JPMorgan Beating Startups to the AI Revolution. Artificial Intelligence to Eat White Collar Jobs – Is Going Solo in the Freelance Economy the Answer?

It is not just startups shaking up the AI world.  JPMorgan discusses its artificial intelligence program. Going Solo in the Freelance Economy starts looking better.

When I left Big Firm, it was for personal reasons.  I did not leave shaking my fist at a horrible culture and history of injustice.  I did not experience that.  I started thinking about a professional life staring at a different set of walls.  I began to question my place in the Big Firm ecosystem and whether I could succeed without the safety net.  Lucky me, I could.

For many attorneys, the choice will not be theirs to make.  Technology is coming for their jobs.

Junior attorneys in bigger firms spend most of their time in some sort of document review and document processing roles.  This is necessary grunt work, and it is how junior attorneys learn, when they pay attention.

Billable rates have continued to increase, and clients push back when they can.  However, discovery in litigation and due diligence in transactional work must get done.  What happens when software can take the place of expensive junior associates?

It is about to happen.

There have been a number of articles lately about first generation artificial intelligence tools for this type of work and their early adopter law firms.

Last week, Bloomberg reported on JPMorgan’s COIN, or Contract Intelligence, program.  It reviews commercial loan agreements, something that consumed 360,000 hours of work by lawyers and loan officers each year.  That task now takes seconds, has fewer errors, does not ask for vacations or have the other baggage associated with human employees.

In addition, JPMorgan’s machine learning and big data system helps automate software coding.

In legal circles, litigation document review was seen as the low-hanging fruit for AI software.  However, any white collar position that provides a service that is based on rote activities can and will be replaced by software.  It may not be tomorrow, but it is sooner than you think.  JPMorgan is already planning to license its service to its bigger clients who are staffed to the rafters with white collar “thought employees” who are about to be replaced by code.

Many people believe their job cannot be at risk to computers because computers do not have the judgement capabilities of humans.  But:

As for COIN, the program has helped JPMorgan cut down on loan-servicing mistakes, most of which stemmed from human error in interpreting 12,000 new wholesale contracts per year, according to its designers.

The software is doing other tasks that lots of humans now perform:

For simpler tasks, the bank has created bots to perform functions like granting access to software systems and responding to IT requests, such as resetting an employee’s password, Zames said. Bots are expected to handle 1.7 million access requests this year, doing the work of 140 people.

I am not writing this as a doom-and-gloom article about lost employment.  I think this is ultimately a good thing.  No one knows about the opportunities that will arise from this shift.

It does mean that people should recognize the shift and their place in it.  Stability, comfort and complacency in large organizations has been an antiquated notion for a while.  Maybe Going Solo and finding your place in the Freelance Economy is a path forward.

Artificial intelligence drives the Freelance Economy, eats white collar jobs.
Artificial intelligence drives the Freelance Economy, eats white collar jobs.  Some large enterprise companies are beating startups to the AI revolution.

Alternative Fee and Billing Arrangements – Wachtell Edition

This is why they’re Wachtell, and you’re not.

NYTimes DealBook posted the engagement letter from famed corporate law firm Wachtell, Lipton, Rosen & Katz to CVR Energy, Inc. They were engaged to help CVR defend against a takeover from Carl Icahn. They lost.

What is most interesting about the letter is the fee structure. Most attorneys bill per hour. Some litigators bill on a contingency basis and take a percentage of the judgement, if any.

Wachtell takes an initial up front fee (not a retainer). For CVR, it was $200,000. They also estimate, but do not charge (they say), fees that are typically 1% or more on smaller matters ($250 million and less) and .10 of 1% or less on matters over $25 billion. They may also get expense reimbursements.

Per the dreams of other lawyers, they do not provide long-form descriptions of services or detail hours.

When I went solo, part of the reason was to reduce my hourly rate. In addition, I was also offered the opportunity to take equity in some cases, and in some cases I would accept. Wachtell shows that you can creatively structure fees apart from the per hour norm.

In their case, the percentage structure also deals with one problem corporate lawyers have always faced: Investment Banker Envy.

LSAT Scores Declining For New Students And The Choice To Go To Law School

BusinessWeek reports that low test scores are not the same barrier to law school then they were previously.

