trust

Legal Industry Roadmap 2016
Legal Industry Roadmap: How Legal Tech Will Transform Our Lives
Legal Industry Roadmap: How Legal Tech Will Transform Our Lives 1024 576 Raymond Blijd
Read time: 8 min.

Was there a lawyer in the room when Elon Musk decided to unleash Tesla’s Autopilot to the masses? A decision to put the lives of heedless humans in the hands of a robot. If there were lawyers in the room, what would they say? If they weren’t in the room, why weren’t they? To answer these questions we should understand how the legal industry will unfold in the future. We’ll look at The Market, The Product and it’s Roadmap…and a huge little secret.

The Market

What is the Legal Industry? It is the business of constructing Trust. Just envision any encounter you have with another person or a business and you needed some kind of assurance, that is where you find legal. Even if you were alone on a deserted island, that island falls under some kind of treaty or agreement to ensure your solitude. When you think that you have enough trust and don’t need any legal in your live, that’s because the legal structure was already solidified somewhere upstream. The end-product for legal is your trust and trust is one of the most precious assets the human race possesses. If you don’t believe me, try living with animals.

What is the Market size? Now that you get a sense how ubiquitous legal is, you may be startled to learn the market size is just $700 billion, according to one astute observer. Compared to other industries, it seems a relatively small market and this may be due to what dynamics drive this market.

What are the Market Segments? When there is little or no trust, disputes arise. One can take court cases as a proxy and get a sense of where the most action is happening in legal. We can draw two market segments most of the legal industry money flows thru:

  1. Low volume – High margin e.g. Corporate Litigation & Arbitration, Mergers & Acquisitions, Intellectual Property.
  2. High volume – Low margin  e.g. Family & Criminal law, Insolvency, Tax.

To see an in-depth breakdown of litigation data, check out: The Evolution of Law Charts for samples from The Netherlands.

Based on the above dynamics, the supply side of the legal industry naturally flocks towards the #1 segment, leaving many stranded in the access to justice. Apparently, it has gotten so bad that even single-digit millionaires can not afford it.

Undoubtedly, we’ve stopped laughing at Peter’s little secrets since November 8th so here’s mine about the legal industry: there is a third market and it’s huge.

The Product

What should the Legal Product become? Trust will become increasingly more depended on Technology. Example: I order a pizza with a smartphone app and want it delivered to me within 30 minutes. Let’s say the merchant offers discounts when the delivery time exceeds 30 min. The app tracks the time, distance and calculates the right price. It can thereby estimate and set the variable amount to be deducted automatically based on these conditions. If demand outstrips supply, the discount may not apply and prices can surge. In return, the consumers can compare offers and seek cheaper alternatives all in the same app in real time. That is the anatomy of a Smart Contract.

One can argue that there were mitigating circumstances which caused the delivery to be difficult e.g. earthquakes, scooter crash, terrorist attacks. Well, you add these conditions in the Fine Code to be executed by the app. Now drone delivered pizzas will limit human errors in the logistics but tech can’t remedy all disasters. So we’ll have to include clauses to ensure these apps don’t act like sociopaths. Fact that Uber surge pricing automatically kicked in during a terrorist attack is evidence that the machine can’t handle empathy yet. As this TEDTalk eloquently explains: we can’t outsource our ethics to machines. Our connected smartphone can check for extreme circumstances but we need the Fine Code to hand us a fair deal.

In addition, these algorithms will use your social profile, job description, and maybe even your bank balance to determine your optimal purchase power. This is already happening in the marketing and ad space. If we consider all the data which can be used to influence us than biased news feeds will be the least of our problems. AI is alive but our data is the oxygen it needs to deliver us smart services that will improve our lives not send us back to the sixties.

Will there be any work left for Legal? Therefore the answer is Yes, it is the greatest opportunity for legal to safeguard our society since the invention of the written law 3000 years ago. We know now that math can’t do it. Sample: a single-digit millionaire is snowed in their secluded chalet, hours away from starvation. Their only option was drone delivered pizzas to reach them in time, what would the optimal offer be? Consider the bank balance and weather conditions in the calculation.

So how would that work? In all Transactions lies a legal agreement in disguise: the assurance of fairness. Now, every transaction happens within a chain of several Interactions. Each interaction has its own set of rules and is govern by law. You receive an Offer, Negotiate, Sign, Exchange, and Execute an agreement. One of these pillars of interactions has spawned the first Legal Tech unicorn by helping to seal deals with signatures. Likewise, a similar startup won the 2016 Dutch Legal Tech Award. What if all these digital signatures were placed on smart contracts?

