Technological Disruption and Lawyers

Technology is rapidly changing the practice of law forever. For example, advances in ediscovery tools have made discovery much more efficient, even as the volume of documents to be located, gathered and processed has grown exponentially. Mostly gone are the days of dozens of full price partner track associates manually reviewing hundreds of thousands or even millions of paper documents. Now that work is mostly done by a small cadre of core discovery professionals/attorneys, using specialized software to cull through mostly electronic documents. Where manual review is still necessary (and it mostly still is) on call contract attorneys employed at much lower cost are employed for the job at hand. Eventually, it is likely that many of these lower rate review jobs will be largely eliminated by smarter and smarter machine review capabilities. Changes like these, while significant, will be dwarfed by advancements in many areas inside and outside of law that will likely reduce the need for lawyers and fundamentally change the nature of legal services provided by those that remain.

I recognize that attempting to predict the future is a fool’s errand —as noted futurist and science fiction author Arthur C. Clark (2001- A Space Odyssey) explained prior to making his mostly accurate predictions in 1964 for the future 50 years away—the year 2014:

 “Trying to predict the future is a discouraging and hazardous occupation because the prophet invariably falls between 2 stools. If his predictions sound at all reasonable, you can be quite sure that in 20 or at most 50 years, the progress of science and technology has made him seem ridiculously conservative. On the other hand, if by some miracle a prophet could describe the future exactly as it was going to take place, his predictions would sound so absurd, so farfetched, that everybody would laugh him to scorn. This has proved to be true in the past, and it will undoubtedly be true even more so of the century to come. The only thing we can be sure of about the future is that it will be absolutely fantastic.”

Lacking Arthur C. Clark’s imagination for the fantastic, my primary example will be a conservative one related to a technology that currently exists—the Google Self-Driving Car.

Google has, under special license from California and other state authorities, been running a fleet of self-driving cars (equipped with stand by human driver) for several years now and they have logged well over a million miles of safe driving, with the only two accidents being caused by other drivers (who happen to be human). Contrary to the belief of skeptics, this is not future technology– this is now technology. As observed by popular documentary producer C.G.P. Grey, “driverless cars do not have to be perfect, just better drivers than humans, and they already are.”  The major automobile manufacturers are already incorporating sophisticated collision avoidance systems in their new vehicles. The automotive industry press has surveyed industry leaders who generally predict that driverless technology should be commonplace by 2025, and ubiquitous by 2035. Volvo has obtained government approval to operate 100 driverless cars in Gotehenburg, Sweden starting in 2017. The cars will be allowed to operate autonomously in normal traffic conditions, with other vehicles, passengers and pedestrians. Nissan has stated its intention to introduce a driverless car for model year 2020. Not surprisingly, a major impediment to moving forward is the need to pass laws, regulations and to create standards to accommodate this new technology.   But in the end, the irrefutable utility of such vehicles will overcome the vested interests in opposition– lawyers will obviously have a big role in this effort- on all sides.

What will the driverless car (and buses, and trucks, and trains, etc.) mean for lawyers? Plenty. It has been estimated that over 90% of all traffic accidents result from human error. Last year these accidents resulted in 32000+ fatalities, over 2 million related injures, and billions of dollars in economic damages. The proliferation of driverless cars (and other vehicles) will dramatically reduce the carnage on our highways. If using driverless cars drastically reduces accidents and the enormous resulting human and economic costs, who could argue this would be a bad thing? But, the reduced number of accidents will also drastically reduce the demand for both plaintiff and defendant personal injury lawyers (and, accident reconstruction experts, ambulance drivers, ER doctors, insurance adjusters and car repair shops, to name a few). Driverless cars will happen and will happen soon. This is just one of the many disruptive technological advances we will see over the next twenty years that will eliminate many jobs of all kinds, including those of a large number of lawyers.

Historically, while new technological advances have often destroyed classes of jobs, over time, the new technology has created comparable numbers of new and often better jobs. There is a school of thought that this time is different, that the technological changes are so significant and the substitution of machine for human labor so complete; that it will permanently displace many workers (the subject for another article). [SeeHumans Need Not Apply“]. From current trends in lawyer hiring and the introduction of more lawyer replacing technologies on the horizon (don’t get me started on artificial intelligence and the Singularity), I believe it is a safe assumption that by 2025 there will be significantly fewer lawyers practicing in traditional legal practices as we recognize them today.

