Thursday, June 22, 2017

Back in the USSR...Russia Actually

(thanks to sobaka.ru)

In this photograph I'm comparing glasses with another delegate at the St Petersburg International Legal Forum. Actually we were at Legal Street, an event held by the Forum and the Russian Ministry of Justice and were being shot by a fashion magazine--Sobaka.ru, as you do.

The last few months have been active, especially in the area of law and technology and new directions for the legal profession. Three events in particular stand out. First is the Law Without Walls ConPosium in Miami; second is the JDHorizons symposium in London; and finishing up with the VII St Petersburg International Legal Forum in Russia. All quite different but with themes in common running through them.

I've written extensively about LWOW in this blog as I have been involved since its inception in 2011. What I will add to my previous comments is the dramatic growth in the students' skills and talents in formulating their projects. In the early days projects would often involve an innovative web portal that enabled people of different kinds to interact. In a couple of projects this year we had students creating chatbots to interact with their audiences. We have students using ideas based on games to coach people in new areas. Their creativity is dazzling. LWOW has now developed an incubator to help develop the winning projects.

LWOW is one of the growing number of programmes that show legal education can't remain trapped in the 19th and 20th centuries, merely based around doctrinal law. New courses such as Iron Tech Law at Georgetown and Law Apps at Melbourne use the Neota Logic platform to develop legal apps targeted at specific problems. Michigan State Law School has LegalRnD for legal services innovation. There is still enormous resistance from conventional law faculty to these types of courses, but among students, when offered them, the clamour for them is strong.

JDHorizons is part of a series of annual events held by Janders Dean, a law firm consultancy. What is unusual about Janders Dean is the way it combines the worlds of practice and academia. Each gets an opportunity to speak to the other, which, as an academic, is so enriching. We had socio-legal scholars, psychologists, lawyers, among others. It means one can be cross-disciplinary as well as cross-professional. Janders Dean is also involved in LWOW.

The VII St Petersburg International Legal Forum is different from the other two. The forum had 4,000 delegates from 70+ different countries. It is as much a forum for networking as it is for exchanging ideas. I was originally invited for one session but ended doing three. The forum is organised by the Russian Ministry of Justice each year on a distinct theme, which for 2017 was law and technology.

I was originally invited to participate in the Plenary session with the Russian Prime Minister, Dimitry Medvedev. Our panel was unusual in that besides myself we had the head of the Swiss Parliament, the CTO of Aliexpress, the head of the UCL Blockchain centre, a co-leader of IBM Watson. The central theme was the disruption of law and legal practice by technology. In particular we discussed how artificial intelligence and blockchain were radically altering our approach to business, life and the professions. (We had a two-hour lunch afterwards with the Prime Minister and the Justice Minister where we carried on these discussion. I have never had such extensive and intensive conversations with politicians before who clearly knew what they were talking about.)

The following two days I talked about law as algorithm as well as the future of legal education.

Normally I don't go to conferences like this. But I am glad I did attend. I had the opportunity to meet with and talk with a range of people, lawyers, academics I might miss. I gained an enormous amount of knowledge and contacts in St Petersburg. (Plus, it is one of the most beautiful cities I've visited.)

In these days of interdisciplinarity academics need to step out of their normal worlds and experience new things, ideas, and forums. It's the necessity to be experimental and innovative. It can be challenging, when over many years one has built expertise and knowledge in specialised areas, to come to grips with new spheres of knowledge where one isn't the expert. We also need to transmit this through our educational systems.

I will admit too as a legal sociologist something like the St Petersburg International Legal Forum is a great opportunity to observe other worlds and try and understand their folkways and rituals.





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Wednesday, January 04, 2017

Future of Legal Services and Legal Education?



When one starts thinking about the intersection of legal services, the legal profession, and legal education, I honestly don't think it's too far removed from the Venn diagram above.

On 13 December my good friend, Julian Webb (and also Paul Maharg), organised a legal services forum at Melbourne Law School to bring together academics, policy makers and practitioners to discuss the challenges of the future of legal services and how we should research them in order to be able to meet them. Richard Moorhead came from London to give a plenary address and I moderated a panel on technology and innovation in the sector. Fortunately, the school videoed the proceedings and you can see the videos here. Happy viewing...



