Litimetrics accepted into New York-based accelerator program

Techstars logo

 

Litimetrics is proud to announce that it has been accepted into the Techstars accelerator program in New York City.  

Techstars is considered one of the best startup accelerators in the world, with fewer than 1 percent of the companies that apply being accepted into the program.

Acceptance into the program is recognition of the value of the unique datasets generated by Litimetrics’ legal technology engine.

In additional to the capital raised from Techstars, Litimetrics will have access to a network of mentors and a host of perks, as well as positioning in the largest legal market in the world.

How do computers recognise lawyers?

A big part of the job at Litimetrics is processing large volumes of judgments and court records to provide the data that supports our legal analytics platform.  Fortunately for us, our machines are intelligent as we’ve been able to teach them how to recognise law firms, barristers and courts.

How do we do this?  Basically we train a natural language processing model that recognises the entity (in technical terms, a named entity recogniser) based on the part of the sentence in which the entity appears and its grammatical function, and based also on our knowledge base of barristers, firms and courts.  For example, the model knows that a proper noun that serves as a prepositional object and matches a known barrister, is likely to be a barrister (eg, Bob Barrister SC with Juñor Barrister).

A depiction of the dependency parser we use to help recognise law firms and barristers.
The dependency parser is much better at grammar than we are.

We’ve uploaded a demo you can play around with to see under the hood of how Litimetrics processes the data supporting the legal analytics platform.  Let us know what you think in the comments below.

Putting the Law Council’s equitable briefing policy into practice

On 18 June 2016, the Law Council of Australia amended its Equitable Briefing Policy by introducing measurable targets and reporting mechanisms.  The new goals are to have 20 per cent of all briefs or the value of briefs going to women barristers by 1 July 2018.  The target is 30 per cent for senior counsel briefs.  Very recently, big corporates such as Telstra, Woolworths and Westpac, and the majority of top-tier law firms (Allens, Herbert Smith FreehillsKing & Wood MallesonsMinter Ellison and Clayton Utz) made commitments to adopt the policy.  In this post, we dive into Litimetrics’ datasets to look at the profile of the pool of barristers and current firm briefing practices so that we can analyse how achievable the targets are, and also look at tangible steps law firms and organisations can take to achieve the targets.

Steps to developing equitable briefing practices

Before we do so, here are some caveats.  First, we think the policy is a great step forward for the legal industry as a whole, despite any opinion we express about difficulty in meeting the targets.  Secondly, there is some noisiness in the data, so don’t bet your house on these figures.  Thirdly, the figures include members of all state bar associations, but do not include those in the ACT and NT.  Fourth, the data presented below about appearances is limited to data from the Supreme Courts in NSW and Victoria, the respective appellate courts of those states and the Federal Court up to the High Court.

Supply side: current makeup of the pool of barristers

The first step in answering the question of what the landscape will look like in July 2018 (about a year and a half away from the date of this post) is looking at the landscape now.  There are obviously many more male barristers than female – our count is about 4,000 to 1,300 or just over 3 to 1.  When looking at senior counsel only, that ratio blows out to just under 8 to 1 (in other words, only about 11% of senior counsel are females).

A bar chart showing the proportion of barristers at each level of seniority
The proportion of male to females increases with the seniority of barristers, and although is more balanced at the very junior ranks, it’s still not even.

Looking at the chart below, and assuming admission and drop-off rates stay much the same, it seems unlikely that there’ll be a marked increase in the number of female barristers between now and the target date 1.5 years away.  This is despite worthy measures to appoint a greater proportion of women as senior counsel and to encourage interest in joining the bar.

A bar chart depicting the number of barristers at each level of seniority
Each additional year of seniority results in a reduction in the number of barristers, but the dropoff rate is largely the same for both men and women

Again, looking at senior counsel, unless there’s a drastic change in the promotion of female juniors, 1.5 years will do little to the make up of the senior counsel pool.  As the chart below shows, although there is greater balance between recently promoted senior counsel, the numbers are still not even.  (We note that recent promotion rates seem to match the proportion of barristers at the level of seniority.)

A bar chart depicting the number of barristers at each level of seniority (senior counsel only)
There are a lot more male senior counsel than female, though the ratios are improving

Will the current proportions of barristers make it difficult to achieve the 20 per cent and 30 per cent targets?   Looking at senior counsel, the 11 per cent of female senior counsel will be expected to take on about 30 per cent of all briefs.  Whether this is possible depends on the current capacity of those barristers.  If only a small proportion of barristers do most of the work, then it’s possible that the 11 per cent have capacity to take on a greater share of the work.  What will happen in that event, is a transfer of work from one set of barristers (male senior counsel) to another (female senior counsel).  On the other hand, if those barristers are ‘jammed’ (a phrase barristers use when they don’t want to take your work), then there isn’t going to be enough female barristers to do the work.

The following chart, which depicts the number of appearances by female barristers in the past five years, supports the hypothesis that the existing pool of female barristers can absorb a much greater number of briefs.  The overwhelming majority of female barristers appeared less than 20 times in that five year period.   Assuming reported appearances are somewhat reflective of workload, there seems to be a huge amount of unused capacity.

As is that case with barristers generally, very few female barristers have appeared more than 20 times in reported cases since 2011.
As is that case with barristers generally, very few female barristers have appeared more than 20 times in reported cases since 2011.

