Is SimpleLegal A Step Forward or Back on the Way to the Future of Legal Billing?

Screen shot 2013-08-06 at 2.39.22 PMTechCrunch reports that there’s a new law technology on the block: SimpleLegal, a company that employs a  machine learning to read, understand and ultimately reduce legal bills.  As TechCrunch describes:

 All a customer has to do is ask their law firm to copy SimpleLegal on each invoice, and then the magic starts to happen. SimpleLegal’s system ingests the invoice and parses each line item into its database. Natural language processing systems figure out who billed what and for how long — and then that data is run through a machine learning system that flags outliers. One example: the system flagged a line item where a professional billed a half hour for mailing. That might not be too unusual but for the fact that the system knew the thing being mailed was a one-page form.

To date, SimpleLegal’s customers have reported savings of between five and twenty percent on legal fees. And SimpleLegal isn’t just for big firm clients – the service is free  for companies with up to $15,000 in annual legal bills – which falls squarely in solo/small firm territory.  It’s also not clear how SimpleLegal protects confidentiality (yes, attorney-client privilege applies to bills which are rich with insights about work-product and strategy) but presumably, transactions between law firms and SimpleLegal would be structured like those with other third-party freelancers or LPOs such that confidentiality is maintained (in fact, my 21st Century Retainer Agreement includes clauses to deal with preservation of confidentiality with outside providers).

What has me most curious is the legal profession’s reaction to SimpleLegal. On the one hand, SimpleLegal represents the kind of techno-powered ethical oversight (since reasonable fees are an ethics obligation) applauded by legal futurists. On the other hand, SimpleLegal’s entire formula revolves around the billable hour and reducing legal services to hours and minutes which most forward-thinking lawyers view either as an antiquated model that fails to align price with value or that commoditizes legal services by imposing uniform standards.

In addition, I wonder about what kinds of behavioral signals will SimpleLegal send? Will SimpleLegal operate as the straw that broke the camel’s hourly-billing back (or more accurately clock?) In other words, will lawyers hoping to avoid the harsh, objective light of SimpleLegal adopt flat fees or pricing arrangements where time spent on tasks is more opaque? Will clients, now empowered with a tool to make lawyers accountable require lawyers to document hours spent on a task? Will SimpleLegal eventually modify its system to keep a check on flat fees – for example, by reviewing costs relative to results obtained, or evaluating the scope of work promised with fees paid?

For now, my simple mind can’t formulate any predictions about SimpleLegal’s implications for the legal profession  – but I’d love to hear your thoughts.