Tag Archives: document automation

A New Paradigm for IP Practice 3.0

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By Ian C. Schick, PhD, JD, CEO & Co-founder of Specifio (first posted on blog.specif.io)

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A recent blog article by European patent powerhouse, Kilburn & Strode, described a state of transition in the patent industry in the context of three eras: IP Practice 1.0, IP Practice 2.0, and IP Practice 3.0. IP Practice 1.0 was largely paper-based with the predominant technologies including word processing and facsimile. The hallmark of IP Practice 2.0 has been the digitization of patent files and prior art documents, which has enabled electronic filing and searching, as well as newer technologies like machine translation. Now, according to K&S, “we are embarking on the era of IP Practice 3.0, which offers greater automation, more use of AI applications …, and the customisation of other technologies” to “increase efficiency, simplify tasks and offer greater value to clients.” 

We are seeing more and more manifestations of the transition to this new epoch, from the emergence of new business models for patent practices to the explosion of new technologies specifically designed to augment and amplify practitioners and other patent professionals. This article begins with a look at some of the immediate challenges facing IP practices, particularly in patent preparation and prosecution, in the new era as efficiency transformation—through leveraging technology and restructuring operations—becomes mainstream and mandatory to remain competitive. Next, a new framework is proposed for contemplating and structuring patent practices in a way that specifically addresses many of today’s challenges.

Immediate Challenges for IP Practice 3.0

Modern patent practices face several pressing challenges which are in large part the impetus for evolving beyond IP Practice 2.0. The first challenge is simply the economics of practice. Take patent preparation, for example. Despite more demand than ever on practitioners, intensifying fee pressure combined with a drive to fixed fee and other hourly-billing alternatives has resulted in a decade-plus industry trend of decreasing fees for preparing patent applications. 

Complicating the economics even further is a pronounced inversion of available leverage among the patent bar, i.e., the associate model has largely collapsed in present day patent practices. Indeed, the last 10 years have seen a drastic falloff of early-career practitioners. The histogram in Figure 1 below bins active practitioners based on their years of practice. 

Figure 1. Currently active USPTO registered practitioners binned based on years of practice.

Readily apparent in the histogram above is the glut of mid- to late-career practitioners with 10-20 years of practice and the surprisingly low relative numbers of practitioners with less than 10 years experience. As the average practitioner is becoming more senior, it logically follows that the industry average billing rate is also rising—amplifying the effects of declining fees for patent preparation. Fee pressure means time pressure for practitioners; and time pressure means a focus on efficiency and quality assurance is more important than ever.

The growing essentiality of optimizing practice efficiency without compromising quality has brought about a recent boom in available “PatentTech” offerings for practitioners and other patent professionals. That in itself, however, has created other challenges for transitioning practices, specifically around procurement and adoption of these new technologies. For example, today’s modern tool offerings for patent practices are highly fragmented often with extremely narrow solutions. This means discovering and vetting available tech can be a cumbersome chore and achieving comprehensive, or even broad coverage across the patent pipeline may likely require engaging a dozen or more vendors. Too many vendor offerings also makes garnering stakeholder buy-in more difficult, particularly at law firms with many partners. 

A Proposed Practice Framework for IP Practice 3.0

Traditionally, legal practice structures are chiefly based on seniority, e.g., partners, associates, agents, paralegals, secretaries, and so on. As technology and efficiency play increasing roles in addressing the challenges discussed above, however, the focus for defining patent practice structure needs to shift to a more modern approach centered on business function. Figure 2 provides a visualization of a proposed structure for 3.0 patent practices—a trifurcated framework comprising a Services Layer, a Production Layer, and a Counseling Layer as separate but interdependent business units. The practice functions were grouped in this way specifically because the activities associated with each layer are conducive to very different approaches for optimization.

Figure 2. A proposed framework for patent practices in the era of IP Practice 3.0.

Several leading patent practices are already incorporating versions of this philosophy in their organizations. The different layers have distinctly different functions, requiring different skill sets and different personnel. While many patent professional roles will change to varying degrees, the proposed framework provides a more efficient alignment of human resources with practice aims and goals.

      Services Layer

In the new era of IP practice, everything that can be automated should be automated. That includes all activities traditionally performed by humans which are mechanical and repeatable and do not involve significant creativity or judgment. In addition to automation, insights from data analytics should be leveraged for most, if not all decisions. For the purposes of this discussion, these automatable or data-driven tasks and workflows are described as “services” in IP Practice 3.0 model. The associated technologies form the bedrock of the practice structure as the Services Layer. 

While the Services Layer is primarily tech-based, some personnel are needed for procurement, implementation, and ongoing operation. To address the issue of adoption, practices may be wise to appoint specific practitioners or other individuals to train on and operate the various technologies in the Services Layer instead of pushing loads of new technology on the entire practice.

Automatable activities can be grouped based on whether they are traditionally performed by registered practitioners or by non-practitioners, such patent secretaries, paralegals, docketers, and other patent professionals. Many non-practitioner activities are excellent candidates for automation including meeting scheduling, preparing filing forms, filing documents with the Patent Office, client reporting, docketing, invoicing, information disclosure statement (IDS) management, shell generation, proofreading, and more.

