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The Legal Department
Will AI Kill The Billable Hour? With Jonah Perlin Professor, Georgetown Law [E94]
00:42:17
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- [00:02]
A
My name is Jonah Perlin. I'm a law professor at Georgetown Law and the host of the How I Lawyer podcast. And a fun fact about me is I remember the day I got Internet in my house, and it was one of the most exciting days of my life.
- [00:17]
B
Welcome to the Legal Department, a podcast for lawyers who want to learn, connect, and grow their careers. I'm Stacy Bratcher. I'm a general counsel, and I'm excited to share these conversations to help you level up in house on today's episode of the Legal Department. I'm excited to welcome Jonah Perlin, who is a law professor at Georgetown and host of the How I Lawyer podcast. Actually, Jonah, you don't know this, but I followed your podcast and tried to learn from you as I was getting this show started almost three years ago. So it's a real thrill to talk to you live.
- [00:54]
A
That's great, Stacey. I really appreciate it. And it's been fun watching you build your podcast and just the general, like, legal podcast ecosystem growing. And I also learned by listening to folks, too, and that's what's very cool. I think about putting content into the world and hopefully making the world sort of a more transparent place by putting that content into the world.
- [01:15]
B
Demystify the legal department.
- [01:17]
A
Love it.
- [01:17]
B
So today we're going to talk about something that I think can help. I want to demystify, and we're going to get into why you're interested in it. But you've written an article and done some LinkedIn posts about how AI affects law firm billing, and I have my popcorn out trying to see where is this going to go. But your article, how the Billable Hour Can Survive Generative AI got my attention. Not that I read a ton of law review articles, but, you know, this is an evolving space. So, you know, you're a law professor. You were a law clerk at one point. Why were you interested in law firm billing?
- [01:55]
A
Yeah, I mean, it's a very fair question. There's not a whole lot of people in law schools that are particularly interested in law firm billing. But from my perspective, right. I got into this business to educate the next generation of lawyers on how to practice as lawyers. That's my North Star. That's what I care deeply about. I started my career as a litigator at Williams and connolly here in D.C. and was a judicial law clerk as well and had the opportunity to adjunct teach a class at Georgetown, and I went to Georgetown as well. And that's a whole other story that I've told on my podcast. But I had this opportunity to adjunct teach a class, and what I learned pretty quickly was that I sort of liked being a litigator, and I think I was sort of okay at it, but I really like teaching, and I felt like it fit my skillset even better than my day job. And so immediately that sort of made my antenna go up and say, maybe I should try to find a way to do this. But I also really wanted to do it at the intersection of practice, as opposed to writing and teaching about law. I wanted to write and teach about
- [02:59]
B
being a lawyer, which is, by the way, underdone at law school. Right. Like, it's.
- [03:04]
A
It is. And. And the way. And that it's changed a lot over time. And I think people sometimes think it's still the way it was when they were in law school. It really depends on where you go to law school. I mean, we could have a whole show just on that particular question. Thankfully, I was able to end up at, back at Georgetown, a place where it is a prized area of teaching and we make it work. And then it got to the point, when you're a professor, when you start thinking about, like, what am I going to write about? Wait, what is my scholarly impact going to be? And my interest in sort of the intersection of law and technology goes back to my practice as a lawyer 100%. And I'm of the generation. I mean, I remember we just had a big snowstorm here in D.C. a couple weeks ago, and I was thinking back to the time when we had a big snowstorm, The Blizzard of 1996, when I was in elementary school. And. And I remember that was the day we got the Internet at our house. And so I am like, I am of that generation that I remember pre Internet days, but I'm as close to a digital native as possible. And I feel like I kind of won the lottery by being that age at that time when the world was changing. And so technology has been sort of in the back of my mind through everything I've done, personal, professional, et cetera. And I think we don't think enough every day about how technology has changed the law, but also how the law has changed to respond to technology. And we have a really rich history as a legal profession of responding to whatever's changing in society. And technology is just a piece of that. And so that's how I got sort of interested in this topic, billing in particular. That is really just a product of the fact that I was reading a lot of sort of, this must be the death of the billable hour kind of headlines. And I was skeptical. And the great part about my day job is when I'm skeptical at something, I can test that hypothesis and do a deep dive. And so that's how that particular project sort of got started and went pretty quickly.
