On Thursday I’ll be speaking at the Law & Entrepreneurship “Conference within a Conference” hosted by Law & Society at its annual meeting in Chicago. Here’s my panel, also including Rob Beard, Brian Broughman and Erik Gerding. My topic is “law entrepreneurs.”
My presentation will continue my speculation, begun in Death of Big Law, on the “legal information industry” that could develop in the aftermath of the demise of current models of delivering legal services. Consistent with the theme of the mini-conference, I focus on opportunities for entrepreneurship in this new industry. So the project might be especially intriguing for those, including the law school class of 2010, who might appreciate alternative employment opportunities.
The paper begins by discussing the forces that are giving birth to the new industry: globalization, new information technologies, clients’ demand for cheaper law, and deregulation of legal services.
I then examine some possible ways to tweak the existing industry model based on customized advice to clients. We can expect to see new ways to connect lawyers and clients, and ways such as outsourcing to substitute contracts for firms. Also expect new kinds of firms that can be sold to the capital markets and that combine law with other disciplines.
Then I look beyond legal advice to refashioning legal information into products. Entrepreneurs might develop new ways to sell legal ideas, uses for contract templates, ways to standardize contract drafting, private development of new business associations, mechanized contract review and investments in legal think tanks that engage in research and development.
The r & d idea could be of particular interest to law professors. I consider the potential for a law version of “Bell Labs” that could privatize some of the research now happening in academia. Good thing, too, because I’m not sure how much room will be left in the brave new world of legal information for research subsidized by law school tuition based on big law jobs that no longer exist.
Next step is revolutionizing litigation. I try to run, or at least walk, with the idea of litigation as an exploitable asset. I consider potential opportunities for entrepreneurship in exploring for new causes of action, production of lawsuits, legal research, financing litigation, assisting the capital markets in valuing litigation and liabilities, legal risk management, and adjudication.
Finally, I consider the preconditions for robust legal entrepreneurship: how the law will have to change; the interest group alignment that will make this legal change possible; and last, but not least, how to train a new generation of legal entrepreneurs who invent things rather than wait for cases and transactions to walk in the door.
The bottom line is that the ancient idea of legal information production as the exclusive province of worker cooperatives surely is going the way of all the other precursors of the industrial revolution. As the existing business model gasps its last breath, it’s time for some serious creative destruction. I plan to consider what this might look like.
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Michael — This is one of the general ideas (though not with this example) that I have begun to explore both in this paper and in the Death of Big Law. The classic example of such an innovation is poison pills, innovated by Marty Lipton. There has been substantial work on this, which I discuss in my previous paper. There’s still much more to do and I would appreciate your input. But this is not a “different spin” as you suggest.
Larry, the panel looks interesting, but I would be interested in a different spin on law and entrepreneurship focusing on the part of lawyers themselves; specifically on innovations in contracting terms, and how those innovations propagate. For instance, take collars/limits on exchange ratios for stock-based M&A deals. According to the SDC database of M&A deals, the very first collar appeared in 1991 in one deal. The number increased from there, but never attained anywhere near the penetration rate one might expect (leveling out around 20% of stock-based deals).
Why and how did that term come into play in 1991 (not before or after)? How did it spread? Why didn’t it spread further? What factors affect lawyers’ ability to successfully innovate in the deals they structure and what are the economic consequences of how such innovations affect value and uncertainty in the deal? These are important questions that I have not seen addressed in the literature. Micah Officer has a paper looking at these collar terms in the Dec 2004 Journal of Finance, but doesn’t get very far into the questions above.
To what extent is such innovation consider “entrepreneurial” in the world of legal practitioners?
The r & d idea could be of particular interest to law professors. I consider the potential for a law version of “Bell Labs” that could privatize some of the research now happening in academia. Good thing, too, because I’m not sure how much room will be left in the brave new world of legal information for research subsidized by law school tuition based on big law jobs that no longer exist.
You might be interested in a comment I recently submitted to the OSTP regarding commercialization of university research.