Will technology be able to disrupt the legal industry?
We rarely see disruption coming. Most businesses function under the belief that the infrastructure that supports their operations is so difficult to replicate that its very existence is a barrier against competition.
Retail stores relied on the friction inherent in developing supply chains to keep them safe from challengers. Travel businesses took comfort in the fact that the effort involved in replicating their large fleets of taxis would keep them ahead of new entrants looking to displace them. Newspapers saw the distribution networks that they had built to get the news to our doorsteps as the moat that no competitors could cross.
Each of these businesses was convinced that the friction inherent in replicating the networks that supported them was all they needed to keep competition at bay. And yet, industry upon industry has been disrupted by new business models whose sole focus was smoothening out the friction that they relied on to protect them.
E-commerce portals made it possible for us to shop without going to stores. Ride-hailing services transformed the way we travel by building a virtual fleet of cars and making it available to us on our mobile phones at any time of the day or night. Even the newspaper you are holding in your hand right now is fighting a losing battle against the many online news sites, content aggregators and social media platforms that have transformed the way that a majority of us (myself included) consume news.
In every instance, disrupters have focused on friction, using technology to replace the infrastructure that was once thought to be an impregnable defence against change.
Complexity is the friction of the legal system. It is the reason why you have to hire a lawyer to navigate the arcane procedures required to see a case through to its conclusion. It is why the contracts you sign today are longer and more convoluted than ever before—why the lawyers who draft them insist on including language to cover every possible eventuality claiming that if you don’t, opposing counsel will take advantage of anything overlooked.
There is an urgent need to simplify the entire legal system—to make it more accessible and less mysterious. This is something that should be easily achievable through the judicious use of technology. If ever there was an industry ripe for disruption, it is the legal industry.
And still it has managed to withstand change.
The reason for this boils down to the single feature that sets this profession apart from all others—its unprecedented control over every aspect that influences its ecosystem. To practise law, you need a licence. In India, this is only available to citizens of the country who have secured a law degree from a recognized university. In practice, the licence itself is of little use unless supplemented by a period of apprenticeship—either with a litigator or as an associate in a law firm—where you learn elements of the profession that are not taught in law school. No one can practise law other than by following this well-trodden path.
The determination of what does or does not amount to the practice of law is left to judges—each of whom was once a lawyer. Anyone who attempts to intrude into the legal domain risks being sued by the very lawyers they sought to disrupt before a court comprised of former lawyers who are hardly likely to view this disruption sympathetically. The power of the judiciary might be circumscribed by the authority of the legislature, but please do not forget that many lawmakers are themselves members of the legal fraternity who would similarly be loath to loosen the barriers that protect their profession from disruption.
It is this 360-degree control over every facet of the legal industry that has protected the profession against disruption. Last week the highest court in the land ruled that foreign lawyers cannot practise law in India unless they are citizens of India and have a degree in law from a recognized university. In doing so, it affirmed restrictions that had been imposed nearly a decade ago by the Bombay high court and the Madras high court against the entry of foreign lawyers into the Indian legal market.
While the entry of foreign law firms is nowhere near the kind of innovative disruption I believe the industry needs, the reaction of the bar and the bench in repelling their entry is indicative of the response technological disruption will face.
That said, we have begun to see green shoots of innovation around the edges of the profession. Research has moved out of the library and on to online databases. Contracts are getting automated—produced by algorithms that populate standard templates with transaction particulars. Alternative legal service providers are encroaching day by day into the domain of the legal industry, initially doing work that lawyers can’t be bothered with, but steadily climbing up the value chain. And all the while Artificial Intelligence is circling around the profession like a vulture waiting to swoop.
All these innovations are focusing on the very friction that we lawyers have always believed will keep us safe. They are probing our defences with technology, trying to find new ways to smooth the friction that has always protected us. I have a sinking feeling that, just as with every other industry that relied on friction to keep them safe, it is not a question of if but when we will be disrupted.
Rahul Matthan is a partner at Trilegal. Ex Machina is a column on technology, law and everything in between. His Twitter handle is @matthan.
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