- [04:58]
B
Well, it's gonna be interesting to see what the impact of it is. I think a lot of law, you know, we'll link it to the show notes, but I think a lot of the law firm lawyers will sort of relax their shoulders with your hypothesis that the billable hour is enduring. So I wanted to pro a little bit. So I'm a consumer of legal services, so I'm a general counsel. We use outside counsel. And I'm not surprised. But it is interesting to me that I have not seen an impact of AI on my legal bills. In fact, they've stayed the same or increased. And when I ask firms about, how are you using AI, let me know. I want to know what you're using, what tasks you're using it for. A lot of folks say, well, it's not that good. I don't use it. And maybe it's generational, but are you hearing that from others? Or maybe you don't interact with people like me all that much?
- [05:58]
A
No, I try to interact with people like you as much as I possibly can. I think I wouldn't be doing my job or studying what I study well if I didn't. It's why I love having conversations like this. And then they become public, and people can sort of sit in on them if they want to. So the immediate response I have to the question would be, what does it mean to see sort of the impact of AI on your bill as a consumer? Right. There's an assumption baked into that question that the way I would see it is for my bill to go down. And that makes sense. Right. There's what I call in the article the AI efficiency hypothesis, which is just a fancy way of saying if you can do things faster, then one of the variables that contributes significantly to hourly billing is the number of hours that a particular task takes. Right. So if that goes down, then the compensation to the law firm should go down. Now, my whole article is predicated on the idea that A maybe the AI efficiency hypothesis isn't 100% right. And even if it is right, the number of hours billed is only one variable among many in what I call sort of the billable hour equation. So, for example, if their rates go up to counteract their hours going down, the bill is the same to you. And it's because. Right. There's a causal relationship between using AI and their rates going up.
- [07:22]
B
Hold on, let's explore the cause. Because to me, the cause is that when you make law firm money, you want to keep earning law firm money. And so the rate goes up not because I'm a better lawyer or, you know, inflation, because the rates that I see inflated are, you know, 7 to 25% per year.
- [07:46]
A
Right.
- [07:47]
B
It is chasing, I think, and maybe I'm jaundiced here, but it's chasing the law firm lawyer's expectation of compensation.
- [07:56]
A
Yes. I mean, the billable hour, and we can talk a little bit about the history of it as well. Right. Is by definition a way of pricing legal services. Right. And the way of pricing legal services is the way that lawyers make money. And so you're absolutely right that the rate doesn't have to necessarily go up unless the lawyer wants to make the same amount of money. Now let me make the case why the rate ought to go up, which is a slightly different story.
- [08:20]
B
Yeah, let's hear that.
- [08:21]
A
Yeah. So two things come to mind immediately. So the first is you, consumer of legal services was paying for a lot of time and energy on tasks that were basically very low level tasks for your lawyer to do. Right. So you are paying not just for the lawyer to come up with the great theory of the case, you're also paying for the document to look pretty. Now AI makes the document look pretty, therefore the lawyer's time spent is on those higher order, more important tasks. And you know, thinking just from a purely economic perspective, if I'm getting rid of sort of the admin and the basic tasks that you don't really want to pay for to begin with, one would then assume that it's reasonable that you should charge more money because you're doing more high impact work.
- [09:10]
B
Well, except that that conclusion is that means that the hourly rate is sort of a blend. Like I charge $1,000 an hour because, you know, some of my time is spent on editing documents and the other time is, you know, said coming up with strategy for your case. And I, I don't know that that's true.
- [09:29]
A
Right. I mean, but that's the fundamental question. Right. The fundamental question is there's.
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B
What are these rates based on?
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A
Right. There's an assumption. Right. That's exactly what I was getting. Right. What are these rates tied to if they're not tied to an articulation of what you, the consumer, are willing to pay the lawyer to do?
- [09:46]
B
Yes.
- [09:47]
A
And so think about it this way. Think about it as the idea that, you know, different people make different hourly rates in regular hourly work. We charge a different hourly rate depending on how hard or how much education the activity requires. And you're absolutely right on it, sort of being at an implicitly blended rate. The second reason that I think lawyers can justify arguing to their clients that their billable hours should go up to sort of, frankly, to compensate the number of hours going down is let's be clear about what consumers of legal services are buying. Right. They are not buying hours. They are buying outcomes.
- [10:25]
B
True.
