The future of law in the age of robot lawyers and blockchain technology

The exponential growth of computing power means that great change is imminent in the legal sector. When we look back on this period in 20 or 30 years' time, I expect we will agree that the most significant metric underlying the transformation of legal practice will have been the cost per unit of processing power. Not profits per partner. Not margin. Not any number of other things we might measure.

Most of the talk about increasing computing power has to do with robot lawyers. Some lawyers imagine machine-learning platforms like IBM Watson taking over large swathes of law practice. Many more lawyers respond to such ideas with disdain. In much the same manner that pilots once said that computers would never be able to land airplanes - that too much subtle human judgement was required - lawyers dismiss the proposition that their judgement can be automated.

Of course, this overlooks the large segments of practice (and the revenue streams attached to them) that have already fallen to automation and process improvement. Think of document review (now very automated), legal research (increasingly automated) and document drafting (in the process of being automated).

Some forward-looking firms are embracing trends like document automation. But, they are imagining that growth in service-sector capabilities will be linear and predictable. Other sectors (such as mobile phones, music, books and retailing) clearly demonstrate that the digital revolution often yields exponential, unpredictable phenomena.

Blockchain law

How might digitisation sweep away traditional law practice? Well, maybe robot lawyers. But, more likely something unanticipated will prove to be the competition - or a hoard of somethings.

Take blockchain technology for example. Blockchains form the infrastructure for digital currencies such as Bitcoin, Qubitcoin, Litecoin and others. The blockchain is a public ledger of all currency transactions that have ever been executed. It is constantly growing as 'completed' blocks are added to it with a new set
of recordings.

Blockchains are only possible with substantial processing power and extensive networks (only just possible now, but phenomenally possible later). They form a perfect, publicly-available ledger in which to record enforceable obligations.

Here's the thing. Blockchain technology was created not just to support digital currencies, but as the foundation for 'smart contracts'. These are contracts that are self-enforcing - they don't need page after page of small print, let alone the lawyers who write the small print or the courts that enforce them.

How might this work? Imagine that you've just leased a car. You commit to direct a stream of digital currency to the lessor, and that happens automatically. Should you fail to meet that obligation, there will be no need for lawyers, courts or even repo men. The car simply will no longer work for you. Indeed, it might drive itself back to the lessor.

Fanciful? Not so much. The first blockchain bond issue by a public company has already taken place. And the creation of that transaction involved more engineers than lawyers. Venture capitalists are funding a legion of smart contract and other blockchain start-ups; some of those will become the Amazons of this sphere.

Response strategies

So should law firms sharpen up their game and start playing with blockchain tech?
I think that's a pointless exercise. Law firms are the antithesis of the sorts of business organisations which are likely to thrive using blockchain power. Law students are negatively selected for entrepreneurship and they are trained to be problem finders rather than problem solvers; to cap that off, law firm partnerships reinforce risk aversion. Sheep look to partners for models of ovine behaviour.

But, law firms do still generate extraordinary margins. The smarter firms in BigLaw will invest some of that cash in acquisitions and start-ups that take advantage of blockchain and other emerging technologies. I expect some of those to outgrow and outlive their parents - to Accenture their Arthur Andersens.

And what of other firms? Their best hope for survival depends upon the ruthless excision of inefficiency. The profit model of many firms today is founded on inefficiency in the sense that much revenue is derived from manually doing what can easily be automated. But, that cannot stand in the face of increasingly abundant and inexpensive machine intelligence.

Will all of this lead to the extinction of law practice? Probably not. There will still be the law and the need for expertise in dealing with it. But, at what scale? Will law firms survive in the same manner that some harness makers still survive the passing of the horse and buggy age - as curiosities in a small, dusty corner of the economy?

What seems certain is that inaction will lead to extinction. This is part of a perfectly natural evolution of the legal marketplace: over time, inefficiencies get removed, no matter what. And something will survive. Whether we call what remains law firms remains to be seen.

John Alber is a futurist for the International Legal Technology Association (www.iltanet.org) and former strategic technology partner at Bryan Cave