Excess capacity extends to the entire barrister pool, as shown in the following chart.  Since 2011, very few barristers, whether male or female, have appeared in hearings that were reported.  This reflects the status of the barrister job as the “most prestigious part time job in the history of the world”.  It also reflects a potential flow on effect (probably intended) – if the number of briefs remain static, and a greater proportion of briefs go to women (who have capacity to take them on), then fewer briefs will go to men.

The vast majority of barristers have appeared less than 20 times in reported cases since 2011
The vast majority of barristers have appeared less than 20 times in reported cases since 2011

Ultimately, assuming women have the excess capacity to take on more work, then supply-side problems would prevent solicitors from allocating 20 to 30% of briefs to female barristers.

Demand side: briefing practices of firms that frequently brief

Looking at the profile of barristers, of course, only tells one side of the story.  Limitations associated with the make up of the barrister pool are supply-side limitations.  The other side is the demand side – even if there were no limitations in supply, would demand from those briefing barristers be such that the targets would be met?  Answering that question is difficult, as it is impossible to determine whether current briefing practices are driven by the limitation in supply, or biases in demand.  Nonetheless, let’s look at firms and their briefing practices.

A histogram of the ratio at which firms brief males to females
The majority of firms (>500 hearings in the past five years) nearly always brief males. Very few brief equally between genders.

Of the 660 firms which have briefed barristers in 500 or more reported hearings, over 300 of them briefed males for 95% of those hearings.  There are a few explanations for this, none of which seem to be altogether convincing.  First, there’s the supply problem.  As explained above, it seems that there’s excess capacity – women barristers are able to take on more work.  Another reason might relate to the fact that the data is limited to reported decisions in superior courts in NSW and Victoria.  But then why are males preferred in those scenarios?  Finally, it might be because there are many fewer female barristers of a certain seniority, such that there are no viable male alternatives.  It’s possible, and without knowing the details of each particular brief, can’t be sure that it’s not a valid reason.  But we know that over 13 per cent of barristers admitted 15 years or more ago are female, so there is some cause for skepticism.  In any event, even if the reason is valid, the unavailability of experienced female barristers at certain levels of seniority and in certain areas of law supports the policy goal of ensuring greater representation across all areas of law.

Practical steps

At some level, theorising about whether the goals are achievable is somewhat unhelpful.  The policy goals have been set so focus should now turn to taking the necessary steps to achieve that goal.  This is especially the case if the problems falls with those briefing barristers rather than with the supply of female barristers.  This next section looks at the tangible steps you should take (many of which are taken from the Law Council itself).

Obviously, if you haven’t already done so, you should sign up to the policy.  Signing up makes it clear to those both inside and outside your organisation that the organisation takes equality of briefing seriously.  It empowers individual decision makers to take their own steps to achieving the organisational goals.

The next step is to take the time to consider what can be done within your own organisation to achieve the targets.  The reporting obligations imposed on signatories will go some way to ensure that organisations do more than speak about change.  Persons that make briefing decisions will have their personal favourites and their go-to barristers, so it will take a concerted effort to consider and brief others.  You should consider whether your briefing practices reflect the policy – a first step may be to setup a record of the barristers briefed and value of those briefs.  If there are a panel of legal service providers, then consider whether the makeup of the panel reflects the policy (eg, are the firms signatories?).

There are tools that will help decision makers identify credible alternatives.  Litimetrics offers data about a barrister’s areas of expertise, their recent history of appearances, the firms that brief them and the barristers they appear with.   The availability of these tools will make it easier for decision makers to educate themselves about alternatives.

Screenshots of some of the tools offered by litigation analytics website, Litimetrics
Analytics tools like Litimetrics allow you to find barristers with particular expertise in areas of law

For litigants and in-house counsel, consider working more closely with firms that have signed up to the policy.  It’s often the case that firms nominate counsel to brief, so engaging firms whose interest align with those of your organisation will make identification of alternative counsel easier.  Also consider engaging those firms with a track record of briefing female barristers.  Litimetrics offers that data about firms and will help you identify the firms that will best help you meet the policy goals.

Finally, ongoing training of staff about ‘best briefing’ practices, will ensure that decision makers adopt practices that will promote achievement of the targets, and that the organisation fosters and encourages women barristers.

 

Quantifying the value of better legal representation

Some lawyers are better than others and quality matters. Intuitively, this makes sense – the job of a lawyer is to persuade, which is part legal reasoning and part hard work. Since the ability to persuade directly affects litigation outcomes, participants are willing to pay highly regarded barristers upwards of $28,000 a day, and some law firm partners an hourly rate of over $1,000. In this post, we analyse data from 22,000 cases to measure the differential impact law firms and barristers have on litigation outcomes.

By applying machine learning algorithms to data mined from court judgments, we find (i) large measurable differences in expected performance and (ii) huge room for improvement in the selection of legal representation. Litigants can increase their chances of a successful litigation outcome by over 25 per cent on average, often the difference between winning and losing, by switching to better legal representation.  Moreover, Chambers and The Legal 500 rankings, the prize often proudly displayed on email footers, are weakly correlated with litigation performance.

