Distribution, Competition, and Antitrust / IP Law

Law Grad Salaries Down, Automated Legal Analysis Systems Marketed – Evidence of the Effects of Technology on Production and Distribution?

English: The famous red eye of HAL 9000

HAL 9000 (Photo credit: Wikipedia)

Below are two fresh links from the InterTubes, the juxtaposition of which is highly suggestive. What’s the connection, and how do they relate to distribution law? Before answering those questions, let me describe the linked materials.

First, the National Association for Legal Career Professionals (“NALP”) reports that

The median starting salary for new law school graduates from the Class of 2011 fell 5% from that for 2010 and has fallen nearly 17% just since 2009. The mean salary fell 6.5% compared with 2010, and since 2009 the mean has plunged almost 16% according to new research released today from NALP. The research also reveals that the median starting private practice salary fell over 18% from 2010 and since 2009 has fallen an astonishing 35%.

Second, a company called Neota Logic is marketing a technology that it says “solves problems in many fields just as Microsoft Excel solves financial and numerical problems – without programmers, quickly and efficiently.”

In a nutshell, Neota Logic seems to be selling expert systems (maybe something like IBM’s Watson?) that, among other things, can help answer legal questions for companies and law firms. I don’t think Neota Logic can yet replace attorneys altogether. It appears the company is marketing its expert systems more as supplements to human advice rather than as replacements. Nevertheless, this is to some extent likely the shape of things to come.

So, what is the connection between these two links? I suspect that the short-term difficulties in the legal field’s labor market are masking a longer-term trend. The Internet began reshaping and (as some like to say) “dis-intermediating” economic relations in the 1990s. But the effect wasn’t initially perceived because of (a) the dot.com bubble which was quickly followed by (b) the housing bubble. The bubbles – by inflating asset prices – for a time successfully obscured an ongoing and fundamental shift in how goods and services are provided and distributed in the global economy. But that shift is now increasing apparent.  What used to require substantial numbers of people to deliver locally can now be done by smaller numbers of people, often remotely.

That is true even in law. In most law firms, it used to be typical for two lawyers to share one secretary. Now the ratio is more like 5 to 1. Document review used to require dozens of attorneys. Now it can be automated with “smart” software that can search thousands of pages a second. Previously, a technician would need to physically service a lawyer’s computer.  Now software can be updated and fixed remotely by technicians thousands of miles away. Some have thought that the core service provided by lawyers – advice – is unassailable by technology. But given Watson, Neota Logic, and other systems, that may no longer be true (or may not be true forever, at least not entirely).

What does all this have to do with distribution and competition law? Well, maybe not that much, but maybe everything. Amazon, for example, is reportedly working on same-day delivery of products – perhaps the “Holy Grail” of retail. If successful, the system may make life very, very difficult for local retailers, who will lose their immediate delivery advantage. This is just another example of the growing effects of technology (and particularly the Internet) on various distribution and labor markets. Lower prices and better service are likely to result – but at the cost of, in this case, retailing jobs.

For better or for worse, antitrust law generally doesn’t consider such labor force effects when analyzing business arrangements. These effects are likely to only accelerate.

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About Howard Ullman

Antitrust, competition, and IP law enthusiast.

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