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Monday, January 02, 2017

Rule of Law and Legal Education: Do They Still Connect?



I've put a new paper up on SSRN.com on the rule of law and legal education. The introduction reads:

When we connect legal education and the rule of law it has two connotations: to what extent should legal education be protected by the rule of law, and to what extent should the rule of law be taught within legal education. It is not difficult to see how both connotations could cause problems in certain countries where the rule of law might exist in a different form. For example, China is becoming a rule of law-based country in respect of its commercial and intellectual property rights. Yet its record on human rights and the due prosecution of them is abysmal. The rule of law like most legal rubrics is slippery and tends to avoid easy definition (May 2014). Jeremy Waldron captures this when he says “…people’s estimation of the importance of the Rule of Law sometimes depends on which paradigm of law is being spoken about (Waldron 2012: 9).” For Aristotle safety was located in customary law and for Hayek it was the evolutionary development of the Common Law (id; but cf. May 2012). Tom Bingham’s idea of a thick definition of the rule of law has appealing since it is elastic and has an anthropological intuition about it that maintains a connection to community (Bingham 2010). In contrast to Waldron who would keep the rule of law at a meta-level rather than a substantive one, Bingham includes specific instances of rule categories such as, notably, the Universal Declaration of Human Rights in which the right to education is enshrined (id: 83).

In this chapter my focus is not so much on the theoretical debates surrounding the rule of law but rather how it is implicated and treated in the developments of modern legal education and practice. I first analyse the changing legal world for which the salient period is the post-World War II to the present. We have the rise of the international and transnational institutions and the emergence of the modern, organization-based, and increasingly financialised, legal profession that plays a significant role in globalization. To provide the labour force for the profession the academy’s role has come to the fore and is now the main gateway to the legal profession. Even with its duality of roles as reproducer and gatekeeper, the academy is now more remote from the profession. This in part reflects a desire on the part of the legal academy to be a more academic and intellectual member of the academy than hitherto (Cownie 2004). The rise of subspecialties within law marks this shift as does the increased number of law professors with PhDs, often in other disciplines. The increased tensions between the academy and the profession have fostered argument over both the content and structure of the law degree. One might almost ask if the issue is not so much the rule of law but the rule of lawyers. Finally I examine some of the challenges for legal education—such as the rise of legal technology—that will have enormous effects on legal practice and the rule of law, especially where it abuts access to justice.

My approach to the topic is essentially sociological, which means I ask under what conditions would the rule of law be promoted or diminished and by whom? In this respect I look to the legal profession, courts, and legal academy as key players. By this I mean they are crucial to the design of the legal system and its implementation. The relationship of the legal profession to the state or market can signify to what extent lawyers might be viewed as radical or conservative in their approach to legality and juridical questions (Rueschemeyer 1973). For example, Weber (1978) saw the English legal profession as a craft-based profession with relatively little input from the academy. The development of the common law therefore depended on the creativity of practitioners who became used to devising solutions to problems as they arose. In the absence of a legal code, lawyers innovated in law through an ad hoc process. On the mainland continent, and in many other countries, the civil code system depended on commentaries by academics that kept the law in tune with its primary principles. This resulted in a different but less innovative law making. Thus, for example, whereas in Germany pfandbriefe are creatures of statute, in the UK they were created by contract using common law principles (Flood 2007). The alliance between the state, academy, and legal profession is much stronger in code systems whereas common law jurisdictions are typically associated with the market and so depend far more on practitioners.

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Sunday, November 06, 2016

Legal Education in England & Wales and Germany: New Paper



Anna Mountford-Zimdars, Kings Learning Institute, Kings College London, and I have written a new paper on legal education in England & Wales and Germany focusing on barristers' education and German advocates. It's on SSRN.