The LSATs are the SATs of the law school world, and they tend to figure highly into the admissions criteria for highly ranked law schools.  Just ask the US News and World Report annual rankings.  And the scores for new law school students are going down.

“…since 2010, 95 percent of the 196 U.S. law schools at least partially accredited by the American Bar Association for which the NCBE had data lowered their standards for students near the bottom of the pack.”

Is it just the lower tiered schools?  Nope.

“In fact, 20 of the 22 U.S. News top-20 schools—there was a three-way tie for 20th place—were enrolling students with lower test scores. Across all schools, LSAT scores for the 25th percentile dropped an average of three points.”

It isn’t too surprising considering that law school application rates have been declining.  As job prospects face across-the-board declines, people normally attracted to other things will try their hand at law school.  It does seem to be the default choice for people who don’t know what else to do.

BusinessWeek claims this isn’t good, but only in the context of correlation to the bar exam.

“LSAT scores matter because they tend to correlate closely with scores on one section of the bar exam, so when schools admit lower-scoring students on the former test, they risk producing more graduates who have a hard time passing the bar. “

All things being equal, yes, but bar exams also tend to weighed and curved.

However, there is another reason.  If the LSAT does its job and judges aptitude for the study and practice of law (a dubious proposition, but whatever), then more people are going to law school who should be doing other things regardless of what this means on yet another test.  Plus, the bar exam can be taken multiple times, so flunking out once does not kill your budding legal career.

The fact is that the practice of law can be rewarding, but it can also be hard work, long hours and very stressful.

Few people engaged in it tend to be happy.  Furthermore, people going as a fallback career are entering into some of the worst job markets for new graduates.  There is still a glut of unemployed and underemployed lawyers and hiring does not seem to have recovered.

People entering law school should think carefully about the three-year, unpleasant and expensive choice they are about to make.

 

 

Law Grad Working In Retail Seems to Miss Some Opportunities

Law Grad Working Retail offers cautionary tale of bad decision and bad attitude.

Business Insider recently highlighted the “Law Grad Working Retail” blog about a hard luck law school graduate without a job forced to sell cologne in some kind of department store.  He clearly feels the job is beneath him.

“I am too good for this job. You know who else is too good for this job? EVERY SINGLE OTHER PERSON THAT WORKS HERE. Retail jobs fucking suck. What’s up with all these idiots white knighting minimum wage retail jobs? If you don’t think this work is dehumanizing then you are insane.”

He says that he’s “liveblogging the loss of my last shred of dignity” and discussing his job and coworkers.

He claims that he went to a top 50 law school, was on law review and had a second year summer associate position, but he did not get a job offer.

It is both difficult and easy to feel sorry for anyone who went to law school in or after 2009.  It is easy because they are entering the worst long-term job market for attorneys that many of us have known or will know.  It is difficult because after the disastrous 2007 and 2008 economies, it should have been clear to anyone being honest with themselves that the market for new law school grads would be extremely difficult.  Even now, there is still a huge glut of legal talent that will take years to balance.

If we assume that even part of his writing is honest, there is a personality issue at play.  A combination of a bad job market and a personality case make for bad job prospects.

Here is something all law students should understand when interviewing.  If your school is good enough, and especially if you got the summer associate position in the first place, it is assumed you have the intellectual ability to do the job.  However, the interviews and summer associate position test your personality.  If working with you is miserable because you are annoying, lazy, ethically questionable or otherwise unpleasant to be with, people will NOT want to spend hours upon hours with you in a conference room reviewing documents.  People will NOT want to take the chance that they will get excuses instead of work product.

He said in his blog that he hasn’t taken the bar exam.  However, he has co-workers asking legal questions.  It seems he is missing an opportunity to rise above a job he feels is beneath him.  Get a license and a laptop and you can be in business.  You do not need the other trappings of an office in a high rise.

“This blog is not about complaining that I can’t get a legal job. Where in the fuck did I ever say that? I haven’t taken the bar so I’m not even trying to get a legal job. But up until the bar exam I applied for thousands of legal jobs and couldn’t get shit. Since the bar exam I’ve applied for hundreds of non-legal jobs and have come up empty. It’s not like I’m gonna pass the bar and suddenly everything is going to be fine. I have plenty of friends who did pass the July bar and don’t have jobs. Stop saying “he hasn’t even taken the bar!” like you found some kind of gotcha against me.”