What is a useful metric to assess the expected performance of legal representation? Intuitively, having better legal representation should lead to a greater proportion of successful litigation outcomes. This points to the strategy of counting successful litigation outcomes. But measuring outcomes without accounting for the difficulty or context of the case is naive. For example, a barrister that takes the easiest cases will have a large proportion of successful outcomes and incorrectly be deemed a high performer. Secondly, litigation outcomes have a random component, outside of the control of even the best legal representation. Hence we should assess expected outcomes, instead of the random realization of outcomes.

To sidestep the randomness of observed outcomes, we focus on modeling the probability of a successful outcome for a given case. Secondly, to account for the context or difficulty of the case, we measure the change in the probability of a successful litigation outcome, from substituting a legal service provider in. The difficulty of the case is not important, but rather the impact a legal service provider has on that original probability of success. From now on, we will refer to this measure as the impact on expected performance. This substitution exercise is known as a counterfactual, as we apply the substitutions to historical data. We identify the set of better firms and barristers, for a given case, by finding those that have positive impacts on expected outcomes.

The difficulty in performing this counterfactual exercise is that many firms and barristers may have only faced a small set of other firms and barristers in previous litigation. We would like to evaluate how A would fare against B, even though we never observe a litigation matter between them. Similarly, if A is only involved in cases against the best opponents, we need to ensure we do not falsely conclude that A is below average.

Key to resolving these concerns is the fact that although many firms and barristers have not faced each other directly, they often have indirect connections to other firms and barristers via sequences of cases. Although A has not faced B, if both have faced C, then we have some information about the hypothetical A and B matchup. This is the same reasoning that allows one to compare tennis players across different eras. Although Sampras never played Djokovic, both of them played Federer. Their performances against Federer provide some guidance to how they would fare against each other. Similarly, even if Bret Walker SC only faces the best barristers, if some of these best barristers face more mediocre opposition, then we can infer how Bret Walker SC would fare against the broader set of opponents.

Example of Simple Graph
Figure 1: Example of Simple Graph

To quantify the connectedness of Australian firms and barristers, we use tools from graph theory. We construct a graph as follows. Each barrister and firm is a node. There exists an edge (or link) between two nodes if the two nodes have directly faced other in court. Define a path as a sequence of edges (or cases) that connects two nodes. See Figure 1 for an example of a simple graph. Ensuring that firms and barristers are comparable is equivalent to ensuring that the litigation graph is sufficiently connected, or that there are enough paths, of short length, between litigation participants. For example, the shortest path, of length 2, that connects Sampras to Djokovic consists of the matches between Sampras-Federer, and the edges between Federer-Djokovic.

Network of law firms and barristers
Figure 2: Law firms and barristers are densely connected via previous litigation

We can measure the connectedness of Australian litigation participants by (i) looking for the largest connected sub-graph (group of nodes such that there exist paths between any two nodes in the sub-graph) and (ii) calculating the average path length within that largest sub-graph. A remarkable 81% of the law firms and barristers in our dataset are connected, with a median distance of 3 cases between them. Figure 2 shows the Australian litigation graph with nodes coloured red and edges in blue. The denseness of the graph indicates that a large number of firms and barristers can be compared, beyond those that directly faced each other in court.

For each of the roughly 22,000 cases in our dataset, we perform the following counterfactual exercise. First, we calculate the probability of a successful outcome for the applicant, given the original lineup of firms and barristers, using a machine learning model designed for counterfactual inference. Second, we construct a set of alternative firms and barristers that meet the following criteria:

  1. at least 5 appearances in the same court and area of law; and
  2. the shortest path between the opponents and the firm or barrister is less than 3 cases.

Finally, we substitute each of these alternatives in for each of the original firms and barristers and measure the change in the estimated probability of a successful outcome.

Firms & Barristers: Distribution of Impact on Expected Performance
Figure 3: Range of avg. impact on expected performance across all firms and barristers

Large differences in expected performance
Figure 3 shows the distribution of the average impact on expected performance for each firm and barrister. The distribution is symmetric around 0, indicating that the median firm or barrister has little impact. However, the standard deviation of the average impact is 0.12, indicating a big difference between good and bad legal representation. To put this in perspective, consider that the average probability of a successful outcome is 0.5, a coin flip, as litigation is largely zero-sum.

Current selection of legal representation is sub-optimal
Given the large difference in expected performance of firms and barristers, how well do litigants select legal representation? The good news is that on average, litigants choose close to the median performing legal representation. The bad news is that this is far from optimal. By choosing the median better legal representation, litigants can improve their chances of a successful litigation outcome by 13.7 percentage points.

Figure K:
Figure 4: Returns to better legal representation (25th, 50th and 75th percentile impacts)

We can assess the returns to better legal representation by finding the 25th, 50th and 75th percentile impact on expected performance, separately for each case. These percentiles can be interpreted as the expected impact for poor, average and better legal representation. Furthermore, to neutralize effects from different areas of law and courts, we average these percentiles across court-area of law pairs. The figure above shows a histogram of the results. For example, the yellow portion of the chart shows the average impact “better” legal representation would have, for each court-area of law pair.