- [10:25]
A
And hours are a way for us to back into how we price those outcomes. And so ultimately, my colleague Mitt Regan at Georgetown wrote a book called Big Law, where he sort of studied empirically big law firms. He and Lisa Rohr wrote this book, and it came out in 2019, right before the pandemic, unfortunately, because, you know, the world changed a little bit. But what's really interesting about their empirical studies and their qualitative discussions with practicing in house counsel are the counsel often said, I actually don't care what their billable hour number is or even how many hours they spend. What I care about is the cost of the. What I value this task to be. So if they are going to charge me more than I value this task to be, I'm not going to hire them. And if they charge me less, I feel like I'm getting a deal. So the hours then become, frankly, just a way of sort of having that negotiation in advance that protects both the client and the lawyer. Plus, we know, Right. That clients are at. When lawyers charge flat fees, clients are still asking lawyers to see their hours so they can sort of justify that work. And by contrast, when lawyers are putting out bids, they're essentially working backwards from what they think the client is gonna cost. So essentially, the billable hour really is just a prox. Yeah. For the negotiation between in house, counsel and outside.
- [11:49]
B
It's a proxy, but then it is ultimately a driver of the cost. Right. Because, you know, whereas you do a flat fee, we're both taking risk. Right. Like, if I. Right.
- [11:59]
A
So it's de risking.
- [12:01]
B
It's. It's de risking. Except that the consumer. Like your estimate of the hours it quote, should take.
- [12:09]
A
Right.
- [12:10]
B
Is based on your experience, having been a law firm lawyer, and mine is dated. Right. Like, I've been in House for 15, 20 years, and as I think back, like, there are resources, there are processes, technology, et cetera, that weren't in place, you know, when I was practicing. So It's. I have a skewed vision of what the should is.
- [12:32]
A
Right. I mean, that's what I mean. That's what I mean by. It's a proxy. Right. We are using billable hours to sort of back into a negotiation about what the cost of a particular matter for a particular client at a particular time is it also, and we've seen this in other industries throughout history that have sort of become more automated. Right. So less manual time and effort. What you often see is that the quality that is desired by the client goes up. Right. Because ultimately the idea for. Let's use spellcheck, for example. Right. If you got a brief today that was not spell checked and had a bunch of typos, which happens. Right. But you would go crazy the second that happens. Right. In the age of typewriters, where that just happened all the time because of the technology available, you may not have thought about it in the same way. So that's a very basic example. But the quality goes up and the expectations go up.
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B
Yeah.
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A
You know, I remember hearing from a law firm partner when I was a very junior lawyer talking about what it was like to be a junior lawyer when he was a law firm associate. Right. And it was, well, we'd write our brief draft by hand, we'd give it to the typing pool and go play golf. And then the next day we'd come in, we'd edit it, then we'd give it back to the typing pool, we'd play golf, and then we'd send it to the client and five days later we'd get one set of hand edits and then we would file. Right. That's not how work is done today. The quality and the amount of work and time that is spent on any given brief, even if it's the same brief that it was 50 years ago, has fundamentally changed because the technology behind it has changed.
- [14:08]
B
Yeah. Yeah, that's interesting. And I think that gives me a little bit of comfort that, yes, while AI is a disruptive technology, we've been there before.
- [14:16]
A
I mean, that's my whole point. And I will say there are a lot of people who disagree with me on this, who believe that AI, there's, you know, AI exceptionalist, that AI is so different. And I recognize that AI works differently and does different things. But to me, I, at this point still believe it is. It is the next chapter in a story where the legal profession is changing. And I actually think it will make the, you know, people like to focus on, for example, hallucinations. I actually Think on balance, the quality of lawyering across the profession will likely go up as a product of the use of AI, not down.
- [14:51]
B
All right, well, that's interesting. Since you mentioned the H word, hallucinations, I do want to talk about this. We were going to get to it later in the conversation, but I can't help myself. So, you know, you see stories about this. There's people getting sanctioned, even judges are using it and getting burned, and people aren't sight checking their filings. And when we talked in prep, I was sort of a guest sharing my real concern about that and worry about lawyers that work for me. And you pointed out that this has always been a problem based on your experience as a law clerk. So help us understand why. Yes, hallucinations are a thing now, but it was maybe always happening.
