 Ibid xv.17 Christensen, n 12; Brescia et al, n 2, p 557.18 Ibid; see also Campbell, n 10, p 11.19 Christensen, n 11, at xv.20 Christensen defines established firms as ‘those that had been established in the industry

prior to the advent of the technology in question, practicing the prior technology’ (ibid, 9).21 Ibid, xvii; George Beaton, ‘Wrestling with the Innovator’s Dilemma’ (The Global Legal Post,

23 July 2012), available at www.globallegalpost.com/management-speak/wrestling-with-the-innovators-dilemma, last accessed 29 October 2015.

22 Campbell, n 10, 15, citing Christensen, n 11, pp 19–20.23 Christensen, n 11.24 Clayton M Christensen, Dina Wang and Derek van Bever, ‘Consulting on the Cusp of

Disruption’ (Harvard Business Review, October 2013), p 2, available at https://hbr.org/2013/10/consulting-on-the-cusp-of-disruption.

25 See e.g., The Innovation in Legal Services Report adopted a broad definition of ‘innovations’ asmeaning ‘both the development of new or improved services and new or improved ways ofdelivering legal services’. The report stated that in this context, ‘innovation is best seen as abusiness (rather than technological) process which is successful only when it delivers value eitherto the innovating organisation and its stakeholders and/or customers’: Stephen Roper et al, ‘TheInnovation in Legal Services Report’ (Enterprise Research Centre, July 2015), pp 6, 15, available atwww.sra.org.uk/sra/how-we-work/reports/innovation-report.page.

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26 Other commentators agree, see e.g., Peter Kalis as quoted in Michael Bleby, ‘New Generation ofLaw Firms Sparks Life into Legal Service’ (BRW 4 July 2013), available at http://www.plxs.com.au/new-generation-of-law-firm-sparks-life-into-legal-industry/last accessed 15April 2016; Sarah Reed as quoted in Alexandra Varney, ‘Firmly Outside the Box’ (Harvard LawToday, 24 November 2014), p 3, available at http://today.law.harvard.edu/firmly-outside-box.

27 Richard Susskind, ‘From Bespoke to Commodity’ (Legal Technology Journal, 2006), availableat www.legaltechnologyjournal.co.uk/content/view/21; see also n 4, p 25.

28 See n 4; see also John O McGinnis and Russell G Pearce, ‘The Great Disruption: HowMachine Intelligence Will Transform the Role of Lawyers in the Delivery of Legal Services’(2014) 82 Fordham L Rev 3041, 3042, 3055.

29 Susskind, ee n 28.30 Ibid.31 Ibid 1–2.32 Ibid 2.33 Ibid; Susskind, n 4, p 28; see also Killian who describes the same concept as ‘legal open-sourcing’,

which is ‘the sustained mass online collaboration in the legal field’ (Kristen E Killian, ‘The LongTail and Demand Creation in the Legal Marketplace’ (2015) 11 Hastings Bus LJ 157, 5).

34 Susskind, n 28.35 Clay and Seeger, n 5, p 24.36 Susskind, n 4, p 29.37 Susskind, n 28.38 Spangler, n 2, p 6; Dzienkowski, n 8, 2999.39 Spangler, n 2, p 7.40 Susskind, n 4, p 3.41 Ibid 4, 24; see e.g., William C Hubbard, ‘Remarks’ (American College of Trial Lawyers, 28

February 2015), available at www.americanbar.org/groups/leadership/office_of_the_president/selected- speeches-of-aba-president-william-c—hubbard/american-college-of-trial-lawyers—february-2015-.html; Killian, n 31, p 5.

42 Susskind, n 4, p 4; Spangler, n 2, p 2.43 Terri Mottershead as quoted in Felicity Nelson, ‘Uberfication Hits Law Firms’ (Lawyers

Weekly, 9 October 2015), available at www.lawyersweekly.com.au/news/17285-uber-fication-hits-law-firms?utm_source=lawyersweekly&utm _campaign =Young Lawyers_Bulletin21_10_2015&utm_medium=email.