As stated earlier, choosing the median legal representation on mostly has little impact, since litigants currently choose the median legal representation. However, there are big consequences of choosing better or worse legal representation. The average impact for better legal representation is +13.7 and for worse legal representation, it’s -13.9 percentage points. As the probability of success is 50 per cent (litigation is zero-sum), this represents a return to better legal representation of 27.5 per cent if one is currently choosing the median legal representation.

Why are litigants unable to select optimal legal representation on their own? This is a topic we will discuss in a later post, but it’s due to a lack of expertise, bias in favor of familiarity or reputation (whether conscious or unconscious) and the agency costs associated with the person selecting having competing interests.

Returns to legal representation vary across areas of law
Returns to better legal representation also vary between areas of law. Figure 5 shows the returns to better legal representation, across different areas of law. Better legal representation in a case categorized as Social Services improves the probability of a successful outcome by only 6.3 percentage points compared to 17.8 percentage points in a Taxation case. The areas where legal representation matter least are areas where the federal government is heavily involved: Social Security, Defence and War and Human Rights.

 

Figure 5: 75th percentile firm/barrister impact on expected performance across areas of law

Existing rankings are weakly correlated with expected performance
It is important to stress that finding better legal representation cannot be achieved by looking up the top performers in Chambers and Legal 500 rankings. For law firms, each step up in Chambers and Legal 500 tier is associated with a barely statistically significant 0.9 percentage point improvement. Overall, ranked law firms generate 2.5 percentage points more expected improvement compared to non-ranked firms. For barristers, Chambers and Legal 500 rankings are similarly uninformative. The average expected improvement from substituting in a Chambers top ranked barrister is 2.3 percentage points more than barristers who are not ranked. Keep in mind that switching to the median better firm and barrister leads to a 13.7 percentage point improvement.

All rankings are misleading
One reason why existing rankings are decoupled from expected performance is that they lean heavily on submissions by firms themselves, which are merely reflections of the ability of the marketing teams within firms. Better firms probably have better marketing teams but the reverse is unlikely to be true. Moreover, relying on marketing strength as an indicator of performance is not a sound strategy for litigation.

But even performance based rankings are flawed. The best legal counsel in a given situation depends on the context. Reducing firms and barristers to an ordinal number and falsely suggests that the ordering is sufficient to choose between legal representation.

Yaya
Figure 6: Comparison between Allens and Clayton Utz on same set of counterfactual cases

Consider choosing between Allens and Clayton Utz. We can use LitiPredict, our legal technology engine to directly compare Allens and Clayton Utz on cases where both firms are valid alternatives. Figure 6 plots Clayton Utz’s impact on expected performance against Allens’, for the same set of cases. Any sensible ranking would order Clayton Utz above Allens given that the average impact is greater for Clayton Utz. But this ranking is misleading, as Allens has a greater impact than Clayton Utz in approximately 30% of the cases. In other words, relying on the ranking would lead to suboptimal outcomes 30% of the time.

Conclusion

Large differences exist in expected performance, so it makes sense to rely on external guidance when choosing legal representation. Rankings are simple and satisfy our natural inclination to rank and order things. But litigation is complex. The simple fact is: existing rankings are poor indicators of performance. It is easy, but foolhardy to rely on rankings, as the basis of litigation strategy.

The current over-reliance on rankings or reputation presents an opportunity for first movers. By moving towards a data-driven litigation strategy backed by machine learning, parties can find better legal representation, improving the chances of successful litigation by more than 25 percent.

Who are Australia’s biggest political donors?

In this final week of campaigning for the 2016 Federal election, spending by political parties will ramp up as parties try to convince undecided voters.  A great deal of money spent will come out of your pocket – I’m talking the $2.62 that candidates get per first preference vote, but also the organisations that spend the money you give them to make political donations.  This post analyses donation data to identify the donors and to identify the reasons donations are made.

Picture of Parliament House, Canberra, Australia

Under the Commonwealth Electoral Act 1918, persons who make donations to registered political parties totalling above a certain threshold are required to lodge annual returns detailing the donations. The Australian Electoral Commission publishes information about the donations made by individuals online.  We’ll look at the most current information available, which is the returns for FY2015 (a non-election year) when about $23.5 million was donated:

Answering the question of who makes large political donations is very similar to the questions investment banks and management consulting firms ask during interviews – if you try pin the tail on the donkey, people will not be impressed even if you’re right.  It’s preferable to narrow down the possibilities by exclusion (ie, not those who can’t afford to donate), and also by asking why a person would make a donation.  Donations may be made by do-gooders.  I accept this – there are philanthropists who happily donate to political parties instead of art galleries.  It also seems that some who donate large amounts do so to influence policies.  Let’s see whether this holds true.

 

 

By separating donors into industry groups, a picture emerges that certain industries are over-represented (eg, only about 14 of the ASX50 – including related parties – donated above the threshold).  Looking at the list of donors, there is a large body of individuals, presumably well-off.  These are our do-gooders.  43 do-gooders, 0.0002 per cent of the population, or 1 in every 500,000 people, making about 7.76% of all the political donations.

The balance of donors are corporate entities.  How likely it that these organisations donate because they have spare cash on their balance sheets and care about good government?  I say not very.  The corporate entities seem to belong to certain interest groups (property, financial services, medical/pharma and mining/energy) that are aligned with businesses liable to be affected by government regulation.  For example, pharmaceutical companies depend on continued funding of the government subsidisation of medicines through the pharmaceutical benefits scheme, while property developers depend on continued favourable tax treatment to maintain demand for new developments.  It’s possible then that donations are made for the purpose of ensuring continued favourable regulation.