While the availability of code-free robotic process automation (RPA) tools makes many automations easy enough for non-technical individuals to set up, some technical skills are likely needed to string together all the various systems and workflows of a busy practice. As for patent professionals whose traditional roles are displaced by automation, they will still be in demand. For some, their knowledge and expertise will be indispensable in assisting with the design and implementation of patent practice automation systems. Many, however, will find new roles within IP Practice 3.0, primarily in the Production Layer, described further below.

When it comes to activities traditionally performed by registered practitioners, technology in IP Practice 3.0 plays a supportive role, rather than a supplantive one. Data analytics support practitioners as they perform analysis and formulate advice. Automation comes into play during the preparation of substantive patent documents including patent applications, office action responses, briefs, etc. In sum, technology should augment practitioners’ tasks with intelligence and should remove as much rote and mundane work from practitioners’ plates as possible.

      Production Layer

The Production Layer is responsible for generating high-volume substantive patent documents, under the direction and oversight of the Counseling Layer. The Production Layer leverages supportive technologies from the Services Layer to help a diverse team of patent professionals generate most of the practices’ work product. Segregating the production function allows IP Practice 3.0 to fully realize the benefits of lean production principles. According to lean production thinking, processes should be viewed as a series of separate but interlinked subprocesses. Each subprocess is then delegated to the most efficient resource. 

In IP Practice 3.0, registered practitioners operating in the Production Layer should be used to draft substantive input for the documents being generated, but that is about it. Most other subprocesses in document assembly can be automated or delegated to other patent technicians (e.g., former patent paralegals and secretaries). This reduces overprocessing—using an expensive resource for a task when another resource could complete the task just as well—a key tenet of lean production. 

To illustrate a lean process, consider patent application preparation. A registered practitioner may be used to draft only certain components of the application like the background section, the problem/solution statement, a primary claim set, and descriptions of drawings illustrating example invention embodiments. Based on the primary claim set as input, natural language generation (NLG) can be used to create content for substantial portions of the patent application. Taking what the practitioner drafted along with the auto-generated content, a patent technician can then assemble a close-to-final draft of the patent application for review and finalization by the Counseling Layer.

Like any production environment, work product consistency in IP practices is crucial for maintaining customer/client expectations and maximizing production efficiency. Strict process and document parameters set by the practice (and not by individual practitioners) can ensure consistency while avoiding overproduction—generating more work product than is needed to meet a client’s needs—another key tenet of lean production. Certain supportive technologies, like automated proofreading and checklists, can minimize defects and streamline quality assurance.

​​      Counseling Layer

The specific functions associated with the Counseling Layer are functions that more or less remain the same in IP Practice 3.0 as they were in traditional law firm and in-house practices. They include most common practitioner activities—except for generating high-volume substantive patent documents (which is handled by the Production Layer). Accordingly, the Counseling Layer is comprised mostly of practitioners but also some number of administrative and support roles.

An obvious first category of functions covered by the Counseling Layer broadly includes activities requiring direct client interactions. Some examples include client relations, counseling sessions, invention disclosure meetings, conveying advice and work product, etc. Here, practitioners are the “face” of the practice.

A second functional category handled by the Counseling Layer is high-end legal services like portfolio strategy and management, patentability and infringement analyses and opinions, IP due diligence, and so on. These things are often too low-volume and too bespoke to gain much leverage through automation or delegation. That is, high-end legal services are high-end precisely because they involve original analysis on novel fact sets and cannot be mass produced. 

Finally, the Counseling Layer is responsible for directing and overseeing work product generation by the Production Layer. This includes providing document instructions to the Production Layer as well as performing pre-filing review and finalization of all substantive patent documents generated by the Production Layer. 

Conclusions 

IP Practice 3.0 is the new reality. Shifting practices to a functional organizational structure aligns human resources such that talent is specifically focused only where it is needed. Leverage can then be efficiently maximized through automation and delegation. This helps address the surplus of mid- to late-career practitioners and the dearth of early-career practitioners while coping with technology-driven attrition of other patent professionals. 

By separating document production from counseling and basic services, lean production can be used to optimize the value of a practice’s work product. The result is prices and quality that satisfy the market without destroying practice cost models. In addition, limiting the use of new technologies to a select group of professionals, instead of the entire practice, can help address issues around adoption.

Finally, new business models are already emerging in the era of IP Practice 3.0 focusing on specific layers or parts of layers in the proposed practice framework. These new business models include examples in law firms and in-house patent departments. They also include companies selling into the patent industry with outsourced technology and talent. The benefits of economies of scale are obvious for services but also for production. By outsourcing some or all of the Services and Production Layers, it’s foreseeable that relatively small practices serving as the Counseling Layer will be able to move huge amounts of patent work.

DISCLAIMER: The views and opinions expressed in this article are those of the author and (1) are not provided in the course of and do not create or constitute an attorney-client relationship, (2) are not intended as a solicitation, (3) are not intended to convey or constitute legal advice, and (4) are not a substitute for obtaining legal advice from a qualified attorney. You should not act upon any such information without first seeking qualified professional counsel on your specific matter. The hiring of an attorney is an important decision that should not be based solely upon Web site communications or advertisements.


