Future Fridays: Can Legal Technology Innovation Be Transformative?

Although I owe my career to legal technology (after all, it enabled me to continue to practice law while staying home with my girls ), truth is, the nuts and bolts and latest and greatest don’t interest me  unless I can find a way to employ those tools to help my clients. In other words, I view legal tech much like driving a car: I want it to get me where I’m going and I don’t particularly care to learn what’s under the hood or what next year’s model is.

For that reason, while I avidly follow the myriad of legal tech advances, few capture my attention. Certainly, cloud-based practice management tools are at the top of the list because they free lawyers from administrivia to spend more time with clients. But document automation – not so much.  Who cares if lawyers can prepare hundreds of petitions or forms each day?  Chances are if a form is easy enough to automate, it will probably be replaced eventually by technology (think blockchain + wills/estates).

So initially, when I learned about  Josh Browder’s chatbot  that will fill out a form for consumers who want to sue Equifax in small claims court, I wasn’t particularly impressed. Sure, the technology is cool and all, but I couldn’t see the point of filing hundreds of suits in small claims court that were likely to be dismissed.

But then I read about the strategy that Legalist , a data-driven litigation financing company, has in mind in assisting consumers in filing small claims actions against Equifax.  As described here . Like  Browder’s chatbot, Legalist likewise facilitates the process for consumers to file a small claims action against Equifax – although Legalist’s approach is different. Instead of giving consumers access to a DIY form, Legalist will send consumers a check for the small claims filing fee and in exchange, provide a pre-filled legal complaint for them to submit. Of course, there’s no such thing as a free claim; if the consumer wins, Legalist will take 30 percent of the judgment.

What’s interesting, however, is Legalist’s underlying strategy. Co-founder Eva Shang explains that:

The evidence is everywhere that Equifax perpetrated massive negligence…What we’re betting on is Equifax won’t show up to these proceedings so the chances are high you’d get a default judgment. If there’s a massive citizens’ protest, they can’t have their officers show up to every small claims court in the country.

Could Browder’s and Shang’s strategy toll the end of class action lawsuits – at least those related to consumer products or other matters where potential for recovery is small?  After all, by providing an easy way for consumers to file lawsuits, Browder’s chatbot and Legalist have eroded the driving rationale behind class action litigation:  “to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights (see “Amchem Prods., Inc. v. Windsor,  521 U.S. 591, 617 (1997)).

And when it comes to class action litigation, maybe it’s time for a change.  As is well-known by now, many class action lawsuits provide little benefit to members of the class. As Bloomberg reports, Equifax would be more than happy to settle its data breach claims for a dollar a customer. In fact, as one attorney quoted in the article acknowleged:

“It’s a dirty little secret, but a lot of defendants welcome these lawsuits,” said Robert Schwartz, a lawyer with Irell & Manella LLP in Los Angeles. “They will kick up some dust but, with a sensible settlement, the problem goes away. That is the end game.”

Granted, individual consumer lawsuits in small claims court for data breaches face the same hurdles that lead to quick settlements in class action cases; specifically, causation and damages.  Even if liability is clear – in other words, that Equifax was negligent – wronged consumers must still show that the breach caused the harm and resulting damages. And that can be tough, because much of the harm may take place two or three years down the line. On the other hand, if consumers file thousands of small claims cases, Equifax will still need to respond which will also cost the company money –  though of course, just as technology automates preparation of complaints, it can likewise automate Defendants’ responses.

But Equifax might still decided the suits aren’t worth pursuing and pay-out, or, in theory, default – resulting in a higher payout to an individual consumer than one who participated in class actions. Or better, it might decide that money isn’t the solution but instead, figuring out the best way to protect consumers going forward.

The recent response by legal tech innovators to the Equifax breach marks a new stage: legal technology as transformative. Although I can’t predict how any of this will wind up, if legal technology can begin to transform the law by enabling us to raise new legal theories or challenge old precedent, that’s the kind of innovation we should be focusing on.

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