Few people in our industry have the experience, knowledge, and cold math skills to influence legal technology and the industry in general the way Karl Harris can. He is the current CEO and former Technical Director of Lex Machina, a hawkish legal analytics platform that LexisNexis acquired in 2017. Before earning his PhD at Stanford, Harris worked his way through his bachelor’s and master’s degrees in computer science, developing marine sonar systems and software projects. Another complex before diving into the legal world. When Harris thinks about the legal technology and the factors that will allow law firms to thrive in the new legal world, as he did with me in an interview earlier this week, it is worth listening.
In his role as CEO and as a general observer of the legal industry, Harris sees law firms on the cusp of a fundamental revolution in how they deliver their services, but the revolution does not come from within: “The stakeholders, the clients, are the ones driving the change.”
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Harris believes that part of this revolution will involve a continuous shift away from the traditional pay-watch paradigm. “The paid watch has to go away, right? Nobody likes it. Customers don’t like it, and the partner who gets the little timer on their screen doesn’t like it, and nobody likes it.” Under Pay Hour, “There is often an adversarial relationship with the client and their outside advisor, and you kind of wonder,” Are we really in agreement? Are our incentives compatible? Are they doing the right thing? “For Harris, the companies that succeed are those that proceed from that adversarial to the one in which the company is seen as an active partner in advancing its clients’ business goals, rather than as a necessary evil or just a line in the expense sheet.
Harris has seen that companies experiment more with fixed fee or result-based fee arrangements in more than 6 times the business consulting world. “The McKinseys, the Bains, the BCGs have been doing this for a long time. There is the participation fee, and then if there are certain metrics of success that are met, there is more money to change, or if the metrics of success are lower, you know, there is less money.” To change it. ” By sharing the risks and aligning the success of a law firm with the success of its clients, Harris believes that companies will become more efficient with their own resources and develop a customer-focused approach to the services they provide.
Harris was quick to point out that being efficient and moving to fixed-wage employment does not necessarily imply diminishing the company’s revenue. “It’s okay if the fixed-fee arrangement actually pays a higher fee than the billable arrangement might do, because what the customer pays is the reduced risk, and people are willing to pay to reduce the risk.”
Who runs the store?
Harris told me, “The question then is which law firms will be able to cope with this change … When I speak to law firm leaders and partners, the first question on their minds is are we as a company energetic enough to meet the changing and evolving needs of our clients?” In many companies, the answer is no. “
Harris said he sees this as a deeply untenable situation, especially for law firms that use a traditional financial system. There are a lot of risks, year to year, in the law firm model. At the end of the year, all profits are paid to the partners and start from scratch. The company is financed for three quarters of the year with loans from a bank. You’re not in bad shape until the last few months of the year, after which time you can make all your profits. For example, if you make one mistake, it can lead to the collapse of an entire company. ”
For Harris, one of the most important questions a company could ask itself is its leadership team. “What are the characteristics of the ultimate decision makers in these large law firms? Are they smart and tech smart? Where are they in the generational turnover, and what is their willingness to take risks and make changes? Harris argues that competition is getting stronger and stronger, and companies unprepared to transform quickly according to the conditions they deserve may find themselves out of business.
Part of the reason Harris sees competition keep growing is the company he leads. Harris sees Lex Machina and other tools like her as a great equivalent in the legal arena, allowing small and medium-sized businesses to beat their weight and handle the lawsuits that were previously the domain of the leveraged Biglaw fashions. As more lawyers have the tools to serve these clients, the level of competition and customer service increases, and our industry begins to catch up on the ground, it is lost in the wider business world.
Lex Machina works by compiling a massive archive of litigation data points that its users can pull from, analyze, and use to make data-driven decisions about litigation strategy. Harris gave an example of trying to decide whether to apply for expedited judgment in a major case. The traditional way to make this decision might be to send an email to the firm to gain insight into the judge or opposing attorney, then try to use any stories that arrive to supplement the attorney’s legal reasoning and judgment.
However, with Lex Machina, the attorney can click some buttons to pull stats on the judge, create a profile for an opponent’s attorney, create projected returns in cases of specific types within his jurisdiction, or collect evidence to support decision-making on any other number. Issues. The software can quickly pull out in seconds the most recent and unsuccessful 10 successful and unsuccessful MSJs that a specific judge has judged, or calculate the percentage of cases of a specific type that succeed or fail in a particular jury. The software does this much faster, and for a dollar less than it would cost a colleague or partner to generate the same data. This data helps attorneys make better litigation decisions and helps them communicate more effectively with their clients about why a particular recommendation is the right one.
Harris was careful to point out that he doesn’t see an AI like Lex Machina coming to take over attorney jobs. “What artificial intelligence is doing now is matching huge patterns on a large scale. This is what machine learning, natural language processing does: It makes sense for patterns that it might be very difficult for a person to keep all the data in their minds … They are great at processing a lot of data. On a large scale, but it’s just patterns that match. There is no intelligence that replaces your judgment, so don’t be afraid of AI. Accept it. Take advantage of it to your advantage. “
Choose winners and losers
Harris noted that “law firms will need to change, and there will be winners and losers.” What is the single factor that will determine, above all, which companies succeed and which do not? Law firm leaders need to make sure they have a customer-focused product management approach. At the end of the day, the company is your product. Listen to your clients. Watch what they do. Be aware of the data. See how they rate your performance, don’t resist it. Embrace it, because you are. You have to be consistent with your customers.
Because it is as strange as the law can be, it is just like any other business in that success or failure will always be limited to how well we serve our clients. Leaders like Karl Harris are giving us the tools to do it better. Whether we use these tools is up to us.
James Goodnow He is the CEO and Managing Partner of NLJ 250 Finmore Craig. At the age of thirty-six, he became the youngest known CEO of a large law firm in the United States. He holds a Juris Doctorate from Harvard Law School and dual business administration degrees from the Massachusetts Institute of Technology. He is currently studying at the University of Cambridge Business School (UK), where he is working towards his Masters in Entrepreneurship. James is the co-author of Motivating Millennials, Which ranked first on Amazon in the New Business Edition category. As a practitioner, he and his colleagues created and managed technology-based The practice of the plaintiffs And business model. You can reach out to James on Twitter (JamesGoodnow) or by emailing them at James@JamesGoodnow.com.