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An example of how contract playbooks designed by lawyer experts can be applied to commercial contracts using GenAI.

As the revolution in large language models (LLMs) makes its way into new startups and applications, would-be customers ask: How is my private data protected? Can commercial AI providers use my input data to train their models? The emergence of retrieval augmented generation (RAG), which can inject private data into prompts, has made this an urgent issue, particularly for companies building applications on top of LLMs since they often use those services on behalf of their customers. 

The big worry is that intellectual property, trade secrets, other sensitive information, or private information is unknowingly leaked to the public via an LLM’s future output for a different customer. Here is a sample nightmare scenario: Continue Reading Fine print face-off: which top large language models provide the best data protection terms? (352)

“Firms outside the Premier and Championship leagues are playing a different sport.” Thus, the winning strategies are different.

Jae Um, in her bracketing exercise for The American Lawyer magazine, arrays the 2022 AmLaw 100 based on the structure of the English football league system. At the top are 22 firms in the Premier League. Next is the Championship League, with 23 firms focused intently on getting promoted to Premier.  The third group is “Everybody Else,” which includes all the corporate law firms playing in lower-tier leagues.

Yet, as Jae Um pointed out during her visit to my Law Firms class, “it’s a mistake to extend the soccer metaphor to all 300 US/UK law firms that are doing significant amounts of corporate legal work.”  Jae explains that Premier and Championship League firms have some combination of practice areas (type, quality, depth), sector focus, and geographic footprint that enable them to attract price-insensitive work from the world’s largest and wealthiest clients. See Part II (332) (discussing market power of these firms).

Jae continues, “The 250+ firms outside the Premier and Championship leagues are playing a different sport.”
Continue Reading Learning about law firms, Part III: Innovation at “Everybody Else” firms (335)

Stable, transparent, not very complicated, reasonably profitable, and often quite collegial. It also has flaws.

As noted in Part I (330) of this “learning about law firms” series, it’s taken nearly two decades in the trenches, including many years doing applied work with law firms, for a very confusing and counterintuitive insight to come into focus:  Most large firms are not “firms” in the sense of conventional business theory.  Instead, they are a confederation of individual partners building and running leveraged practices in various complementary and adjacent legal specialties.

In today’s essay (Part II), I’ll add a second counterintuitive insight:  For the most part, lawyers pay little or no financial price for organizing themselves as a confederation rather than a firm.  Even in the event of spectacular collapse, as was the case with Dewey, Brobeck, Heller, Howrey, Thelen, and many other large firms, see ALM Staff, “30 Years of Law Firm Collapses: An Annotated Timeline,” Law.com, Oct 29, 2019, there’s always a large cadre of competitor firms looking to give the partners (and their fee-generating practices) a new home.  In most cases, what provides financial security and certainty to an equity partner is seldom the quality of firm-level strategy, or the ability of firm leadership to execute, but instead the health and vitality of their own practice.

This is what distinguishes law firms from conventional businesses. Like Legos blocks, individual law practices can be removed from one law firm and snapped onto another. 
Continue Reading Learning about law firms, Part II: Why confederation is our default model (332)

Examples of ‘Rules of Engagement’ that produce results.

[Editor’s note:  Legal Evolution is pleased to announce that Patrick McKenna has agreed to join Legal Evolution as a regular contributor.  Patrick fills a large gap in our coverage—the daunting challenges of leading and managing in a law firm.  As illustrated by Patrick’s earlier posts, see Post 305 (the perils of shared leadership) and Post 318 (most common pitfalls of law firm leadership training), there is no good substitute for experience and observation. Thus, we are very grateful that Patrick has agreed to share his 40+ years of wisdom. For an introduction to Patrick’s career and writing, see Post 304. wdh]

Whether working with a practice/industry team, an executive committee/elected board, or the members of some firm’s strategic planning working group, I continue to be struck by the dysfunctional behavior that is often present.  For example, how does one deal with the situation where all of your fellow Executive Committee members engage in a lengthy meeting to discuss a challenging, somewhat controversial situation and finally make a decision — only then to discover that following the conclusion of this meeting, a couple of your colleagues were quietly telling partners in the hallways what the group had decided to do, but that they were not in favor of that particular course of action?
Continue Reading The highest performing teams have rules (323)

Four key elements: caps on total liability, exceptions to cap, limitations on type of damages, and exceptions to limits.

In recent posts, I have postulated that commercial contracting is on the following path of evolution:

  1. Reliable data as to what is market for key contracting terms will become readily available as utility models, powered by large data sets and AI, become prevalent. See Post 225 (“Can contract analysis operate like a utility?”).
  2. Companies will look to remove friction from their businesses by aligning their contract terms (and negotiating practices) with market, with some companies offering better-than-market terms in an effort to achieve competitive advantage. See Post 211 (“Competition based on better commercial contract terms”).
  3. Moving to market terms will lead to contract standardization, less contract complexity, and significant returns to the companies that adopt this approach, benefitting the economy as a whole.  See Post 228 (“The cost of contract complexity”); Post 236 (“Case study: impact of AI and Big Data on low-risk contract negotiations”); Post 292 (“The emergence of data-driven contracting: notes from the field”).

