Finance And Law: Is Computer Software Coming To Replace You?

Technology is changing the legal profession, and lawyers must think about how this can increase their productivity.

robot lawyer computer attorneyAs an economist and finance expert, I am often brought in to act as an outsourced CFO for small and mid-sized companies that need more financial expertise than normal because of a potential company sale, capital raise, or similar situation. On one such recent engagement, an incident occurred that caused me to rethink the future of the legal profession.

While helping a mid-sized company with putting together financial forecasts for a venture capital Series A round, I started working with the firm’s attorneys who were compiling various documents such as the Investor Rights Agreement. In talking to the attorneys, I discovered that much of the initial work of compiling the documents was actually done for them by technology.

Apparently, on all of the deals this law firm worked on, the client started the process by using a piece of Turbo Tax-type software and filling in details about their company. The software then created documents specific to the particular company and deal in question. Those documents were then briefly modified by the attorneys before being sent to the client company for use in their deals. This process enabled the law firm to handle more deals more quickly and with fewer staffers than it otherwise could have.

This type of technology represents an example of how technology is changing one of the world’s oldest professions. From e-discovery software to document-automation software, and even high-profile technologies like IBM’s Watson computer system, once you do a little digging it is clear that the legal world is changing significantly.

Against this backdrop, attorneys need to figure out how they can add value for clients over and above what is done by computers or software. Certainly in-court arguments are unlikely to be taken over by software anytime soon, but that’s a minimal part of the day job even for litigators. Other areas of the average lawyer’s day job may be much more vulnerable to disruption.

The rapid pace of technology’s advance highlights two important realities. First, it is probably getting tougher to be a new attorney. Second, attorneys should be thinking about how technology can enhance the core tasks they do and enable greater productivity.

On the first point, young attorneys are rarely put forward as point persons on new accounts or as significant advisors to clients. Instead, much of the role of a young attorney has traditionally been supporting more senior personnel. That’s not unusual, of course – in fact, it’s typical in most fields. But it does mean that as computers become more effective support for senior personnel, the role of junior attorneys may need to be rethought.

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More importantly, pertaining to the second point, attorneys should be thinking about adding value to clients with consultation and as an advocate for clients rather than by compiling paperwork. To use an analogy from my own field, stockbrokers historically spent a lot of time processing trades for clients and making recommendations. New technology has obviated the need for much of that work, and so most successful stockbrokers over the last ten years have shifted to focusing on advising clients on portfolio allocation, offering personal investment consultation, and talking about what-if scenarios with clients. Attorneys need to meet the same challenges. The technology has taken a little longer to reach the legal field, but the end result may be the same. It is unclear at this point what the future will bring, but attorneys clearly do need to evolve to meet the challenges and opportunities technology is ushering in.


Michael McDonald is an assistant professor of finance at Fairfield University in Connecticut. He holds a PhD in finance. Michael consults extensively with organizations ranging from Fortune 500 companies to start-up businesses on financial matters through Morning Investments Consulting. Michael has served as an expert witness in legal disputes, and is an arbitrator with the Financial Industry National Regulatory Authority (FINRA). Michael can be reached at M.McDonald@MorningInvestmentsCT.com.

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