That organisations seek to influence policies and regulation by making donations to political parties is not an original thought.  The AEC register exists principally so these donations are publicised – so that interest groups can be identified.  Special interests successfully lobby for various sub-optimal policies, it is said, because:

1. citizens do not care to get riled up about technical policies the costs of which are dispersed over all citizens (rational ignorance, cf issues such as the inhumane treatment of refugees, which is something that is viscerally important);
2. the benefits of the policies are shared by a small special-interest group with strong incentives;
3. special-interest often target lobbying efforts at policies which are difficult for the general public to evaluate; and
4. even if some individuals notice, the diffusion of interests across individuals makes collective action difficult.

If we look at donations by those in the financial services category, by way of example, we can see that there’s clear support for the Liberal/National Party coalition over the ALP.  The ALP is much less friendly to financial services than the Liberal party.  Financial services are heavily regulated, and the majority of voters, even those passionate enough to post Facebook status updates and sign change.org petitions will find the issues difficult to understand.  That seems to explain the $220,000 that Macquarie Bank donated to the Liberal/National Party coalition in FY2015.

 

It’s interesting to see that even the Big 4 banks, whose customers would likely fall evenly on either side of the political spectrum, donated heavily in favour of the Liberal/National Party coalition.  Again, that they did so suggests that they were advancing their self-interest when donating rather than some other good-hearted goal.

Finally, because this is ostensibly a blog about the legal market, let’s look at law firms and barristers. Firms and barristers care very little about the election if the amount of donations they make is an indicator of interest. (To be precise, it might be the case that a lot of lawyers donate money, but below the reportable threshold.)

 

As you can see, the ALP donors are comprised by the standard set of plaintiff firms, Maurice Blackburn and Slater & Gordon and others, with a cameo by Corrs.  Slater & Gordon, whose top three clients are the CFMEU and the AMWU, and John Setka (the CFMEU boss), donated over $35,000.  What motivated that donation?  I’ll leave that to you to decide.

Five things Seinfeld can teach you about the law

There seems to be something of a Seinfeld revival in the air.  I’m thinking the not-a-reunion on Curb Your Enthusiasm, Larry David’s appearances on Saturday Night Live, Jason Alexander reviving the Jerry and George shtick in Jerry’s Cars-Rich-People-Own web series and the custom-framed Seinfeld emoji poster I have in my office.  As a Seinfeld fan, I could not be happier.

A poster of Seinfeld emojis
Seinfeld meets the emoji in a Seinfeld emoji poster. I will give a reward to the person that can identify the meaning of the most emojis. Source: McCauley Creative LLC

Seinfeld, for those of you born before, or after, the early 80s and who didn’t have the benefit of watching re-runs on Channel Ten while doing your calculus homework, was a show ‘about nothing’.  This is the typical description of the show.  I tend to think of it as a show about neurotic thirty-somethings in New York in the 90s, which makes it very much a hokier, more male-focused version of Girls.

The premises in the show were often dilemmas you face as you grow into an adult.  Who of us can’t remember the first time you experienced your dinner party host neglecting to bring out your marbled rye?  As a lawyer, I have come to recognise that a lot of these scenarios are governed by the law.  Following are five examples of what would have happened if the characters were more litigious and took care to enforce their legal rights.

(Note: my legal interpretations are intended to be light-hearted.  If you have a different interpretation, please comment below.  But don’t take it as any reflection of my legal reasoning abilities, which I leave for work hours.)

1. The Marble Rye

The Constanzas visit the Rosses, who, as well as failing to serve cake with the end-of-dinner coffee, refuse (I’m on the Constanzas’ side) to serve the bread that the Constanzas brought to dinner.  Frank, incensed about the refusal, takes the loaf back when leaving.

The loaf of bread is a gift.  Once delivered, and even though without any explicit consideration (eg, money or a promise in return), it becomes the property of the recipient.  In that way, Frank was not entitled to take the rye back just as he was not entitled to take the bottle of wine Mrs Ross was drinking.

Frank, being a person well aware of social customs, perhaps too aware, would argue that the rye was not a gift.  It was given on the condition that the bread would be offered during dinner and also in exchange for the performance of the dinner obligations, which included pleasant conversation and cake served with coffee.  As those things did not occur, property in the bread never passed to the Rosses.

VERDICT: if your guest gives you something consumable upon arriving at a party you are hosting, you better offer it around.

2. The Armani Suit

Bania: You didn’t think I was really going to give you a suit, did you?
Kramer: What, you’re giving him this suit?
Bania: That’s right, and it’s an Armani.
Kramer: Armani? Hey, Armani Jerry. (Kramer takes the suit and looks it over)
Jerry: Yes, yes, I heard.
Kramer: Come on, try it on.
(Kramer takes the jacket off of the hanger and put the pants, still on the hanger, on the kitchen counter — he opens the jacket for Jerry to slip into)

Jerry: All right, all right. (trying on the suit jacket)

Kramer: Oh boy, that looks great. I can’t believe you’re giving him this.

Bania: I don’t even want anything for it.

