Legal Tech and the ‘Luddite Fallacy’

Hardly a day goes by without the business and legal media reporting different versions of a story with the same theme: new technologies and automation are on the cusp of replacing a whole range of professional services, including within the legal sector. The inevitable result, so the story goes, will be less need for lawyers.

Just this week, for example, Australasian Lawyer reported on a study published by Deloitte. The study had looked at the UK legal profession and, so the media report said, had predicted that “39 per cent of jobs in law will be automated” over the next 20 years.

For many lawyers, or as a student looking to a future career within the legal profession, it might be easy to be alarmed or discouraged by this type of report. I am certain that there is cause to be more optimistic.

This post draws on some of the research I undertook on automation during my MBA studies. In particular, it looks back to a particular period of British history for reasons as to why lawyers should be less fearful about their future role, but also to recognise that to embrace this more positive future will require new ways of working.

Yorkshire and the Industrial Revolution

I grew up in Yorkshire, in the North of England. This is an area where the story of another period of disruptive technological change once played out. This was the Industrial Revolution and as with any change, the story includes those who tried to resist, in the form of the Luddite movement. It is a story which lives on in the Yorkshire landscape, in the architecture and in the stories of local history.

I lived in a town which was at the edge of the region known as the Pennines. After school and on weekends, I loved to go hiking or mountain biking up on the moors. The hilly terrain is criss-crossed with dry stone walls, built for sheep-farming and dotted with the ruins of old cottage buildings. I may well be biased, but on those rare days when the sun breaks through the clouds and on to the hills, Yorkshire also happens to be one of the most beautiful places on Earth.

Until the late 1700s, local artisan craftsmen lived and worked in this region, raising and shearing their sheep, then weaving the wool by hand into cloth. It is from where we get the expression “cottage industry”.

Later, when I bought my first home, an apartment in Leeds, it was in a building that had been converted from an old blacksmith foundry. Starting in the early 1800s, the very first steam engines were designed and manufactured in this foundry building.

These engines would go on to power the Industrial Revolution – ships that would bring cotton and wool from all over the world back to the docks of Liverpool, along new canals and railways and into huge mills and factories. Steam-powered looms now replaced and automated the weaving that had traditionally been done by hand.

With the Industrial Revolution came genuinely disruptive social change. Some change was positive, with new sources of wealth, international trade and new consumer products that could improve the quality of life.

Other changes were more negative, including all the problems associated with rapid urbanisation and industrialisation: environmental damage, extreme poverty and degrading, unhealthy or dangerous working conditions.

At this time, there were some who actively, even violently, opposed the technological change of the Industrial Revolution. These were the Luddites, named after the character, possibly fictitious, Ned Ludd.

The Luddites were gangs that would gather at night on the moorlands surrounding industrial towns, armed with hammers and weapons. They would set out to attack mills, wreck the machines and threaten the mill owners. As time went on, the attacks became increasingly violent, with the Luddites setting fire to the mills and committing targeted assassinations of mill owners.

To counter this violent insurrection and to illustrate how seriously it was regarded at the time, the British army deployed 12,000 soldiers to the region. Putting this figure into context, even at the height of the Afghanistan conflict, the UK had deployed there approximately 10,000 soldiers.

Eventually the Luddite movement was crushed, with its leadership rounded up and subjected to a show trial, held in York, which also happens to be the city where I attended law school. Found guilty of a range of crimes, many were ultimately executed. Others were sentenced to be transported to the new penal colonies of Port Jackson, in Australia (now known as Sydney), which to bring this history to a neat finish, is also where I now live and work.

Luddites and Legal Tech

This legacy of the Luddites lives on, especially in the modern use of the expression “Luddite”. This label is now used to describe those that appear to resist or are ambivalent to technological change, as in “you’re not on WhatsApp? You’re such a Luddite“.

Amongst professional service providers, the legal sector is often portrayed with this Luddite label, seen as slow to adapt and resistant to change.

