On a crisp, clear spring afternoon, Dan Katz sits in the back of a taxi as its driver abruptly switches lanes, looking to quicken the southbound crawl down Michigan Avenue past Millennium Park.
Katz, meanwhile, is preparing for his own lane change.
He will join the faculty at IIT Chicago-Kent College of Law in the fall, moving from Michigan State University College of Law, which he put on the map as a forward-thinking institution by creating the ReInvent Law Laboratory. There, students learn about software-application design and Lean Six Sigma business processes. They make Silicon Valley-style pitches to investors about startups they devise, in tech parlance, to “disrupt” the business of law.
The taxi moves slowly. Katz’s mind races.
He is excitedly talking about his research that will combine algorithms with human insights to predict Supreme Court decisions. Using the algorithms alone, he correctly calls the outcome of 70 percent of high court cases. When he’s done layering the human aspect into his system, the number will be higher still.
“I think that’s a statement of our whole age,” Katz said in a more formal conversation less than an hour earlier. “Humans plus machines beats humans or machines for a whole range of processes.”
Exiting the taxi, he’s now explaining the impact his predictions will have on things such as stock trading. In an upcoming paper, he will analyze all the Supreme Court rulings that moved financial markets. For traders, Katz’s predictions create an opportunity for arbitrage — the financial term for taking advantage of an asset mispriced by the market.
One example of arbitrage that particularly animates him is the stock price reaction to a unanimous 2013 ruling that banned human genes from being patented, Association for Molecular Pathology v. Myriad Genetics Inc. The ruling immediately created competition for products sold by Myriad that test for hereditary cancers. But instead of pushing Myriad’s stock price lower, the market seemed to interpret the company’s loss of a monopoly as a bonanza.
“The stock traded the wrong way for several hours,” Katz said as he moved his finger along Myriad’s imaginary stock chart that day — initially rising 10 percent before ending the day down 5 percent.
If there are large-scale arbitrage opportunities yet to be exploited by innovative financial firms, correctly predicted court rulings may just be one of them.
The law, however, is a much different story. Katz believes there are arbitrage opportunities left and right. His move to IIT Chicago-Kent is an attempt to capitalize on something he believes is wildly undervalued — technological training for law students.
His thesis is that increasingly intelligent technology fed by bigger and bigger data sets will eat away at the human monopoly in some segments of the legal market, and law students who know how to harness that innovation will benefit from it. Lawyers who do not will be left behind or, at best, outperformed.
Lawyers plus machines will be better than lawyers or machines on their own.
This idea, his track record at Michigan State and his plans at IIT Chicago-Kent — where a tech focus stretches back to the 1980s when it was the first law school to equip students with computers — put Katz at the forefront of academics who agitate for a shake-up of the staid law school hierarchy.
But he and other legal innovators face a problem that looks a lot like a taxi driver swerving through a traffic jam: No matter how vigorously they pursue change, they are often stuck by the slow speeds of those around them.
“I’m sort of an arbitrage hunter,” Katz said. “I’m looking for opportunities as they emerge and trying to take advantage of them.”
A young professor long in exposure
The 37-year-old Katz became an associate professor at Michigan State in 2011. In that short time, he has had an outsize impression on legal academia and the business of law.
In East Lansing, he co-founded the ReInvent Law Laboratory. Its futuristic website (which also takes a minimalist approach to punctuation) states: “We believe lawyers can change the world but to change the world we must first change ourselves.” Courses he teaches that would help them accomplish just that include Quantitative Methods for Lawyers, Legal Analytics and Entrepreneurial Lawyering.
In one legal analytics class, he taught students how to use a patent litigation tool developed by Lex Machina. Founded by Stanford law professor Mark Lemley in 2009, the company can analyze data from all federal patent cases filed since 2000, telling a user how frequently a judge rules in favor of the defense or plaintiff on summary judgment or how quickly a court terminates cases on average.
At IIT Chicago-Kent, Katz will offer courses similar to those he taught at Michigan State. The school is working on the branding for something like the ReInvent Law Laboratory, since that name will stay at Michigan State.
When he isn’t in the classroom, Katz often gives PowerPoint-based presentations on his vision of the future of law. One, titled “Innovation in the Legal Industry: The Future Is Already Here, It Is Just Not Evenly Distributed,” points out the ways technology is already altering the law — through workflow optimization, document production, info visualization and quantitative legal analytics.