- [15:33]
A
Yeah, I mean, ultimately, like, let's just be clear that as a legal research and writing professor, hallucinations also horrify me, right? That it almost feels like I have not done my job. If a student goes out into the real world and submits a brief that has incorrect information on it or any document. But I'm just using briefs as an example. And I think as of yesterday, there's someone on the Internet who's been tracking hallucinations, I think, or hallucination cases. So sanctions cases, basically. And we're up to over a thousand. We've crossed that threshold. So get a cake. Huzzah. We've crossed the thousand hallucination mark. But I think a couple of things. So first, we only see the errors, right? So we know, for example, that according to some statistics, more than 50% of lawyers today, across all age demographics, use AI assisted tools at least once a week. Right. For their profession. Now, again, that statistic may be wrong, but just one statistic. But that's one I've seen. If we're only seeing a thousand hallucinations, that tells me that there are hundreds of thousands of briefs or millions of briefs that are getting filed using AI that don't have hallucinations, or we're not catching them. Those are the two options. Right. But either way, we don't have a good comparator. And so when you only know the numerator and not the denominator, it's frankly a misleading number. And it comes down to, I think, the fact that lawyers believe we can never make mistakes and therefore the denominator is irrelevant. This is where my second point that we were talking about comes in, which is this idea that we didn't put factual inaccuracies in briefs before AI is just wrong. Right. The type of inaccuracy may have been different. We didn't usually have just made up case names. I concede that 100%. But actually, I think the harder thing to identify, especially as a judge, is when a lawyer talks about a case and basically fudges the case, either intentionally or otherwise, to make it look better for them. And if the opposing counsel, and we know, you know, three quarters of civil cases don't have lawyers on at least one side of the voice, the opposing counsel didn't catch it and the judge didn't catch it. You have these situations that end up happening where law is made based on precedent, articulations that are false.
- [17:52]
B
Yeah. And you saw that as a clerk.
- [17:54]
A
I saw that as a clerk. Right.
- [17:55]
B
Like all the time. Like a thousand times or.
- [17:57]
A
No, I mean, not all the time, but, you know, again, it's what you check. Ultimately, I got into the habit of checking all of the important citations at the very least, especially when I was at the court of appeals, when we only were only, you know, we were only working on a handful of cases at any given time. It was my duty, I thought, as a law clerk, to go and like, look and see did the case actually say that? And it's not just law. Right. It's also factual records. I mean, think about the size of the factual records in many of these cases. And people make generalizations. I mean, I teach my students who are writing their briefs now to not give what I call opinions. Right. Which is articulations of what the facts kind of say, as opposed to facts, what they actually say. And we're trained as lawyers to sort of walk up to that line, where that line is to provide sort of the necessary zeal to our client. And people cross that line all the time. In some ways, hallucinations worry me less than those kind because they're easy to catch. Right. If you just spent any time looking up, is there a case with this name, with this citation checked, it's done.
- [19:01]
B
Right.
- [19:01]
A
Those are far scarier to me. And frankly, AI does that too. Right. Because it's just summarizing, and it's trying to summarize like humans summarize. And human summaries are not 100% accurate. And so ultimately, my view on this is the sanctions decisions are helping us create a infrastructure as a profession about what the expectation is. And ultimately, I also think that laws practice so fast now that I saw this when I was practicing and I haven't been, you know, in practice for almost 10 years at this point. But the infrastructure we set up around for example, site checking and verifying had started to fall down a little bit. Right. The idea that, I mean, I remember I was getting as a junior associate edits to a brief from partners within minutes of when it had to get filed. You can't site check.
- [19:51]
B
Yeah, right.
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A
In that environment.
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B
Yeah.
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A
And so I think there's actually going to be a renaissance of, you know, we're going to start having people, you know, firms used to have employee full time site checkers. They don't much anymore. I think they will start doing that.
- [20:03]
B
Yeah. Yeah.
- [20:04]
A
Well, I guess there will be new review.
- [20:06]
B
As a consumer, I. And you know, because I think we talked about this before, I can't imagine anything worse than having a firm on your behalf, your client's behalf, filing something with a court or a regulatory body that had false information, false representations, a fake case. I think your credibility is completely undercut. And so I ask, I tell all firms, you know, if you do, I expect a human to site check everything in any filing you have for me.
