Legal tech and blogging expert Kevin O’Keefe, of LexBlog, has thrown himself and his company into generative AI. Kevin posted recently on the story of social media content creators being replaced by ChatGPT and asked about the eventual impact such technology will have on legal jobs. His post got me thinking about a favorite obsession of mine, which is how come law firms have multiplied dramatically in size over time at the exact same time that technology made practice more efficient.
As the finance people always like to caution (usually in the fine print), past performance does not guarantee future results, but the history of the incorporation of technology into the provision of legal services has not been one of advances in efficiency leading to job losses by attorneys, although I don’t think that has been the same for support staff. Somehow, it has led, instead, to increased efficiency on the micro level with regard to the amount and sophistication of the work done by a particular attorney but not to any sort of reduction on the macro level of the size, scope or cost of legal services.
Over the last couple of decades, lawyers have incorporated a tremendous amount of technology that should – and on a case by case, use by use basis, does – give rise to tremendous increases in efficiency. From computerized legal research, to word processing, to electronic management and searching of document productions, the practice of law is nothing like the human-centric practice it was even when I started in 1990. Back then, legal research often involved a lawyer literally sitting in a library, working his or her way through bound volumes in the search for cases to support a proposition; I can find those cases now on Westlaw, Lexis or other services in a few minutes.
The change that most stands out to me as a litigator is the tremendous reduction in labor needed to review, evaluate and utilize evidence, from deposition transcripts to emails to contracts to other types of written or electronic documents. When I began as a lawyer, firms hired dozens of entry level lawyers into their litigation departments primarily to read through boxes of documents or thousands of pages of deposition transcripts and locate within them the relevant evidence; for years now, electronic search functions, knowledge management and AI tools have been doing much of this work, and the numbers of lawyers hired to work on discovery by firms has declined considerably.
Yet despite all of this – which undeniably improved the efficiency of legal services on an assignment by assignment, case by case basis – law firms have exploded in size over the same period of time that this technological leap was occurring. In 1990, when I started and much of the work – particularly contract and similar drafting on the corporate side and discovery work on the litigation side – was still bespoke (done by hand time and again, case after case by lawyers), a large firm had 300 or so lawyers in it; today, that same firm likely has more than a thousand, despite each single lawyer now having the technological firepower to do work at a level that used to require multiple lawyers. How did technological advances, providing extensive growth in efficiency, simultaneously lead to ever larger law firms, to ever higher hourly rates and, as any in-house lawyer will tell you, ever larger legal bills?
I have a few theories, but the one I want to talk about today has to do with an old chestnut from the study of public administration, concerning highway construction. In that field, they tell the story of how creating more capacity leads to more demand, rather than to simply the satisfaction of existing demand, by using the example of building a new highway. When new highways are built to relieve congestion, they don’t have that effect, because the moment the congestion clears up after the new highway is built, more drivers show up to use it, again creating congestion. In other words, the increased supply of roadways simply leads to more drivers, and the re-creation of the same congestion that the new highway was built in the first place to avoid.
My theory is similar. The rise of technology in lawyering over the past thirty years (roughly the length of time I have been practicing) has dramatically increased the efficiency of lawyers and the provision of legal services. However, it has coincided with ever larger and more complicated cases, transactions and regulatory efforts, leading to the need to throw ever more legal resources at problems, despite the rise in efficiency. I am well aware of the old chestnut that correlation isn’t causation, and have written on it – however, I do think there is a causal relationship between the efficiency of modern lawyering and the complexity of the legal doctrines, rules, cases, transactions and evidentiary burdens that modern lawyers and clients confront. To me, the rise in the ability of law firms, financial entities, regulators and others to engage in ever more complex disputes, transactions, investigations and regulatory efforts has led – directly or indirectly – to the urge to engage in ever more complex disputes, transactions, investigations and regulatory efforts.
Take a frequent topic of this blog, excessive fee and breach of fiduciary duty class actions against sponsors of 401(k) plans. As I discussed here, part of this boom is driven by smaller plaintiff-side class action firms bringing such suits. Thirty years ago, this dynamic wouldn’t have existed, and class action cases were generally more straightforward, simply because no one, and particularly not smaller plaintiff-side law firms, had the tools and staffing to give rise to this dynamic, at least not to such an extent. Now, however, we do, and the legal system now has the capacity to continually create, drive and process a large number of these highly complicated and fact intensive cases. I don’t think the recently developed ability to litigate in this manner, and the fact that we now do so at ever increasing cost, are unrelated.