Understanding Patent Document Automation

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By Ian C. Schick, PhD, JD, CEO & Co-founder of Specifio (first posted on blog.specif.io)

For attorneys, gaining a practical understanding of technologies impacting the practice of law is no longer just an option. The rules of professional conduct in most US states now explicitly require a duty of technology competence, primarily so that attorneys can (1) determine whether and when to incorporate technologies into their own practices and (2) adequately counsel their clients on the benefits and risks associated with these technologies. In states that do not have the explicit requirement, the duty of technology competence is generally considered to fit implicitly within the existing duty of competence requirements. To be sure, the duty exists always, not just if an attorney decides to leverage technology in their practice.

In patent practice, the industry is experiencing an explosion in new technologies that let practitioners process their work efficiently with less errors, make data-driven decisions, and, overall, provide more value to their clients while respecting existing budget constraints. Indeed, tech adoption is becoming a competitive imperative for patent practices in order to cope with challenging economic and demographic trends in the hyper-competitive patent industry.

At the recent Intellectual Property Owners Association (IPO) Annual Meeting in DC, the general session that opened the conference was titled “IP Automation – What’s Here Today, Not Years Away?” Representatives from private practice and in-house presented ways they are automating processes (e.g., docketing, filing, etc.) and automating patent preparation. The latter made a huge splash and dominated the buzz for the rest of the conference.

This article seeks to provide a practical understanding of document automation in legal, generally, as well as in patents, specifically.

What is Document Automation?

Document automation (also known as document assembly) relates to technologies designed to assist in creating electronic documents. Typically with some amount of human input, computers assemble text and other content into new documents. The text used to build the documents may be pre-existing (or “canned” such as boilerplate or templated text) or it may be computer-generated on the fly during the assembly process.  

Document automation has been on the rise for years across many industries and is now becoming mainstream in legal. Stanford’s LegalTech Index lists about 250 legal document automation companies with more and more being added regularly. These companies serve virtually all areas of legal practice.

Benefits and Risks

The benefits of contemporary document automation generally far outweigh the potential risks. For example, document automation reduces labor needs for rote and mundane writing. Not only are these types of tasks detrimental to attorney job satisfaction, it is also wasteful to have a highly-trained practitioner performing tasks like this at steep hourly rates. Reducing burnout saves in recruiting and training costs. And reducing waste is essential for patent practices competing in today’s market.

Document automation has benefits beyond labor savings in document drafting. It reduces risks associated with human error. Because of this, and the ability to create more consistency between documents of the same type, document automation can drastically reduce the amount of time needed for proofreading. Since proofreading often rests with law firm partners or time-strapped in-house attorneys, time savings here is particularly impactful.

Some of the risks associated with document automation are the same as with any technology for attorneys, such as maintaining confidentiality and data security. Here, vendor transparency is critical so that attorneys can accurately assess these risks and counsel their clients accordingly. 

Other risks relate to adoption and utilization. For example, failure to properly use or leverage technology where the costs are passed on to the client can potentially result in overbilling. If the cost being passed to the client does not reflect the full value that should be realized by using the technology, then the fees may be considered unreasonable from an ethical standpoint.

Another risk might be improper reliance on a technology due to a misunderstanding of its capabilities. For example, if an attorney relies on a technology to perform tasks A and B, but the technology is only designed to perform task A, then task B is either not being done at all or it’s being done inadequately, and potentially without the attorney realizing it.

A Framework for Understanding Document Automation

To have a practical understanding of how and to what extent a given type of legal document is or could be automated, it is useful to decompose the document based on content type. Legal documents generally have some combination of bespoke writing, mechanical writing, and canned text.

Bespoke Writing

Bespoke writing reflects the intellectual heavy lifting performed by attorneys while preparing legal documents. It often involves original analysis or disclosure on a unique fact set. This type of writing requires creativity and judgment. It is typically guided by the attorneys’ training, experience, and their knowledge of their client’s business and business strategy. Bespoke writing is too nuanced and context-dependent to be automated with existing technologies. This is where attorneys provide their primary value-add to written work product, which will likely remain the case for the foreseeable future.

The world’s most advanced system for natural language processing (NLP) and natural language generation (NLG), by far, exists between your ears. Expecting a machine to do bespoke legal writing is unrealistic with today’s technologies. Some cutting-edge technologies can generate text that may appear bespoke, but it can be unpredictable and nonsensical in the context of a specific legal document and underlying fact set. Recurrent neural networks (RNNs), for example, can create never-before-seen text, but only in relatively short spans (under 100 words). RNN plus neural bag-of-words (BoW) is used for real-time predictive text (e.g., Gmail’s Smart Compose), but is currently limited to just a few words ahead of a typist’s cursor.

Mechanical Writing

Mechanical writing is the traditionally rote and mundane parts of legal writing projects. This writing is usually driven by convention and/or by satisfying document requirements. It must be accurate and complete, but does not require significant mental work. Since the mechanics of mechanical writing are essentially repetitive across different documents of the same kind, this type of content in legal documents is ripe for automation.

