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Thursday, March 09, 2017

Lawyer Economic Insecurity in Perspective

Hadfield and Susskinds[posted by Bill Henderson]  This is my last post on two very important new books.

The core thesis of Richard and Daniel Susskind’s book The Future of the Professions is that technology is reducing barriers to specialized information, which in turn reduces the role of various professionals as intermediaries and problem-solvers.  As the Susskinds ably show, this process is well underway and will only accelerate in the years to come.

It is virtually impossible for most lawyers, law students or legal educators to hear this message and not involuntarily, reflexively worry about our own economic security.  The topic of lawyer fear and anxiety over the future is not explicitly taken up by the Susskinds; it’s just a side effect of their core message that we’d be foolish to ignore.  The one piece of good news for lawyers is broad swath of similarly situated professionals -- it’s akin to the old banking proverb, “Owe the bank thousands, and you’ve got a problem; owe the bank billions, and the bank has a problem.”  

This is true on two levels: 

  1. Society [or the current end-users of professional services] are going to need a lot of professional help to replace professionals with high-quality, low-cost technological substitutes.  Before lawyers go away or are heavily marginalized, a subset of lawyers will profit handsomely.  
  2. What technology can, in theory, do today is much bigger than society's ability to absorb technology’s putative benefits. Why? Because someone must first bear the cost of building an effective change infrastructure—i.e., creating working prototypes, educating the target audience on the benefits of new technology, overcoming objections to change, threading the pricing needle, closing sales before cash runs out, and, finally, turning a profit.  In the case of replacing professional know-how with something like artificial intelligence, the interdependencies are so complex that first movers have a high risk of getting slaughtered. And until these new tech-enabled business models get proven out, there are no fast followers. 

Thus, do I fear disruption in the legal services market? No, not at all. As the Susskinds and Hadfield point out, law is underserving its intended beneficiaries.  Quantum leaps in productivity are needed to close this gap.  We are in the early stages of transitioning from one-to-one consultative legal services – an entrenched archetype that is familiar to all buyers of legal services  – to one-to-many platforms that, as yet, seem like science fiction but are definitely taking shape. What is feared by lawyers, law students, and legal educators are the switching costs -- that they exist, that they have to be paid, and that riskless options have evaporated.  Yet, outside the bubble of the legal profession, that looks a lot like business.  That's the real paradigm shift for law.

What I think far more troubling than change in the legal services delivery model is the growing angst in society that more and more workers, including those with professional degrees, are at risk of technological obsolescence.  As this risk becomes near universal, the price of entry to professional employment—in the form of educational debt—is also going up.   

There is a very significant connection between the economic insecurity for knowledge workers that is the unavoidable subtext of the Susskinds' The Future of the Profession and the legal infrastructure described by Gillian Hadfield in Rules for a Flat World

PostitThis connection came to light a couple of weeks ago when these two books caused me to recall an incident from a few years ago.  A recently graduated student who was at the Law School studying for the bar slipped a copy of an op-ed under my office door.   On a yellow post-it note, my student wrote, “Isn’t this a terrible article?”

The op-ed was titled "The Start-up of You," and was written by Thomas Friedman, the author of the best-seller The World is Flat, which inspired Hadfield's title.  Friedman was giving a preview Reid Hoffman's book The Start-up of You (Hoffman is co-founder of LinkedIn): 

Hoffman argues that professionals need an entirely new mind-set and skill set to compete. “The old paradigm of climb up a stable career ladder is dead and gone,” he said to me. “No career is a sure thing anymore. The uncertain, rapidly changing conditions in which entrepreneurs start companies is what it’s now like for all of us fashioning a career. Therefore you should approach career strategy the same way an entrepreneur approaches starting a business.”

My former student wasn’t quibbling with its logic – rather, she was terrified with the insecurity it portended, as the job market was terrible and, notwithstanding a lot educational debt, her professional degree was no longer a safe harbor.

