This is my next article on why there will be fewer law firms after 2017 and in the years to come. My last post discussed how cultural changes are reducing the demand for legal services. It is very important that attorneys understand the fact that marijuana legalization, declining marriage rates, and the “sharing economy” are reducing the amount of work available to law firms. Unfortunately, most will ignore these trends and keep on truckin’ down their current path. Such lawyers will wind up feeling like this guy:

bankrupt lawyer

If you want your practice to thrive going forward then it’s important that you pay attention to some of the things that are quickly happening in our society. Later posts in this series will discuss what you need to do to be successful going forward. This article is going to discuss how current technology trends, specific to the legal industry, are about to reduce the number of law firms and attorney jobs. The two big trends in this area are automation of law firm tasks and the rise of artificial intelligence or “AI.”

Automation is making attorneys more efficient and, in turn, reducing the number of law firms

Technology has been making attorneys more efficient for decades. The profession has come a long way since the days of this guy:

Attorney with wig

Examples of this improved efficiency include online legal research tools which eliminate the need for associates who do nothing but spend time at the law library, the use of email, the use of word processing, etc. These tools allow a firm to do more with fewer lawyers. This, in turn, means that the number of firms needed to handle “x” amount of work is smaller and, given that the amount of work available to attorneys is decreasing, we now need fewer law firms. The big thing is that the changes of the last twenty to thirty years are just the tip of the iceberg and that new automation tools are kicking this trend into overdrive.

Many products are becoming available which allow for the automation of tasks performed by paralegals or low level associates. One example of this is Zola Suite’s software for law firm document automation. In a nutshell, this software allows lawyers to automate many of the routine documents generated in a law office. Such documents may range from letters to simple pleadings. The effect of this is huge. My firm typically employed 2-3 associates in addition to myself. We typically handled 250-300 cases per year. Each of these cases often included roughly anywhere from four to possibly a dozen simple filings. This is the type of work that could have been quickly handled by Zola’s software rather than a paralegal or junior associate. As more law firms adopt this type of technology (and they will) the number of law firms required, to meet the demand for legal services, will decrease.

AI powered software is reducing the need for attorneys which, in turn, will reduce the number of law firms

AI powered software is now performing the type of work typically performed by entry-level attorneys. Seyfarth Shaw, a “big law” firm with more than 800 attorneys, is deploying AI backed software which will do the jobs of associates who used to spend time “…analyzing contracts and contract flows.1” The firm says that such automation will free associates up to do work of a higher value. In other words, associates will no longer be needed to do as much of the “grunt work” and the firm will be able to handle more cases with fewer resources. Again, law firms doing more with less means that the number of law firms our country needs will go down unless the demand for legal services goes up. As I laid out in my last article, the demand for legal services is dropping rapidly. This means that the number of law firms our country needs will decrease.

Advances in artificial intelligence and machine learning are also creating a future in which people won’t even need to speak with a lawyer. As an example, let’s look at H&R Block’s recent agreement to use IBM’s “Watson” software to assist in preparing tax returns. In short, Watson has reached a level of advancement which allows the software to analyze and complete simple tax returns. This is more than just another version of Turbo Tax. Watson is able to look at the information it’s provided, apply cognitive processes similar to a human’s, and say “hmmm, I think this person may have some additional deductions that they didn’t give me paperwork for.” Give this commercial a watch:

H&R Block trained Watson to perform these tasks by giving:

…IBM scores of common customer tax questions to train Watson to understand how to respond to questions…They also fed the software with thousands of documents about various state and federal tax laws2.

The key from this is that Watson can now understand “various state and federal tax laws.” If Watson can complete simple tax returns then there’s no reason it can’t complete simple uncontested divorces, simple wills, and more. Imagine a future where this technology is applied to a “legal forms” website such as Legal Zoom. Instead of logging into the website and simply downloading a form, people will login to the website and Watson or similar software will begin asking them questions about their situation. Watson will then complete their uncontested divorce paperwork and e-file it with the Court without the person having to print a shred of paper. This type of technology isn’t science fiction anymore – the future is here. Also, the cost of this technology is dropping rapidly and it will become more available in short order. The impact of this level of artificial intelligence upon law firms is obvious.

Advances in automation and artificial intelligence are about to quickly eliminate law firms

I’m not saying that we’ve reached the rise of Skynet and that the Terminators are coming for the legal profession. So, you don’t have to worry about this robot showing up at your door, for today at least:

terminator robot

It is important to understand that technology is here, in 2017, and that it is making law firms more efficient. This, in turn, will reduce the number of law firms and these trends will accelerate as time goes on. Ignoring these trends, and acting as if your firm doesn’t need to change, will equal a one way trip to bankruptcy.

My next article will be focusing on technology trends, not specific to the legal industry, which will quickly reduce the number of law firms in the United States. What are you doing to prepare your firm for the future? Please chime in through the comment form below.

References:

1 The American Lawyer: Seyfarth Shaw Puts ‘Software Robots’ to Use in Automation Push – accessed at: http://www.americanlawyer.com/id=1202778576045/Seyfarth-Shaw-Puts-Software-Robots-to-Use-in-Automation-Push

2 Fortune: H&R Block Is Enlisting IBM’s Watson To Help With Your Taxes – accessed at: http://fortune.com/2017/02/01/hr-block-ibm-watson-taxes/