To prosper going forward over the next decade, we as a profession and as individual professionals cannot rest on our laurels and traditional ways of doing business. We must not only be technologically astute and incorporate the latest technologies in our practices, but we must also devise fundamentally different and innovative delivery models that utilize technology to offer increased value to our clients, in a manner which at the same time allows us to make a reasonable living. If we fail to do so, then those that will, e.g. Axiom, Legal Zoom and expert systems such as IBM’s Watson, will piece by piece, function by function, supplant our noble and historical role in society. Disrupt ourselves or be disrupted—that is the choice we face.

Look Ma! I Just Created My First Legal Expert System

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The technology freight train is barreling down the track; for those law firms and lawyers hobbled and bound by an inability or unwillingness to innovate, the collision will be a messy one indeed.

One innovation rapidly gaining traction is the use of legal expert systems by law firms and clients alike to provide quick answers to repetitive legal questions.  Legal expert systems are software applications that enable a user to solve legal decision making tasks by answering questions posed by the software. The decision tree upon followed by the expert system is created by one or more subject matter experts. Ideally, the interaction with the expert system should simulate the give and take the user could expect if engaging a subject matter expert to analyze the problem. Once the expert system has sufficient information, it provides its conclusions to the user.   One familiar example of a widely used expert system is TurboTax. You answer its questions, it applies the rules behind the scenes and then it spits out a completed tax return and related documents.

Expert systems have been around for decades, but with the continued exponential advancements in computer processing power and memory, these systems have drastically improved. It is only a matter of time until in-house counsel will have ready access to expert systems that can answer many routine legal questions without the need to consult outside counsel. Perhaps such systems will be provided on a subscription or other fee basis by law firms or as an added benefit of retaining the law firm for non-routine matters. It is more likely, however, these systems will be provided by the likes of IBM or other technology companies playing the role of disrupters. The success of IBM’s Watson system at defeating the best two Jeopardy players in the World is well known. IBM is investing over a Billion dollars in transforming Watson into a legal and medical expert.  Have no doubt Watson and similar systems will replace many lawyers—and it will not be long before lawyers start noticing.

For “fun” I recently created a simple expert system using Exsys Corvid Core, an application for the Apple Mac. (App Store $149.99).  Corvid Core is relatively easy to use, even without prior programming experience. The system I created helps the user determine whether a putative class action filed in state court is removable to federal court under the Class Action Fairness Act (“CAFA”).  The decision tree upon which the system was based was one I created several years ago and is the title photograph for this article.  To use Corvid Core you construct a similar decision tree, which looks like this:

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While Exsys claims it is possible to make this expert system active on a website or intranet,  I have not quite figured out how to do that yet. For now, I can only show you a screen recording demo of this simple expert system in action.

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The important take away is that an expert system can be created for any problem that can be resolved by answering questions on a decision tree. This would encompass most routine legal questions. One company, Neota Logic is helping law firms to catch the expert systems train instead of being run over by it. However, they are not putting all their eggs in one basket and are also selling the same expert systems technology to corporate law departments. They also suggest that companies request their counsel to create expert systems to answer routine legal questions:

“Many elements of a large company do not benefit from, or even seek, legal advice because obtaining advice is costly and time-consuming. Neota Logic applications meet this latent demand for legal advice by delivering interactive applications on the company intranet that can be consulted by managers and other business people to get situation-specific guidance around the clock and across the globe.”

http://www.neotalogic.com/industries/law-departments

All indications are that the use of legal expert systems is likely to increase dramatically in the next few years. Smart law firms will either use these tools to bring additional value to their clients or risk losing clients to those that will.

Breaking News: US Supreme Court Sets Low Amount in Controversy Burden for Class action Removal under the Class Action Fairness Act

Today the Supreme Court ruled that a defendant’s notice of removal of a putative class action from state to federal court pursuant to the Class Action Fairness Act need in­clude only a plausible allegation that the amount in controversy ex­ceeds the $5 million jurisdictional threshold; the notice need not contain eviden­tiary submissions.