Chapter 4 of Hadfield’s book describes the well-developed complex of rules and norms that enables an America entrepreneur to navigate the risk and uncertainty of starting a business.  Hadfield compares this legal infrastructure to our physical infrastructure of roads, bridges, airports, and power grids. But for the physical infrastructure, which is so easy to take for granted, economic activity and innovation would substantially grind to a halt.  Hadfield persuasively makes the case that our legal infrastructure is an equally crucial to the dynamism of the U.S. economy.

It is this legal infrastructure that enables entrepreneurs, venture capitalist, and private equity moguls to obtain financing for ventures that seek to replace humans with machines and algorithms. Friedman continues:

[W]hat is most striking when you talk to employers today is how many of them have used the pressure of the recession to become even more productive by deploying more automation technologies, software, outsourcing, robotics — anything they can use to make better products with reduced head count and health care and pension liabilities. That is not going to change. And while many of them are hiring, they are increasingly picky. They are all looking for the same kind of people — people who not only have the critical thinking skills to do the value-adding jobs that technology can’t, but also people who can invent, adapt and reinvent their jobs every day, in a market that changes faster than ever.

Who is choosing this future of perpetual competition and insecurity?  Certainly not the college students who were showing up at Bernie Sander rallies in the summer of 2016, nor the white working class that supported Trump.  Unfortunately, we lack an intellectual frame and vocabulary to honestly discuss these anxieties and worries.  This is a difficult, messy job.  I suspect that legal educators feel ill-equipped to take it on; but if not us, then who?

In the early 1970s, the deans of law schools carried on a robust dialogue about “law school as leader school,” largely because of the social upheaval of the late 60s and early 70s. That rhetoric largely went dormant in the 80s, 90s, and 2000s.  In 2014, I concluded that after nearly a century of relative calm and prosperity, the legal profession has headed into a period of tumult and change.  Thus, reasoning that law students and professors alike needed a deeper knowledge of leadership for the challenges that lie ahead, I created a course at Indiana University called Deliberative Leadership.  (I'm happy to share the course proposal and syllabus. One caveat—the students largely run the class, and that is a very good thing.)

Now in my 3rd year of Deliberative Leadership, each class with exactly 20 students, I can say with confidence that Millennial law students – at Indiana Law, but likely elsewhere – are more than ready to have substantive, non-ideological discussions about the future.  And those discussions are, week after week, very energizing. To my mind, having these conversations is no less pressing to law students than a class on Artificial Intelligence and the Law.

BopLikewise, I am equally confident that law school alumni, particularly the tens of the thousands of Baby Boom lawyers who are about to retire healthy and relatively wealthy, would love to be invited back into the law school community to focus on the challenges identified by Hadfield – particularly the 4 billion people who live at the “bottom of the pyramid” due to the lack of a legal infrastructure. 

Two weeks ago, I was fortunate enough to have breakfast with Dean Gordon Smith of BYU Law and a group of his alumni.  Somehow I managed to steer the conversation toward Hadfield’s Rules for a Flat World.  I then made the case to Dean Smith that BYU Law was uniquely positioned to focus on these problems: 

  • Such an undertaking is consistent with the Mormon faith and mission
  • Mormon lawyers are often connected to the emerging and developing world through foreign missions done during their college years – nearly half of BYU undergraduates have been on missions abroad. Many of those grads went on to law school at BYU and elsewhere.
  • To support foreign missions, BYU has a staggeringly deep language program – over 100 languages taught; three-quarters of BYU grads are proficient in a second language.
  • Building a legal infrastructure that spans the first and third world is an audacious goal that would capture the imagination of every generation of lawyer.

I honestly believe this to be true.  And Dean Smith is a person of great intelligence, conviction, and character who could potentially pull it off.  The problems identified by the Susskinds and Hadfield are nothing less than our opportunity.  Dozens of other law schools have good hands to play.

I want to think Dan Rodriguez, who gave me the perfect excuse to timely read and think through two terrific books, and the PrawfsBlawg editors for giving me access to such a large audience of fellow law professors.

Posted by Bill Henderson on March 9, 2017 at 10:28 AM in Symposium | Permalink

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