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“The price of [legal] information is being driven toward its marginal cost of production.”

Mark Chandler, the general counsel of Cisco Systems, intoned this at Northwestern School of Law’s 34th Annual Securities Regulation Institute. Chandler thundered decline ahead for large US law firms, with their current business model, in part because their hoarding of legal information is doomed. He believes that “the networking of computers [the Internet] is transforming the nature of knowledge accumulation and distribution.” He believes that large law firms, many of which are enormously profitable and all of which rely on billable hours, block access to legal information.

The availability and cost of much of that legal information will drop dramatically in coming years. Chandler predicts that information technology will enable some legal service providers to “standardize services to meet clients’ cost management and predictability needs where very good is good enough.” He cites as a leading-edge example Tax Almanac, “which uses wiki to create sophisticated, easily-searchable on-line discussions, and ultimately counseling, by tax professionals on a variety of topics.” His other examples include fixed-fee work for patent work (citing Intel, GE, and his own company), consolidation of corporate secretarial duties with a single firm (citing Cisco), and contract processing (See my post of June 16, 2006 on Cisco’s contracts approach.).

Chandler gives too much credit to technology, I believe, and not enough to the willingness of some law firms to develop innovative methods of providing legal counsel at lower or fixed costs. But I agree with him that information wants to be free, and that legal information will become a commodity. The experienced human judgment, however, which applies all that digitized and searchable information to the particular facts presented by a human client, will always be highly valued.