- [20:37]
A
Let me just say, okay, so here's the last piece of it which you might disagree with and might be a spicy take, but that's what podcasts are for, which is I actually think that the assumption that humans are better at site checking than computers, if it hasn't already gone away, it will go away soon. Because ultimately humans make mistakes. We know that. Right. Humans read things quickly. They forget to highlight that one case that they were going to check. AI based tools, I truly believe are going to be both part of the problem, but eventually part of the solution where there's gonna be a one click way in sort of the major market tools to say do all these case names exist, yes or no. And so ultimately again, it's creating this larger infrastructure. I've actually been. My next article I think is gonna be on this topic. So I've been doing some early reading on the history there. Really interesting history of like the Shepherd's product.
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B
Oh yeah.
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A
For those who are too junior to know what that is. Right. You might have heard the story.
- [21:40]
B
You went from spicy to snoozy, I have to say.
- [21:44]
A
History to me. History of legal tech. Snoozy to me. But I'll tell you this. So Shepherds, for example, Right. Was a direct response to the fact that lawyers didn't have up to date information about what remained good case law. Right. So they were citing case law to courts. That was false in the sense that it was. It had been overruled. And so what did we as a profession do? We created a bunch of tools. Shepherd's is sort of the most successful of these tools. And interestingly, the guy who created Mr. Shepard was. Was not a lawyer. He was a law book salesman from Illinois who said, I know I can sell this new product. So he was like the first legal tech product. And so I think AI is going to be part of the solution, not just part of the problem.
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B
Yeah. All right, Well, I look forward to that. And I don't know enough about the tech to argue with your. With to say whether it's a spicy take or not. But that's my, you know, analog solution to the hallucination issue. Getting back to the billable hour issue, and maybe you could go through what are the different. I've never heard anyone talk about law firm billing in this way, but what are the different variables that go into the equation?
- [22:56]
A
Sure. And again, no one's used these exact terms, but I think we all sort of. Anybody who's been in the billable hour space knows them to exist. And there could be other terms. It's by definition an oversimplification. But the variables or the levers that I came up with are the compensation to the law firm is equal to the hours worked times, the rate at which you charge for those hours, minus any. What I call granted reductions. Right. Agreements between adjustments. Adjustments, exactly. Minus expenses. Right. The expenses and overhead of the law firm. So why is that helpful? Because it spells charge. C H, R, G, E. Thank you to ChatGPT for helping me come up with the acronym. Right. But those are sort of the main major variables that I talk about in the piece and that I think lawyers sort of intuitively think about when they're thinking about billing. And my whole point is we need to talk about how AI is going to potentially affect all of those variables, not just hours, because ultimately, if we don't have that conversation, we don't have a complete picture about whether or not the billable hour works or not. And to be clear, my article, it comes off like I'm saying it should stay. My main point is actually that I think it is likely to stay whether or not it should as sort of like a smart econ or a moral judgment. I truly don't have a job in that fight. Right. The idea was I'm responding to what felt like the prevailing argument of the time in which it was being written, and maybe it's changed in the six months since it came out, which is hours go down Billable hour dies. We're all doing alternative fee arrangements now, and they're no longer alternative. And maybe that's an oversimplification, but that seemed not exactly right to me.
- [24:41]
B
Yeah. Yeah. Well, I. I am eager to see what the impact will be. One of the things I have on my mind is, once ediscovery came to be, and you have these big databases and relativity and all these different tools that help law firms manage and search big, big caches of data, we all now see data charges on our bills. So my prediction, and maybe this is happening already, is that we'll start seeing AI tool bills as well. Yeah, like, if you want us to use. Harvey, if you want us to use something else, then, you know you're going to pay for it.
- [25:20]
A
Right. Or they're going to bake that into their rates. Right. So then there's another reason. We didn't talk about why rates go up. Because the tools that function to make those rates go up. I mean, there's. There's a lot of different ways rates
- [25:30]
B
go up because people will pay it. That is, honestly, I think that law firms put out a flyer. Can I get $3,000 an hour? Someone pays it, and then that sets the market.
- [25:41]
A
Right. But that, to me, tells me, as long as that's true, the billable hour will survive.
- [25:46]
B
I think you're right, because it's not rational.
- [25:48]
A
The billable hour has not entirely been rational. And it's how we. That's I guess, what I mean. But I do think you're right. I think you're going to see that, and I think some people are going to push back on it. Right. And they're going to say, if you
- [25:59]
B
get more, which you should do about data charges, by the way, the law firm will adjust those off again.
- [26:05]
A
And I hate to be a broken record on this, but this is, again, not the first time that law firms have tried to pass tech costs. I mean, I remember, again, faxing.
- [26:13]
B
Faxing was charged. You were charged.