44 ‘Uber is essentially an app which connects drivers with passengers directly, instead ofthrough a centralised booking service or just hailing a car in the street.’ Michael Rundle(2014) ‘What Is Uber? And Why Do London Cabbies Hate It?’ (The Huffington Post UK, 11June 2014), available at www.huffingtonpost.co.uk/2014/06/11/what-is-uber_n_5483290.html

45 Spangler, n 2, p 1; Killian, n 31, p 2; Jordan Weissmann, ‘The Death Spiral of America’s BigLaw Firms’, (The Atlantic, 19 April 2012), available atwww.theatlantic.com/business/archive/2012/04/the-death-spiral-of-americas-big-law-firms/256124/.

46 Spangler, n 2, p 3.47 Christensen, Wang and van Bever, n 22, p 4–5; Spangler, n 2, pp 3, 6; see e.g., Sky Analytics,

‘About Us’ (Sky Analytics, no date), available at www.skyanalytics.com/page/4760/About-Us; see also the newly launched Lawcadia in Australia at www.lawcadia.com.

48 See e.g., Wolters Kluwer ELM Solutions (2015) ‘TYMetrix 360°’ (Wolters Kluwer ELMSolutions) available at www.wkelmsolutions.com/products/T360.

49 www.justiserv.com; see n 42).50 Lexoo (2015) ‘How It Works’ (Lexoo), available at www.lexoo.co.uk/how-it-works; see

also Lawyer Quote in Australia at www.lawyerquote.com.au/about.51 Susskind, n 4, p 75.52 See below under title ‘New Models of Legal Practice’.53 Campbell, n 10, p 35.54 See n 25, 5–6; see n 7, 2998–2999.55 Dina Wang and Firoz Dattu ‘Why Law Firm Pedigree May Be a Thing of the Past’ (Harvard

Business Review, 11 October 2013), available at https://hbr.org/2013/10/why-law-firm-pedigree-may-be-a-thing-of-the-past.

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56 Firoz Dattu, ‘Advancing the legal profession’ (Lumen Legal, 18 August 2015), available atwww.lumenlegal.com/resources/legal-visionaries/advancing-the-legal-profession.

57 Ibid; AdvanceLaw (2015) ‘Home’, available at www.advancelaw.com.58 Clay and Seeger, n 5, ii.59 A branding, PR and design agency for businesses, focusing on the professional services field

and in particular, legal services, based in London: Overture (2015) ‘About Us’ (Overture),available at http://overture.london/about-us.

60 Mark Brandon (2015) ‘Law Needs Disruption, Not Innovation’ (The Lawyer, 8 June 2015),available at www.thelawyer.com/analysis/behind-the-law/industry-leaders/law-needs-disruption-not-innovation/3035806.article.

61 Campbell, n 10, p 27–28.62 Susskind,’ n 4, 75.63 Ibid, 8.64 Ibid, 6.65 Ibid.66 Ibid, 9.67 Based on the results from a survey of 1500 organisations included Solicitors, Barristers,

other legal service providers in the regulated sector (‘including patent and trade markattorneys, notaries, legal executives, conveyancers and cost lawyers’) and other legal serviceproviders in the unregulated sector (‘including will writers, bailiffs, arbitrators, examinersand referees’). There were 20 in-depth interviews and a telephone survey conducted inMarch and April 2015: Roper et al, n 26, 26, 11.

68 Roper et al, n 26, 4, 16, 73.69 Ibid, 71.70 Campbell, n 10, 5.71 Ibid, 5–6. An in depth discussion of the changes in the regulation of legal profession within

different jurisdictions is beyond the scope of this report.72 Susskind, n 4, 13, 40.73 Brandon, n 61.74 Allen Rodriguez (2015) ‘Legal Hackathons: Innovation Labs for the Legal Industry’ (Law

Technology Today, 23 October 2015), available at www.lawtechnologytoday.org/2015/10/legal-hackathons-innovation-labs-for-the-legal-industry.