In popular venues such as the LegalTech trade show in New York, Katz has used Lex Machina as an example of how analytics is changing the practice of law and also the types of job opportunities that will be available to young lawyers in the future. Katz is well-connected in the legal technology space — in part because of his interest and in part by others’ recognition that he can move markets in this area.
“It’s kind of funny because we think of ourselves as a pretty young, scrappy startup, but in Dan’s worldview, we’re kind of like the granddaddy of legal-tech startups,” said Owen Byrd, an executive at Lex Machina, which raised $4.8 million in funding in 2013. “We’re succeeding so much that he’s now (moved on and is) sharing the spotlight with some other brand new, raw legal-tech startups.”
This data visualization, produced by a team including Dan Katz, shows the links between U.S. Supreme Court citations in rulings from 1800 to 1825. He learned the method at University of Michigan’s Center for the Study of Complex Systems, and he says similar modeling could, for instance, use patent citations to trace the spread of innovation.
Photo courtesy of
Michael J. Bommarito II
and Dan Katz.
Like his teaching pursuits, Katz’s academic research, including the Supreme Court predictions, is also a departure from the humanities tradition of law schools. That has helped him garner media attention in the New York Times, Slate and Wired, among other publications.
He earned a Ph.D. in political science and public policy from the University of Michigan in 2011 (he got his J.D. from there in 2005). In his doctoral program, he focused on the study of complex systems — a physics-based field that, among other things, uses big data to map connections between various actors or objects.
He has applied that knowledge in his legal scholarship. In one paper, he mapped every move made by federal law clerks between judges, which he used to infer what judges held sway over others.
“It gives you a portrait of who has social authority in the federal judiciary,” Katz said.
Another paper measures the complexity of the U.S. Code’s Titles using an approach known as “knowledge acquisition” that blends psychology and computer science.
While the word count of a law is often used as a proxy for its complexity (see: newspaper reports about Obamacare), Katz prefers a more empirical method. By analyzing the structure, language and cross-citations of the 49 titles, he determined Title 42 — the section dealing with public health, social welfare and civil rights — was the most complex section of the code.
His conclusion based on this analysis is a warning to lawmakers. It is also informative regarding his view of lawyers’ place in society.
“Unnecessary legal complexity can drive a misallocation of … human capital toward comprehending and complying with legal rules and away from other productive ends,” he wrote.
Katz said it’s important to him to strike a balance between describing the changes he sees happening in the legal market and doing scholarly work to capitalize on the tech transition.
For him, academia is the place to help drive change.
“My goal has been to bring this polytechnic perspective to law, and I think a great place to do that is in the training of the next generation of lawyers,” he said. “It’s a great place to have a big impact.”
The importance of prediction
One impediment Katz’s work faces is the very establishment it hopes to help evolve. Some fear teaching students tools to innovate the practice of law will cannibalize the very jobs other law students are seeking.
That argument was captured in a New York Times article on Michigan State and other schools’ tech-law focus in which a University of Colorado professor said, “The irony here is that these new technologies are destroying traditional legal jobs!”
Katz countered that this new form of legal protectionism will ultimately be in vain. The machines are coming.
“You’re deciding that you’d like to cede a large chunk of the existing market to some third party?” Katz said. “That’s not a particularly well-reasoned idea. Thankfully, it’s not up to whomever is saying that. It’s up to the collective market and what they think.”
So far, the market has moved relatively slowly.
Students hoping to land Big Law associate positions vastly outnumber those who enter law school aspiring to be a legal technologist or a legal process engineer, jobs that work to standardize legal matters using technology to reduce cost and errors. The high cost of law school would incentivize any student to seek the better-paying (and at the moment more plentiful) law firm jobs first.
IIT Chicago-Kent is particularly well-regarded for its focus on technology and the law, exemplified by Ron Staudt’s work or Lori Andrews’ Institute for Science, Law and Technology.
Still, Harold Krent, the dean of IIT Chicago-Kent, said students rarely seek out the school specifically for that focus. Krent hopes the school’s existing classes and, starting in the fall, Katz’s teaching will change that.
“I think over time, that will be a differentiator for students coming in,” Krent said. “But Dan’s point is there’s a differentiator on the output side. A cadre of students who are more facile on project management and structuring technology … will be more in demand by corporations and law firms.”