This removes an evidentiary impediment that some circuit court’s had imposed on defendants seeking to remove class actions from state to federal court.

Justice Ginsberg writing for the 5-4 majority explained:

When a plaintiff invokes federal-court jurisdiction, the plaintiff ’s amount-in-controversy allegation is accepted if made in good faith. See, e.g., Mt. Healthy City Bd. of Ed. v. Doyle, 429 U. S. 274, 276 (1977) (‘[T]he sum claimed by the plaintiff controls if the claim is apparently made in good faith.’) (quoting St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U. S. 283, 288 (1938); alteration in original). Similarly, when a defendant seeks federal-court adjudication, the defendant’s amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court. Indeed, the Tenth Circuit, although not disturbing prior decisions demanding proof together with the removal notice, recognized that it was anomalous to treat commencing plaintiffs and removing defendants differently with regard to the amount in controversy. See McPhail v. Deere & Co., 529 F. 3d 947, 953 (2008) (requiring proof by defendant but not by plaintiff ‘bears no evident logical relationship either to the purpose of diversity jurisdiction, or to the principle that those who seek to invoke federal jurisdiction must establish its prerequisites’).

If the plaintiff contests the defendant’s allegation, §1446(c)(2)(B) instructs: “[R]emoval . . . is proper on the basis of an amount in controversy asserted” by the defendant “if the district court finds, by the preponderance of the evidence, that the amount in controversy exceeds” the jurisdictional threshold.1 This provision, added to §1446 as part of the Federal Courts Jurisdiction and Venue Clarification Act of 2011 (JVCA), clarifies the procedure in order when a defendant’s assertion of the amount in controversy is challenged. In such a case, both sides submit proof and the court decides, by a preponderance of the evidence, whether the amount-in-controversy requirement has been satisfied.

DART CHEROKEE BASIN OPERATING CO. v. OWENS, Slip Opinion at 5-6.

Does Your Data Breach Insurance Policy Measure Up?

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My role on our law firm’s data breach rapid reaction team includes mitigating litigation risk and assessing the data breach and other insurance coverage available to the client in their time of need. I also help the client comply, if feasible, with any policy preconditions to obtaining coverage and help frame the initial notification to the insurer(s) to improve the likelihood of a favorable coverage decision.

In too many cases where we have been retained post-breach, it turns out our client has not purchased the appropriate coverage for their cyber risks. Unfortunately, some clients are under the usually mistaken impression that a standard Commercial General Liability (“CGL”) policy or a Commercial Crime policy will provide meaningful coverage in the event of a data breach. While there were arguments for third-party coverage available under the advertising injury provisions of older versions of the standard Insurance Services Organization (“ISO”) CGL policy form widely used by insurers, new exclusions added to these policies in 2014 make it much more difficult to obtain coverage for data breach claims under them. As a general rule, adequate data breach coverage will require the purchase of a separate data breach policy or a data breach endorsement to an existing policy.

When considering data breach insurance coverage, it is important to distinguish between first party and third-party claims. Pre-2014 CGL policies may potentially some cover third-party data breach claims, e.g., defense costs and indemnification if you are sued by a customer for exposing their data. This is to be contrasted with first party claims by the insured for reimbursement of the high costs of responding to a data breach—such as hiring data breach counsel, computer forensic experts, a PR firm to provide crisis management services, an administrator for sending legally sufficient notice to those persons and businesses whose data has been compromised, and potentially providing credit monitoring services to the victims. Claims made by an insured for expenses it has incurred in responding to and mitigating liability for a data breach are generally considered to be first-party claims, and are not typically covered by most standard CGL policies.

Several of my data breach clients thought they were covered with so called “cyber breach” policies, but in reality the policies provided little if any coverage to reimburse the insured for monies they necessarily incurred in rapidly responding to the breach. In one case, on the recommendation of their broker, a client in the financial industry purchased an additional policy endorsement titled “Technology Services Endorsement” that to a layman appeared to be comprehensive data breach coverage, but after all the exclusions were applied, in reality provided no additional meaningful coverage for the extra premium—no mitigation or response costs and not even coverage for third party claims except for social media defamation claims which were an unlikely risk for my client in the payment processing business. My conclusion was that the coverage was illusory and the insurance broker had committed malpractice by recommending an inappropriate and inadequate policy. The insurer and broker were eventually “persuaded” to pitch in toward the substantial response costs under threat of bad faith and broker malpractice litigation.