75 Ibid.76 AngelList (2015) ‘Legal Startups’, available at https://angel.co/legal.77 Devised by Gordon Moore in 1965 and revised in 1975: Computer History Museum (2014)

‘1965 – “Moore’s Law” Predicts the Future of Integrated Circuits’, available atwww.computerhistory.org/semiconductor/timeline/1965-Moore.html.

78 McGinnis and Pearce, n 29, 3043; Intel, ‘Moore’s Law: Fun Facts’ (no date) available athttp://www.intel.co.uk/content/www/uk/en/history/history-moores-law-fun-facts-factsheet.html.

79 Intel, ‘50 Years of Moore’s Law’ (no date) available at www.intel.com/content/www/us/en/silicon-innovations/moores-law-technology.html?wapkw=moores+law.

80 McGinnis and Pearce, n 29, 3043.81 Damon Poeter, ‘Gordon Moore Predicts Ten More Years for Moore’s Law’ (PC Mag UK, 12

May 2015) available at http://uk.pcmag.com/chipsets-processors-products/41844/news/gordon-moore-predicts-10-more-years-for-moores-law.

82 McGinnis and Pearce, n 29, 3045.83 Ibid (emphasis in original).84 Ross (no date) ‘About’ available at www.rossintelligence.com; Brian Jackson, ‘Meet Ross, the

Watson-Powered “Super Intelligent” Attorney’ (itbusiness.ca, 23 January 2015) available atwww.itbusiness.ca/news/meet-ross-the-watson-powered-super-intelligent-attorney/53376.

85 Clay and Seeger, n 5, 83.86 Ibid.87 McGinnis and Pearce, n 29, 3046.88 Ibid; Modus (2015) ‘Overview’, available at http://discovermodus.com/overview.89 Campbell, n 10, 8–9.

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90 Rany J Sader and Rebecca Younan (2014) The Growing Use of Information Technology in theDeliverance of Legal Services in the Middle East (Sader & Associates).

91 McGinnis and Pearce, n 29, 3049.92 Ibid, 3050.93 Ibid, 3048.94 www.judicata.com, accessed 6 November 2015; Ansel Halliburton, ‘Judicata Raises $5.8M

Second Round Offer to Build Out Advanced Legal Research Systems; Keith Rabois Joins Board’(TechCrunch, 2013), available at http://techcrunch.com/2013/05/28/judicata-raises-5-8m-second-round-to-build-out-advanced-legal-research-systems-keith-rabois-joins-board; see also,another start up in this area: Lex Machina, www.lexmachina.com/what-we-do.

95 www.ravn.co.uk/technology/applied-cognitive-engine.96 ‘“The only thing to fear is doing nothing” – BLP becomes first law firm to sign up to

RAVN’s artificial intelligence solution’ (Legal IT Insider, 15 September 2015), available atwww.legaltechnology.com/latest-news/the-only-thing-to-fear-is-doing-nothing-blp-becomes-frst-law-firm-to-sign-up-to-ravns-artificial-intelligence-solution.

97 Sader and Younan, n 91.98 Information drawn from the FT 2015 Asia-Pacific Innovative Lawyers Report. For details

see: www.ft.com/reports/innovative-lawyers-asia-pacific.99 www.legalzoom.com/about-us, last accessed 6 November 2015; www.rocketlawyer.co.uk/

about-us.rl.100 Campbell, n 10, 12.101 Brescia et al, n 2, 573.102 McGinnis and Pearce, n 29, 3050.103 Ibid, 3052.104 www.ibm.com/big-data/us/en.105 Joanna Goodman, ‘Big Data: Too Much Information’ (The Law Society Gazette, 23 February

2015), available at www.lawgazette.co.uk/law/big-data-too-much-information/5046950.fullarticle; McGinnis and Pearce, n 29, 3052.

