Quantitative Legal Prediction is the Next Frontier of the Industry
Later this week at Emory Law’s Symposium on Legal Practice in a Changing World, I will be discussing the next great frontier of our business - Quantitative Legal Prediction – here is the basic idea:
Human generated prediction is one the hallmarks of the legal services industry. That was the past but this will not define the future. The race for the future of this industry is in developing 'soft' artificial intelligence processes that leverage the data/information streams being used by "expert reasoners" (i.e. lawyers at all price points) to mimic their underlying decision processes but do so with the benefit of large scale datasets (if you do not think this is possible see IBM Watson - coming soon to your laptop in some version via Moore's Law). In much the way computation and large-scale data analytics changed an industry such as finance (or since it has been popularized - baseball – see Moneyball), it will (it already has) change the legal services industry at all price points (high end and the retail level).
On the high end of the market, sophisticated law firms, general counsels and even the future retail legal industry are (will be) interested in two forms of prediction:
(1) How much will this matter cost? Law firms will want to know this so they can do matter pricing (if they are forced to do so) and GC's want to know this so they can control their legal spend. In particular, both Law Firms & GC's are in a epic struggle to manage the global legal supply chain. GC's are getting lots of help doing intelligent procurement from their procurement divisions and/or are hiring vendors such as TyMetrix and leveraging insights from documents such as the Real Rate Report.
(2) What is the likelihood of success or the ultimate projected exposure in the particular matter? This second class of prediction is usually done through instruments such as the classic client memo, mental models (ancedote, gut, instinct) that are honed using a variety of data stream – most notably on the job experience. As I discuss in my presentation slides linked to below - this is ready for a significant reset:
Toward the MIT School of Law
In light of the technology infuse world where we are likely heading - the training is simply not good enough. The skills that students are going to need to be competitive -- technology, computational data analytics, finance, informatics, economics, accounting, human computer interaction, supply chain mgmt, etc. are in limited supply (particularly the technology and high end data analytics). To make our students competitive (hopefully thereby restore the Return on Investment associated with the JD) will require legal education to move away from its significant liberal arts / humanities bent and look more like polytechnic research and teaching operation – or what I have called in other related work "THE MIT SCHOOL OF LAW"
Listen I do not expect every school to adopt this approach. When it comes to real reform the legal academy is pretty damn conservative. Although, I have nothing against the humanities but this is no longer a humanities age (other than this). It is an age of technology. Law school needs to transition from its liberal arts predisposition to a polytechnic research and teaching operation (you know one with peer review and grant $$). From both a scholarship and training perspective, it is time to get serious about science, computation, data analytics and technology.
I have argued that the arbitrage opportunity in the market for legal education is for an institution(s) the move toward an “MIT School of Law.” In other words, an MIT style institution would do just fine in the market for legal education (in the long run perhaps better than HYS?).
If you are an employer – hiring a lawyer for the 21st Century – please ask yourself this question: do you want a student from an MIT Style institution or some sort of liberal arts school? Of course, the market will ultimately decide this question — but I would place my bet with an MIT style legal institution.
Yes there is going to be math (technology as well) on the exam
This is the reality of our industry and it is already underway. Technology is going to reduce the total number of lawyers needed and recast the set tasks associated with those who remain in the practice of law. Law is a mature industry and the total number of jobs is not likely to grow over the coming years.
As I have previously argued “the return on investment (ROI) of a J.D. is waning and reform is needed before the system collapses (via the reform in student loan market). The ROI is not really within the control of any particular institution. What institutions control is the curriculum and it is fair to say that the curriculum offered at most institutions is in need of a serious reboot.”
Here is the implication for legal education – stop exclusively training your students for primary sector of the legal services market that has essentially experienced ~0% net job growth since 2000 and try to help your students compete for the law jobs of the 21st Century – you know the ones that have experienced more than 90+% net job growth since 2000.
This means that who you hire to teach might need to be different. Different criteria simply need to be privileged.
In other words, if you want to help your students - it is time to start training them for the technology infused law jobs of the 21st Century. This starts by jettisoning the general technophobia and anti-quantitative culture present in many law schools. The fact that the culture of law school all but celebrates the "I did not go to law school to do math pathology" is at the heart of the problem.
The task for legal education is to ensure our students have the training necessary to be competitive in the legal employment marketplace. The training we offer is simply insufficient for the current reality. To command the salary of today - in the not too distant future - our students are going to have to be able to do much much more.
In short, welcome to law’s information revolution - revolution already in progress and as I like to say in all of these forums - yes there is going to be math (and technology) on the exam.