Here's the abstract:


This paper explores the relationship between legal practice and type of university attended and degree course studied for English and German lawyers.  For England, some of the analysis is only based on data for barristers. We find that university attended matters a great deal for English barristers if they tend to have graduated from elite universities within the stratified British higher education system. In contrast, the flat German higher education system is also mirrored in the profile of lawyers were graduates in the top jobs come from a wide range of institutions.  For Germany, attainment at university and graduating in law are keys to unlocking elite positions whereas the status of university seems second to none in the British system, trumping having studied law as a first degree.  The paper thus empirically confirms anecdotal insights that knowledge and skills directly related to law matters more for early career entry in Germany and generic skills and socialization at elite universities matters more for transitioning into elite legal employment in England.  It is unclear from the available data whether the different structures mean that the social make-up of the legal professions differs, but it is clear that different ways of accessing this key profession operate in the two contexts.



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Tuesday, September 20, 2016

Financing Law Firms: New Law versus Old Law: Good or Bad?


It seems to be the season of law firm/business surveys. We're hearing a lot about New Law, pushback from clients, less for more and so on. Smith & Williamson, an accounting firm, have surveyed law firms about their future finance decisions. 

Law firms are facing increasing competition from other firms. This isn't surprising as most below the Magic Circle are fungible. And it would be the same in the US too. The choices are maybe to merge or downsize into a boutique. Indeed it is the boutiques that are causing the competitive pressures on mainstream law firms. 

One solution is to buy them, rather like Facebook and Google buying smaller but useful companies. Think Facebook and Oculus. The problem for law firms is that they are shy when it comes to external financing. They like to borrow from banks with revolving credit facilities or, worse, via overdraft. (I know this is external but it isn't perceived in that way by lawyers.)

Aside from personnel, one of the biggest expenditures for law firms is technology, especially if they are trying to commoditise part of their services--e.g. online term sheets. Altman Weil say their survey found the biggest threat for law firms was CCCT (competition, commoditisation, competition [from alternative suppliers], and technology.  Calls for capital contributions from partners and overdrafts are primitive ways of funding the future. The Legal Services Act 2007 gave law firms (or more strictly legal services providers) the opportunity to become Alternative Business Structures so they could attract external investment. 

Big law hasn't really taken advantage of this yet. The most common form of entity is still the limited liability partnership. None of the big firms have incorporated, because they fear external scrutiny and pressures for change. However, Smith & Williamson found around 32% of their respondents (about 50 of the top 100) were prepared to see private equity as a source of funding. 

The funding would be used to buy "bolt-on" acquisitions, the boutiques that are the source of frustrating competition for the mainstream firms. I suspect law firms think this type of funding will be easier to control than other kinds. This is speculation but the fact that law firms haven't yet incorporated or gone public (pace Slater+Gordon) suggests to me that either they don't know how or don't want to subject themselves to market disciplines. Given private equity works on a three year timeline to exit, I can't see them taking a back seat on financial decisions in the law firm. Cost cutting, commoditisation and asset stripping are the usual weapons of private equity, so I don't see law firms being immune. And of course the private equity investor's favourite investment technique is debt loading. Law firms are used to being encumbered with debt as that's what they do normally. PE debt will be fiercer. 

So as much as law firms think of themselves as businesses, and they are, in many ways they are still immature in matters of the market. If they don't start to learn market disciplines and see themselves as something other than chummy clubs, when they go to market [I considered a number of metaphors here from dull to unprintable, so insert your own] it will be a case of, to use Goffman's phrase, "cooling the mark out".


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Thursday, September 01, 2016

What Happens When the NSA Gets Hacked?



My colleague, Adrian McCullagh, and I published a story on Medium.com about the NSA hack by a group called the Shadow Brokers.

Shadow Equations: Where IT Security Fails

Everyone now lives on the internet and security is paramount except we seem so bad at providing it. Businesses and governments receive thousands of cyber-attacks a day from countries like China. In the wake of infiltrations into Austrade and the Australian Defence Department’s networks, the prime minister’s cyber security adviser, has admitted the Australian government is attacked on a daily basis. It was even thought the failure of the Australian online census was due to a denial of service cyber-attack, which helped foment nationwide privacy scares. The story we tell here indicates that we are at a tipping point in cybersecurity.Recently a hacker group known as the ‘Shadow Brokers’ published on a particular open web site a sample of source code of particular malware (MALicious softWARE) claiming that the malware had been downloaded from an organisation known as ‘Equation Group’ (NSA)......

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Thursday, August 18, 2016

What Is Going on with the Legal Profession?