From a technical perspective, mechanical writing can be automated with some combination of text transduction, text extraction, and text generation. Text transduction simply means turning one span of text into a different span of text. A common example of this in legal writing is propagating certain language throughout a document. If it were done manually, an attorney might copy and paste text into different parts of the document and then massage it so that the text reads appropriately for the different parts.

Text extraction relates to locating and describing facts to provide context and support within a document. In legal writing, extracted text may come from resources such as dictionaries, rules and statutes, encyclopedias, and other written bodies of knowledge. When used for document automation, relevant text (e.g., sentences or paragraphs) may be lifted from existing documents and used as content in newly generated documents.

Mechanical writing can include text generation such as summarization and data-to-text. With summarization, the most salient points of a larger document are distilled into a brief passage, which can be automated. One technique for automatically identifying pertinent terms in a document is known as “term frequency–inverse document frequency” (TF-IDF). This approach involves measuring, for each term used in a given document, the frequency in which the term is used in written language, generally, and then dividing that by the frequency of the term in the document itself. If a term is normally used rarely but appears often in a given document, the term is likely an important one.

When it comes to data-to-text, classic examples include weather reports, sports reports, and stock reports where noteworthy aspects of numerical data is automatically expressed with language. Because legal writing is not often informed by numerical data, data-to-text is less common in legal document automation.

Canned Text

Canned text is predetermined language such as boilerplate and template text. While this type of text is pre-existing, there is still an associated labor cost with manually identifying and locating appropriate canned text (e.g., in a template repository, old related documents, etc.). Different canned text needs to be properly organized within a document. It also may need to be adapted for specific projects, for example, by completing variable or conditional parts of the canned text.

Luckily, computers do a very good job of dealing with canned text for the purposes of document automation. A simple example is mail merge for letters and simple documents. Here, given some basic input information, a document with templated text is automatically completed by essentially filling in the blanks. A more complex example is contract assembly. With automated contract assembly, an attorney may identify a type of contract as well as the basic facts and terms. Based on that information, standard-language clauses are assembled into a draft contract document.

Different Legal Documents Lend Themselves to Different Automation Technologies, or Not at All

Depending on the type of legal document, there will be different ratios of bespoke writing, mechanical writing, and canned text. The ratio for a given type of legal document determines whether or not the document is a good candidate for automation and, if so, which technologies are best suited to automate that type of document.

At one end of the spectrum, contracts are dominated by canned text. There may be some amount of mechanical writing (e.g., propagating certain facts throughout the document) or bespoke writing (e.g, novel terms), but, by and large, contracts are mostly standard language. On the other end of the spectrum, memoranda are often primarily composed of bespoke writing where original analysis is being performed on a unique fact set. As such, they are generally not candidates for automation. Most legal documents, however, will fit somewhere in between where mechanical writing makes up a significant portion.

Document Automation in the Patent Context

A combination of statutory requirements and case-law-informed drafting conventions drive the contents and structure of patent applications. To be sure, a significant component of patent preparation includes bespoke writing where key concepts and nuances of an invention are described in a careful and strategic manner. The claims, obviously, fit squarely into this category, as do the background section and problem / solution statement.

A substantial component of most patent applications, however, includes mechanical writing and canned text. These are the parts that can be readily automated with currently available tools. In a patent application, mechanical writing may cover things like the title, field of the invention, summary, literal claims support in the detailed description, additional claim sets mirroring attorney-written claims, abstract, and basic drawing figures like those illustrating the environment in which the invention is practiced and method flow charts. 

Other examples of mechanical writing may include lists of well-known examples (e.g., “Examples of types of material strength may include compressive strength, shear strength, tensile strength, and/or other types of strength.”), dictionary definitions (e.g., “Tensile strength is the resistance of a material to breaking under tension.”), and descriptions of well-known facts (e.g., “Steel is an alloy of iron and carbon, and sometimes other elements.”). 

Canned text in patent applications often includes things like boilerplate, stock figure descriptions, and stock definitions.

Conclusions

The duty of technology competence is now widely adopted in the US and applies regardless of whether tech is actually adopted. The threshold is not expertise, but rather knowing your limits and asking for help when appropriate so that you can make determinations about adopting tech in your practice and counseling clients as to the benefits and risks.

Document automation is becoming increasingly relevant to legal practice, particularly with patents. It helps practitioners avoid rote and mundane writing, which benefits them and their clients alike. With more and more products coming to market, it is important to have a practical understanding of document automation to have realistic expectations and appreciate the potential for your practice.

DISCLAIMER: The views and opinions expressed in this article are those of the author and (1) are not provided in the course of and do not create or constitute an attorney-client relationship, (2) are not intended as a solicitation, (3) are not intended to convey or constitute legal advice, and (4) are not a substitute for obtaining legal advice from a qualified attorney. You should not act upon any such information without first seeking qualified professional counsel on your specific matter. The hiring of an attorney is an important decision that should not be based solely upon Web site communications or advertisements.

US Patent Filings: Peaking or False Peak

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By Ian C. Schick, PhD, JD, CEO & Co-founder of Specifio (first posted on blog.specif.io)

Annual patent filings appear to have leveled off at the USPTO in the first slowdown since the financial crisis of 2008. Is this a sign of a sustained plateau or even decline in annual filings? Or are the last few years just noise in an ever-increasing trend?

