The digital advertising revolution has made us less dependent on the scarce talents of “Mad Men” like Don Draper. The legal tech revolution will do the same thing for lawyers.
By Jamie Wodetzki, Chief Product Officer, and David Rosen, Co-Founder, Catylex.
Let’s start with a whirlwind tour of the recent history of advertising. The advertising industry used to be full of mystery. Ad men (they were mostly men), famously quipped that “50% of your ad spend works, I just can’t say which 50%.”Your best bet was to ask a guru like Don Draper, and hope that his special instincts would boost the odds of spending ad dollars wisely.
But there wasn’t enough of Don to go around. He was busy. He was expensive. And he drank a lot. So many people had to hire lesser mortals, and most of them wasted a big chunk of their ad spend.
Then along came big tech, and internet delivery, and clicks. Big tech had data and metrics on what worked, and what didn’t –lots of data – and the ad dollars poured in. With all that data, monitoring, and measurement, we finally had a much better picture of which ad dollars were well spent. And Google, the king of big tech, now rakes in more than$200 billion a year on digital ads.
Nice story, but what’s it got to do with legal?
Legal has the same dependency on human experts as pre-digital advertising. Let’s call our lawyer Don Draper, Esquire, for fun. Is this contract safe to sign? Ask Don Draper Esq. Are these clauses worth fighting over? Ask Don Draper Esq. Should I litigate or settle? Ask Don Draper Esq. Do we know every contract affected by the crisis of the day? Hire Don Draper Esq and a small army of his associates.
The problem with most of these scenarios is that there aren’t enough Don Draper Esquires in the world, and those that do exist are only human (and they drink all your Scotch). So many legal consumers have an impossible choice between paying high prices, waiting too long, or rolling the dice and signing without legal input.
With limited data about which clauses really make a difference, we’re often advised to fight for them all, slowing down deals and blowing out costs. And faced with thousands of pages of complex legal language, the human cost of reading and summarizing all the possible risks is prohibitively high. This makes us reactive to the risks hidden in our contract portfolios, so we pay a higher price when those risks materialize.
But just as ad technology revolutionized advertising, legal technology will revolutionize legal.
A wave of disruptive forces is starting to break over legal: better technology, de-regulation, and more innovative ALSPs or “law companies”. As a result, the legal industry is gaining access to an explosion of high-quality, low-cost data. We’re entering an era of big legal data that will change the legal market in dramatic ways. Legal is about to have its digital advertising moment. But what, exactly, will digital legal look like?
First, there will be much less guesswork, and the lawyers of the world will be more productive. Legal AI will make it possible to analyze millions of pages of documents in minutes or hours and will turn messy words into hard data. When asked about the impact of inflation on our business, legal won’t need to guess based on reading a small sample. Instead, they will confidently say that 37% of sales agreements permit us to make annual CPI price adjustments, and 56% of vendor agreements having pricing capped at levels below CPI.
Second, there will be more affordable, automated, self-service offerings. Just like Adwords made it possible to buy advertising in small, bite-sized chunks, automated legal offerings will provide lawyer-less solutions to many common problems. Do I need regulatory approval to sell this widget? Robo-lawyer will tell you. What legal documents do I need to start a crypto-mining business in Bucksport, Maine? Robo-lawyer will ask 50 questions and deliver them to you. Should I try negotiating better terms on this employment contract? Robo-lawyer will guide you.
Third, by combining legal data with other business data streams, we will have insights we never previously imagined and make smarter decisions accordingly. For example, through big data analytics, we may discover correlations between legal budgets, dispute frequency, and costs of dispute resolution. Or we may discover that companies with below average contract risk scores have below average insurance claims and reward those companies with better coverage and lower premiums.
Fourth, legal spend will be linked to measurable outcomes, with industry benchmarks, and will be targeted to deliver bigger bang for every buck. As data is normalized (so we can compare apples with apples), we’ll have better insight into what everyone spends on specific legal services and tasks, and more and more benchmarks will emerge. Data may reveal that having any NDA is far more important than the specific terms of that NDA, and that we’re better off just signing a standard version without wasting time and money on negotiations. Or, for certain risky industries or transactions, the details of the NDA may be critical, and a few dollars spent negotiating is worth millions in terms of the extra protection it brings.
Finally, it’s very likely the legal market will get bigger, not smaller, thanks to these tech and data innovations. Just like in advertising, when people have evidence that money spent delivers measurable results, there’s every chance they’ll be happier to spend more.