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creative destruction
Start-Up Takes Aim at BigLaw

Venture capital money keeps flowing to promising new tech companies that are working to automate many of the routine tasks conducted highly-paid 20-somethings at big city corporate law firms. The latest example, from Bloomberg:

Could the armies of lawyers needed to close billion-dollar deals soon be a thing of the past?

That’s what Invoke Capital, the London-based venture firm run by former Autonomy Plc Chief Executive Officer Mike Lynch, is betting with its latest project financing. Invoke said Wednesday that it’s making an investment in Luminance, a U.K. startup using artificial intelligence to process legal documents and automate due diligence in mergers and acquisitions. […]

Luminance says its software can read and understand hundreds of pages of legal documents a minute, enabling lawyers to carry out due diligence far faster than previously. Sally Wokes, a partner at Slaughter and May who works on large company mergers and who helped trial Luminance, said the firm found that completing due diligence while using the system was as much as 50 percent faster than doing the same document reviews using only humans.

Over the last several decades, the bulk of the dislocation wrought by globalized finance capitalism and technological innovation has been concentrated on less-skilled workers, who have faced downward wage pressure from automation and outsourcing, while sectors like law, banking, and consulting have reaped a disproportionate share of the benefits. But as computer technology continues to cross new frontiers, even high-skilled professional jobs may be affected.

Big law firms are especially overdue for disruption. Hourly rates for corporate clients have been soaring, raising prices for consumer goods. And the cartel-like American Bar Association has actively shielded firms from competition at the public’s expense. Enter algorithms, exit lawyers: The next stage of the information revolution may end up looking more egalitarian than the last.

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  • Beauceron

    I for one will be delighted when this really kicks in.

    For two decades, the elites flooded the country with immigrants to take away the working class jobs and lectured those who got the short end of the stick about the benefits of globalization– and topped it all of with condescending charges of racism.

    I would love to see all these high level lawyers and bankers get a small taste of the medicine they’ve been dishing out.

    • seattleoutcast

      Yes, elites like Drucker preached the Knowledge Economy for those dumb rubes who worked in manufacturing. It’s nice to see the smug professional class get a taste of what they’ve wrought.

      • Beauceron

        I am not, btw, arguing against modernization.
        Change happens. But it was the callous way it has been done over the last three decades that has irked be– and this is on the right and the left. The WSJ/Chamber of Commerce wing of the Republicans and the far left of the Dems have been terrible for this country.

        • seattleoutcast

          Agreed. Manufacturing was bound to lose workers because of productivity. Many states did have programs to help manufacturing employees transition. It was the indifference to the blue collar sector that was so egregious.

          • Beauceron

            Good points, all. But it’s not just indifference– there is a visceral disdain for these people amongst our urban elite. I live in a big city now, but grew up in a semi-rural area. I am not romanticizing them and not pretending they are without fault, but I have a soft spot for them and know many of them, including family members, who are genuinely good and decent people. That they cling to religion and love of country may make them a joke to some, but they are not in the main “deplorables.”

          • FriendlyGoat

            If you have adequate taxation of profits earned from being indifferent to the blue collar sector, you won’t see nearly as much of that “egregious” behavior.

  • MarkM

    For better or ill, document review work is currently viewed as some of the worst scutwork within the legal profession. Document reviewers are lucky to make $25/hour and would be well advised to hide that experience if they are ever applying for a job within a law firm. This is not the bread-and-butter of the top end. Indeed, for many litigation matters, at least part of the document review work has been offshored already. I personally worked with outside counsel and an India-based review group which went through approximately 1.1M documents on a case. We ultimately used the India-based reviewers not only for the initial review, we used them for the second tier review as well.

    Having a machine do document review more efficiently for due dilligence may have the paradoxical potential to bring more of the document review process back onshore. Incidentally, I’m shocked that this is being presented as a new thing. Having machines search and categorize electronic documents is not new at all – see any discussion on predictive coding in eDiscovery matters.

    Bottom line – this service will be sold to (a) in house counsel or (b) big law as applicable and is a direct extension of what is already being done by many, many other firms in litigation context. I’m not sure there is any news here unless the software does something more than your typical e-discovery/predictive coding type analysis.

  • FriendlyGoat

    Don’t forget the benefits of high taxes on high incomes of the partners who continue to earn stratospheric remuneration with Luminance.

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