Lawyer Ethics for Innovation

Abstract

Law struggles to keep pace with innovation. Twenty-first century advancements like artificial intelligence, block chain, and data analytics are already in use by academic institutions, corporations, government entities, health care providers, and others but many questions remain about individual autonomy, identity, privacy, and security. Even as new laws address known threats, future technology developments and process improvements, fueled by consumer-demand and globalization, inevitably will present externalities that the legal community has yet to confront.

How do we design laws and systems to ensure accountability, equality, and transparency in this environment of rapid change? A solution can be found in a surprising source — the regulation of professional ethics. Lawyers have the capacity to play a critical role both in assessing the risks and benefits of innovation generally and also in deploying innovative tools to enhance the delivery of legal services. This Article is the first to articulate a formal obligation of ethical innovation as a component of professional discipline and licensing rules. This proposal comes at a time when the legal profession is increasingly immersed in innovation — whether measured by the number of “NewLaw” providers, exponentially increasing financial investment in legal tech, or by the American Bar Association’s 2020 Resolution supporting innovation to address the access-to-justice crisis.

Rather than taking a particular side in the debate over whether lawyers and judges should adopt innovations like artificial intelligence or machine learning, this Article acknowledges that technology advancements inevitably are part of modern society, including the practice of law, and advocates for reforms to professional conduct rules to protect individuals in the midst of innovation. This protection is especially warranted when innovation is forced amidst a moment of crisis, for example as seen when the 2020 coronavirus pandemic abruptly halted law practice in its traditional form, canceling office meetings and jury trials and other in‑person interactions. Some lawyers and courts were prepared, others were not. Some clients received the legal advice through virtual consultations or apps, and had their cases decided by judges via Zoom hearings, but many found themselves without the justice they needed. The lawyers and judges at the forefront of ethical innovation before the pandemic hit were the ones best able to serve their clients. Formalizing a duty to innovate as an ethical obligation will make the profession better prepared to serve the public in the future.

(Newman) Knake Jefferson, Renee, Lawyer Ethics for Innovation (April 20, 2021). 35 Notre Dame Journal of Law, Ethics and Public Policy 1 (2021), U of Houston Law Center No. 2021-A-7,
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Legal Services Board of England and Wales releases new report on how regulation can foster innovation

On the 20th of April, the Legal Services Board (LSB) released a report outlining what legal services can do to support the safe development of technology and innovation, whilst also acting in the public interest. The report outlines steps regulators can take to create an environment that ‘de-risks’ innovation and reduces uncertainty for tech providers and consumers.

In the report, the LSB outlines the role that regulation plays in removing barriers to innovation, both by increasing consumer trust and managing risks. This would in turn allow technology to open the legal services market to underserved elements of society, such as citizens and small business. Addressing unmet legal need and access to justice issues.

The LSB also notes that technology carries risks that need to be considered and managed. These include ensuring that those with low digital capability and digital literacy are not excluded from accessing essential services. The ethical and regulatory challenges of advanced technologies such as Artificial Intelligence must also be considered while ensuring they are not stifled.

Matthew Hill, Chief Executive of the Legal Services Board, has said: “Technology has the potential to improve access to legal services. It can enable citizens to get advice and support in a way, and at a time, that suits them. It can also help legal professionals carry out their work in new ways that make them more competitive, reduce costs and support growth. Covid-19 has accelerated the pace and scale of technological change, with many providers adapting and using technology to offer their services in new ways. We have started to see what is possible, but there is a long way to go to unlock the full potential. Regulation can help build on the momentum that Covid-19 has created and harness technology to reshape legal services to better meet the needs of society. Regulation can also help secure consumer confidence and build trust in new technology. Legal services regulators can take encouragement in opening up their regulatory arrangements to support new ways of delivering services for the benefit of consumers. As the oversight regulator for legal services, we have an important role in fostering innovation. From considering technology as part of our regulatory performance framework to exploring a statutory statement that can underpin proactive regulatory arrangements, we can create, and maintain, a regulatory environment that unlocks the role of technology and innovation in increasing access.”

Read the full report and recommendations here. 

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New research project on innovation and technology in England and Wales commissioned by the Solicitors Regulation Authority

The Solicitors Regulation Authority of England and Wales (SRA) has commissioned a piece of independent research into the use of technology and innovation in the legal sector, and how this may develop in the future. The research is being carried out by a research team at the University of Oxford including Professors Mari Sako and John Armour.