Kramer: He’s very generous, isn’t he?
Jerry: Yes, yes, he is.
Bania: I’ll tell you what — you can take me out to dinner sometime.
(Jerry starts taking the jacket off and stops — looking very surprised at Bania)
Jerry: Dinner?
Bania: Yeah. You buy me a meal — you can’t get a better deal than that (pats Jerry on the shoulder)
Kramer: No, you’ll never get a better deal than that.

Picture of Kenny Bania in Jerry's apartment delivering the Armani suit jacket
Kenny Bania delivering the Armani suit to Jerry

In short, the ‘deal’ Jerry struck with Bania is an enforceable contract. There was an offer by Bania, a suit for dinner, acceptance by Jerry (albeit reluctant), and manifested intention by both to enter into legal relations.

Jerry could argue that there was no intention, but the clarity of the essential terms of the transaction and Bania’s description of the transaction as a deal supports it.  There might also have been an absence of intention if Jerry and Bania were closer friends, rather than begrudging acquaintances.

Jerry seems to be aware of all this, and for that reason, offers Bania a soup and sandwich, after also having had a consommé with Bania at Mendy’s.

VERDICT: don’t accept gifts from people who like to eat soup.

3.  Cheapskate Wedding Invitations

Picture of Susan Ross character dying from licking envelope glue
Another thing I learned from Seinfeld.  Never use anything but self-adhesive envelopes.

Somehow, George finds himself in a relationship he doesn’t want to be in (who hasn’t been in that situation before?)  Somewhat of a cheapskate, he chooses the cheapest wedding invitations available.  His fiancee, Susan Ross, responsible for sending out wedding invitations, dies after ingesting too much of the toxic adhesive while sealing envelopes.

Is George guilty of any crime?  To be convicted of homicide, a person needs to perform the act that causes the death (actus reus) and needs to have the requisite guilty mind (mens rea).

VERDICT: don’t agree to marry people if you aren’t willing to pay for decent wedding invitations.

Also, I should note in George’s defence that he considers himself not to be a cheapskate:

4. Shoddy NYU student-journalism

Elaine notices the woman sitting behind George is eavesdropping on their conversation and discreetly alerts Jerry and George. She decides to add some spice to the conversation. She makes sure to say it loud enough so that the spy at the next table is sure to hear…

Elaine: Y’know, just because you two are homosexuals, so what? I mean you should just come out of the closet and be openly gay

Jerry rolls his eyes and turns away in disbelief while George on the other hand addresses Jerry directly:

George: So, whaddya say? You know you’ll always be the only man I’ll ever love.
Jerry: [indignantly] What’s the matter with you?
George: [quietly] C’mon, go along…
Jerry: I’m not goin’ along. I can just see you in Berlin in 1939 goose-stepping past me: “C’mon Jerry, go along, go along…”

All of this is overhead by an NYU journalism student who later interviews Jerry and publishes an article outing him.  Could Jerry sue NYU for defamation?

Having worked on one defamation matter in my 8 year career, I have no idea, but will try to answer the question anyway.  The statement was published to third parties and assuming being outed as homosexual is damaging to a person’s reputation (I actually wonder whether this will change given society’s greater acceptance of sexual preference), the statement was defamatory.

The key issue is whether it is open to the journalist to rely on the defence of fair comment/honest opinion.  Given that Jerry admits that people think he is homosexual (‘cuz I’m single, I’m thin and I’m neat’), NYU may succeed in this defence as the opinion was honestly held and at least in the world and time depicted in the show, there was a reasonable basis for the opinion.

VERDICT: never go along with jokes made by your friends in public.

5.  The Soup Nazi

After Elaine is denied soup for unnecessary small talk while ordering, including a pretty bad Al Pacino Scent of a Woman impression, she publishes the Soup Nazi’s recipes that she finds in an antique armoire (this is French for fancy wardrobe).  The Soup Nazi’s business, well, as a soup Nazi, is ruined as a result.

Picture of George getting soup taken back
Spillover effects. George gets denied that delicious Soup Nazi soup.

The recipes are in the nature of trade secrets. “5 cups chopped porcini mushrooms, half a cup of olive oil, 3 pounds celery” is a mere listing of ingredients, and isn’t sufficiently artistic to constitute a literary expression which would attract the protection of copyright law.  The Soup Nazi therefore has no legal recourse against Elaine to recover the loss caused by her publication of his recipes.

VERDICT: store your recipes securely on the cloud (Dropbox or Google Drive) and not in armoires.

H/t credit to this Eugene Volokh blog post.  Although I had conceived of this idea prior to the blog post – he published it well before I had found a vehicle in which to publish these ideas.

Using Google search volumes to measure changing interest in law firms

There are many metrics available to determine whether a law firm is performing.  If you’ve been around firms long enough, you’ll have experienced forced exposure to various internal financial metrics, such as profitability, working capital-type figures (WIP lock-up and debtor days) and performance (ROCE), and heard of outward-facing metrics (I’m thinking the apparently flawed chest-beating profit per partner metric).  This post looks at a metric that is non-financial in nature: internet search engine volumes.  Content is thanks to Google.