106 Goodman, n 106.107 McGinnis and Pearce, n 29, 3053.108 Founder of Datafloq, a platform connecting stakeholders within the global Big Data Market:

Mark van Rijmenam, ‘How Big Data Can Improve the Practice of Law’ (Datafloq, 23August 2015), available at https://datafloq.com/read/how-big-data-can-improve-the-practice-of-law/158.

109 Ibid.110 Goodman, n 106.111 van Rijmenam, n 109.112 Goodman, n 106.113 The National Archives, ‘Big Data for Law’, available at www.legislation.gov.uk/projects/

big-data-for-law; Goodman, n 106.114 A process by which value is added in business: Campbell, n 10, 21–22, citing Charles B

Stabell and Øystein D Fjeldstad (1998) ‘Configuring Value for Competitive Advantage: OnChains, Shops and Networks’, 19 Strategic Mgmt J 413, 415.

115 Ibid, 27.116 Spangler, n 2 8.117 Jennifer Smith, ‘Clearspire’s Technology Outlives “Virtual” Law Firm’ (6 June 2014), available

at http://blogs.wsj.com/law/2014/06/06/clearspires-technology-outlives-virtual-law-firm;Patrick J Lamb, ‘RIP Clearspire: Is this an ominous sign for New Law’ ABA Journal (11 June2014), available at www.abajournal.com/legalrebels/article/rip_clearspire_is_ this_an_ominous_sign_for_newlaw.

118 Campbell, n 10, 24.119 Ibid, 27.120 Ibid, 32.121 Ibid, 34.122 Williams, Platt and Lee, n 10.123 Ibid, 2.124 Ibid, 18.

162


F–692017]


125 See e.g., www.blisslawyers.com.126 Williams, Platt and Lee, n 10, 9.127 Ibid, 7.128 Brandon, 61.129 www.axiomlaw.co.uk/what-we-do; Dzienkowski, n 8, 3008.130 www.axiomlaw.co.uk/what-we-do/capability/iris-by-axiom.131 www.axiomlaw.co.uk/what-were-not.132 Financial Times, ‘FT Innovative Lawyers Awards 2015’ (Financial Times, 2 October 2015)

http://im.ft-static.com/content/images/cb7809b4-7808-11e5-a95a-27d368e1ddf7.pdf,accessed 19 November 2015, 10.

133 Williams, Platt and Lee, n 10, 76–77.134 Ibid, 77.135 http://employsure.com.au/what-we-offer.136 Williams, Platt and Lee, n 10, 79.137 Bliss Lawyers, n 126; Williams, Platt and Lee, n 10, 32.138 Sader and Younan, n 91.139 FT 2015 Asia-Pacific Innovative Lawyers, n 99.140 Andrea Ortega Villalobos, ‘Unique Possibilities for Legal Innovation in the Asia-Pacific

Region’ (Global Legal Challenges, 23 February 2016), www.globallegalchallenges.com/unique-possibilities-for-legal-innovation-in-the-asia-pacific-region.

141 Susskind, n 4, 3.142 Peta Tomlinson, ‘Accountancy Firms Make the Move into Legal Services’ (ACCA, 1 October

2015), available at www.accaglobal.com/ng/en/member/accounting-business/practice/legal-services.html; ‘Attack of the Bean-Counters’ The Economist (21 March 2015), availableat www.economist.com/news/business/21646741-lawyers-beware-accountants-are-coming-after-your-business-attack-bean-counters.

143 Note that only organisations developing and improving services and the way in which theyare provided answered this question: Roper et al, n 26, 27–28.

144 Susskind, n 4, 25; Susskind, n 28.145 The Report used a particular definition of ‘innovation’ as explained in n 22.146 Roper et al, n 26, 4, 6.147 Susskind, n 28.148 Clay and Seeger, n 5, vi, viii.149 Susskind, n 4, 28; Brescia et al, n 2, 555; Hubbard, n 42.150 Elder Law Answers, ‘Legal DIY Web Sites Are No Match for a Pro, Consumer Reports

Concludes’ (28 May 2013), available at www.elderlawanswers.com/legal-diy-web-sites-are-no-match-for-a-pro-consumer-reports-concludes-9983.