On a spectrum of technology diffusion, Katz views the law at a place similar to where the finance industry was 40 years ago. Almost everything is done by humans, and very little computer modeling occurs. That had long been the case in finance. But this year, the CME Group will close its open outcry trading pits in Chicago, where a mere 1 percent of the market’s trades occur.
Something akin to that will happen in law, Katz believes. One statistic he points to is a MacArthur Foundation study that says up to 65 percent of today’s grade-school students will grow up to work in jobs that don’t exist yet. In Katz’s view, the law will be affected.
One way he and Krent believe technology will redefine the law is in the field of prediction. Just as an algorithm can guess 70 percent of Supreme Court cases, analyzing large reams of court data could lead to more accurate predictions in other courts.
“Dan’s work predicting Supreme Court cases is just to get attention to it,” Krent said. “But prediction is incredibly important in terms of litigation finance and, certainly, in terms of e-discovery. I think it may become incredibly important to understand new ways to structure claims against the government.”
Krent said data could be used, for instance, to speed up the process of awarding Social Security disability benefits. If, say, 95 percent of a disability application lined up with others that received benefits — an analysis made capable by big data — Krent said, “maybe you should get benefits right away instead of waiting.”
In that future, Katz predicts, there will not only be tech-focused jobs for lawyers, but tech-savvy lawyers will also have the upper hand in practice. They will provide a better service to clients by using technology and analytic-driven process improvement to understand and simplify their operations. Their costs will be lower and their legal work more predictable.
Still, it’s unclear how rapid the transition will occur or how prevalent these new types of jobs will be.
“That’s one of the trickiest points here,” said Michael Bommarito, who co-founded the ReInvent Law Laboratory after meeting Katz while the pair pursued doctorates at Michigan.
“You can be right about the fact that a change will occur, but you can starve waiting for it to be true. And in this case, my personal opinion is that it is very hard to predict how long it will take for change to occur.”
But that is one reason Bommarito believes Katz is the right professor to take on the challenge. When asked what Katz’s best quality was to pursue his goals in legal technology education, Bommarito said, “It’s not a technical skill, degree or learning a programming language. It’s being open-minded about what issues there are and how you can solve them and stay optimistic in the face of a lot of hurdles.”
More immediate plans
Katz made his case for a “polytechnic” school of law in a 2014 paper titled “The MIT School of Law?” and published in the University of Illinois Law Review.
He calls that paper a “thought experiment,” but it lays out an end-to-end business plan and curriculum for a law school that trains tech-focused lawyers with the idea that there would be no better place for that school than the Massachusetts Institute of Technology.
The Illinois Institute of Technology is at least more practical, even if his goals at Chicago-Kent are not to re-create the entire curriculum.
But his model for how a tech-focused law school would work still applies in his new job. It starts by attracting students with science and mathematics backgrounds. The school then trains them to apply technology in legal practice — or to disrupt legal practice altogether — then finds them jobs to showcase those skills.
“If you think you’re going to copy Harvard or Yale or whomever has market power and think that’s a good strategy, I say you’re wrong,” Katz said. “I look at those two schools and I say, ‘I can get the flank on them on the technical questions because that’s not what they’re about.’ They’re going to disagree. They’re going to yell at me. Whatever. That’s fine.”
It is a different vision of what law school should provide students. Rather than a broadly similar liberal arts legal education, it would be a legal education with a specialty in technology.
Katz and some others view it as a way to escape the copycat competition created by U.S. News & World Report’s annual law school rankings.
“For the longest period of time, law schools have just been sorting people, and we really haven’t thought that the content of a curriculum can differentiate people,” said Bill Henderson, a professor at Indiana University Maurer School of Law known for his work in law school reform.
“And this is relevant to Chicago-Kent more generally, but what Dan stands for is the idea that the skills learned through his teaching opens up a lot of doors. ... And I think it will open up doors.”
One of the main reasons Katz came to IIT Chicago-Kent was the work of the man who recruited him to the school, Ron Staudt, who plans to retire within 18 months after building a law and technology legacy that dates back to 1978.
Staudt’s most recent — and arguably most successful — innovation in that field is a software called A2J Author. Students use it to write “guided interviews” that help consumers get legal documents, such as wills, without paying fees. The service is free and has been used 2.5 million times across the country.