A graph depicting Google's share of the search engine market over time
A market share to die for. Google dominates the search engine market. Source: Statista

Before we get to the fun part, let’s set this up.  In 2015, Google had about 94% of the search engine market share in Australia.  So it’s safe to say that searches for law firms were being made on Google.  Lawyers still using hard copy directories don’t count.  As well as collecting information about everything, including what you click on and how long you look at a page, Google records the search queries made by its users (ie, 94% of Australian internet users), the number of times a search query is made, and when and from where it was made.  Google also groups queries that are related to a certain object (eg, person, company or idea) through its Knowledge Graph.  It then bundles all of this up into a nice tool called, understandably enough, Trends.

What this means is that Google can tell us how many times a law firm is searched, and whether the volume of queries is increasing or the opposite, going off a cliff.  Here is the graph of the most searched top tier firms from the first half of 2016, or thereabouts:


The Google Trends report of search queries made during the first half of 2016.  Numbers represent search interest relative to the highest point on the chart (marked as 100), not absolute search volume.

We can see that during the first half of 2016 (or last half of FY2016, if you’re that way inclined), Minter Ellison averaged a significantly more number of search queries originating from Australia than other major firms.  And in late May and early June, all the firms suffer a drop – possibly as their clients head into EOFY party season.

What does this mean?  Good question.

At it’s simplest, it means that Minter Ellison is searched the most.  Searches are performed by persons seeking to gain additional information about a firm – that is, the queries aren’t being made by existing clients (unless for example, they are confused about its location, which is understandable given the Rialto’s current state).   The volume of search queries therefore hints at interest in the firm.  This could be from potential clients.  But it could also be from opponents.  Unlike the other firms, Minter Ellison does a fair amount of work against individuals (migration and personal injury).  At certain times of the year, search volumes would increase because of the summer clerkship application process, though this will affect the entire body of firms as most students apply the shotgun approach.

Is it possible that, post-merger, the international firms with their bags-of-Sterling clients have a smaller proportion of Australian clients?  Well, yes, if their strategies of setting up outposts for their global clients have succeeded.  Is it possible that Australian clients are more interested in domestic than international firms (a la the Made in Australia campaign)?  This seems to be a no.  As can be seen in the following chart, firms continuously jostle for the title of ‘most-searched firm’, with no noticeable and permanent change apparent at the time the formerly domestic firms (Blake Dawson, Mallesons and Freehills) merged with their international arms in 2011/2012.  It just seems to be Minter Ellison’s time in the spotlight:

The Google Trends report of search queries made since July 2009.  Search volume in 2016 is much less for all firms than it was in 2009 and continues to trend downwards.

Rounding things off, Trends can also be used to display differences between offices of the same firm.  If we look at Herbert Smith Freehills by way of example, the Sydney office attracted about 300% of the queries that the Melbourne office did.

Although not conclusive, the information available on Google Trends seems to be somewhat useful to track changing interest in firms.  At the least, it’s another metric for law firm managers to fret over.  Does your firm make use of Google Trends?  We highly doubt it and would be impressed if any do – please let us know by commenting below.

Finally, if you’re an outsider, and it wasn’t clear, you probably shouldn’t rely on Google search volume or financial metrics to select a firm or barrister.  Instead, visit Litimetrics, to view statistics about appearances drawn from cases and access tools to analyse and project historical performance.

Could James Hird have obtained better legal representation?

A few weeks back, the Supreme Court of Victoria handed down judgment in the proceeding James Hird brought against his insurer, Chubb.  (For those of you not in Victoria, Hird is a lauded former captain of a football club famous for wearing long sleeve shirts, and involvement with the supplements regime at the Essendon Football Club.) Hird claimed that Chubb failed to indemnify him as it was required to do so under a D&O insurance policy taken out by the club.  Apparently there was a legal bill of about $700k, and Hird thought it was a good idea to go double or nothing Martingale betting strategy.

For various reasons that others will write about, Justice Kim Hargrave dismissed the proceeding.

Hird, who seems to have a close relationship with Stephen Amendola of Ashurst, engaged Ashurst to instruct Geoffrey G McArthur QC and Rachel Walsh.  Chubb, being an insurer, briefed insurance firm Clyde and Co and James Peters QC, who led Chris Archibald.

Was this the best team he could have briefed?  We’ll never know for sure, but LitiPredict gets us pretty close.  But according to our LitiPredict model, Hird’s selection of his legal team was about as good it was going to get.  Here’s a graph of how the team was expected to perform given historical outcomes.

The predicted outcome probability distribution for James Hird's legal team
The large area under the positive outcome (blue) curve and the positioning of  the peak of the curve to the right of the negative outcome (red) curve suggests a positive outcome.

Hird’s team had a greater probability of a positive outcome and a lower probability of a negative outcome than the benchmark team.  The probability density function (the continuous random variable is itself the probability of the particular outcome – ie, the chart depicts the probability of a probability) suggests that his team was expected to perform well, given the case and other contextual features.

Here’s a comparison of the predicted performance of Ashurst against some benchmark firms with experience in insurance indemnity issues.

