Business Lawyers Resist Labor-Saving Technology Because they Sell Hours — Not Results — A New App from Silicon Valley Makes the Point

A new app from Silicon Valley highlights a legal industry that resists innovation to the point of self-parody.

Zero, a 2015 start-up headquartered in Los Gatos, California, now enlists artificial intelligence in the retrograde practice of lawyers billing by the hour:

“ … Today, lawyers work everywhere and anywhere, on mobile devices, and until now, that time has been fiendishly hard to capture. It was typically just written off. Not anymore …

“ … The result? Time that used to be lost is now captured, and billable. A typical attorney using Zero recovers between half an hour and an hour per day. Multiply that by your hourly rate. Now multiply it by 20 billable days in the month. Zero delivers ROI on the first day you use it – and keeps on delivering, day after day.”

In light of the severe and volatile legal and regulatory demands on business in 2018 — this is kind of like MIT or Cal Tech studying laser power — to deploy in buggy whips.

Don’t get me wrong — artificial intelligence has huge potential for the legal industry.

Used in technology assisted review to short-cut the use of individual lawyers reading thousands of pages in the litigation discovery process, or to automate the cross-checking of new IRS regulations against a company’s thousands of contracts – artificial intelligence has great promise. A recent McKinsey study estimates that 23% of lawyer work output can be automated using artificial intelligence. And an ex-BigLaw partner has left his firm to form a bankruptcy boutique that uses artificial intelligence-powered legal research from ROSS Intelligence to replace junior lawyers who use law libraries for such support in traditional firms (like the one he left).

But lawyers aren’t adopting artificial intelligence — not in the present tense — not in material numbers.

Despite loud publicity within the legal tech echo chamber– empirical data show a signal-to-noise adoption-to-hype ratio among lawyers in U.S. and U.K. firms down at single-digit percentages. (See Altman Weil and PwC adoption numbers cited in an earlier post of mine: “Business Lawyers Resist Labor-Saving Technology Because they Sell Hours – Not Results – And Efficiencies Reduce Lawyers’ Hours Sold”.)

Taken on its own terms Zero’s offering of artificial intelligence to boost hourly billings of lawyers who are riding in taxicabs, sitting in airports, or waiting for court calls makes sense. Seen from the vantage of how lawyers actually behave — as contrasted with the hopeful thinking that pervades the legal media — it’s not self-parody. It’s a matter-of-fact conclusion that this Silicon Valley company has learned how lawyers — their target market segment — views their clients: As adversaries in a zero sum game.

Lawyers lose to the extent that the client isn’t charged. Simplistic — binary — thinking.

Do you see anything that smacks of client value in the “count-up-your-extra-hours-and-charge-for-them” quote above?

Neither do I.

Patrick Lamb, founding partner of a Chicago firm of trial lawyers called Valorem — whose business model is based on alternative fee arrangements and who never charges by the hour — responded to Zero’s offering with heavy irony:

“Clients love these tools that capture significant time (according to the ads) without adding any value. Notice no tools to eliminate .2 minimums [where if a lawyer spends any amount of time he / she records a bill of at least 2/10 of an hour] or rounding errors (always up) that really fluff invoice amounts.”

For all of the law firm website bromides that say “it’s all about the clients” — the reality is — not in the ways that clients care about.

I give credit-where-due to this Silicon Valley business for accurately sizing up a provable market opportunity: Attorneys who want to maximize billings under a cost-plus pricing framework.

But — in terms of law firms being our true partners versus our adversaries — the business community needs to emulate this start-up’s pragmatic realism. Focus on lawyers’ deeds — and don’t be beguiled by their aspirational words.