Moscow Legal Tech’s Holger Zscheyge: a Lawyer Replaced by Robot Is Less Probable Than a Lawyer Replaced by Another Lawyer With Better Technology
As our knowledge of robotics and machine learning evolves, automation advances into a variety of aspects in our daily lives and jobs. Soon, AI will be able to get to even the most complicated, abstract, and responsible tasks traditionally available only to humans. One of such complicated cases is the adoption of AI-based solutions in legal practice. To some extent automation was present in legal practice for some time now, as the first technological solutions for lawyers were available since the 70s. However, back then such solutions weren’t anything like the tech of today. Or were they?
Delving deeper into the matter of AI-lawyers and AI-judges, lawless.tech reached Holger Zscheyge, a professional legal publisher, legal tech and law firm strategy expert, a prominent speaker, and one of the co-organizers of Moscow Legal Tech, the first specialized conference on legal tech in Russia.
lawless.tech: First, what inspired you, a publishing professional, to dive into legal tech? Were there other grand ideas competing for your commitment?
Holger Zscheyge: Lawyers are my main customers as a publisher. So I am interested that they stay relevant in the 21st century. And legal information alone doesn’t cut it anymore to stay relevant. I started to read the books by thought leaders like Richard Susskind, Mitch Kowalski or Bruce MacEwen about the changing environment for legal services. But the real starting point has been a revelation in 2015. Our colleagues at the “Legal Insight” magazine organize an annual forum for the heads of legal departments of Russian companies. You have to come up with new topics every year, so in 2015 we decided to conduct a survey, together with PwC Legal, about the use of technology for business processes in legal departments. About 500 departments took part in the survey. Long story short – back then 70% of legal departments in Russia used solely Microsoft Office for the automation of their processes. In 2015 that’s a total disgrace for the profession. So we decided to set up a panel discussion about legal technology at the 2015 forum, a totally new topic back then. This discussion turned out to be the hit of the forum, so we asked ourselves “Why not organize a conference around legal tech?” In 2016 Moscow Legal Tech was the first conference in Russia on the issue. The rest is history. In 2017, barely a week went by without some legal tech event. In the most recent survey only 10% of Russian legal departments stated that they use only Microsoft Office for automating their processes.
As I said, the grand idea is to keep lawyers relevant (so they can earn money and buy my products). That is what I am committed to. Technology is only a part of it, together with new management methods, business development skills, process optimization and service promotion and delivery. It’s the package that makes the difference.
lawless.tech: This year you’ve co-organized the third Moscow Legal Tech conference. What were the hottest topics presented? What were the most popular or interesting questions brought up?
Holger Zscheyge: We are traditionally strongly oriented on processes. This is the first step is to analyze and understand your processes. Only after this you can start with automation. So we build Moscow Legal Tech around fundamental ideas and show how to implement them by using technologies. This year we emphasized on topics like innovation, legal operations, cybersecurity, compliance, blockchain and data science. The technology part was covered by a vendor ally and an elevator pitch session of legal tech startups. The whole topic of artificial intelligence was split out into a separate conference on April 6, which we co-organized together with the Skolkovo Technopark. The most pressing (and interesting) questions are always around the practical implementation of process automation and optimization. About 75% of the attendees are from legal departments. For them, blockchain and smart contracts are nice to know, but the automation of contract review or claim filing is need to know. That’s the tasks heads of legal are faced at the moment.
lawless.tech: Why did you choose to work in the Russian market, if there are such active legal tech hubs as the US’ Silicon Valley, the UK, and Germany? What can you say about the local legal tech community?
Holger Zscheyge: The decision to work in the Russian market has been made long before the decision to explore legal tech. I came to Russia in 1996 to work for Wolters Kluwer, a large multinational publishing company. Since then I never looked back. Sure, the US, UK and Germany are the three largest markets for legal services in the world. Therefore, competition is strong and talent is rare, especially in the valley, where giant corporations pick the best developers off the market. As I see it, we have a “golden triangle” of highly educated and capable developers in Russia, Ukraine and Belarus. You can start with an idea and comparable low investment, make it into a product that you sell on the local market, and then scale it to conquer Western markets. There are already cases of startups that have followed that path – Pravo.ru (case.one) from Russia and PatentBot from Ukraine.
As for the dynamics – I don’t see a substantial difference between the dynamics in Western and Eastern Europe. To an extent things are even more dynamic in Russia and Ukraine right now. In mid-May a team from Legal Geek (the organizer of the largest legal tech conference in Europe) and Nextlaw Labs came to Moscow to listen to pitches from 15 startups (14 from Russia, one from Ukraine) on their tour around the world to find the best legal tech startups. That’s double the amount of startups they saw at the next stop, Singapore. And they have been blown away by the variety of ideas in our markets.
lawless.tech: Typically, automation in almost any area eliminates workplaces or at least forces people to learn new skills to keep up with the job market. In this respect, what is the situation in legal practice?