A comparison of the expected performance of benchmark firms in the James Hird indemnity case
Based on historical performances, Ashurst was predicted to outperform other firms

What happened then? The anomaly in this case seems to be Hird’s willingness to take the battle all the way to the end, which is somewhat suggested by his willingness to double down.  Ordinarily, good lawyers (being the team Hird engaged) would be able to convince a client in a case of this sort to drop the claim or if the claim has some merit, to obtain a compromise that would offset some of the loss.  If there’s any criticism of the team, it’s that they could’ve done a better job convincing him to settle.  But Hird I’m sure was not the sort that was easily convinced.

It waits to be seen whether Hird will follow through with Martingale and appeal to the Court of Appeal, and then again to the High Court.

Find out how Litimetrics can help you optimise engagement of legal representation here.

We’re optimising the selection of legal representation

The way that the market currently selects legal representation, while not quite broken, is definitely sub-optimal.  Here’s why.

Strangely for members of a profession with the goal of achieving particular outcomes, the value of a litigator is not measured by the ability to do so.

The ultimate goal of all lawyers is to achieve the outcome desired by the client (filtering out various ethical and professional duties). For litigators, the goal is often achieved via an independent tribunal – the award of damages or findings of innocence in a criminal prosecution.  Strangely for members of a profession with the goal of achieving particular outcomes, the value of a litigator is not measured by the ability to do so.  The reason for this is that, until now, the market is unable to easily (in terms of cost and time) and accurately measure this ability.

At this stage, it’s important to state the assumption that some lawyers are better than others at achieving an outcome. (It’s more than an assumption, as our data strongly suggests its truth, but for present purposes, let’s just assume the proposition is true.) Given that assumed fact, a client would be able to increase the probability of achieving a desired outcome if accurate information about which lawyers are better was available.

The legal market suffers from what economists term an adverse selection problem because of information asymmetry, much like the market for used cars.  Information is of course available, but it’s held by a select few, and even if you are willing to pay for access, it isn’t clear how credible that information is.  According to economic theory, there are two solutions.

Photograph of graduation hall
How much does the law school from which a lawyer graduated affect a lawyer’s ability to achieve a desired outcome?
The optimal solution, screening, is the one the subject of the work done by Nobel Prize winning economist Joseph E Stiglitz.  Market participants that are able to cheaply gain access to the information reposed in the other make selection decisions based on that information.  Screening is what insurers do when they ask a potential insured about driving history.   Screening, although the optimal solution, is not widely used in the legal market.  This is because:

1. there are only very few consumers of legal services who have had repeated interactions with different firms and barristers such that they have ready (meaning quick and cheap) access to the information from which screening decisions can be made (eg, performance in previous cases and particular expertise in certain areas of law); and
2. it is otherwise costly for a consumer to obtain that information by taking the risk of simply briefing the same firm repeatedly.

Market participants who do not have the benefit of those repeated interactions and ready access to information (ie, the vast majority of consumers of legal services) cannot screen.  Instead, they rely on the alternative solution to information asymmetry, signalling.  As a substitute for information, the market relies on signals considered to correlate to the ability of a lawyer to achieve an outcome.  These signals include:

1. the law school attended (Melbourne or Sydney or bust);
2. the law firm at which the lawyer trained (decent national firms or proper boutiques);
3. any experience as a judge’s associate/law clerk; and
4. post-graduate study (Oxon, or for the non-traditionalists, a decent US law school).

Photograph of scene in Moneyball
A scene from the team selection scene in Moneyball. Would you brief a barrister because he wears Brioni ties?
For barristers, another signal is tenancy in a good set of chambers (anything with the word Selborne, Wentworth or List A in its name). And for firms, a listing in Chambers or having a lawyer listed as one of the 15,000 Best Lawyers is also considered important.

The problem with signalling is that signals are often imperfect substitutes for information.  In the legal market, the fact that a lawyer went to Melbourne instead of Monash, for example, may not correlate at all to the desired attribute: the ability to achieve an outcome.  (This problem is recognised by law firms, which now adopt blind recruitment policies.)  It’s very much like baseball’s old-timey reliance on the attractiveness of a player’s wife depicted in Moneyball – it’s imperfect.

Michael Spence, who shared the 2001 Nobel Prize with Stiglitz, alluded to another problem with reliance on signals.  If a market becomes overly reliant on signalling, such as Australia’s legal market seems to be, then the signal’s correlation to the desired attribute will decrease as the ability to signal itself becomes desired, rather than what the signal is supposed to represent (eg, ability to develop well-reasoned legal arguments).  For example, as the market becomes more reliant on post-graduate education as a signal, it becomes more attractive to poorer quality lawyers to have that education and ultimately, the signal becomes less valuable to consumers.  The result is a messy relationship between the signals the market relies upon and the attributes desired by the market.

Example of area of law chart
An example of the information available on the Litimetrics platform, which is available for over 12,000 barristers and firms
Litimetrics solves this problem and displaces the need to rely on signals.  Because we provide a range of information about law firms and barristers (subject matter of cases, identity of clients and opponents, courts appeared in), we allow consumers of legal services to screen for desired attributes.   Litimetrics places consumers in a better position than those who already have access to cheap and credible information through repeated interactions.  This is because of the comprehensiveness of the information available.  The information held by the most experienced consumers of legal services, which we take to be banks or insurers, is limited to that gained from their own personal experiences of firms and barristers and specific areas of law.  The information bestowed to users of Litimetrics, by contrast, spans the collective experience of all consumers, whatever the area of law.