
Peter Thiel on The Future of Legal Technology - igurari
http://blakemasters.tumblr.com/post/37411481044/peter-thiel-on-the-future-of-legal-technology-notes
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ramanujan
The legal industry is perfectly suited to be utterly destroyed by startups.
It's pure information work, it can be done from offshore, it is generally
disliked by the public, and as a whole is pretty much entirely technologically
inept.

Certification regimes present a barrier to full automation, but with so many
young and unemployed lawyers, you could easily get around that as well. Just
do most of the stuff on the computer and let Mr. cheap-young-JD sign off on
the last mile work on his phone. Each contract he goes through knocks another
$100 off his student loan bill. Use the law schools' oversupply to break the
legal industry and bring cheap legal services to all.

The main threat will be regulation. Putting lawyers out of work will mean they
will try to rewrite the law to ban you. Depending on how you structure it, you
might want to ally with a few firms in each vertical to rain fire upon their
competitors. As long as you divide and conquer, and some lawyers are profiting
from the new regime, it will make it much more difficult for the ABA to
achieve consensus on the imminent threat your startup undoubtedly poses to the
health of the republic.

EDIT: Even more interesting...as a dotcom you may also be able to market your
services in a way that normal lawyers cannot.

[http://en.wikipedia.org/wiki/Legal_advertising#In_the_United...](http://en.wikipedia.org/wiki/Legal_advertising#In_the_United_States)

~~~
rayiner
So I'm a lawyer and you should take my opinion with a grain of salt, but I
think you've misread the market.

There has been an oversupply of legal gradutes for decades now. Today, half of
law graduates don't get a job, and 90% can't get a job at a big firm. Yet, big
firms are still paying $160k+bonus to people fresh out of school, because
that's what they have to pay to get kids out of the top 15-20 schools or the
tippy-top kids from the lower-ranked schools. Why do they continue to do this
when lowering their standards for pedigree could cut their costs massively?

You can say that it's because law firms are stupid and invested in the status
quo, but corporate clients surely aren't. Why do firms persist in putting so
much stock in hiring Harvard/Yale/etc graduates, and why do clients keep
hiring such firms? If there was really an opening in the market you could
drive a truck through, what has stopped anyone from taking advantage of it
thus far?

~~~
ramanujan

      Why do they continue to do this when lowering their 
      standards for pedigree could cut their costs massively?
    
      If there was really an opening in the market you could 
      drive a truck through, what has stopped anyone from taking 
      advantage of it thus far?
    

The key reason is that in this scenario, all the intelligence is being
implemented in the computer, with a few Stanford JDs at the company making
sure the code is up to snuff at a high level.

Then your less-skilled JDs can review the documents mass produced by software,
in a sort of legal assembly line. They may not be able to follow chains of
complex reasoning, but that's ok: engineers + Stanford JDs already made sure
the legal templates and algorithms worked on representative data.

In other words, we are making use here of the old joke - "What do you call the
guy who got the lowest GPA in medical school? Doctor."

Similarly, the less-skilled JDs who can't get jobs today do have one very
important asset: they passed the boolean threshold and are licensed to
practice law. Hollow out everything else, replace it by software, and use this
army as scalable last-mile reviewers with the thinking done by code. Their
value-add is that they absorb the last mile liability, as they are doing final
review before release to client.

This is no different than the way that Intuit replaces the CPA in many
situations. Kind of a TaskRabbit for law. By giving jobs to (a) young tech-
savvy jobless students and (b) a few top attorneys from the very best law
firms to write the contracts, you can do a pincer attack and massively reduce
legal costs.

~~~
rayiner
For the kind of simple contracts that could be handled by software, people
already use form contracts. And remember, you don't need a lawyer at all to
draft contracts.

As for more complicated contracts, wake me up when software can negotiate risk
allocations for you.

~~~
btilly
Lawyers are not nearly as necessary for negotiating contracts as they want
people to believe.

Lawyers, by reflex, attempt to insert themselves in the middle of processes,
and naturally tend to create conflict. (This is according to my experience,
and the experience of many others.) If a lawyer can do this, the negotiation
will naturally take longer, generating billable hours.

Secondly lawyers all know that the person who is in a hurry to get a contract
is going to get a worse deal, and so will NEVER be in a hurry to close the
deal. But there are times when "winning" this negotiation is simply not worth
the delay.

Now step back and look at it from the point of view of a company. Paying
lawyers fees is not good. Creating conflict with someone you want to cooperate
with is not good. Making negotiations take longer is not good.

Making this concrete, I was in a recent negotiation for a pay for performance
compensation. Because it was pay for performance I could quantify how much
delays cost the company versus what I will get paid. Their lawyers' delays
cost them several times what I will get paid. On my side I did not let my
lawyers negotiate. I told them to identify everything in the drafts that I
should object to. Then I negotiated without them. Once there was nothing that
made me unhappy, I signed. And what I got was pretty much the deal that we
agreed to up front, in person, which I emailed to them months earlier.

Limiting my lawyers' role saved me thousands of dollars. If the company had
limited theirs, they would have saved thousands of dollars. And would have had
a contract faster.

