Moore's Law vs. Flesh & Blood

Most of the ink on the topic of outsourcing by law firms has been understandably devoted to back-office functions such as HR and tech support desks.  I view the trend to house these functions elsewhere than in, say, midtown Manhattan, as eminently sensible and economically inevitable.  But how about outsourcing what lawyers themselves do?  Far-fetched?   Or, at least, far in the future?

I have news for you:  If you believe that once The Wall Street Journal reports a trend, it's for real, then today is your day.  In "On the Case" (subtitled "rising legal costs may have finally met their match:  technology"), we learn that using secure extranets to create virtual deal rooms is old news.  For example, through a highly automated patent-application processing system (built inhouse for an investment "in the low hundreds of thousands") Cisco is now saving about $2.5-million per year, and that Dupont's use of far more generic technology (those extranets) has cut $5-million per year from their outside counsel fees.  You don't even need to outsource to India; try going about one time zone away, to the midwest or southwest for hungry, low-overhead law firms.

Next up: Cisco and DuPont, together with FMC and Clorox, are developing a "virtual lawyer" to provide automated online responses to routine legal questions concerning, for example, human resource policies.  And lest you think they're all alone out there on the early-adopter curve, they plan to license this tool to all comers.

For 2003 (the most recent year available), total revenue of the AmLaw 100 was just north of $41-billion.  What percentage of that work could be supplanted by applications like this?  More interestingly, is it eternally possible to keep moving "up the value chain" to produce work at an ever-increasing premium level that cannot be eroded by technology?  In prognosticating about that to yourself, keep in mind that the arms merchants on the technology side of this competition have Moore's Law in their camp, and we flesh-and-blood lawyers do not—indeed, we have the non-negotiable ceiling of 24 hours in a day.  

My good friends Jeff Rovner (Director of Knowledge Management for the Americas Region, Clifford Chance US LLP) and Ron Friedmann (Prism Legal Consulting) recently had a brief but enticing back-and-forth on this question, with Jeff astutely analogizing the predicament of law firms to that of firms overtaken by a "disruptive technology" as described in Clayton Christiansen's classic The Innovator's Dilemma.  Can it happen here?  Today HR, tomorrow structured project finance?  So long as we aspire to being truly wise counsellors to our clients and not anal document drudges, we're not fungible with silicon.  But that leaves first-year associates in a tenuous spot.