The critical foundation for this evolution is that all parties to a negotiation have reasonable access to information regarding what constitutes market.  (For a discussion of the problems associated with information asymmetry, see the works of Joseph Stiglitz.)
Continue Reading What is “market” for limitation of vendor liability? A look at the data (322)

An effort to close the communication gap between legal technologists and the lawyers and called legal professionals they serve.

This post is for lawyers and allied legal professionals who are not legal technologists but want to understand some of the basic principles of constructing and operating an effective litigation management system.

The development of legal profession software —more specifically the forging of sophisticated litigation matter management systems, has been one of my core vocational functions for a period of time far longer than I wish to admit.  See Post 108 (discussing my initiation to legal in the legal department of Bristol-Myers Squibb).   It is particularly important to master and adopt advanced software of this nature when attempting to manage some of the more expansive civil litigation issues of our time (e.g., Roundup, Juul)
Continue Reading Best practices for effective litigation tracking systems (316)

Source: The Commons Law Center

Sliding scale “low bono” legal services powered by a legal operations toolbox.

When it comes to legal representation, many people are at risk of slipping through the gap. The modest means gap, that is.

The modest means gap is an often-overlooked subsection of the population whose income is too high to qualify them for some pro bono services but too low to generally afford legal representation at full price.

The Commons Law Center, or simply the Commons, is a 501(c)(3) nonprofit law firm that’s specifically designed to close this gap.  As discussed in greater detail below, what makes the Commons worthy of a case study is an innovative business model that generates earned revenue from paying clients while simultaneously minimizing costs and maximizing access and impact through a tightly controlled menu of unbundled legal services.  The result is a mission-driven law firm in the A2J PeopleLaw space that has the potential to fund its own future growth.
Continue Reading The Commons Law Center: A unique and promising business model for PeopleLaw (311)

Illinois Court Help is changing how people interact with the court system.  Let’s hope it’s the beginning of something big.

[Editor’s note: Today’s feature post is written by Amanda N. Marino, a very talented recent law grad (Maurer Law ’22) with stellar journalism credentials.   Back in the summer of 2020, when the pandemic disrupted the summer internships of so many law students, Amanda ended up in a special summer version of my How Innovation Diffusions in the Legal Industry course.

I’ve taught the Diffusion course several times at three different law schools. And certainly, Amanda is among the most engaged and creative students I’ve encountered. But on one dimension, she’s completely unique.  One day during class, she spoke her truth, which I paraphrase here: “I understand the importance and power of diffusion theory — that it can help companies successfully drive adoption of their products and services. But I want to use its power to improve the legal system.”  Okay, I thought to myself, if I can use my network, connections, and resources to help this student, I will.

In the spring semester of her 3L year, Amanda asked if I would supervise a short independent study project to earn one more course credit needed for graduation. I agreed on one condition — that she digs into some topics in the PeopleLaw realm that are relatively time-intensive to research yet likely important and useful to the underresourced #A2J movement.  I had a few ideas on where to start and primed the pump with some initial phone calls and email introductions.  But Amanda Marino did everything else. I hope you enjoy today’s unique and special feature.  wdh]
Continue Reading Illinois Court Help: A case study in court customer service (310)

Standard processes deliver efficiency and risk management. Personal touch ensures effectiveness.  In our business, we need both. 

While the legal and technology professions may seem diametrically opposite in many ways, certain functional elements of the roles executed by lawyers and technologists are, perhaps surprisingly, similar. 

One example is how both professions have standards or methodologies for stepping through defined processes.  Like most conventions, these structured practices are in place for very good reasons, having been tested over time to deliver results that are predictable within a narrow band of risk. Of course, whether a lawyer or technologist, the skilled technician also understands that there will be circumstances that occasionally warrant a personal touch. 
Continue Reading Standard processes and the occasional personal touch: the common ground of lawyers and technologists (294)

Several in-house innovators are converging on a set of best practices.

In Competition based on better commercial contract terms (211), I reviewed the current norms surrounding commercial contracting and postulated that the growing transparency regarding what is market for a particular term would cause the market for contracts to evolve from its current souk-like state to something that more closely resembles a modern e-commerce marketplace.  Since that post came out in December 2020, numerous companies have been employing AI tools such as TermScout. and crowd-sourced data such as Bonterms, to make their contracting practices more data-driven.
Continue Reading The emergence of data-driven contracting: notes from the field (292)