TD;LR, just because your lawyers want to be involved, and try to convince you
that they should be, doesn't mean that they are providing value.

~~~
igurari
Those are valid points, and I've seen it from both sides - as a lawyer and as
a businessperson. But one of the things missing from your comment is that
_good_ lawyers are protecting their clients from the possibility of things
going wrong in the future.

Contracts are often unclear and are often broken. Sometimes things just don't
work out. Regardless of how, litigation often ensues. That's when the value of
a lawyer becomes apparent. It's easy to complain about lawyers during the
negotiation - they often needlessly inject themselves into the process - but
it would be worth considering that a good lawyer is trying to protect you in
case things go wrong. Look at the Frank McCourt case for an example of where
the lawyering was poor and it had a disastrous impact:
[http://www.minnlawyer.com/jdr/2010/09/17/legal-
malpractice-c...](http://www.minnlawyer.com/jdr/2010/09/17/legal-malpractice-
causes-dodger-blues/)

~~~
btilly
I agree. I think it would be stupid to sign any moderately complex agreement
without a lawyer having been through it, and having informed you about what
you are signing. (I certainly wouldn't sign that.) I also think it would be
stupid to have a moderately complex agreement that was not drafted very
clearly. And if things go south, you _definitely_ need competent legal
counsel.

My entire point was that lawyers like to inject themselves into the process of
negotiation, often feel like they are generating value, but in reality tend to
generate billable hours and negative client value at the same time.

------
rayiner
I think Thiel misses a key point: getting the right answer isn't necessarily
as important as the appearance of justice. Human beings are fundamentally
emotional creatures, especially in situations when they feel they have been
wronged or are accused of wronging someone else. The whole process of a trial
with a human judge and a human jury doesn't just resolve a dispute, but it
serves as an emotional palliative allowing people to get beyond the dispute.

And that is, of course, one of the key functions of the legal system as a
system of dispute resolution: allowing society to continue to function by
helping people get over disputes.

~~~
igurari
I think this is a very good point, and I totally agree about the importance of
emotion and the appearance of justice in our legal system. But I'm not sure it
follows that the appearance of justice is at odds with getting things _right_.
A better system would get things right _and_ feel like a fair system to the
participants.

My personal opinion is that you can get both with a more transparent system.
In theory, a transparent system would drive consistency, and consistent
outcomes would _hopefully_ converge around correct outcomes.

~~~
rayiner
I think the danger is when it comes to automation/rigid rules. People want to
feel like their problems are unique and being considered in all their unique
complexity. That makes achieving transparency or automation hard, because a
system of hard and fast rules is more amenable to transparency than a system
of fuzzy fact-specific inquiries.

~~~
ramanujan
But at what cost? There is a tremendous opportunity for pretty-good, bargain-
basement, automated legal services.

~~~
rayiner
Is there?

There are two kinds of clients in the legal field: rich ones and poor ones.
Rich clients don't seek the cheapest legal services in the way they don't look
for the cheapest office space or the cheapest office furniture. No board
member wants some guy in India poring through his e-mails to do an
investigation or diligence for a transaction. For rich clients, saving money
and hiring "pretty good" isn't such a great thing if their opposing party
spends more money and hires "pretty great."

Poor clients are different. Poor clients do want the lowest possible price for
the given result. But poor clients tend to have problems that are hard to
outsource. How is an attorney sitting in India supposed to represent you in
your divorce, or help you get out of a traffic ticket?

------
dreamdu5t
This is surprisingly naive for someone like Peter Thiel. The law is not an
axiomatic rule based system, and it's far too complex and fuzzy to be
automated.

We haven't even automated medical records for godsakes!

~~~
jbooth
This is surprisingly naive for someone who wants to build a floating city in
order to create libertarian paradise?

What would be 'expectedly naive'?

~~~
crusso
_This is surprisingly naive for someone who wants to build a floating city in
order to create libertarian paradise?_

Was it surprisingly naive for the explorers and founders of the New World to
want to build new societies based upon their ideas? They packed up everything
they owned and risked their very lives to go to somewhere lacking an
entrenched society so they could build something new.

The effects of their experiment have been disproportionately dominant in the
culture and growth of the world for centuries.

Now we're in a world where all the land is spoken for by government bodies
that enforce their monopolies on governance through force. Imagine if
government said, "There can be no new startup companies. You'll have to
influence the existing companies from within." How would entrepreneurs feel
about being unable to start new enterprises?

~~~
jbooth
A continent generally provides more opportunities to be self-sufficient than a
retro-fitted cruise ship.

EDIT: Also, survival rate on those colonization trips? Not so great. And that
was with things like DIRT around that you can PLANT things in.

Basically, the 'floating city' idea is just a rebranding of what current
cruise ships already offer: Pay exorbitant prices for everything in order to
be on the ocean. Ain't no new society coming out of that.

~~~
crusso
_Also, survival rate on those colonization trips? Not so great. And that was
with things like DIRT around that you can PLANT things in._

Early colonists didn't know much about desalination and hydroponics.

 _Ain't no new society coming out of that_

You very well may be correct as far as probability of an outcome, but your
cynicism and lack of imagination are so very wrong... and sad.

~~~
jbooth
Sigh. Plenty died of starvation and exposure. Read up on history sometime,
disease was one of the lower risk factors the first few winters.

A bunch of programmers on a boat who need to get every single essential supply
from the mainland is not a society. It's a tax avoidance scheme.

It might even be profitable for a generation, until they start having kids and
incur more costs.

And the funniest part? Small groups of people in scarcity/survival situations
tend to organize themselves into something that looks _much_ more like
collectivism than it does capitalism.

When you criticize my lack of imagination, do you mean 'imagine' in the John
Lennon sense?

~~~
crusso
Yeah, it's like we don't even speak a similar language.

------
sek
Well why not start somewhere, create axiomatic TOS for example and proceed
with contracts between companies.

There has to be academic groundwork to build something like that, a mixture of
CS and law. Maybe some students at a law faculty could create a project
together with a few CS students just to get the stone rolling.

A programming language to describe who is responsible for cleaning the flat.