Interactions - LegaLComplexWhy is this Third Market relevant? In a pen & paper world, it was humanly impossible to track all these interactions. Now that we’ve gone digital, they have resurfaced to become an integral agent of new industries and the transformation of our lives. Moreover, going digital meant being able to scale the Volume of transactions as well as the conditions. On November 11th, one merchant made $5 billion in one hour by being able to process 120,000 transactions per second. Each transaction was part of a non-negotiable offer, executed under a single immutable contract and without a signature. It’s inevitable that these exchanges will evolve at both ends: negotiating the deals and settling disputes.

Imagine, you could negotiate a discount for a large order of pizzas with just a slider in my app rather than a lengthy complicated phone call with an operator who may be unauthorized to make me any offer. All the while trusting it is a fair offer considering the circumstances and knowing you can resolve any disputes directly in the app.

The Roadmap

Here’s the kicker, all the ingredients are in place: infrastructure, algorithms, engineers, and demand. No fancy blockchain required unless we aim for near-perfect transparency. The minor missing piece is the Consensus. Why minor? Let’s go back to the first statement about Tesla’s Autopilot. I bet there were engineers in the room and maybe even some marketing people to get consensus. If they would have invited a lawyer, it may have never launched.

What is the Roadmap? In 2013 I drew an image depicting the path I envision the legal profession would travel into the future. First, some see change coming and build the technology and platforms. That movement gathers steam and attracts passionate crowds to rally behind these platforms. With more minds on the job, we get to build robots. Robots which in turn would start to communicate and assemble themselves. This will free up the minds to return to the boardroom and ponder the safety and fairness for future generations.

Legal Industry Roadmap 2016Here’s some evidence we are on this trajectory: in the year 2014 and especially 2015 we saw a rise of legal tech startups vs just legal startups. For every 10 “law firm” startups created, we had 3 Legal Tech startups (3:10 ratio) in 2014. In 2015 we ran at an amazing 7:10 ratio clip. This year we dropped to a 5:10 ratio. Check out the chart: Legal vs Tech 2016.

In 2015-2016 we also witness the rise of Legal Hackers events, Legal Tech Meetups, Awards and Conferences. Dedicated Legal Tech incubators, accelerators, funds and institutes. Legal now has it’s very own AI award and Design Summit. There are many communities and networks to choose from so I encourage you to join one.

This year, we also met quite a few robots. Lawbots generally answer simple legal questions or generate documents. The next natural progression of legal AI is that machine generates law and create smart contracts. If a robot can navigate traffic than regulating humans isn’t far fetched.

Who will Build this stuff? In the 80’s the financial experts ruled the world. If you could calculate you would be at the top. That slowly transitioned to the engineers in the 3 decades thereafter. Those who could compute went on to become rulers of the platforms. But remember that they all started in cubicles on spreadsheets and terminals writing formulas and code to lay the groundwork for the future. Now I see the beginnings of a new shift, those who can Consensualize* and restore the balance within the code will become the Players in the future.

Who are the Players? A few words on who will pioneer this revolution. We have the Investors, Builders & Consumers. Investors aren’t only the ones handing out angel capital, these are also students, engineers, and enthusiast who see the need and are willing to invest their expertise and time for a career in legal. While I do see the passion from the existing legal professionals, I’ve yet to witness the new mindset it requires. I’ve noticed that successful Builders of legal tech generally aren’t legal professionals but rather practically minded pioneers that see a problem and want to fix it. Why these Builders succeed is that the new Consumers of legal value the products for their simplicity and practicality not for its complexity nor completeness.

Conclusion

#Robolaw stated that law will vanish in virtual since the Biggest Problem the industry faces is failing to envision the future. So here’s the future:

Any business needs trust to operate and serve customers. Where you need trust, your hire legal. The message for legal: your end-product can not be just talk & texts, it has to be technology.

One can hardwire trust into a chip like Apple or convert the entire language of lawyers into a computational one like Stephen Wolfram’s  Symbolic Discourse Language. In any case, it will reside in the code not the courts. The legal elites may have to stop chasing the high margins in low volumes because the people just want pizza to be great again.

So to get back in the boardroom we’ll have to start at the bottom and involve everyone with a passion for serving fairness. If legal wants to help the next Elon Musk launch the next AI, legal should draw the blueprint, not draft the fine print.

If you don’t believe me, try living with AI.

Software is eating the world, #LegalTech should be hot sauce.

Consensualize* : the act of continuously calibrating connections between commerce interactions to balance these interactions for fairness. Is used in algorithms to proof their legitimacy by having them constantly be validated by an external independent framework of rules on justification.  Is derived from the word ‘Consensus’.