- [26:15]
A
And postage. And when I started. Right. And when I started at the law firm. We still pass. Well, I don't know if I'm telling secrets. I think I could say this. When I started the law firm, many clients still paid for our legal research bills for their matters. And by the time I left, many of them had negotiated that that was a cost of the firm. That was an expense that the firm was going to bear. And so, ultimately, again, it's all about pricing in house counsel. Don't come to outside counsel to buy hours. It's not like buying hours at a, like daycare center or a ski lift. You are buying outcomes or buying attempted outcomes. And if you're going to buy attempted outcomes, you have a price in mind that you are willing to pay. And lawyers are gonna try to figure out how close can they get to that price. And then everybody's gonna end up happy enough that it's going to keep going.
- [27:07]
B
Yeah, no, you're not wrong. You're not wrong. Hey, I wanted to grab something from your article, and I know it's not your term, but there was a reference to sort of the symbolic economy or like there's a prestige, like back to our pre roll conversation here, there is a perceived prestige that goes along with hourly billing. Let's talk about that for a second.
- [27:28]
A
Yeah. So, you know, at a high level. And this also comes from my colleague Bit Reagan, who I mentioned earlier in his book on big law. He and his co author talk about that the billable hour serves two different purposes in the legal profession. One is what they call the material economy. That's the sort of financial reward, you buy this, you get this in return. There's also an element of the billable hour that is related to what he calls the symbol, or they call it the symbolic economy, which is the status and internal value. And it's why in the equation that I just gave, right, I defined compensation as the law firm's compensation because from the perspective of the client, that is who they're paying, Right? But anybody who's practiced in a law firm knows the number of hours you work inside a firm, which may not be the number of hours that get billed to the client, is how you prove to the firm your worth to the firm. And it's not necessarily just in a financial sense, but that is how you are valued at in terms of promotion. That is how you are valued in terms of your bonus, your status.
- [28:29]
B
It's like a hitting average status. It's like a hitting average in baseball. It's a stat that shows how cool you, how great you are.
- [28:35]
A
Exactly. So there's that piece of the symbolic economy, the other piece of the symbolic economy. And this is another reason why rates are going to continue to go up is because counterintuitively, right. People think if they're paying more money, they're getting a better product. And so actually the incentive is not to fight on cost or on low cost because you will be perceived as not as good a lawyer. Right. It's like I sort of think about it like when you go to a restaurant and you're with other people, you never buy the cheapest bottle of wine on the menu.
- [29:08]
B
Medium.
- [29:09]
A
You go medium. Right. Because what is that signal that signals I'm not cheap, I'm not cheap, and it signals I care about quality. Right. And so ultimately there is a world. And I talk about this very little bit in the article, but I think it is absolutely true that especially at top places, if you get too good a deal, you're going to go to a more expensive law firm.
- [29:32]
B
Yeah, I thought that was fascinating. And a big reason I do the show is for professional development for lawyers. And I think that that's a concept I'm going to come back to because to me, it's this sort of. It's feeding that ego. It's this perceived success. It's all these things that we, as lawyers, you're sort of conditioned. If it's hard, if it's expensive, it must be good.
- [29:59]
A
Right.
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B
And it's why I must want it in my career.
- [30:01]
A
Totally. And it's why the Wall Street Journal, I think it was just last week published an article saying that there are some top lawyers in New York charging $3,400 an hour. Right. But we don't know, maybe they're writing off half of that. Yeah, but what's the headline? The headline is the hourly rate, because that's a prestige factor that has very little to go to the financial material reward.
- [30:24]
B
Yeah, I would love to talk more about that at some point. The last thing I want to just on the billing topic is, you know, I think I totally agree that law firms are built, and most professional services firms are built on sort of a pyramid model where your juniors and what you charge for your juniors are the economic engine that fuels the profits for those at the top, the equity owners, so to speak. So I wonder, one of the things I wonder, and you're teaching the next generation of juniors here, is there concern that there's not going to be as many roles and as many opportunities for them to learn and build? Like, do you see a funnel appearing?
