In ten years, it is predicted that 40% of the Fortune 500 companies will no longer exist1. This forecast originally cited in Fast Company is from a Babson Olin School of Business study. This notion is nearly incomprehensible, but may have a significant impact on the legal business.
Why is this happening now, and what impact might it have on the law firm?
We are at an extraordinary moment in time with the evolution of technology on three fronts. The trinity of forces are colliding at once, propelling change with everything around us.
Gordon Moore, an Intel chip scientist, formulated a well renowned technical law. Moore’s Law states that roughly every 18 to 24 months, the processing power of computers doubles. That is, the ability for a computer to perform calculations is increasing exponentially. For some perspective, if you were to buy a $1,000 computer in the year 2000, it would have had the processing power of an insect brain. Buy a new computer in 2010 and you would have the processing power of a mouse brain. Fast-forward to 2024 and the expectation is that a new computer will be as powerful as the human brain. In 2045, a $1,000 computer purchased from Amazon.com will process as fast as all of humankind. The implications of this are staggering.
In the second of the three forces, we couple what amounts to unlimited processing power with the advances to storage and memory for computers. In 1965, IBM built a computer with 5MB of storage. It was as big as a bedroom and cost $120,000. In 2004, a memory chip the size of a fingernail cost $99 and held 128 MB. Ten years later, we can purchase a 128 GB chip for $99. This is the hockey stick picture of momentum with exponential growth accelerating rapidly up the graph for both processing power and memory.
The third and last piece of this triumvirate of significant change is programming and algorithms. We are at a state where computers are beginning to teach themselves. Machine learning is becoming an increasingly important part of many businesses. Through an algorithm, a programmer builds a foundation from which the program can learn and continue to adapt and grow. There are a plethora of examples that are starting to take hold. IBM Watson has the most buzz right now with its cognitive computing platform. Uber uses machine learning to price rides, location drop-offs and pickups. Amazon can couple complementary products with your purchase. In the legal space, WestSearch®, the fundamental algorithm behind WestlawNext®, learns as people conduct research. It surfaces up the most pertinent content and good law for the researcher. Other legal examples include e-Discovery where many products utilize predictive analytics to help reduce the number of eyes necessary to review documents.
The blending of these three forces – processing power, memory, and algorithms – is a mixture for infinite growth and transformation at law firms. The opportunities are immense. Here are some possible changes afoot as the trifecta take hold over the next 10 years.
- As predicted that 40% of the Fortune 500 companies will no longer exist because of these forces, law firms will likely mirror this as some who do not adapt and embrace these technologies will struggle to survive
- In the next 10 years, because of unlimited storage and processing power, most document review will be completely automated and computerized. No longer will the first years or contract attorneys be reviewing documents for 18 hours a day
- Workflow solutions will reign over the next five years, but beyond that the trifecta of forces mentioned will push these solutions into complete automation so that drafting documents will be computer generated. This is actually happening now with 20 percent of Web news articles written by computer
- We are in an interstitial period with the Cloud. Currently, security frightens many firms from taking advantage of its scale and low cost. In the coming years, most firms will move everything they can to some type of Cloud, including private or hybrid
- Everything will be outsourced at the firm. Phone systems, HR systems, back office, administrative and technical support, where the portal will be hosted, office tools like Microsoft® Office, and all things technical will likely be moved away from the firm and managed by vendor experts. This will greatly reduce costs for the firm as they tap into the three forces
- As a result of the above, most attorneys will work remotely, and law firm office space will be dramatically smaller
- Big firms will get bigger and the medium may get smaller. The mediums who adapt will find their niche as a regional player, local generalist, boutique, or litigation specialist
- The impact on speed and adaptability on new attorneys will begin in law school. Some schools have already begun a two-year program with the third focused on technology, lawyer tools, and recalibrating how the attorney will work in the new firm
The law firm of 10 years from now will certainly be different from what we have today. In this extraordinary time, with the evolution of technology and trinity of forces, firms will have to adapt rapidly. This fundamental shift will be an opportunity for the firm to become more efficient, create new opportunity, and ultimately serve their clients better.
1 John M. Olin School of Business study