A look at the economics of patent preparation over the past decade may provide some explanation for the recent falloff in US patent filings. For example, consider the collision of these three trends: (1) stagnant fees for preparing patent applications, (2) increasing costs for law firms to generate patent applications, and (3) a labor shortage of junior practitioners to prepare applications. In this article, we will examine these market trends to offer a greater understanding of the current state of the patent-preparation market and where it may be heading in the future.

In the last decade, average fees for preparing and filing patent applications have remained quite stagnant. For software-related patent applications in particular, the average cost has been hovering around $11,000. It’s as if “buyers” and “sellers” of patent preparation are at an impasse over the value of drafting patent applications. This trend also coincides with the bi-annual release the AIPLA’s Economic Survey, which began in 2007 providing the first industry-wide visibility into fees charged by competing law firms (we’ll be looking further into this in a future blog post).

While fees have remained static, the costs associated with preparing patent applications, such as salaries and overhead, have been on the rise, slimming profit margins and creating significant cost pressures for law firm patent practices. The average annual salary for patent associates with less than five-years of experience, for example, has trended mostly upward since 2007.

Firms have responded to the revenue and cost trends in a variety of ways, but the most common reaction seems to be pushing the work down to individuals with lower billing rates. Increasing reliance on junior associates and patent agents for patent preparation, however, may be an unsustainable approach to cope with shrinking profits per app, which leads us to the third market trend.

The number of new patent practitioners has dropped by roughly 50% in the last decade. This is illustrated by the steady decline in the number of individuals passing the patent bar each year over the past ten years. According to the AIPLA Economic Survey, less than 7% of practitioners were under the age of 35 in 2017 compared to 13.2% in 2008, further demonstrating a decrease in early-career practitioners. Increasing reliance on this group of practitioners, due to shrinking margins for patent prep, is directly at odds with a shrinking pool of candidates.

Have the three market trends outlined above reached an equilibrium or are we at a tipping point for major change in the patent industry?

Are we at a tipping point for major change in the patent industry?

Taking a more historical view of patent filings in the US, a different picture emerges. Maybe we really are at the end of roughly three decades of steady growth. Alternatively, one could argue that annual patent filings should parallel the acceleration of technological innovation and, thus, these last three years are likely just a blip in an otherwise exponential increase in patent filings.

In some ways, the historical trend in US patent filings is reminiscent of Moore’s Law and transistor size. Many times since Gordon Moore made his famous prediction, the semiconductor industry feared that transistors had become as small as possible due to a “fundamental limit” only to see a breakthrough enable several more years of exponential increase in transistor spatial density.

Perhaps the patent preparation industry is awaiting a breakthrough to enable continued growth in annual patent filings to keep up with innovation. Gaining efficiency, in the form of lower per-app costs and higher per-practitioner drafting capacity, is clearly a requirement to continuing an upward trend in annual patent filings.

Greater efficiency could include optimizing human processes such as patent preparation and other pre-issuance activities. One could imagine future legislation simplifying the statutory requirements of patent applications to make preparing them more efficient. More immediately, however, human process innovation seems more likely to include growing adoption of outsourcing, offshoring, or other alternatives to the traditional law firm model for patent preparation.

Technical innovation provides another clear avenue to continued growth in annual patent filings. Several “PatentTech” companies have emerged in recent years in both document automation and patent process automation.

Leveraging AI, modern document automation goes beyond simple merges and form-filling. It can look at context, writing style, format and content requirements, and other characteristics to create or correct text. Existing examples of document automation include automated patent drafting, auto-generated patent figures, patent-specific proofreaders, and office action shell generation.

Process automation relates to non-writing tasks in the patent preparation and filing process. Examples of process automation on the market now include patent docketing, patentability searches, creating and managing information disclosure statements, and client reporting.

Ostensibly, the trends of stagnant fees, increasing preparation costs, and labor shortage could serve as threats to the patent industry, but they may actually be doing quite the opposite by driving PatentTech innovation. Regardless of the direction annual filings end up taking, advances in process automation and document automation are creating greater efficiencies within the industry. Practitioners and patent owners benefit alike with better work product and less rote and mundane work per application.

Data Sources:

DISCLAIMER: The views and opinions expressed in this article are those of the author and (1) are not provided in the course of and do not create or constitute an attorney-client relationship, (2) are not intended as a solicitation, (3) are not intended to convey or constitute legal advice, and (4) are not a substitute for obtaining legal advice from a qualified attorney. You should not act upon any such information without first seeking qualified professional counsel on your specific matter. The hiring of an attorney is an important decision that should not be based solely upon Web site communications or advertisements.

