After I graduated from law school, my first assignment at a large New York law firm was to assist in the discovery phase of a securities case. For 12 hours a day, I sat in a conference room jammed with bankers’ boxes full of documents, reviewing them one page at a time. I’d code them on SAT-like bubble-filled sheets that were then stapled to each document and placed on one of two dozen piles scattered across the table.
This archaic scene didn’t take place during the Johnson presidency, or even Reagan’s, but about 10 years ago. Since then, nearly all document review has been transferred online, but other changes have been slower to take hold: Lawyers, for instance, still manually keep track of their time in six-minute increments, and many firms hold onto voluminous hard copies of old case files.
Even though many firms remain behind the times, they soon may not be. New technologies and increased competition are forcing the legal industry to slowly remake itself.
“The billable hour is the culprit of everything,” explains Ralph Baxter, the former chairman and CEO of Orrick, Herrington & Sutcliffe. Implementing innovations that render billable hours obsolete can be like tugging on a thread that threatens to unravel the basic concept of a law firm. For example, the start-up Lex Machina can speedily mine and analyze litigation data that would take an army of associates months to go through. Suddenly, several associates aren’t billing. And if they aren’t billing, the firm could do without them. And if they could do without those associates, then they could do without the office space they occupy. There goes the business model.