A Big Law Firm Aims to (Partly) Automate Big Law

(Bloomberg Businessweek) -- The California Consumer Privacy Act (CCPA), passed in 2018 and set to take effect on Jan. 1, will require an estimated 500,000 companies with annual revenue of more than $25 million to account for the personal information they’ve filed away about Californians and delete it upon request. All told, the law’s adoption will cost those companies about $55 billion in legal fees, employee training, and other compliance measures, according to an impact assessment prepared for the California attorney general’s office by Berkeley Economic Advising and Research, a consulting firm. That leaves plenty of room for savings, says Kimball Parker, especially if you can do the legal work with far fewer lawyers.

Wilson Sonsini Goodrich & Rosati is the only one of the top 50 U.S. law firms with an office in the small city of Lehi, Utah. There, Parker is the president of the firm’s year-old subsidiary, SixFifty, which aims to deliver the quality of Wilson Sonsini’s top legal minds via software. His team of 15 has taken an early lead in the nascent market for legal automation by focusing on the data-privacy law, an issue key to its parent’s core Silicon Valley interests.

Parker’s team is pitching clients a suite of automation software to help them comply with the new law. Its document program fills out CCPA-required paperwork with a series of prompts written by Wilson Sonsini’s flesh-and-blood lawyers. Its training program will look familiar to anyone who’s had to complete electronic human resources training sessions; clients can track their workers’ progress remotely. And a third piece of software creates a digital pipeline where companies can manage requests to delete personal data. All told, the services will cost a typical small business $20,000 to $30,000 a year, Parker says, plus a premium for regular updates. “We really wanted to price it so that the funeral parlor in Fresno could afford it and that it would provide significant value for a big public company as well,” he says.

The other options on the market tend to require companies to combine traditional legal counsel with software that isn’t ready to use off the shelf, says Austin Baird, an in-house lawyer at Vivint Solar Inc., which makes and installs solar panels for a great many Californians. Baird became one of SixFifty’s first customers in June, won over by the company’s system for handling data requests. (He says Vivint may need to respond to as many as 30 million of them.) “We ultimately decided it was just easier to rely on SixFifty for everything,” he says, and the savings have been significant.

Competing on price is also unusual for big law firms such as Wilson Sonsini, whose high fees are a sign of prestige and can be a selling point. That’s one reason hourly rates now top $1,500 at brand-name firms, where some partners make as much as $10 million a year in guaranteed salaries alone. But billions of dollars of venture capital and private equity investment have flooded the legal industry in recent years—broad bets that technology will be able to handle an ever-wider range of legal tasks and reduce the need for paralegals and associates. Wilson Sonsini is the only major U.S. law firm making a serious bid to bridge the divide by automating its own associates’ work.

The firm is well-placed to venture into emerging legal technology. In 1980 it helped take Apple public. In 2004 it did the same for Google. More recently it has represented Lyft Inc. during its initial public offering preparations and advised LinkedIn on selling itself to Microsoft Corp. Parker, a former litigator at rival firm Quinn Emanuel Urquhart & Sullivan, who helped develop document automation software in collaboration with Brigham Young University, is still struggling a bit with the basics of wrangling a sales team. “What I didn’t realize is there is actually a mechanism and skill set to sales that has nothing to do with demo-ing the product,” he says. “Like, most of sales is following up consistently but in a way that isn’t annoying.”

The California compliance software went on sale in July; Parker says he expects it to bring in $4 million by the end of 2019. That’s roughly the amount of revenue that four of Wilson Sonsini’s 770 lawyers generated for the firm last year. But the SixFifty team is a lot cheaper, with a total 2019 budget of about $2 million, the equivalent of about 10 first-year associates’ starting salaries.

Parker’s efforts are likely to face serious skepticism even from his colleagues, as well as at rival firms, says Dan Linna, a law professor at Northwestern University who’s studied innovation in the industry. But he says some degree of automation is inevitable, and Wilson Sonsini should continue to invest in SixFifty rather than relegate it to the role of a marketing tool.

SixFifty says it plans to release similar software next year that can help clients comply with a broader range of data security standards. “Those tools are really just a delivery device for the human expertise,” Parker says, adding that it’s easy to imagine them applying to the Foreign Corrupt Practices Act, for example. “We will just deploy those tools over and over again until, I don’t know, until the cows come home.”

Roy Strom is a reporter for Bloomberg Law.

To contact the editor responsible for this story: Jeff Muskus at jmuskus@bloomberg.net, Flynn McRoberts

©2019 Bloomberg L.P.