Unauthorized Practice of Law and an Evolving Legal Landscape

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By Ian C. Schick, PhD, JD, CEO & Co-founder of Specifio (originally posted here on Oct. 31, 2018)

Numerous third-party legal software providers have been recently accused of unauthorized practice of law (UPL). In 2011, LegalZoom, a trailblazer in personalized online legal solutions and documents for consumers, was entangled in a class action lawsuit alleging the service provider was engaged in UPL, which eventually led to a settlement. Some, including the North Carolina State Bar, have argued that by providing guidance and reviewing documents, LegalZoom serves as more of a legal advisor than a simple document provider, thus creating a UPL issue. In 2016, however, the North Carolina legislature ruled that the practice of law does not include software that generates legal documents based on a user’s response to a legal questionnaire. DoNotPay, a digital platform used for submitting small claims that has taken the legal industry by storm, has been accused by many of violating the UPL rule. However, many have argued that the UPL rule is simply a well-disguised barrier or tactic utilized to protect a traditionally risk-averse legal sector from innovative technology and other market disruptions.

We are already seeing focussed interest and new legislation aimed at addressing the high volume and precedence of UPL issues within non-law-firm legal services providers. In 2007, the United Kingdom (U.K.) liberalized their legal services market by passing the Legal Services Act. Practicing as part of an alternative business structure (ABS), nonlawyers are permitted to hold ownership interest and participate in the delivery of legal services. In 2014, the ABA Commission on the Future of Legal Services was created and tasked with examining how legal services are delivered and holding open forums for how to alleviate UPL issues in third-party services. In 2016, the ABA Commission initiated a debate on whether to request that the ABA House of Delegates passes a resolution encouraging state courts to liberalize ethical rules forbidding nonlawyer participation in legal services. However, the bar did not agree with changing regulation, which many critics, including academics, believe is because of “lawyer exceptionalism” and “lawyer-centric” thinking that may be eroding the core values of the profession. [Judith A. McMurrow, UK Alternative Business Structures for Legal Practice: Emerging Models and Lessons for the US, 47 Geo. J. Int’l Law 665, 673 (2016)].

“barring business from engaging in the practice of law severely limits innovative change from occurring in the industry.”

More recently, the California State Bar has implemented a Special Task Force, which will have a primary focus to investigate whether the current rules of UPL should be modified. The California Task Force was motivated by arguments that UPL issues have a strong influence on the structure of the legal landscape, unfairly limiting the opportunity and incentive for nonlawyer entrepreneurs to enter the legal market. Additionally, some argued that barring business from engaging in the practice of law severely limits innovative change from occurring in the industry.

In the current regime, attorneys must remain vigilant of the lingering liability of unintentionally assisting in UPL.The Model Rules on UPL mentions that “a lawyer shall not aid a non lawyer in the unauthorized practice of law.” [Model Rules 5.5(b)]. While specific laws for UPL vary by state, the definition may be generalized as illegally providing legal services or advice, such as preparing any document to affect or secure legal rights for a specific person or entity, negotiating legal rights or responsibilities, and expressing legal opinions.

Generally, nonlawyers are allowed to perform legal tasks, such as document creation, as long as the lawyer assigning the task is ultimately responsible for the work product (see our previous post on attorney oversight with third-party services) [ABA Standing Committee on Ethics and Professional Responsibility Formal Ethics Opinion 08–451]. Likewise, document automation software, for example, may perform certain legal tasks, given that the outsourcing lawyer is responsible for the work. More specifically, outsourcing attorneys must have “in effect measures giving reasonable assurance that a non-practitioners compatible conduct is compatible with the professional obligations of the practitioner.” [37 C.F.R. § 11.503(a)].

In the context of patent drafting, unregistered individuals (i.e., those who have not passed the patent bar or met other requirements) are not authorized to practice before the United States Patent Trademark Office (USPTO), including the representation, preparation, prosecution, and advisement of patent applications. Registered individuals include only patent attorneys and patent agents recognized to practice before the USPTO. [37 C.F.R. §11.14(b)]. According to the USPTO, there is a supervisory liability for UPL when outsourcing legal work. [C.F.R. § 11.503(a)]. Patent practitioners are charged with liability of a non-lawyer’s actions if they “know of the [unethical] conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.” [37 C.F.R. § 11.503(c)(2)].

Outsourcing patent attorneys should proceed with caution and remain overly and properly informed when selecting a third-party outsourcing relationship and throughout the entire outsourcing process. Maintaining an appropriate amount of supervision and control throughout the process is important to mitigate the risk of assisting in the illegal practice of law. Specifio, for example, provides the first and only fully-automated patent drafting service that begins and ends with the attorney, thus avoiding UPL by design.

“UPL changes will favor the public sector by improving access to justice for poor and middle income populations that may not be able to afford adequate legal assistance and guidance.”

The legal sector in many jurisdictions seems to be on the right track towards modernization and liberalization. By expanding the participation of legal services to nonlawyers, the U.K. has taken the global lead in opening up an exclusive industry to a plethora of productized legal solutions that will benefit all parties. In the United States, task forces have already begun investigating potential UPL rule changes and improvements to legal service delivery. In addition to advancing the legal sector, UPL changes will favor the public sector by improving access to justice for poor and middle income populations that may not be able to afford adequate legal assistance and guidance. The future of law is bright, but that may depend in large part on changes to UPL rules.

For more information on Specifio’s automated patent drafting service, visit our website or email us at info@specif.io.