Apple’s Backdoor is Unlawful…with One Exception & One Solution
Apple’s Backdoor is Unlawful…with One Exception & One Solution 1024 576 Raymond Blijd
Read time: 2 min.

I was quick to condemn the courts forcing Apple to create a backdoor. I couldn’t imagine any situation where it would be justified…or maybe I could?


Yesterday I drove home thinking: there really are no legitimate circumstances where this judgement could stand. And many are siding with Apple but one provided a balanced response which gave me pause:

 

Exception

It suddenly flashed through my mind that there may be one exception: If one of my little girls had gone missing and her iPhone contained the only clue to her whereabouts. Let me first pray ??  and knock on wood ✊? that it will never happen. But if it did, I would move heaven and earth … and most likely beg Apple to unlock her phone.

I’m a big proponent of privacy because it creates trust. When Apple introduced Touch ID, I was hoping for the end of password tyranny and the dawn of a more considerate and secure digital age. Any large institution, with the power to invade my privacy at any given time, must honor my basic human rights.

That’s easy to say when it is just my life. Amber alerts set a precedent that gave authorities extraordinary powers including the ability to send everyone’s an SMS, even if their number was private. It might be worth considering alternate ways to provide access to, at the very least, loved ones to retrieve critical information under certain conditions.

Solution

In his Message to customers, Apple’s CEO Tim Cook eloquently explains why their smartest engineers designed security into the iPhone. In that same spirit and passion, I hope Apple have Legal engineers design ways to resolve ethical issues into its products. Coding security is possible, now let us give morality encryption a try.  Inevitably, the Future of Law should have us moving from Courts to Code and Apple can lead the way.

I hope brighter minds than mine will ponder and prevail in this dilemma. So while Apple’s backdoor may seem unlawful, having no exception will feel as awful.

Meanwhile, I’ll work on creating enough trust between me and my angels, that they’ll let me know their password.

The Power of Privacy and The Value of Confidentiality
The Power of Privacy and The Value of Confidentiality 453 276 Raymond Blijd
Read time: 3 min.

Google’s Vint Cerf, who is recognized as one of “the fathers of the Internet,” stated “Privacy May Be An Anomaly.” Historically, he is right in some context. We used to bathe in the open and wore less and more revealing clothes in the past. Some won’t mind going back to those days but ever since humans acquired the ability to communicate it always had the option to do it in private. Moreover, confidentiality is the corner-stone of several business sectors such as Health, Legal and Finance. So the question is: as a professional, who will you trust?

 

Privacy

Snapchat – a service that provides self destruct photo messaging – turned down a reported$3 billion offer from Facebook. Whatsapp claims to have more users than Twitter and handles more messages than Facebook. Bear in mind that Twitter and Facebook are free and Whatsapp is not*. In Asia, Wechat and QQ combined rule the messaging airwaves with more than a billion users. All these social messaging services enable users to communicate much in the same way we use email and SMS. Better yet, social messaging challenges the connections we make by phone, email or SMS. A recent study by industry-analysts Informa indicated that by the end of 2013 OTT (Over The Top) messaging traffic should be twice that of traditional SMS texts, topping out at around 41 billion messages sent every day (compared to 19.5 billion sent via SMS). More importantly: I believe services like Snapchat are popular because they simulate a sense of privacy traditional communication use to provide.

 

trust3Confidentiality

One might suspect that the push for more privacy is driven by an older more conservative demographic. Actually, it is quite the opposite. Recent studies revealed teens are fleeing social networks while elders, the only growing group, are encouraging them to stay on and broadcast. So if those who share scatter, but the spectators multiply, it is likely that privacy backlash will lead a ‘Trust Revolution’. This is already evident in the legal industry were legal tech experts predict ‘security awareness’ to be among the top priorities for law firms in 2014. To be specific: maintaining confidentiality of client information will be the top priority for law firms according to this article. This is especially more pertinent where professionals rush to the clouds out of convenience. Thus the question is: who can you trust?

Trust

In a previous post, I touched upon Apple’s fingerprint technology as a valuable breakthrough which might have far-reaching implications in how we communicate. Imagine securing not only your phone but all your documents with a fingerprint instead of passwords orproperly identify parties you communicate with and have them sign with their hands instead of a John Hancock. While I’m truly grateful I’m still hesitant to completely place my faith in any one company that either needs to lock me in or lure me to reveal information for ads. Free is very attractive but my soul is priceless and I value a whisper among the trees as much as shouting from the rooftop. As a legal professional, I can imagine doing business with a company that understands my needs. As a Wolters Kluwer employee, I will always strive to secure the trust our customers place in us.

 

*Whatsapp is a subscription service.