Holger Zscheyge: That’s what happens, when new technologies enter the economy. Whole sectors of the economy undergo dramatic changes. Some people lose their jobs, the workforce in general has to learn new skills. This happens faster and faster – some 100-200 years ago you could hold a job for your entire life with the same skill set. Today you will be out of a job if you do not improve your skills for a couple of years. As the great Alvin Toffler said “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn”.
In general, new technologies improved the life of everybody. For instance, in the 80’s of the 19th century, almost 80% of the American population was employed in agriculture. Back then it was hard, hard labour. Today, only about 3% of Americans are employed in agriculture. It is still hard work, but instead of toiling on a field, you sit in an air conditioned combine that is maneuvered by software and GPS, and operated with a joystick. Productivity is much, much higher today. And most the remarkable drop in employment in agriculture didn’t destroy the American economy or society. Society and governments have to take care of those that become victims of tectonic shifts on the labour market, by providing job alternatives, training and, where this doesn’t help, some form unconditional basic income.
Of course, technologies will change the playing field for legal services as well. If it was enough to be a good lawyer in order to be successful in the legal services industry, you now have to be proficient in business process optimization and technology as well. It’s like a three-legged stool – if one leg is missing, you can’t’ sit comfortable.
But in general technologies will make the work of lawyers more interesting. According to McKinsey, 23% of a lawyer’s tasks can be automated with existing technologies. And these are normally tasks that are delegated to paralegals and junior lawyers – dreadful repetitive jobs like sifting through thousands of pages of documents during a due diligence. Instead of spending months of the time of humans on those tasks, technology tools can do the job in seconds. Lawyers will spend their time on more valuable and intellectually stimulating work.
lawless.tech: Evidently, legal technology solutions are already taking over the paralegals’ jobs, such as document discovery, complaint processing, or looking for precedents. Will such solutions eventually replace people in more complex and “human” professions such as lawyers or even judges?
Holger Zscheyge: In 2013, Carl Benedikt Frey and Michael A. Osborne of Oxford University published a report titled “The Future of Employment: How susceptible are jobs to computerisation?”. Frey and Osborne tried to predict the probability with which humans will be replaced by robots in various professions. The probability for paralegals is indeed very high, 94%. That’s because paralegals are handed predominantly repetitive, relatively easy tasks. Jobs, that can and will be taken over by technology. The probability of lawyers being replaced entirely by algorithms is only 3.5%, very low indeed. The probability for judges is somewhere in between – 40%. But a machine without empathy cannot make a fair decision in a complex legal dispute, or where law collides with common sense. A human judge would not hand a sentence to somebody for violating traffic regulations because a sick child had to be delivered to the hospital as quickly as possible. What algorithms can do is unbiasedly decide high volume matters where the decision is only a technical issue. This would greatly decrease the pressure courts are under all over the world and expedite the delivery of justice.
I think that a lawyer replaced by robot is less probable than a lawyer replaced by another lawyer with better technology. That’s what we all should focus on.
lawless.tech: AI is one of the most promising aspects of our technological progress. It is paving its way into legal tech as well. There is an opinion that a robotic judge would have no empathy to the defendants. On the other hand, most people think that an AI judge would also be completely unbiased. Do you think that robotic judges need such a human trait as empathy to make fair decisions? Simply put, will the AI judges be an idealistic manifestation of the blind justice or an insensitive scourge punishing without hesitation?
Holger Zscheyge: Let’s all calm down for a moment. The instant you start talking about AI in the legal profession, everybody is discussing robo-lawyers, robo-judges and robo-legislators. We tend to go from the top, assign the most sophisticated legal jobs to artificial intelligence. I may be wrong, but I am pretty sure that everybody who reads this interview will not live to see an AI with that capability. But there are millions of cases where a sufficiently advanced artificial intelligence might help speed up the delivery of justice in the near future. Courts all over the world are swamped with cookie-cutter cases, where it is relatively easy to get to a just decision. And you do not need empathy to resolve them. There might be one in ten thousand traffic violation cases, where someone ignored speed limits to deliver a sick child or an expecting mother to the hospital. For this, you need a human to make a fair decision. The other cases are just what they are – violations of the law, and the defendant should be punished according to the law.
Humans are flawed, but that is what makes them human. I don’t think that we need an army of Judge Dredd’s, even if they are incorruptible, unbiased and with all the necessary legal knowledge. What we need is a better way to serve justice quick and at an affordable price to society. And if artificial intelligence can help, and if humans still have a choice whom to trust with the delivery of justice, then let it be. At a recent event about data science at Yandex a speaker, who talked about the possibility of robo-judges, asked the audience whom they would trust more with deciding a legal case. The majority voted for the robo-judge.
lawless.tech: Do you think that legal tech products are currently more demanded by legal professionals or, on the contrary, by their clients? How will this trend change in the future?