- [31:09]
A
Yeah. I mean, anybody who's listened so far can figure out that I'm typically a tech optimist. I think tech, on balance, gets us more, not less. That's a sort of, you know, I'm willing to wear that on my sleeve. This is the thing that keeps me up at night. Right. Is how do we build a infrastructure as a profession. Right. If we don't have a good way to incentivize those who are instructed to train the future professionals to Build that profession. Now, again, not to sound like broken record, this is not the first time we've had this discussion. We've been having this discussion as long as technology has come around. Early on in this country's history, law clerks, right, the role of law clerk was mostly to copy down. There was basically like stenographer and correspondent. That was the idea that you would sort of train as an apprentice by osmosis. And ultimately, we've been leveling up what that junior has been doing every single sort of generation. The query is, have we hit that ceiling? And if you are a senior lawyer who can use. Who doesn't need a junior to create leverage, you can use technology to create leverage, or where does the junior lawyer go? Ultimately, I think that there are a couple of different ways this actually can work out fine for juniors. One way may be that juniors are not billed out to clients, which we know was starting to be true pre AI. Right. The firm was bearing a lot of the cost. And the firm was bearing it in part because they needed that junior labor, but it was also bearing that cost because that's the future of the firm. And at least in a sort of event, in a world where, you know, everybody gets a piece of the cake for the rest of their career, it makes sense to train people at your firm.
- [32:59]
B
Sure, sure.
- [33:00]
A
And so they're gonna find a way to do that. The second thing is to say that maybe the senior lawyers are gonna move even further up the chain. Right. They can have even more cases, even more money more matters and even more money. Right. And the junior. So basically, the first year is now gonna play the role that a third year used to play, and a third year is gonna play the role that a seventh year used to play. Now, as a law professor who teaches skills based classes, that petrifies me.
- [33:29]
B
Sure. How are you gonna get ready?
- [33:30]
A
Students aren't ready for that. And I will tell you, legal education is not ready to train them to do that. And so there will be a messy period of time where, look, most of my life talking to lawyers is them telling me what we're not teaching them in law school. And I have some strong that are not my general good vibes only approach on those topics, but that Delta is going to get larger before it gets smaller. And so, you know, ultimately, I think this is an opportunity to give junior lawyers greater exposure even earlier in their careers. Because let's be real, like, let's just be honest. Do you really need, as a junior lawyer to spend a year formatting signature pages on A deal to learn how to do a deal. No, you need to be part of deals and watch deals. But the actual task you were doing sort of justified you being on all the other emails. We can find other ways to justify you being on all the other emails.
- [34:30]
B
Yeah, yeah, yeah.
- [34:31]
A
But it's scary.
- [34:33]
B
It's scary. But again, I think that the model, the pyramid model, until it shifts, I think that there will continue to be a role for juniors. And you know, the rate, I mean, we can go round and round about whether the rate, you know, you can survive a 3,400 or 5,000 an hour rate. We'll never answer that question. But I do think just inherent, because I was, as you. We were prepping for this, I was thinking about, you know, there are a number of positions that don't exist in law firms anymore.
- [35:06]
A
Sure.
- [35:06]
B
There's not necessarily a huge word processing department. There's not even legal secretaries, which were really highly trained. Like people don't do dictation anymore. You have a redlining program as part of word processing. Maybe there's not librarians. There has been a winnowing of staff. But as I think about it now, most of those functions, they weren't billing you for. And so there's an inherent inside incentive to keep the juniors because they keep others fed. That's, I think, my final take on that.
- [35:38]
A
I think there's some truth there. And I also think there's the possibility that the same amount of legal work, and I actually fundamentally believe more legal work will be done. There will be more hours to go around. New technology has shown us that every single time. Right. New technology. You know, everybody said, oh, now that we have these tools to do discovery, discovery will be faster. Guess what? We then created a hundred thousand times the number of documents. And so it's far worse than it was or better if you're charging by the hour to do the discovery or
- [36:08]
B
if you're one of the data companies or strip.
- [36:11]
A
And so I think there's a chance that you get sort of a barbell effect where the big get bigger. And then the idea of being a junior lawyer who can go out on your own sooner and have a couple of key local clients and survive because all of the overhead and admin can now be done by a computer or by a software solution. I think there's a world where that starts happening more than we think it does. But that's not an empirical prediction. That's just the intuition.
- [36:38]
B
Yeah, yeah. Well, you've got your ear to the ground. Just a teaser I know you have another article coming out about AI and confidentiality. I'm very fascinated about that. There was a recent decision out of the Southern District of New York, which was sort of the first, I think, big splash around privilege. So just real quick, can you give us a couple minutes on your views on AI and acp?