DISCLAIMER: The views and opinions expressed in this article are those of the author and (1) are not provided in the course of and do not create or constitute an attorney-client relationship, (2) are not intended as a solicitation, (3) are not intended to convey or constitute legal advice, and (4) are not a substitute for obtaining legal advice from a qualified attorney. You should not act upon any such information without first seeking qualified professional counsel on your specific matter. The hiring of an attorney is an important decision that should not be based solely upon Web site communications or advertisements.

Attorney Supervision and Legal Document Automation

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By Ian C. Schick, PhD, JD, CEO & Co-founder of Specifio (originally posted here on Oct. 12, 2018)

It is crucial for outsourcing attorneys to competently review the work product generated by any third-party service. This, of course, is also true when the third-party service leverages automation to complete the outsourced work. Below, we discuss the necessary steps for assessing this ethical obligation in the context of third-party legal document automation services.

The analysis can be broken down into two steps. For the first step, the lawyer must ensure that the third-party service complies with the ethical obligations that govern human lawyers. [See our previous posts, here and here]. Just how attorneys must ensure that ethical violations, such as breach of client confidentiality and conflicts of interest, do not occur with non-lawyer employees or independent contractors, they must do the same with third-party services, including automated services.

The main concern with outsourcing is “to ensure that tasks are delegated to individuals who are competent to perform them.”

The second step in assessing competent attorney oversight involves evaluating the competency of the third-party technology. In other words, is the work product of the third-party service comparable to that of a competent human lawyer?

Attorneys are generally allowed to contract work to third parties “provided the attorney is competent to review the work [and] remains ultimately responsible for the final work product,” among other guidelines. [Los Angeles County Bar Association Professional Responsibility and Ethics Committee Opinion No. 518]. Stressing the importance of competency, the ABA says, “the lawyer who is responsible to the client satisfies her obligation to render legal services competently.” [ABA Standing Committee on Ethics and Professional Responsibility, Formal Opinion 08–451]. In the case of patent drafting, for example, it would be understandable to question competency where an attorney assigns the task of drafting a patent application to an associate lacking the necessary training or technical background. The main concern with outsourcing is “to ensure that tasks are delegated to individuals who are competent to perform them.” [Id.]. According to the Model Rules on the client-lawyer relationship, the outsourcing lawyer “must reasonably believe that the other lawyers’ services will contribute to the competent and ethical representation of the client.” [Model Rules 1.1].

Applying the above reasoning to outsourced services rooted in technology, such as document automation, attorneys must ensure that the output of the technology reflects a certain level of competency. That is, one ensuring the final work product embodies the same competencies required of the attorney responsible to the client.

Specifio’s fully-automated patent drafting service begins and ends with the attorney (or patent agent). Attorney-written patent claims (2–3 pages) are converted into a first-draft patent application with basic figures (20–30 pages). However, by clearly presenting these auto-generated patent applications as strictly first drafts (as opposed to ready-to-file), Specifio sets the appropriate expectation to encourage the level of attorney oversight that should exist with all legal document automation services.

For more information on Specifio’s automated patent drafting service, visit our website or email us at info@specif.io.

DISCLAIMER: The views and opinions expressed in this article are those of the author and (1) are not provided in the course of and do not create or constitute an attorney-client relationship, (2) are not intended as a solicitation, (3) are not intended to convey or constitute legal advice, and (4) are not a substitute for obtaining legal advice from a qualified attorney. You should not act upon any such information without first seeking qualified professional counsel on your specific matter. The hiring of an attorney is an important decision that should not be based solely upon Web site communications or advertisements.

Avoiding Conflicts of Interest When Leveraging Third-Party Legal Document Automation Providers

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By Ian C. Schick, PhD, JD, CEO & Co-founder of Specifio (originally posted here on Oct. 1, 2018)

As outsourcing certain legal work to third-party service providers gains popularity within law firms, it is important for lawyers to fully understand the potential risks of conflicts of interest, as well as guidelines for avoiding these issues in the future.

There is always the potential for conflicts of interest and misuse of private information when legal work is outsourced to a third-party lawyer or law firm representing an opponent or competitor of the lawyer’s client. Likewise, there is also the risk of these issues when outsourcing work to non-attorney service providers, including automated services, which is the focus of this conversation. For example, a conflict may arise when two parties use the same document automation service and the system uses confidential information from one party to help complete the work product for the other party.

Attorneys cannot outsource their ethical obligations.

Similar to how an attorney must ensure there is no conflict of interest that would prevent representation, lawyers are responsible for confirming third-party services do not perform work in a way that creates a conflict. It is important to minimize the risk of conflicts by making a reasonable effort to learn about the service provider’s assurances. [ABA Standing Committee on Ethics and Professional Responsibility, Formal Opinion 08–451.] For example, the outsourcing lawyer should investigate the service’s procedures for managing and obviating conflicts.

There are a couple questions an attorney should ask prior to outsourcing work to a legal document automation company. What are the handling and storage procedures for client information? And are there any employees of the service provider that may have access to this information? If such access exists, there is a potential for conflicts and, in such cases, background checks, non-disclosure agreements, and other precautions may be advisable.