Holger Zscheyge: Let’s start with fixing the wrong perception of lawyers, that clients are looking for a legal professional. They are looking for a solution for their legal problems. Furthermore, they want three things: 1) transparent and predictable prices, 2) high quality of work, and 3) excellent customer service. That’s all. And if that can be achieved faster by implementing technologies, then clients will demand that lawyers use those legal tech products. That is already happening in the B2B sector. Legal departments demand explicitly that law firms are deploying legal tech, otherwise they will lose work. The general public will follow, or pivot to alternative service providers. Look at the industry around “airline compensations”. Technology-based providers found a way to make suing an airline for a compensation of € 250 on average profitable for both sides. This is now a six billion Euro market annually. I hope that law firms realize the threat, and the potential, and catch up with technologies soon.
lawless.tech: What does the “traditional” legislative apparatus think about this ongoing technological intervention into legal practice? Is there a need for additional rules to regulate the usage of legal technology? Are there any attempts to do so?
Holger Zscheyge: We already have a decent framework of regulations for the legal services industry in most developed countries. Technologies are mere tools for professionals, and if the work of those professionals is sufficiently regulated, then we do not need to regulate the tools as well. Nobody would regulate the use of a fax machine either. There will be new aspects to the work arising out of new technologies, like data privacy or cybersecurity. Those aspects need to be regulated independently of the technologies used.
What might help the proliferation of legal technologies are regulations or recommendations by governing bodies of the legal profession to use technology. One example is Rule 1.1 of the American Bar Association, requiring that “a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology”.
Legislators might have to catch up with laws that enable new technologies, set the legal framework for technologies like blockchain to work in real use cases. Another important issue where legislators can help is the open access to data. Governments are the owners of huge amounts of data (data on individuals and corporations, financial data, court decisions, etc.). Open access to that data will hugely impact the development of legal technology.
lawless.tech: How would you evaluate the legal tech industry as of today? What were the earliest attempts in this area? What are the most notable projects out there? What do you think about its future?
Holger Zscheyge: Legal professionals using technology to become more efficient is not a new phenomenon. LexisNexis, the research tool no American lawyer can live without, was founded in 1970. German practice management software AnNoText was released in 1978. Even on the post-Soviet territories legal databases appeared as early as 1990. But a real boom legal tech experienced in the years after the global financial crisis in 2008. Cash-strapped corporate clients decreased their legal budgets, transferred legal work in-house in order to slash costs. This could be achieved only by applying technologies. So the demand rose for everything that made legal processes more efficient. Together with that trend the falling prices for IT infrastructure made it possible to start technology-intensive SAAS projects like marketplaces or online document assembly software. These projects were meant to improve access to justice and legal advice for those who can’t afford it at the regular prices.
Notable projects are LegalZoom, Avvo and Rocket Lawyer that made legal help more accessible and affordable. Clio is a good example in the practice management domain. Lex Machina made waves when they were acquired by LexisNexis. Today there are quite a number of projects already that became “household names” in the legal profession.
In my opinion, when we go past the hype about legal tech in the last 2 years, the future will be rather bright. There is a demand for technologies that make lawyers’ work more efficient and affordable. As long as legal tech developers provide the right solutions at the right price, lawyers will buy them. In our surveys with PwC Legal money, or the lack thereof, has never been the main reason legal departments did not buy technologies. The main reason has been that existing solutions didn’t sufficiently meet the specifications of the departments. So there is potential in the market. The US market for legal tech alone is estimated to have a potential of 16 billion US-Dollars annually (total accessible market). Only 3 billion of that materialize in sales, or less than 20%.
Another huge potential lies in making legal help more affordable to citizens and small and medium sized (SME) businesses. Over 80% of US citizens cannot afford legal services at the present cost. Only 13% of SME business owners in the UK consider the prices for legal services to be adequate, and they have legal problems in the amount of £100 billion annually. 70% of Germans do not use the services of lawyers because the pricing is not transparent enough. Take the example with the airline compensation market – nobody will spend € 400 to receive a € 250 in compensation. The moment someone started to use technology to offer a no-risk deal for 25% of the compensation, a new market was created.
For over 40 years lawyers all around the globe have been utilizing numerous technological solutions to get their jobs done faster and better. Evidently, the fears that tomorrow, if not today, their jobs will be taken away altogether by perfectly unbiased sentient machines are somewhat unreasonable.
In the next decades, legal tech tools will most likely remain mere tools, though increasingly more sophisticated. The introduction of AI-based solutions, in its turn, will make legal tech smart, but the real human lawyers and judges will remain at the helm. Nevertheless, the tech on the legal professionals’ table is a must-have in this rapidly advancing industry.
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