All 10,200 law firms regulated by the SRA in England and Wales are being asked to complete a survey around their use of legal technology, as well what the impact of COVID-19 has been on their use of technology.

As well as surveying firms, the university is also conducting wider research with a range of industry stakeholders from both within and beyond the legal profession, with a focus on how innovation and technology can improve access to services within the public.

The aim of the report is to improve understanding of:

  • current use of innovation and technology across the sector
  • likely areas of future development
  • how to best support future innovations, including by potentially removing regulatory barriers

Anna Bradley, Chair of the SRA Board, said: “We are committed to supporting the use of innovation and legal technology that helps to meet the needs of the public, business community, law firms and the economy. Commissioning this research from the University of Oxford is an important step as we work to bring together the views of a wide range of stakeholders on what is happening in our sector at the moment, and what the future might hold. New ways of doing business and the increasing use of legal technology will affect everyone working in the legal sector, so we want to hear from as many people as possible. I encourage you all to take this opportunity to get their views heard.”

Further information about the report, including how non-law firm stakeholders can be involved is available here. 

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Lawtech: Levelling the Playing Field in Legal Services?

Abstract

The legal services market is commonly thought of as divided into two “hemispheres”– PeopleLaw and BigLaw. These segments represent, respectively, individuals and corporate clients. The last few decades have seen an increasing concentration of resources within the legal profession toward serving corporate clients, to the alleged detriment of consumer clients. At the same time, the costs of accessing legal representation exceed the financial resources of many ordinary citizens and small businesses, compromising their access to the legal system. We ask: will the adoption of new digital technologies lead to a levelling of the playing field between the PeopleLaw and BigLaw sectors? We consider this in three related dimensions. First, for users of legal services: will technology deliver reductions in cost sufficient to enable affordable access to the legal system for consumer clients whose legal needs are currently unmet? Second, for legal services firms: will the deployment of technology to capture economies of scale mean that firms delivering legal services across the two segments become more similar? And third, for the structure of the legal services market: will the pursuit of economies of scale trigger consolidation that leads both segments toward a more concentrated market structure?

Armour, John and Sako, Mari, Lawtech: Levelling the Playing Field in Legal Services? (April 21, 2021).

Read the full article on SSRN. 

 

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Legal Technology and the Future of Women in Law

Abstract

Much has been written about how automation will change the legal profession as a whole, less so about how automation might affect women in legal practice. This paper briefly maps the likely changes that legal tech (legal technology) will bring to the provision of legal services, and explores how these changes might affect the barriers to advancement that women face in the profession. It determines that, while the use of legal tech may improve women’s work/life balance and overall job satisfaction by bringing about more flexible working hours, positive changes to the billing hours’ system, and fairer hiring and promotion mechanisms, an unfettered inclusion of legal tech might lead to increased working hours for less wages, increased competition for case files among associates, and the perpetuation of existing gender biases when using algorithms in the hiring and promotion process. Finally, the paper makes several recommendations on how law societies, bar associations and other relevant regulatory bodies could ensure that legal tech promotes rather than hinders Equality & Diversity in the legal profession. It proposes that:

(1) detailed data on men and women lawyers should be collected to better inform equality and diversity policies;

(2) law firms should be required to report on their progress in pursuing equality and diversity;

(3) management techniques to promote work/life balance and more flexible pricing systems should be encouraged;

(4) female entrepreneurship in legal tech should be promoted; and,

(5) technological due process procedures should be required when using algorithms in law firm management to ensure fairness, accuracy and accountability

Munisami, Kayal, Legal Technology and the Future of Women in Law (2019). 36 Windsor Yearbook of Access to Justice 164, 2019.

Read the full article on SSRN. 

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Law, Artificial Intelligence, and Natural Language Processing: A Funny Thing Happened on the Way to My Search Results

Abstract

Renowned legal educator Roscoe Pound stated, “Law must be stable and yet it cannot stand still.” Yet, as Susan Nevelow Mart has demonstrated in a seminal article that the different online research services (Westlaw, Lexis Advance, Fastcase, Google Scholar, Ravel and Casetext) produce significantly different results when researching case law. Furthermore, a recent study of 325 federal courts of appeals decisions, revealed that only 16% of the cases cited in appellate briefs make it into the courts’ opinions. This does not exactly inspire confidence in legal research or its tools to maintain stability of the law. As Robert Berring foresaw, “The world of established sources and sets of law book that has been so stable at to seem inevitable suddenly has vanished. The familiar set of printed case reporters, citators, and second sources that were the core of legal research are being minimized before our eyes.”