In another case, my client had a reasonably comprehensive multi-million dollar CGL policy with a data breach first party response cost endorsement. One problem with this endorsement was that data breach coverage was limited to $25,000.00 and there was a sublimit for legal and forensic expense reimbursement of $5000.00. This was token coverage at best. The policy also required the insured to use the insurance company’s designated breach counsel and data forensics company.  This can be an issue because a data breach demands immediate action to limit the damage done and to timely comply with statutory notification requirements. Insurance companies, however, generally want to ponder on a claim. I am not confident that many insurers are set up to react quickly enough to rapidly get qualified personnel on the ground to timely assist their insured with the breach response. I do know that even at low insurance company rates, the forensics and legal work related to a data breach cannot be done for $5000. Once again we were able to convince the insurance company to pay most of their $25,000 limit by pointing out ambiguities in the policy language.

While we do our best to “find” some coverage for clients who come to us after a breach has occurred, the much better practice is to have an evaluation done of your insurance needs compared your coverage in advance of a breach. This should be stating the obvious, however, based upon what I see in the field, it bears repeating: do not wait until a breach occurs to find out if you are adequately insured. One of the services our firm offers is a review of the client’s insurance portfolio to assess whether they have adequate and appropriate insurance coverage for a data breach considering the nature/size of their business and their financial/legal exposure. The few thousand dollars spent for such a review is a small investment for the peace of mind that comes from knowing you have taken reasonable steps to ensure adequate coverage.

While not a substitute for a review of your insurance portfolio by an experienced data breach insurance coverage attorney, the following checklist will give you a flavor for some of what I look for when conducting such a review:

Data Breach Insurance Coverage Checklist

_______ Understand nature of client business and identify data       maintained and likely risk areas.

_______ Gather and inventory all active insurance policies.

_______ Assess data breach coverage, if any, provided by standard policies.

_______ Do you have a specific “Data Breach,” “Cyber Security,” “Cyber Risk” or similarly titled Policy or Endorsement to another Policy (such as CGL).

_______ If not, how are you covering the data breach risk?

_______ What are the Data Breach Limits of Coverage? Are they per incident or per claim?

_______ Amount of deductible/retention for data breach claims?

_______ What sublimits apply? (This could be the ball game).

_______  Are defense costs unlimited or included in the limits of liability?

_______ Does your policy provide for third-party (liability) and first-party coverage – i.e., the policy provides protection to the insured for liability to others and reimbursement for expenses incurred responding to the breach?

_______ Does your policy apply to claims made or events occurring anywhere in the world?

_______ Does your policy provide an option to choose your own defense counsel – i.e., option to select duty to defend or reimbursement coverage at policy inception?

_______ Does your policy provide first-party coverage for computer program and electronic data restoration expenses?

_______ Does your policy include cyber extortion coverage – applies to expenses to deal with the threatened compromise of your network or data?

_______ Does your policy include business interruption coverage – applies to expenses and lost revenue due to a computer virus or denial of service attack that impairs your computer system?

_______ Does your policy provide coverage for security breach remediation and notification expenses including:

_______ Management of breach response by counsel?

_______ Legally sufficient notification to impacted persons?

_______ Purchase of an identity fraud insurance policy?

_______ Credit monitoring services?

_______ Computer forensics?

_______ Does the policy provide option to choose your own forensics expert or provide a preapproved list? [important to allow rapid reaction]?

______ Does the policy provide coverage for regulatory fines and penalties?

______ Does the policy provide for reimbursement of crisis management and public relations services?

______ Does the Policy contain exclusions barring coverage in the event breach is a result of:

_____ Mechanical failure?

_____ Failure to maintain a computer network or system?

_____ Failure to maintain risk controls?

_____ Lack of performance in software?

_____ Spyware, cookies or other information collection?

_____ Lack of encryption?

This checklist list is not exhaustive and the requirement for a particular coverage will vary depending upon the nature and extent of the client’s business. The important take away, do not wait for a breach to occur before you have the adequacy of your insurance coverage assessed by experienced data breach coverage counsel.  The few thousand dollars spent on such a review is chump change compared to the risk of inadequate coverage.