Katz called that total “an incredible accomplishment.”
“But we should treat these things the way a venture capitalist would say, I want my ‘10x’ (return). How do I get my ‘10x’?” Katz said.
“He reminds me a lot of what I was like 30 years ago,” Staudt said.
And while Katz has Staudt’s work to build on, in order to attract budding legal technologists, he will need to better advertise the school’s legal-tech pedigree.
Staudt said the school’s reputation in that field “is not as widely known as it needs to be.”
“There is nobody else in the country that has done as much or continues to do as much in this space as we do,” he said. “But you can’t always be today’s darling, you know?”
Katz is not the only academic making an argument that law schools need to reconsider their curriculum to train lawyers for an emerging, new legal market.
“The idea that law schools need to change from their legacy, I do think, is becoming mainstream,” said Philip Weiser, dean of the University of Colorado Law School, which has gained attention for innovations such as a program that places lawyers in Cisco Systems Inc.’s legal department and lets them graduate in 2½ years.
Weiser has known Katz since 2009 and said he is impressed by Katz’s argument for what he calls “T-shaped lawyers.” It’s the idea that lawyers need to have a breadth of knowledge of law (represented by the horizontal line atop the T) with an in-depth knowledge of a particular subject matter (the vertical tail of the letter).
Lawyers with subject matter expertise, he reasoned, beat lawyers without it.
That is the basis for Katz’s idea that law schools will eventually compete by offering new and in-demand subject-matter expertise. An example when that occurred in the past, cited frequently by Katz, is the expansion of patent law.
“Patent law, just as a substantive area, went from being not very well covered to you couldn’t really hold yourself out, to me, as a credible law school without somebody who does patent law full time on the faculty,” Katz said.
“That would be a ridiculous deal. There are very few law schools who would credibly do that in 2015. So they reacted, eventually, to these changes. But it took a long time.”
Weiser envisions a whole series of substance knowledge areas lawyers could need. An energy lawyer needs to know about geology. A family lawyer, psychology. The same goes for technology.
“Lawyers are going to be consumers and shapers of technological change,” Weiser said. “Thus, technology literacy is becoming an important touchstone for a lot of lawyers, and the sooner lawyers get started on that journey, the more effective they’re going to be.”
Getting out of a traffic jam
The vast majority of law schools, according to Katz, continue to pursue similar objectives: Attract the smartest people possible and hope to place them in the highest-paying law firms. It’s what Henderson refers to as “sorting.”
Striking a balance between traditional legal education and boundary-pushing programs is even a struggle for IIT Chicago-Kent. Katz, Krent and Staudt all highlight that technology-focused learning is only an option for students. This is not a complete redesign.
“It’s a matter of stress and where schools are on the spectrum,” Krent said. “And on that spectrum, I think we will be much more focused on what we think are the disruptive or fundamental areas at the intersection of law and technology.”
“If you were a law school dean, to me, you would want to put a bet in this direction, minimally,” Katz said.
“That doesn’t mean you’re going to shut down all the other things you’ve been doing. But it’s like, ‘Well, this appears to be an emerging thing and there is plenty of evidence to support it.’ And we should respond to that.”
Changes at the law firm level face a similar barrier. Big Law practice is an oligopoly with no single firm large enough to disrupt the entire business. According to The Economist, the global legal market has revenues around $650 billion a year. No law firm has a market share as high as 0.5 percent of the industry.
“When nobody has that much market share, and nobody can really have that much market share, then you can’t change that fast. The industrial organization of the profession just won’t allow for it,” Katz said, drawing on his knowledge of complex systems.
“You would have to have the GCs of the 500 largest companies in America all get on the same page and simultaneously pursue the exact same strategy. And not just pursue it, but really, really cram down on people. But that’s not realistic.”
What that means is there are fewer law firms demanding the innovation that Katz’s students will supply. The demand isn’t there yet. Katz knows that creates a roadblock.
But he’s not afraid to change lanes, hoping the traffic will clear in front of him. And if it does, IIT Chicago-Kent’s technology and the law program will hit top gear.
“Law school is so slanted toward this humanistic liberal arts tradition that they have left it wide open for this,” Katz said, sticking to his arbitrage theme. “I think it’s a great opportunity.”