Here is Version 2.01 of the Law on the Market Paper —
From the Abstract: What happens when the Supreme Court of the United States decides a case impacting one or more publicly-traded firms? While many have observed anecdotal evidence linking decisions or oral arguments to abnormal stock returns, few have rigorously or systematically investigated the behavior of equities around Supreme Court actions. In this research, we present the first comprehensive, longitudinal study on the topic, spanning over 15 years and hundreds of cases and firms. Using both intra- and interday data around decisions and oral arguments, we evaluate the frequency and magnitude of statistically-significant abnormal return events after Supreme Court action. On a per-term basis, we find 5.3 cases and 7.8 stocks that exhibit abnormal returns after decision. In total, across the cases we examined, we find 79 out of the 211 cases (37%) exhibit an average abnormal return of 4.4% over a two-session window with an average |t|-statistic of 2.9. Finally, we observe that abnormal returns following Supreme Court decisions materialize over the span of hours and days, not minutes, yielding strong implications for market efficiency in this context. While we cannot causally separate substantive legal impact from mere revision of beliefs, we do find strong evidence that there is indeed a “law on the market” effect as measured by the frequency of abnormal return events, and that these abnormal returns are not immediately incorporated into prices.
As my part of my final day in Amsterdam – it was my great pleasure to join with my friends from the Dutch Law Firm – Kennedy Van Der Laan (co-founded by the Mayor of Amsterdam Eberhard van der Laan) for a Legal Innovation Event. The event combined sessions in data, technology and design thinking for a variety of European General Counsels.
Legal Innovation is a global phenomena. US, UK, Canada, Australia, Continental Europe, South America, Asia, Central America, Africa, etc. (and new events in new places popping up everyday).
My view is that despite jurisdiction differences – lawyers are lawyers. No matter where I travel they are a recognizable species with similar business, technology and process improvement challenges.
It was a great honor to deliver an address as part of the Legal Tech Lecture series at Bucerius Law School here in Hamburg, Germany. Bucerius Law School was rated the number one law school in Germany by CHE-University ranking.
It was a pleasure to give a half day workshop to Law Firm Leaders from across Central America and South America as part of the IE Law Executive Education Program here in Miami. Thanks to all of the participants!
I am honored to be Elected as a Fellow of the College of Law Practice Management. The College includes legal technologists, law firm leaders, corporate counsel, etc. I am looking forward to joining many friends and colleagues who are members of the college …
Our SCOTUS Prediction Paper is now live in Plos One (one of my favorite journals) — very happy about this (thanks to Luís A. Nunes Amaral of Northwestern University for serving as our Editor). #OpenSourceScience #SCOTUS #LegalAnalytics #LegalData #QuantitativeLegalPrediction
Yesterday was the 5th Annual Future Law Conference at Stanford CodeX. As always, it was an exciting day to see the best in cutting edge technology (including chatbots, predictive analytics and rules based A.I.). I moderated a morning panel entitled The Perils and Promise of Predictive Analytics in Law. Overall – it is clear that the community is growing both domestically and abroad.
We are excited to be giving a talk at Stanford the day before the Future Law Conference. Our talk will be hosted by Stanford CodeX – The Center for Legal Informatics. If you are in the Bay Area – you can join us by signing up for free here.
A more measured article than what we have seen lately regarding the so called ‘Robot Lawyers Thesis.’ I find it pretty funny that the NY Times Facebook link leads to the Click-Bait title but the final online version has the more measured title (see image above).
The article certainly has an Enterprise Law / Big Law undertone. If we focus on this subset of the market for legal services, there are a number of collective trends which together are transforming the market. It is the combined cocktail that is potent …
Here are five of them:
(1) Legal Outsourcing
(2) Insourcing and the Growth of Corporate Legal Departments
(3) Process Improvement (Lean / Six Sigma)
(4) Automation of Legal Tasks using A.I. (a.k.a. robot lawyers)
(5) Financialization of the Law aka #Fin(Legal)Tech
Plenty has been written about legal outsourcing, insourcing, and the growth of corporate legal departments and the application of process improvement methods (Lean / Six Sigma).
With respect to automation, it is curious to see the Times cite the Remus / Levy paper. At best, this paper is only relevant to the automation of the fraction of the work that is undertaken in Big Law (drawing from data from several years ago). They suggest an ‘automation rate’ of 2.5% per year. If that were to continue – this implies a rate for the decade of 25% just in Big Law alone. Again, this does not focus upon the other market dynamics highlighted above.
It is worth noting their data comes from a period before the implementation of #MLaaS (Machine Learning as a Service). Since its inception, #MLaaS has made A.I. tools far cheaper to custom build to problems. I have said recently that the best in legal tech has yet to be built (see slide 260).
So thanks to the NY Times for shedding light on this field. But lets remember the #RobotLawyers Thesis is only a small part of the puzzle.
As a matter of strategy, some element of the #LegalInnovation agenda should be part of the strategic portfolio of every legal organization (law firm, law school, corporate legal dept, etc.) Why? Because those who do so can increase their standing in the relevant market in question. Only those who use the newest and best tools available will thrive in an ever-changing market.