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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)

Source: Adobe Stock

The value of embracing roles outside our comfort zone

I recently became the Educational Co-Chair of ILTA‘s (International Legal Technology Association) EVOLVE Conference. I ended up in this role because my ambition for myself and my organization required me to wander outside my comfort zone. Yet, along the way, I’ve enjoyed building a community of fellow travelers—professionals in the legal industry who are climbing into the trenches to help build the first iteration of our cross-functional future. By helping each other, we all benefit.

In the spirit of community building, this post announces the (First Annual) ILTA EVOLVE. Relatedly, I will also share some of the details of my own cross-functional journey, which provide answers to three questions: Continue Reading Cross-functional is our future (351)

For decades, I’ve helped my clients change. Now it was my turn.

For as long as I can remember, I’ve wanted to clone myself—to create a twin that could bring my wish list to life.

Although conventional science has fallen short (perhaps a good thing), an unexpected catalyst became my genie in a bottle.

The pandemic.

Covid-19 shut down the typical version of David Freeman, the one who ran retreats, conducted live training, and provided business development and leadership coaching. It all came to a screeching halt when law firms hunkered down and delayed investing in my services.
Continue Reading A better way to teach business development (342)

Legal technology is slowly becoming core to the legal business. It’s time to commit to a cross-functional team approach.

In the legal profession, attorneys with specialized subject matter expertise (e.g., discovery, trial work, corporate transactions, appellate, regulatory, and many others) provide tremendous value to their clients.  Similarly, technologists supporting the legal profession typically include accomplished programmers, skilled engineers, application experts, integration specialists, security ninjas, and the like. In both disciplines, specialized expertise is incredibly valuable.   

The premise of this post is that individual capabilities and excellence (either legal or technical) standing alone are not enough to ensure long-term, sustainable success.  No superstar technologist or lawyer is equipped to do it all, as there are too many specialties and functional roles which need to be filled.  Rather, a better approach is to construct team-based, cross-functional units that offer greater operational efficiency while building in layers of redundancy that reduce the potential for surprises, errors, or disruption.  Cf Post 323 (Patrick McKenna’s “rules of engagement” for high-performing legal teams).
Continue Reading The expanding role of technology in the law firm business model (338)

“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)

Source: “Danny Kahneman on Decision Hygiene,” Jury Analyst, July 22, 2021

Decision hygiene is to product and service selection as testing is to software development.  Skip them at your peril.

Decisions about technology can be noisy affairs.

(Please take a moment to relive one you were part of.)

As Daniel Kahneman, Olivier Sibony, and Cass Sunstein masterfully point out in Noise (2021), noise is different than bias. It’s an independent contributor to infelicitous results in professional (and other) judgments. Noise tends to be an invisible enemy. Bias, more obvious, moves decisions in particular directions; noise just adds errors through unwanted variability. Responsible decision-makers seek to minimize both.

The Noise authors provide vivid examples of judgments in which noise plays a role, including some in law, like judicial sentencing decisions, which have been shown to turn on such things as the outside temperature or whether the local city’s football team won its most recent game. Contexts like insurance underwriting can operate like lotteries. As the authors say, “wherever there is judgment, there is noise” (p 12).  We are all noisy.
Continue Reading Keeping the noise down in tech selection (325)

Unlike sharks, killer whales hunt collaboratively.  Is this the right approach to the legal tech vertical?

Why aren’t more law firms investing in startups and/or launching corporate venture arms? Is corporate venture capital (CVC) a good fit for the legal industry? If not, is there a better model? And then, finally, what does all of this have to do with killer whales?

In this essay, I’m going to attempt to answer each of these questions. I will start by giving a brief introduction to CVC and then I will outline the current models of law firm venture investments, highlighting both strengths and shortcomings. In the second half of this essay, I’ll suggest an alternative model, a collaborative industry-wide approach which I have dubbed “Investing like Killer Whales.” This is the strategy we used when we syndicated an investment in AI-based contract benchmarking startup TermScout.  See Abramowitz, “As Promised, Our Second #Legaltech Investment Announcement This Week,” Zach of Legal Disruption, May 5, 2022 (describing collaborative syndicate approach and why worked well for TermScout).
Continue Reading Sharing my playbook for Legal Tech investment (324)

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)

Probably not, but we’ll see.  A surprising conversation with digital transformation expert Isabel Parker

It’s already been quite a year for law firm innovation.  Just last month, Norton Rose Fulbright launched LX Studio, a new “innovation-focused” subsidiary, and Wilson Sonsini unveiled Neuron, a proprietary SaaS platform for start-ups.  Exciting propositions, but the development that had the NewLaw cognoscenti scratching their heads was ‘white shoe’ firm Cleary Gottlieb launching of ClearyX, which the firm describes as a “platform for highly efficient, AI and data-driven legal services.”

What’s driving these unveilings? And, are these new platforms worthwhile?
Continue Reading Q: The first “White Shoe” law firm launched an innovation subsidiary. Does that matter? (315)

First-gen matrix for evaluating software options. Harvard Law School, circa 1985.

Oh, the Humanity!  We can choose to choose better.

My first serious experience choosing law-related technology was in early 1985. Personal computers had just been introduced in the Harvard Law School clinics (as part of Project Pericles) and we had to decide which software to use for word processing. (WordPerfect was around, but we somehow missed it.) So I typed up a chart on an electric typewriter and added lines by pencil. See above graphic.  We wanted to be sure our choice did things like automatically centering text.

Such charts are familiar to product choosers everywhere. Options on one axis; features or considerations on the other. Ideally incorporating some sense of the relative importance of the latter. (One defect of the above chart is that there’s a “How desirable?” column for each option. Perceived importance of factors may vary across decision-makers, but shouldn’t differ by option.)
Continue Reading The social life of legal tech choices (309)