Here is where is he so misguided.  No, getting the license is not going to make everything “fine.”  However, it is a prerequistite to the practice of law.  Since he did not get hired out of law school, he needs to pass the bar to even be considered for any type of legal job.  He had a probationary period with a law firm that may have carried him through the exam, but for some reason it did not work out.  I seriously doubt anyone else will take the same chance.  No one is going to hire him as an attorney without it.

My guess is, even if his stories are true, he is really an aspiring writer.  Fine.  However, there are a number of red flags here for anyone who would consider hiring him, and it makes his lack of job offer from the firm where he spent his second summer understandable.

That said, his writing is somewhat entertaining.  His co-workers sound like interesting people, and their stories will make you continue reading through the various posts.

In any respect, I wish him the best of luck.  For aspiring lawyers, use it as a cautionary tale. Credentials are just the beginning. Personality and attitude also matter.

Going Solo Unexpected Rules – Attorney Requirements for Maintaining a “Bona Fide” Office

Going solo in the Freelance Economy requires that you follow requirements for where, not just how, you do business.

Going Solo Risk – Delaware attorney suspended for, among other things, not maintaining a “bona fide” office

The ABA Journal recently reported on a disciplinary case where the attorney received a two-year suspension for not maintaining an exclusive office space, among other things.  Delaware requires attorneys to maintain a “bona fide” office for the practice of law in Delaware.  The respondent did not, and being available by phone is simply not enough to comply with the rule.

 

“Barakat’s lease does not include any designated office space that is exclusively his. Rather, the employees of the landlord collect Barakat’s mail and greet any visitors Barakat may have. The building security guards direct visitors to the fourth floor, where a receptionist is stationed during normal business hours. Under this arrangement, Barakat is entitled, for additional fees, to rent a conference  room or office space, and utilize secretarial, reproduction, facsimile, word processing, and shipping services. The landlord’s billing records (the “Occupant Ledger”), and the testimony of two employees who work on the fourth floor, evidence that Barakat’s presence at 901 North Market Street is “sporadic and unscheduled.””

For attorneys going solo, or anyone entering the Freelance Economy and working from their home, this case should be an eye opener.  Licensing requirements for office space are just as important as practical realities in choosing where to set up shop.

In reading the case, we don’t want to get too hung up on the office requirement since the attorney at issue was deficient in this administration in other matters, such as safeguarding client funds (a very big ethical issue, as you non-attorneys may guess) and lying about these issues in response to prior inquiries.

However, for the purpose of setting up your business, make sure where you practice complies with licensing requirements and ethical obligations just as much as how you practice.

Online Research Services. Worth It?

This can be a huge expense for a solo practitioner.  However, since I am not a litigator, time and search-fee intensive services like Lexis or Westlaw are not necessary.  Basic Google Scholar searches and the Delaware court websites can usually get specific cases I need (if any).

There are often questions related to corporate/securities law that come up where I need guidance, my arrogance notwithstanding.  For that reason, The Corporate Counsel website is great even if it is separate from the print newsletter and its archives, which is helpful but not necessary.  I also have a subscription to their sister site, Deal Lawyer, which seems to be money wasted.  There just is not enough substance there to be worth the fee.  I have used it for a couple of issues that would fall squarely into its area of expertise, but each time the site has come up short.  It either has nothing that addresses the question or the information it does have is not helpful or could have been accessed faster from the SEC’s EDGAR site.

That brings me to Other Research Provider (not named at this time).  They have great services for business lawyers looking for SEC documents that are not available on EDGAR or could easily be missed using EDGAR’s clumsy search engine.  However, like dealing with Lexis and Westlaw, there is no easy pricing guide.  You deal with salespeople as if you were buying a car.  Do you feel like you are being ripped off?  You probably are, at least in terms of paying more for the same service than the solo down the block.

Try getting a list of services for your subscription.  You get a one page .pdf sales sheet without the list of services.  They may be running specials next week or not.  At least with the Deal Lawyer site, I knew exactly how much I was paying and what I was getting without having to talk to a sales person.

At some point substitutes won’t cut it anymore, and I will need the service.  I will keep putting it off until it is unavoidable or they make the process less unenjoyable.