Lawyer and legal business consultant Mark Cohen observes that the legal profession is essentially a data wasteland in the digital era , ranking behind all other private industries in utilizing big data and its uptown cousin, artificial intelligence to make decisions and serve clients. Still, both nature – and today’s clients – abhor a vacuum and more enterprising companies from outside legal are targeting the legal void.
For example, the same day that Cohen’s article ran on Forbes , Tech Crunch carried a feature on Atrium Records — the latest release by Justin Kan’s on techno-powered #altlaw firm Atrium. As described by the Techcrunch article, Atrium records creates a collaborative portal for clients, which aggregates all their business documents in one place, and can generate hiring offers and contracts from forms completed by clients within the site. But what caught my eye about the Atrium service – and what relates it back to Cohen’s piece — is the way that the portal leverages data. From the article:
Instead of writing hiring contracts from scratch each time, you fill out a form and use menu selections to set the salary, share count, vesting schedule and offer expiration. Looking across its anonymized data set of contracts, Atrium can recommend the best clauses and most common set ups, like four-year vesting with one-year cliffs. You can see the status of the contracts every step of the way, from drafting and finalizing to getting employees to accept. [Kan says] that Atrium’s goal is to continue building on its archive of more than 100,000 legal documents to develop aggregated pools of data clients could opt into. If they’re willing to share their salary data, vendor contract pricing and more, they’ll get access to that of Atrium’s other clients. “You’ll be able to see if you’re on the high end of being paid by Salesforce for a contract,” Kan explains. That’s a much more data-driven approach than when most lawyers just think of the last few salaries they saw for that position and give you a rough average.
Atrium’s use of business data harvested from law firm clients (with their consent) to help other clients make business decisions about salaries is very different from traditional legal analytics — where firms look at past judicial decisions, results and outcomes to predict what might happen in a future case. With traditional analytics, lawyers rely on data to do what they were hired to do, which is to advise clients about the impact of the law on their intended action so that they can decide how to proceed. In Atrium’s case, data gathered during the attorney-client relationship is employed to help other clients – and potentially competitors – make business decisions. And that’s what gives me pause.
Here’s the thing. We lawyers come into contact with lots of proprietary and personal data in the course of representing clients. In its role representing startups, Atrium is privy to an array of data from vendor costs, executive compensation, companies’ source and supply for different products and all kinds of other information. Likewise, lawyers who represent clients in divorce cases or estate planning compile information on their homes, their cars and finances. It’s one thing for an attorney to advise a divorce client with a particular financial profile not to fight a $3000/month alimony and custody payment because it’s comparable to what the judge awarded in a dozen other cases with clients who had nearly identical financial profiles. It’s quite another for lawyers to share the price that Client A was able to get for her house with other clients.
To be clear, I’m not suggesting that Atrium is acting improperly or unethically by collecting and sharing client business data which is anonymized and shared only with their consent. What concerns me is that as attorneys and trusted advisors, we have the kind of special relationship with our clients that invites them to let down their guard and share proprietary and personal information because they know it will never be revealed. Sharing proprietary information gathered during the course of legal representation for purposes other than advising on the law and in a manner that can place clients at a disadvantage, or leveraging that information to market a law firm (“Unlike other firms, we have access to thousands of pieces of proprietary data on startups) makes me uncomfortable.
There’s another issue too – just as time is money, so is data. In fact so much so that yesterday, Senators Mark Warner (D-Va.) and Josh Hawley (R-Mo) introduced legislation that would require Facebook, Google, Amazon and other gib platforms to disclose the value of user data. Of course, this legislation wouldn’t apply to law firms, but nevertheless, it confirms that data has value and owners of data ought to be compensated for its use.
Nothing in this post should be construed as detracting from the importance of using data analytics to predict legal outcomes. Relying on data to predict outcomes or to test hunches ought to be a no-brainer – unless of course, you practice law in France.. The harder question is whether and to what extent we lawyers can use the non-public data that we come in contact with through our cases for other purposes than just representing clients.