Various bar associations have concluded in their official opinions that:

“The attorney must also recognize that he or she could be held responsible for any conflict of interest that may be created by the hiring of [a third-party] Company and which could arise from relationships that Company develops during the attorney’s relationship with Company.” [Florida Bar Opinion 07–2 (2008); also see Los Angeles County Bar Association, Opinion 518 (2006).]

As document automation technology grows more prevalent and sophisticated in the legal sector, it is becoming more important for automation providers to develop their own set of high ethical standards around preventing conflicts. For a company that handles sensitive information, like patent applications, these standards are even more acute.

Full automation is among Specifio’s answers to avoiding potential conflicts and other ethical issues. Specifio’s fully-automated patent drafting service has no human intervention, meaning no person at Specifio is ever exposed to confidential information, preventing conflicts of interest from occurring at the human level. In addition, due to the fact that we do not train our machine learning models on confidential information or store information long-term, there is zero chance of one party’s confidential information being used in another party’s patent application.

Legal ethics guidelines are still catching up to today’s dynamic legal sector, which is rapidly evolving due to advancing technology. However, it is crucial that both the outsourcing lawyer and third-party service providers observe ethical guidelines that help protect confidential client information and avoid conflicts of interest issues.

For more information on Specifio’s automated patent drafting service, visit our website or email us at info@specif.io.

DISCLAIMER: The views and opinions expressed in this article are those of the author and (1) are not provided in the course of and do not create or constitute an attorney-client relationship, (2) are not intended as a solicitation, (3) are not intended to convey or constitute legal advice, and (4) are not a substitute for obtaining legal advice from a qualified attorney. You should not act upon any such information without first seeking qualified professional counsel on your specific matter. The hiring of an attorney is an important decision that should not be based solely upon Web site communications or advertisements.

Legal Document Automation and Client Confidentiality

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By Ian C. Schick, PhD, JD, CEO & Co-founder of Specifio (originally posted here on Sept. 24, 2018)

Attorneys are increasingly adopting artificial intelligence to streamline the drafting process for various legal documents, but are they currently meeting the ethical guidelines for protecting private client information? Below, we discuss the role and ethical responsibility of attorneys using third party document automation services and recommended measures to protect confidential information.

The Model Rules of Professional Conduct 3.3 state that lawyers must make “reasonable efforts” to protect client information, which includes understanding the sensitivity of the information, potentiality of disclosure without employing additional measures, and cost of these measures. Lawyers are responsible for maintaining the confidentiality of the information to and from the document automation service. Hypertext Transfer Protocol Secure (HTTPS) and email with encrypted text or attachments are the two most secure methods for transferring information online.

The ethical obligations relating to lawyers outsourcing work to third party attorneys similarly applies to non-lawyers, such as machines. According to Model Rule 5.3, attorneys are responsible for ensuring that the ethical conduct of non-lawyers are identical to professional attorneys.

While reviewing written confidentiality agreements and security policies is recommended, the Model Rules make it clear it’s important lawyers understand what happens to confidential client data (1) when it is transmitted to a third party, (2) while the third party is in possession of the data, and (3) when the third party returns work product back to the lawyers.

Specifio is the first and only fully-automated patent drafting service. This means there is no human intervention, which addresses potential confidentiality and conflicts issues. In addition, all documents transmitted between the service and the user are password-encrypted.

At Specifio, we transparently address how information is processed and protected by the company. As outlined in our Terms of Service and Privacy Policy, Specifio does not store any confidential client information. Instead, confidential information is immediately and permanently deleted from the system after each application is processed.

In order to provide customer service and improve our technology, however, Specifio does keep metadata associated with the client information. The metadata includes a “content-stripped” version of the confidential information in which content words are replaced with nonspecific symbols, making the meaning of the text uninterpretable. These disguised content-stripped texts are only used to analyze document structure, word form, word count, and other metrics that are useful without knowing the underlying contents.

Below is an example of what content-stripped information may look like:

Original:

“The present disclosure relates to systems and methods for facilitating review of a confidential document by a non-privileged person by stripping away content and meaning from the document without human intervention such that only structural and/or grammatical information of the document are conveyed to the non-privileged person.”

Content-Stripped:

“The p0018 d0017 r0019s to systems and methods for f0000ing r0001 of a c0002 d0003 by a n0004 p0005 by s0006ing a0007 c0008 and m0009 from the d0003 without h0010 i0011 such that only 20012 and/or g0013 i0014 of the d0003 are c0015ed to the n0004 p0005.”

Finally, with no training on its machine-learning models on confidential information, there is never “cross pollination” between patent applications we generated. In other words, text from one auto-generated patent application will never appear in another auto-generated patent application.

For more information on Specifio’s automated patent drafting service, visit our website or email us at info@specif.io.

DISCLAIMER: The views and opinions expressed in this article are those of the author and (1) are not provided in the course of and do not create or constitute an attorney-client relationship, (2) are not intended as a solicitation, (3) are not intended to convey or constitute legal advice, and (4) are not a substitute for obtaining legal advice from a qualified attorney. You should not act upon any such information without first seeking qualified professional counsel on your specific matter. The hiring of an attorney is an important decision that should not be based solely upon Web site communications or advertisements.