151 Brescia et al, n 2, 579, 585.152 See e.g., ibid 579; n 207; Campbell, n 10, 12.153 Brescia et al also discussed how non for profit face less stringent regulations in this area:

ibid, 579–580.154 Ibid, 584; Janson v. LegalZoom.com, Inc., 802 F. Supp. 2d 1053, 1063 (W.D. Mo. 2011).155 Daniel Fisher, ‘LegalZoom Sees Supreme Court Ruling as Tool To Challenge N.C. Bar’,

(Forbes, 6 June 2015) available at www.forbes.com/sites/danielfsher/2015/06/06/legalzoom-sees-supreme-court-ruling-as-tool-to-challenge-n-c-bar.

156 Dzienkowski, n 8, 3036.157 Ibid, 3026–3027.158 Ibid, 3029.159 Ibid, 3031.160 Dzienkowski raised similar issues that arise in relation to the obligation of lawyers to

supervise non-lawyers who assist them (ibid 3024–3025).161 Ibid, 3027–3028.162 Brian Sheppard, ‘Incomplete Innovation and the Premature Disruption of Legal Services’

(2015) 5 Mich St L Rev, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2659654.163 Ibid, 71.164 Clay and Seeger, n 5, iv.165 Rodriguez, n 75.

163





166 Ibid.167 Brescia et al, n 2, 572–573.168 Goodman, n 106.169 Spangler, n 2, 2.170 Susskind, n 4, 16.171 Campbell, n 10, 27–28.172 Ibid, 17; see also Stephen L Carter, ‘A “Big Law” Revolution? Not Likely’ (Bloomberg View,

21 August 2015), available at www.bloombergview.com/articles/2015-08-21/a-big-law-revolution-not-likely, citing Benjamin Barton.

173 Susskind, n 4, 53–54.174 Clay and Seeger, n 5, ii.175 Roper et al, n 26, 72.176 Ibid, 7.177 Roper et al, n 26, 7, 52.178 Ibid, 57–59.179 Campbell, n 10, 29.180 Ibid, 29, n 95.181 McGinnis and Pearce, n 29, 3062.182 Roper et al, n 26, 7.183 Ibid.184 See, e.g., Noam Scheiber, ‘Yes, Big Law Really is Dying’ (New Republic, 29 July 2013)

available at https://newrepublic.com/article/114065/death-big-law-firms-cant-be-ignored; Dzienkowski, n 8; Carter, n 181.

185 Roper et al, n 26, 85; Williams, Platt and Lee, n 10, 6.186 Parnell (n 3).187 McGinnis and Pearce (n 26) 3054.188 Ibid 3042.189 McGinnis and Pearce (n 26) 3042.190 Ibid; Susskind, ‘Tomorrow’s Lawyers’ (n 4).191 Susskind, ‘From Bespoke to Commodity’ (n 25).192 Beaten (n 17).193 Christensen, ‘The Innovator’s Dilemma’ (n 10) xxi.194 Spangler (n 2) 10.195 Ibid.196 Dzienkowski (n 7) 3039.197 Parnell, n 3.198 Spangler, n 2, 10.199 Roper et al, n 23, 24.200 Caroline Hill, ‘ILTA: Innovation and the Generation of Legal Services’ (Legalit Insider, 13

November 2015) available at www.legaltechnology.com/latest-news/ilta-innovation-and-the-generation-of-legal-services/.

201 Spangler, n 2, 11–13.202 Ibid, 14.203 Sarah Reed, ‘Lawyer, Disrupt Thyself’ (TechCrunch, 21 March 2014) available at http://

techcrunch.com/2014/03/21/lawyer-disrupt-thyself; see also Michael P Downey, ‘BuckUp and (Really) Innovate’ (2014) 40 (4) Law Practice Magazine available atwww.americanbar.org/publications/law_practice_magazine/2014/july-august/perspectives.html.

204 See e.g., Susskind, n 4, 123.205 Wang and Dattu, n 56.

164


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