- [37:03]
A
Sure. So, you know, this is something I've been thinking about a long time. And I was writing about client confidentiality before generative AI became a thing, or at least a public thing. And so I've been thinking about it for a long time. Doesn't mean my views are any stronger than anybody else's, but I do have strong views on it. I think, ultimately, you know, the first thing we have to remember is that we often talk about the lawyer's duty of confidentiality in the singular, but actually we have a lot of different duties that come from a lot of different sources. So you mentioned attorney client privilege. That's the one that's in the news right now because of the Hepner decision. And then a decision out of the Eastern District of Michigan, Warner, which came to the opposite conclusion. You also have the model rules of Professional conduct that have a huge impact. Over a dozen state bars have already passed formal opinions specifically about generative AI, that almost all talk about some confidentiality. There are also confidentiality provisions written into attorney engagement agreements. There are confidentiality provisions in court ordered, you know, ESI protocols and everything else. So the challenge, I think, for today's lawyers vis a vis AI and confidentiality fundamentally, is every lawyer has a different set of responsibilities and a different set of risks that they need to worry about. And so there will be and cannot be a sort of like checklist safe harbor. If you do X, you're fine. If you do Y, you're not. My article fundamentally is saying, like, sorry, I wish I could give you sort of a checklist, but actually, I think what we need is a framework. Here are the kinds of things you need to think about. Here's how to think about them. One sort of teaser on how I think you should think about them is what are the responsibilities you've been worried about all along with technology? Because you've already answered that question right? You know what your duties are to your clients. You know what's in your confidentiality agreements, because you have email and you have cloud and you have this and you have that. That should inform your discussion of what your responsibilities are for AI. And if you don't know what your responsibilities are, then you're in. You have no business creating an AI policy.
- [39:00]
B
Well, because there's tech competency in California anyway.
- [39:03]
A
We have a. Yeah, there's also tech competency. That's another sort of. That's one of the many responses. Right. And that's the other. That other half. So basically, I argue you need to know what your responsibilities are. We need to have a real conversation about the risks. That's where, candidly, I think the New York decision got it wrong. I don't think the articulation of the specific risks is entirely accurate, even based on the face of what the tools do. But reasonable minds can differ. And then what responses do you adopt? So on the one extreme, you can just ban using the tools altogether. On the other extreme, you can allow any tool. And in between those, there's lots of different choices. And my argument again is that I'm a history guy, right? So email is a great example. Originally, the first statement the ABA ever made that I know about about email was you can't use it unless it's encrypted. 1986, the first two state bars to ask the question, can you use it? The first one says, no, you can't. The second one says, you can, but only if you get written informed consent from your clients by 1999. The rule totally flips. The ABA puts out formal opinion 99413, which says, actually the default is you can use unencrypted email unless there are special circumstances or special. You need special protections. So again, I think we're seeing this same play out in AI. So the first answer is going to be fear. And we have to discuss what's real and what's not. So the thing that I'm not afraid about at all is that you are going to put in information into an AI tool, even a free tool. That's a spicy take. Even a free tool. You put it in and immediately your opposing counsel is going to get that information out. I write up many pages about why that happens. Almost never. Not never, but almost never. And the actual real risks that we should be primarily worried about are what happens when we give our whole document management systems to third party companies that create an additional sort of access risk. But that's very similar to your email and similar to your Dropbox and similar to everything else.
- [41:01]
B
All right, what was old is new. Again. Okay, so my last question. Sure. Hopefully not spicy. What is your pump up song?
- [41:09]
A
I love this question, by the way. I don't have quite such a great ending to my podcast questions, so I will confess I'm not a huge music person but I have two big pump up songs. The first is Eye of the Tiger and the second is Pat Benatar's Hit Me with youh Best Shot. And I've been listening to those since I was a high school student doing high school debate when I got myself pumped up for high school debate. Nothing cooler than that.
- [41:30]
B
Well, you're not the first lawyer to choose those, so great, great classics. All right, Jonah Perlin. Check out his amazing podcast How I Lawyer and look for his all of his hot takes in law review articles about technology and the law. Thanks so much Jonah.
- [41:46]
A
Yeah, thanks for having me Stacy. This was fun.
- [41:50]
B
Hey, before you go, if you want more content from the legal department, check out TLD Goal Getter on Substack. It's a mix of free and subscription based content to help you level up your career. That's TLD Goalgetter on Substack. Hope you check it out.