In this article I focus on Artificial Intelligence (AI) and natural language processing with respect to searching. My article will proceeds as follows. To understand how effective natural language processing is in current legal research, I go about building a model of a legal information retrieval system that incorporates natural language processing. I have had to build my own model because we do not know very much about how the proprietary systems of Westlaw, Lexis, Bloomberg, Fastcase and Casetext work. However, there are descriptions in information science literature and on the Internet of how systems with advanced programing techniques actually work or could work. Next, I compare such systems with the features and search results produced by the major vendors to illustrate the probable use of natural language processing, similar to the models. In addition, the use of word prediction or type ahead techniques in the major research services are studied–particularly, how such techniques can be used to bring secondary resources to the forefront of a search. Finally, I explore how the knowledge gained may help us to better instruct law students and attorneys in the use of the major legal information retrieval systems.

My conclusion is that the adeptness of natural language processing is uneven among the various vendors and that what we receive in search results from such systems varies widely depending on a host of unknown variables. Natural language processing has introduced uncertainty to the law. We are a long way from AI systems that understand, let alone search, legal texts in a stable and consistent way.

Callister, Paul D., Law, Artificial Intelligence, and Natural Language Processing: A Funny Thing Happened on the Way to My Search Results (October 14, 2020). 112 Law Library Journal 161-212 (2020).
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Structuring Techlaw

Abstract

Technological breakthroughs challenge core legal assumptions and generate regulatory debates. Practitioners and scholars usually tackle these questions by examining the impacts of a particular technology within conventional legal subjects — say, by considering how drones should be regulated under privacy law, property law, or the law of armed conflict. While individually useful, these siloed analyses mask the repetitive nature of the underlying questions and necessitate the regular reinvention of the regulatory wheel. An overarching framework — one which can be employed across technologies and across subjects — is needed.

The fundamental challenge of tech-law is not how to best regulate novel technologies, but rather how to best address familiar forms of uncertainty in new contexts. Accordingly, we construct a three-part framework, designed to encourage a more thoughtful resolution of tech-law questions. It:

(1) delineates the three types of tech-fostered legal uncertainty, which facilitates recognizing common issues;

(2) requires a considered selection between permissive and precautionary approaches to technological regulation, given their differing distributive consequences; and

(3) highlights tech-law-specific considerations when extending extant law, creating new law, or reassessing a legal regime.

This structure emphasizes the possibility of considered and purposeful intervention in the iterative and co-constructive relationship between law and technology. By making it easier to learn from the rich history of prior dilemmas and to anticipate future issues, this framework enables policymakers, judges, and other legal actors to make more just and effective regulatory decisions going forward.

Crootof, Rebecca and Ard, BJ, Structuring Techlaw (July 30, 2020). Harvard Journal of Law & Technology, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3664124 or http://dx.doi.org/10.2139/ssrn.3664124

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The Anatomy of Consumer Legal Funding

Abstract

Litigant Third-Party Funding (LTPF), where financial companies advance money on a non-recourse basis to individual plaintiffs, is a growing and increasingly controversial industry in the U.S. This funding made headlines during the NFL concussion litigation with more than 1,000 players reported to have received such advances and with class counsel raising concerns of “predatory lending” with the Court. Policymakers and scholars echo these concerns as they call for regulation of the industry to protect vulnerable consumers. Any regulations, however, should be based on systematic data rather than good intentions or isolated anecdotes. But to date there has been almost no empirical research on the actual practices of the industry. This Article begins to fill that void.

Using a unique data set from one of the largest consumer litigation financing firms in the U.S. (“Funder”), we are the first to explore the anatomy of pre-settlement litigant finance in mass tort cases, such as the NFL class action. We are also the first to examine general post-settlement litigant finance in the U.S., which is the type of funding many NFL players were reported to have obtained. Our comprehensive data set includes approximately 225,593 requests for funding from 2001 throughout 2016.

With respect to pre-settlement funding, we find that the Funder makes an annual median gross profit of 55% from Mass Tort claims (compared with 60% from Motor Vehicle claims, our control group). We also find that the Funder includes complicated terms in their contracts that make it extremely difficult for clients to understand the actual interest rate they will be eventually be charged. We believe lawmakers should regulate these contracts, banning any unnecessarily complicated provisions and requiring that the effective annual interest rate and total amount due be straightforwardly disclosed.

