Legal Moneyball

Zachary Al-Khatib (2L)

Why the game might be changing, and the choices facing law students

When U of T Law’s Career Development Office announced an “Alternatives to Big Law” session, I expected a talk on public interest careers, maybe including some mid-size or rural firm practitioners. What I got, however, was a legal Moneyball session.

The panelists were: Peter Carayiannis, founder and CEO of Conduit Law (recently acquired by Deloitte); Rubsun Ho, founder of Cognition LLP (which split into Axiom Law and Caravel Law); and Andrew Cooley, of SkyLaw. They were here to talk about how the legal market— and our roles as lawyers may be changing, and what we should do to keep pace.

The panelists share a similar narrative: high achievers who worked on Bay Street and thought they could capture under-served portions of the legal market—clients who cannot afford large full-service firms, but are not adequately served by smaller firms, either.

Conduit and Cognition, for example, are not organized along the traditional partnership model, which creates an environment where lawyers have more flexibility and autonomy. Their services are also unique: they supply lawyers who can act like in-house counsel, or supplement a business’ existing team. These services are often provided on a retainer or flat-rate—there is no hourly bill. Use of technology allows the legal service providers to have smaller offices, reducing overhead. This translates into high-value, low-cost service that goes beyond what smaller clients could previously afford.

Rather than replacing “Big Law,” legal startups often see themselves as serving different markets, or serving the same clients, but in a different capacity. The panelists suggested there is a symbiotic relationship with some large firms, in that the startups are neither equipped for, nor interested in, handling mega-transactions and high-stakes litigation.

However, the panelists also pointed out that, given the changes in the legal market, some traditional legal practices may be going the way of the horse-drawn buggy. “At one point in time, that was what everyone was into—but then the car came along,” said Carayiannis. “What that means isn’t that no one should do horse-drawn buggies—there’s still a market for those. You just have to realize that your market will become a niche, and you’ll become very dependent on specific clients.”

Samuel Witherspoon is another legal startup founder with whom I later chatted. His product, This Too (thistoo.ca), is an online tool for managing amicable divorces. He emphasized that his goal is to expand the market, rather than just compete for others’ clients. He says there are studies suggesting only one eighth of people with legal problems actually get help from lawyers. By innovating to make legal services less expensive and more accessible, he hopes startups can capture more of the remaining seven eighths.

All panelists were dismayed that our legal education is largely bereft of talk about the future of the legal market and profession. One panelist asked: “How many of you have heard of Richard Susskind? ‘End of the Professions’? ‘End of Lawyers’?” Maybe one or two students up their hand. “That’s bullshit. Excuse me, but it is. Are they not talking about this in your classes? I’m going to speak with the Dean. They should give you at least a ten-percent tuition rebate just for that.” There were, of course, no objections.

The panelists went on to speak candidly about their perception that law schools were simply not preparing students for the future of legal practice. Not in the sense of failing to impart practical skills, but rather that we aren’t thinking about how the future of legal service delivery may make some existing skill sets irrelevant.

Even if that’s not the case, said Witherspoon, failing to innovate means that we miss serving large segments of society who could benefit from legal advice. Although most law schools, like U of T Law, have “poverty law” clinics, the clinics cannot keep up with demand, and there are also potential clients who are ineligible or don’t know to seek out those services. “Family law, labour, residential tenancies law—these are just some areas where innovation could provide low-income, poorly-served communities with access to justice.”

The panelists were pleased that parts of the profession are increasingly engaged with issues of legal development. All had praise for the Canadian Bar Association’s “Legal Futures Initiative,” which recently put out a booklet: “Do Law Differently: Futures for Young Lawyers.” The author, Jordan Furlong, is a Canadian lawyer and author specializing in legal innovation.

Furlong said the impetus for the guide is that recent grads will be practicing in a time unlike that of previous generations. “We don’t have any template for a legal market with multiple providers, advanced technology, complex algorithmic processes, and liberalized regulatory systems. So in the absence of precedent, we need to make informed, principled forecasts about what we can expect and how we should prepare. That’s what this report aims to do.” He recommends that students stay current with the world of legal innovation and think about how to use technology to serve clients in various capacities.

In particular, Furlong suggested learning about the unserved legal market by reading the work of Professor Julie MacFarlane, from the University of Windsor. “There are commercial as well as moral needs that can be met here,” said Furlong. He emphasized “above all” the need to take seriously lawyers’ professional and ethical obligations, because “these provide the foundation of our integrity and commitment to service that will see us through the challenging times ahead.”

While acknowledging these coming challenges, most were careful to point out they are not trying to be alarmist. “Your generation of law students is actually in an ideal position,” said Peter Cariyannis. “You’re likely the last group of lawyers who will have the choice of either riding the old wave represented by the older, traditional modes of practice, or trying to get onto a new wave of legal innovation and being pioneers. You have to make choices, but either way, you can be successful.”

Others, while not so optimistic about riding the old wave, argued that the changing legal landscape should be embraced, not feared. Mark Morris, the founder of Axess Law, says that “law school is not preparing people for the changes that are coming—the legal monopoly that long-guaranteed our profession good pay is crumbling with the advance of the information age.” Unlike other industries, where people invest in technology because of fierce competition and a worry that they “will get left behind or run over,” law has been slow to see the value in technological innovation. “But make no mistake,” says Morris, “if we have self-driving cars, that same technology is going to be transferred to and affect the legal industry.”

Both Morris and Witherspoon stated that the prospect of change naturally leads to anxiety, but only for those who fail to embrace progress. In Morris’ words, new grads have to abandon being anchors. “We’re trained to assess risk and hold back the boat. Instead, we need to think differently, to ask ‘where does this change create an opportunity?’”

One recurring observation made by the innovators with whom I spoke was the effect of rising tuition fees on innovation. Morris and Witherspoon both pointed out that recent grads would be ideally placed to develop new delivery models and legal technology, but only if they were not burdened by high debt.

“When you’re right out of school, you have no sunk costs—those start to accrue after you practice for a few years. We could build Axess because we didn’t have sunk costs,” said Morris. Witherspoon noted that he was fortunate to graduate with a low debt-load, which meant he had the freedom to take on an innovative legal project. Students with large debt loads, on the other hand, are less likely to take on the risks associated with non-traditional careers involving legal entrepreneurship, and are more likely to just find the highest-paying job that they can. One wonders, therefore, to what extent our $35,000 per year tuition is hindering student-led legal innovation.