However, it is now a reality that a whole range of innovative legal technology products are either on the market, coming on to the market very soon, or under development. Examples include software for automated contract management, automated document review in M&A or e-Discovery processes, the use of Artificial Intelligence to answer increasingly complex legal questions and blockchain-based distributed ledger technologies. In the UK and USA, for example, predictive coding has already been accepted in judicial decisions, where it has been endorsed as being more reliable than human based review.

In relation to the adoption of these technologies and what they will mean for the legal workforce, resistance from lawyers can take different forms.

One is to deny that technology could ever replace a particular job. This is the view that “my job as a skilled lawyer is too complicated ever to be automated”. This is an interesting phenomenon, which is also a great example of the cognitive bias known as “illusory superiority”. This is the bias which is reflected in the statistic that a majority of car drivers all think that they drive at a standard which is better than the average, even when faced with evidence to the contrary. In relation to automation, a recent survey reported in the Wall Street Journal, stated that nearly two-thirds of Americans thought that robots could replace more than half of human jobs over the next 50 years. However, in the same survey, 80% simultaneously thought that their own job was not capable of being automated!

Another form of resistance is to accept that change will occur, but portray it with a negative focus, as destructive of jobs. This is the type of coverage commonly seen in the media. This brings us to the issue of the “Luddite Fallacy” and why, in the view of most legal technologists, there is reason to be more optimistic.

Economists have coined the phrase the “Luddite Fallacy” to describe the set of counter-arguments that oppose the Luddite view that technological change will cost jobs – in this case, that legal services can be undertaken by robots or other automated technologies.

Admittedly, there is an ongoing academic debate as to whether the Luddite Fallacy applies to our particular era of technological change. Whilst that debate is not resolved, the arguments used to critique the Luddite Fallacy are enlightening.

A first argument is based on the fact that legal technology ought to make the provision of legal services more efficient, thereby reducing the cost for the consumers of those services. To economists, this is a classic “consumer surplus”, capable of being spent on other services or invested into other areas of the economy, thereby generating new jobs in those sectors. The challenge for the legal profession, therefore, is to ensure that they remain relevant, by being involved in the development of those new products and services and by adding value for their clients, thereby creating new jobs within the legal sector. This will require lawyers to adapt and embrace new skills – whether those skills be technical (for example, learning to code) or commercial (such as the marketing, finance or strategy education that one gets at a business school).

Secondly, the process of change itself may create new work opportunities. Just as the Industrial Revolution created new, never-before needed, engineering jobs to build the infrastructure of that era, innovation within the legal technology sector will require the engagement of lawyers to build the tools of the future legal profession.

Thirdly, whilst technology may well drive change in the way that the legal sector operates, it is also just as quickly causing change in other areas of society and the economy. Whether it is drones, driverless cars or advances in the fields of biotechnology or nanotechnology, applying the old rules to new technologies (and assisting in developing the new rules) will continue to pose an increasing number of unique and interesting challenges for lawyers to deal with.

To extend this argument even further, there will be legal jobs in the future that a lawyer of today is not yet able even to contemplate. It would make no sense to a lawyer of a century ago to hear about an “Aviation Law” practice, or to a lawyer of only twenty years ago to talk about a legal practice focused on “Social Media issues”. Similarly, there will in future be whole areas of law in which lawyers will practice that do not exist today.

These arguments all reject the view that legal innovation and technology will reduce the pool of available work for lawyers. At the same time, the experience of the Luddites gives us a very valuable lesson about how to respond to periods of innovation – wrecking the machines and doing things the same way tends not to end well.

This article was also published on LinkedIn by Michael Milnes and is re-published here with the permission of the author. The information and views set out in this article are those of the author alone.

Michael Milnes is a corporate and commercial lawyer, based in Sydney, Australia.  His work focuses on M&A, JVs, procurement, out-sourcing and commercial law advice. As an MBA student, his personal research includes the role of automation, especially in the e-commerce, FMCG and supply chain sectors.