The other day I was asked to write a paragraph about the future of the legal profession and here's what I wrote:
The legal profession of the 21st century has been described as having encountered its own Cambrian explosion. Rather than extinction the legal profession is facing rapid change as the result of increasing use of technology, globalisation, the deregulation of legal services markets. Australia and the UK were early adopters of alternate structures for the provision of legal services, which in the case of the UK is placing small legal practices under immense pressure as, for example, online providers (e.g. LegalZoom and DivorceOnline) enter the market using loss leader pricing to capture business. Some refer to this as the Uberisation of the legal practice. Outsourcing of legal work to “cheaper” markets such as India and South Africa has reinforced the trends working through globalisation. Millions of dollars are being invested in new legal enterprises such as ROSS Intelligence based on IBM Watson, and Ravn, which use big data to research and answer legal questions and predict outcomes of cases. 
I don't think there's anything particularly startling in that paragraph although the reader in my law school was shocked. All one has to do is read Jordan Furlong, George Beaton et al to see where the profession and legal services are heading. But I wonder.

The counterfactuals won't go away, so how right is New Law? Dealbook reported in the New York Times that law firm revenues rose by 4.1% for 2016 H1 compared to 3.3% for H1 of 2015. Law firms have experienced growth, albeit in single digits, for the last four out of five years. There are no signs of it slowing down.

Those doing bankruptcy and litigation are thriving while transaction lawyers are faring less well owing to the stupidity of Brexit (sighs in exasperation at those idiots). Yet we've seen Big Law doing well on M&A work. Cravath raised starting salaries to $180,000. Hourly billing hasn't been abandoned. London law firms have been reporting big rises in lawyers' earnings (as PEP).

So, I'm confused by the conflicting signals. Maybe it's not a Cambrian Explosion. But there are explanations. The New York Times is talking about big law firms whereas we know smaller firms are feeling the heat from alternate suppliers, especially online providers. Big Law is relatively secure because there are no realistic alternate suppliers for what they do. Axiom and Lawyers on Demand pick low hanging fruit, the work that is easily standardised, not the big jobs like M&A. The Big 4 accounting firms are credible threats but how different are they from law firms?

Perhaps we need a big London law firm to convert to an ABS and redesign itself and see if that sets change in motion. I recall that it was the merger of Coward Chance and Clifford Turner, in the late 1980s following Big Bang, that led to a rush of law firm mergers all over the world. I don't know how close we are to that yet.



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Monday, August 01, 2016

Professions and Technology: History and Transformation


I gave a presentation at a roundtable organised by the Royal Society on professions and machine learning recently. This is the text:

Professions and Technology: History and Transformation
One way of characterising professions is as vehicles that convey expertise to consumers who are unable to generate that expertise themselves. To this basic formulation we add professions are usually self-regulating for which entitlement they form compacts with the state to prevent exploitation of consumers because of asymmetrical relationships, all of which results in a social licence to operate. Over the years, to follow Sciulli, professions have functioned within structured situations as opposed to fluid sites. For lawyers, this is the court; for doctors it is the hospital. These institutions granted the professions status, autonomy, and the right to determine the socio-cultural conditions of reproduction. Having gained independent authority in civil society, these professions have been able to monopolise resources and create closure. States sanctioned moves towards professionalism thereby entrenching it in society. In this paper I focus on law with medicine as my comparator.

The history of law and medicine shows how the professions have altered in structure and institutions. Despite their central importance, law and medicine were small-scale enterprises, almost guild-like. Relationships were based on collegiality and patronage. The professional was a single person delivering services and different components within occupations competed with each other to dominate their fields of practice (e.g. solicitors v barristers; doctors v chiropractors). The French Revolution brought physicians to the fore as the treatment of the body was separated from that of the soul and the modern hospital was born. Industrialisation hastened hospitals’ development and consolidated their place as sites of treatment and research.

