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Law's Future from Finance's Past - ReInvent Law, Silicon Valley
1. Law’s future from finance’s past
Michael J. Bommarito II
Quantitative Legal Solutions, LLP
Reinvent Law: Silicon Valley
2013-03-08
2. GOAL
Motivate two questions:
• Where can we go?
• Who can we learn from?
Analogy from broad strokes characterizations.
Devil-in-the-details.
Still valuable as a thought experiment.
Quantitative Legal Solutions, LLP; www.qlsllp.com
3. RISK
• From 10k’, law and finance are just two risk
management strategies (finance ⊂ law?).
• Tools for entities as large as U.N. or as small as an
individual.
• (Hammers are hammers; can be used for good and
bad.)
Quantitative Legal Solutions, LLP; www.qlsllp.com
5. HOW? (FINANCE)
Incentives
• Exogenous
– Macroeconomic environment (end of post-war boom,
globalization)
– Regulatory environment (de-peg in ‘71)
• Endogenous
– Labor/process bottlenecks as transaction volumes grow
6. HOW? (FINANCE)
Creativity
• Create new “products”
– Commoditized, non-commodity derivatives
• FX and interest rate futures
• Stock and index futures and options
• Volatility futures and options
• Create new service delivery models
– Integrated exchanges and clearinghouses
– Online/electronic brokerage
Quantitative Legal Solutions, LLP; www.qlsllp.com
12. RESULTS (LAW)
• Expansion in market demand
– Undo “demand destruction”
– Segment and profitably service low-cost market
– Educate consumers w.r.t. legal needs
• Improve lawyer efficiency
– More risk management per unit of labor
– Opportunities for engaged firms on buy and sell side
Quantitative Legal Solutions, LLP; www.qlsllp.com
13. RESULTS (LAW)
• Net societal effects
– Better overall access to legal remedy
– Less unmanaged risk as a society
– Increased inequality intra-lawyers
Quantitative Legal Solutions, LLP; www.qlsllp.com
14. ASIDE ON COMPUTING
N.B.: Computers necessary but not sufficient.
• Real change are:
– Conception of process, value, and role
– Formalization from art to science - measurement
Quantitative Legal Solutions, LLP; www.qlsllp.com
15. WHEN?
So why not yet? What can we work on?
• Data, data, data; formalize, collect, clean
• Commoditization and creativity
• De- or re-regulation;
• Old dogs, old tricks; Kuhnian labor replacement
Quantitative Legal Solutions, LLP; www.qlsllp.com
16. Thanks!
Michael J. Bommarito II
Quantitative Legal Solutions, LLP
http://www.qlsllp.com/