Journalists have a bias in favor of change. Something’s not “news” unless it’s new. Pronouncements of “seismic shifts” and “sea changes” generate more buzz and pageviews than saying things aren’t really changing all that much. This explains why we media types tend to go on breathlessly about “transformation” this and “disruption” that.
But picking up on the major theme of my story from yesterday about the latest Am Law 200 rankings, in which I argued that reports of Biglaw’s death (or even disruption) are greatly exaggerated, I’d like to provide more examples of how the practice and business of law aren’t changing as much as some might think. These all come from a great event I attended earlier this week, the third annual Big Law Business Summit, hosted this year at the gleaming tower on Lexington Avenue that’s home to the Bloomberg empire.
1. Don’t expect a regulatory revolution, even if President Donald Trump talks a big game.
Dramatic regulatory changes could have major implications for Biglaw and the business of law — but don’t bank on such changes actually happening. Former SEC chair Mary Jo White, now back at Debevoise & Plimpton (this is her sixth stint at the firm, for anyone who’s counting), had this to say:
White said she doesn’t expect enforcement actions to dip significantly, and she predicted the Financial CHOICE Act, which aims to replace the 2010 Dodd-Frank Act and roll back many of its provisions, likely won’t make it further than the House of Representatives….
“I think whatever change happens is going to come several years down the road by virtue of how the regulators carry out their jobs with a different kind of philosophy,” said White, now a senior chair of Debevoise & Plimpton. “But it’s both uncertain where the administration is actually going to land on policy, and then there’s uncertainty as to whether they can bring that about.”
Stephen Cutler, vice chairman of JPMorgan Chase and former head of the SEC’s enforcement division, echoed her sentiments, predicting that the Trump administration’s regulatory reform won’t be as sweeping as some hope (or fear): “I think we’re a long way away from accomplishing a significant change in the regulatory agenda even if one were to have that agenda.”
2. The separation of law and compliance, a major post-recession development, might actually get reversed.
Regulation of the financial sector increased dramatically since the Great Recession (and might not be going down as much as some might think, if White and Cutler are correct). One notable change in response to that regulation was the establishment at many banks of separate compliance divisions, distinct from the legal department, and with reporting lines not even going to the general counsel.
But this trend could be unwound — and that’s as it should be, as argued by Morgan Stanley’s chief legal officer, Eric Grossman:
During a keynote address at Bloomberg Law’s Big Law Business Summit in Midtown Manhattan Wednesday, Grossman told an audience of law firm partners and corporate legal officers that it’s “counterproductive” to separate a company’s legal and compliance functions, and that doing so does a disservice to clients, shareholders, employees, and regulators. “If you’ve built the right culture, the lawyers and the compliance professionals all share the same goal.”
…. Grossman said he expects other financial firms to [do what Morgan Stanley has done and] combine the functions again soon. “If they’re allowed to, they will,” he said.
3. Robots aren’t taking all your jobs.
Grossman noted that in his industry, they’re seeing the rise of automated investment advisory services (such as Betterment) — but there will still be strong demand for human financial advisors, for a long, long time. Baby boomers, who have a huge amount of investable assets, just aren’t there yet in terms of robot advisors. And it’s not just a factor of age, but also of issues; in Grossman’s view, if you have serious issues or problems, whether financial or legal or otherwise, you’ll still want to talk to a human.
As general counsel to a bank, Grossman spends a good amount of time (and legal spend) on ediscovery. In that sphere, technology has made things more efficient, but it hasn’t eliminated the role of human beings: “Computers can reduce your universe of documents from 10 million to one million, but you still need humans to look at individual documents to see how they fit into a case.”
Jamie Wine, global chair of the litigation department at Latham & Watkins, talked about how her firm is working with IBM (of Watson fame) to see how artificial intelligence can improve the delivery of legal services. But AI is still not a total substitute for actual lawyers. For example, artificial intelligence can streamline the due diligence process, but it’s still not perfect; for example, it’s not great at detecting when key provisions are missing from a contract.
As Stuart Ingis, chairman of Venable, added, “Computers aren’t yet able to advocate. We are being hired to advocate, whether in court or in a deal, and computers can’t yet do that.”
(A fun fact demonstrating how slow some lawyers are to adopt technology: Jamie Wine still uses a BlackBerry. The horror, the horror!)
4. The billable hour still reigns supreme.
As head of Capital One Financial’s legal department, Matthew Cooper is all in favor of trying out new approaches to the acquisition and pricing of legal services. His company has, for example, asked its law firms to farm out document review to lower-cost providers, instead of charging Capital One a small fortune to have it done by associates.
That said, the bulk of the company’s legal work is still done on an hourly basis. In Cooper’s view, “the death of the billable hour has been overstated.”
5. Diversity is still a challenge — and isn’t an easy problem to fix.
Jamie Wine of Latham said that law firms are making major efforts to enhance diversity, but “we aren’t seeing as much change as we’d like — and the reasons why are very complicated.” (For more on that subject, see this prior Above the Law column by David Perla and Sanjay Kamlani, Diversity In The Legal Profession: The More Things Change, The More They Stay The Same – Until They Don’t.)
One factor is that young lawyers might not aspire to Wine’s life as a Biglaw partner (notwithstanding Latham’s insane profits per partner). She suggested that women and diverse lawyers might look at her and say, “I don’t want that life — she works her ass off and she travels all the time.”
But for those lawyers who do want to go for the gold (or golden handcuffs?) of Biglaw, Wine offered words of encouragement: “I understand that you might be nervous about juggling work and family responsibilities. I get that. My main message to you is, stick with it, stick it out. These things have a way of working themselves out.”
In other words, Lean In (affiliate link). Or to tweak another famous saying (of disputed origin), be the change you want to be — in Biglaw.
Top Morgan Stanley Lawyer: Legal and Compliance Belong Together [Big Law Business]
Mary Jo White Doesn’t Expect Big Regulatory Changes Under Trump Admin [Big Law Business]
Big Law Business Summit [Big Law Business]
Earlier:
- The 2017 Am Law 200: Keep Calm And Carry On
- Diversity In The Legal Profession: The More Things Change, The More They Stay The Same – Until They Don’t
David Lat is the founder and managing editor of Above the Law and the author of Supreme Ambitions: A Novel. He previously worked as a federal prosecutor in Newark, New Jersey; a litigation associate at Wachtell, Lipton, Rosen & Katz; and a law clerk to Judge Diarmuid F. O’Scannlain of the U.S. Court of Appeals for the Ninth Circuit. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at [email protected].