Within law the archetypal lawyer was the sole practitioner whether barrister or solicitor. But the division of work practices between the two, augmented by status concerns, created different constellations of practice. Barristers focused on the court, which also represented potential judicial career progressions for them. Rules such as the cab rank rule helped impose a commitment to sole practice and deterred the formation of firms and partnerships. Most barristers were located in London, close to the courts. Solicitors, while technically officers of the court, applied their skills and talents elsewhere, and they became agents for barristers. They were men of capital and located throughout the country. According to Sugarman, solicitors were the conduits for capital flowing around the country. They drafted contracts and agreements, and transferred property titles. And as London became the financial capital of the world, the law firm grew as the key legal institution to serve capital both nationally and internationally. Freshfields, one of the big City law firms, formed its main relationship with the emerging Bank of England in the 18th century, a relationship that endures today.

Both institutions—hospitals and law firms—have grown massively through the 20th and 21st centuries. And while both have the missions of health and justice, they have been driven by commercial concerns, which raises questions about their commitment to the public good or interest. This leads me to a crucial point in this discussion, that the ethos of business is now endemic in professions and professionalism. The ABA, for example, in 1986 attempted to restore ‘principle’ over ‘profit’ with little success. Similarly, hospitals are driven by commercial concerns whether in for profit areas or social medicine. Hanlon argues that we should talk of ‘commercialised professionalism’ emphasising technique, managerialism, and entrepreneurialism. If we look at how law firms are evaluated today one of the more common measures is ‘profits per equity partner’ based on billable hours. Lobby groups like CityUK applaud the £23 billion contribution to GDP made by legal services and the Lord Chancellor entreats foreigners to litigate in the English Commercial Court.

The value system of professionalism has shifted and changed over the course of the last 200 hundred years. The distinction between professions and expert occupations is harder to justify and the ideal of the autonomous professional has transformed into an expert with degrees of discretion. It is even reflected in the way regulation has moved away from self-regulation towards more external regulation—evident in both legal services and health care. These changes refer to internal and institutional factors like the rise of global law firms and managed health care companies. The consolidation of power and authority in fewer hands has had to be balanced by stricter regulation.

The transformations beginning to flow into health and law now are separate, but related, to the changes outlined above. Technology is increasingly penetrating the world of professionals and redefining their work. Their business models (and so their ideas of professionalism) are slowly and painfully adapting. The first autonomous surgical robot tied perfect sutures in a pig and IBM Watson Oncology is assisting in cancer diagnosis and treatment. However, the hospital is a site of research as well as treatment. Law firms are not engaged in research and development although they may innovate occasionally. This difference means law has less ability in its traditional form to manage the incursion of technology, which will probably reach a crisis point in the near future.

The big law firm has relied on employing large numbers of associates and paralegals to administer complex litigation, for example. Discovery of documents means examining thousands, if not millions, of documents to exclude those ineligible for disclosure. E-discovery done by legal process outsourcers in India using sophisticated algorithms is accurate, faster, and much cheaper than humans. This is standard fare and generally affects junior members of firms—neo-professionals and paraprofessionals. What is potentially more interesting is where professions are being exposed to and made subject to the environment of competition. In Britain the Legal Services Act 2007 opened up the ownership of legal services providers to those outside law and so to new business models (ABS). Perhaps the biggest development is in the provision of online legal services that dispense with lawyers or minimise their involvement. For example, companies like LegalZoom and Rocket Lawyer provide legal documents online; Divorce-online sells automated divorce packages; and Radiant Law uses technology to analyse companies’ contracts in order to expedite contract formation over time. Modria is already automating online dispute resolution without the intervention of lawyers. The emergence of new legal ABS compromises the legal profession’s claims to expertise and closure. Yet the legal profession still exists, so perhaps these moves should be interpreted as boundary movements rather than fundamental change.

Are professions secure or is the possibility of radical mutation likely? Two developments in legal services convince me insecurity is reasonable. One is the advent of blockchain and related technologies, e.g. smart contracts and decentralised autonomous organisations (DAO). I won’t pursue this further now but to say the ramifications are profound. And the other is the introduction of artificial intelligence in law. Riverview’s Kim is a virtual assistant for inhouse counsel to improve decisionmaking through triage procedures. ROSS Intelligence is a legal research tool based on IBM Watson. Watson has been ‘fed’ data—legislation, cases, articles, etc—on bankruptcy law and it responds to natural language enquiries to produce tailored answers as relevant as possible. ROSS improves its predictive capacity the more it is interrogated. While it is designed to augment and supplement lawyers’ expertise, it is not difficult to imagine AI beginning to supplant lawyers. If we tie this to the DAO, for example, the potential for AI in law increases enormously.