With respect to post-settlement funding, we find that the effective annual interest rate charged and the profit to the Funder are even greater than for post-settlement fundings – 68% compared to 60% for Motor Vehicle claims. This is striking given that post-settlement fundings present virtually no risk to the Funder. Indeed we find that the rate of default in post-settlement cases is close to zero, which means that this category of advance is “non-recourse” on paper but not on the ground. We therefore recommend that funding in post-settlement cases should be subject to consumer protections similar to those usury laws provide for ordinary loans.

Avraham, Ronen and Baker, Lynn A. and Sebok, Anthony J., The Anatomy of Consumer Legal Funding (August 10, 2020). Cardozo Legal Studies Research Paper No. 618, U of Texas Law, Public Law Research Paper Forthcoming, U of Texas Law, Law and Econ Research Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=3670825 or http://dx.doi.org/10.2139/ssrn.3670825

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SRA legal access challenge, reports and next steps

Following the conclusion of the SRA and Nesta Legal Access Challenge, joint reports from both the SRA and Nesta have been released which highlight the lessons learned and the future next steps that will be taken to support the development of innovation. The SRA report focuses on how the lessons learned from the challenge are influencing regulation, and how this can be used to support the development and responsible adoption of legal tech. Whilst the Nesta report gives an overview of the challenge, looking at what innovations were supported, and what was learned about the wider innovation environment in the UK.

The Legal Access Challenge was a £500,000 Challenge Prize, split across early stage digital technology solutions that could directly help individuals and small medium enterprises (SMEs) better understand and resolve their legal problems. The Challenge was made possible by a grant to the SRA from the £10m Regulators’ Pioneer Fund launched by The Department for Business, Energy and Industrial Strategy and administered by Innovate UK. The fund aimed to help UK regulators to develop innovation-enabling approaches to emerging technologies. The two final winners were announced in April. The winning teams were RCJ Advice for its collection of digital tools that enable survivors of domestic abuse to get legal support, and Mencap and Access Social Care for their virtual assistant which helps people to understand and exercise their social care rights.

The 18-month challenge has been seen as successful by both the SRA and Nesta, with both seeing potential for legal technology to improve legal access. The reports conclude that the SRA’s regulation is not a barrier to innovation, but that many find it difficult navigating overlapping regulatory regimes across, for example, legal services, financial services and information management. The Challenge also showed that innovation in public-facing legal technology is mainly coming from unregulated organisations.

The scale and diversity of interest in the Challenge – with 117 applications – resulted in the Regulators Pioneer Fund providing an additional £250,000 of funding.

Feedback on the Challenge from the eight finalists showed:

  • seven had seen the development of their solution accelerated
  • seven had been introduced to new and useful contacts, with five building new partnerships
  • six had support that they otherwise would not have been able to access.

The SRA report sets out its next steps, including producing guidance to help innovators understand its rules, the requirements of overlapping regimes and how they can design products that enable regulated law firms to interact with them. It will also continue to work closely with other regulators and build networks. This includes being part of recently announced Lawtech Sandbox developed by Tech Nation.

Anna Bradley, SRA Chair and Chair of the Challenge judging panel said:
“Too many individuals and small businesses struggle to access expert help when they need it. This can be the difference between someone losing their job, home or family; or a business succeeding or failing.”

I believe tech will be a game-changer for access to legal support. Covid-19 has brought into even sharper focus the importance of digital solutions. However, it’s clear that the adoption of technology has been slow when it comes to public facing legal services.

The Challenge showed the range of ideas out there, and the potential for it to help people in vulnerable situations. I was pleased that our own regulation is not seen as a barrier to the development of tech in the legal sector but we want to do more to support innovators to navigate what can be complex and overlapping regulation.”

See the SRA’s full report on the challenge.

See Nesta’s full report on the challenge. 

 

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Law Society of Hong Kong launches law tech fund

In light of the ongoing uncertainty and the potential for change in how court hearings may be undertaken in the future, the Law Society of Hong Kong has lobbied for assistance to be provided to practitioners who may not have access to the technological tools required to conduct remote hearings or transactions.

On 8 April, the Government announced the proposed establishment of a LAWTECH Fund (“LTF”). On 18 April, the Finance Committee of the Legislative Council approved reserving HK$35 million for the LTF to assist law firms and barristers’ chambers with five or fewer practising lawyers to procure or upgrade their information technology systems and arrange relevant lawtech training for their staff.

See the full information on the fund.

Read more about the webinars.

 

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