For the legal profession, in existence for hundreds of years, new technologies will be disruptive innovations as modelled by Christensen. Already traditional partnerships are under strain and the Bar is shrinking the more legal work is unbundled. Does it mean the end of professionalism or its redefinition? The answer will emerge over time as technology and law collaborate or contest each other. And I haven’t discussed what this means for education: what will the new lawyer need to know?

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Tuesday, July 26, 2016

Thought Experiment: What Does the Uberization of Legal Practice Mean?



Yesterday I had lunch with Joanna Goodman, a journalist who writes for the Guardian and the Law Society Gazette on matters technological, and we talked about the conservatism of law when it came to incorporating technology.

This has led me to a thought experiment I'd like to try out here. First, a couple of assumptions: this is speculation into a distant future. I say this because in my experience it takes approximately a generation for lawyers to change. That although this is a thought experiment I would like to make a distinction, often lost, between expert occupations and professions. Professions have elements of judgment, wisdom and the like that derive from the long cultures that back them. We can't deny that law, as an occupation/profession, has hundreds of years of cultural development and history that are transmitted in all sorts of ways--memes, apprenticeship and knowledge. Expert occupations are often devoid of, or avoid, this type of cultural environment.

The thought experiment. The rise of Google, Facebook and Uber signify a number of fundamental changes in the way we live. Data is free. Communication is seamless and no longer bound by time and space as it was in the old days. Ownership is mutating into sharing (the gig economy). Data is empowering in that we can now manage and manipulate huge amounts of unstructured data. Google has successfully incorporated this into its autonomous vehicles. Amazon is developing autonomous drones to deliver packages to customers.

Uber is disrupting the taxi industry everywhere by using data to enable people to use their cars as a taxi service when they want. Of course, Uber is facing backlash from conventional monopolistic taxi businesses. Despite this the move towards uberization seem inexorable.

We know from Google, Tesla, and Uber that the weak point in the chain is the human. Humans don't behave like machines and have accidents. Tesla claimed that the failure of its recent enhanced cruise control was far rarer than normal traffic accidents. Moreover, the patch to fix the problem will be transmitted to all Teslas when ready. Compare that to traditional automotive recalls that necessitate individual action.

Underlying Uber's strategy is the removal of the human driver. Google's autonomous vehicle would answer this. There is a further aim behind this which is to move people away from "owning" vehicles that are used partially and are wasting assets. Instead of owning we would adopt, rent or subscribe to "personal transport solutions". To get from A to B, I need transport of a kind not necessarily my own vehicle.

Streets would be clearer, congestion reduced, and air cleaner. So onto lawyers.

At present, we have a lawyer or a law firm. In a pre-Uber sense we own it. The law firm is an expensive conglomeration of people, land and other assets, which makes it expensive to use, and reduces access to justice.

Much of legal work can be done without human intervention or minimal human intervention. For example, minor dispute resolution can be done online: divorce, parking tickets, complaints about banks. Document construction relies on computers. With the increasing sophistication of AI and tech, we have entities like ROSS Intelligence based on IBM Watson, Kim, and Ravn that are using unstructured data to improve legal power.

What then is the purpose of the law firm? At the moment it is a signalling device: my law firm is bigger or better than yours. This is the bet the bank type of deal. But for most law firms at the consumer end of the market, there appears to be little justification except that they satisfy their owners. And for most business owners there is a feeling that lawyers and law firms don't understand their businesses or want to. How much of what companies need in terms of contracting could be put into smart contracts on blockchain?

What if law firms were uberized? Much work would be automated--think compliance, IP, and regulation management. Remember Stuart Brand said "data wants to be free" back in 1984. So much of legal information would be free, like medical information, and the AI will shape it to individual ends.

The work that requires a human dimension could be done by real people but wouldn't necessarily require firms. If we need those intangible attributes of professionals like judgment and wisdom or high level advocacy, then we seek out humans for them. But much of this could be done through networks than physical firms. After all, there is little to distinguish one law firm from another. They are largely fungible.

I won't begin to speculate what this means for law schools....





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