For more information contact bill.latham@nelsonmullins.com

Cool Apps to Show Your Friends

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Recently, I had a delightful dinner with my distinguished co-counsel renowned Arkansas trial lawyer Bobby Jones and his beautiful and delightful wife Cheryl. Over the course of the night, the topic of fun Apps came up (imagine!). The Apps we discussed, which normally would not be the focus of this blog, are some of my current favorites I am recommending to my lawyer and non-lawyer friends alikeDescribed below are a number of the apps we talked about in the “courses” of dinner.

Reading the Menu

First things first– for those of us past 40, those menus can be hard to read, expecially in dimly lit restaurants.  There’s an App for that–

MagLight+ Magnifying Glass with Light [.99 The App Store]

This app turns your iPhone into a lighted magnifying glass perfect for reading those small print menus. 

Ordering the Wine

Cor.kz ([$1.99] App Store, Android

Excerpted from the Cor.kz website- so true–

“Cor.kz helps you enjoy wine even more! They say that life’s too short to drink bad wine. We couldn’t agree more. That’s why we’ve created the Cor.kz Wine Info iPhone application. In seconds, you can access CellarTracker’s information on over 1,000,000 bottles of wine… right from your iPhone!

Virtually any bottle of wine can be found using Cor.kz – really! So stop taking chances on the bottles you buy at the market and in restaurants. Simply type in the name of the wine (or even scan the bar code!) and you’ll have access to over 2,000,000 notes and ratings from experts and from the huge CellarTracker community of wine drinkers.

Whether you’re a seasoned oenophile or a novice, Cor.kz has great features to enhance and enliven your wine-drinking experience. If you’re just starting out, Cor.kz will help you improve your palate, find more wines you like to drink, and save time and money. Experts will love the detailed information on each wine and the inclusion of even the most rare and exotic bottles.”

Dinner talk—great trips–pictures

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360 Panorama (App Store $ .99)—

This App is incredible– allows you to create an interactive 360 degree photograph with your iPhone or iPad. An invaluable tool for capturing those unforgettable vacation sights (or mapping out an accident site or crime scene). You can see an example photograph of a cul-de-sac I created in about five minutes using my iPhone. These images can be shared, flattened, etc. One of the Apps I use when demonstrating the “amazing wonders” of the iPad/iPhone.

Dinner Talk- The Amazing Walmart App

Walmart Mobile App [Free] for iPhone/iPad or Android

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Walmart is not a frequent subject in my dinner conversations. However, this dinner took place just a few miles from Bentonville, Arkansas – the worldwide headquarters for Walmart.They have developed an amazing “Savings Catcher” App that allows you shop with confidence that you are getting the benefit of advertised deals by Walmart’s competitors when shopping Walmart. Simply scan the barcode on your Walmart receipt, and within three days Walmart notifies you what items were advertised for less by its competitors in your locale, and here’s the kicker Walmart refunds you the difference in the form of an egift card. BRILLIANT! In three weeks of shopping with the app, Walmart has refunded me $ 28.00. You can also use the Walmart app for comparison-shopping while shopping in a competitor’s store. Simply scan the barcode of the item in question and the App will show you the price for the same item in your local Walmart store.

Skip the Desert—time to work out

The practice of law is often stressful and sedentary – a bad combination.  There are a number of technology tools designed to encourage you to live a healthy lifestyle and TO MOVE YOUR BODY.  I have been using the Fitbit Flex for five months now. I have only lost 10 pounds, but I have kept them off. So what is a Fitbit Flex?

It is a small bracelet monitor that keeps track of your movements (steps). It can also track how long you sleep and coupled with the Fitbit scale, your weight and percentage of body fat. Based upon your activity level, and how aggressive you tell it you want to be losing weight, Fitbit will set a custom daily calorie goal for you, and allows you track what you eat and the calories you burn through activity. You can also manually record your blood pressure, heart rate, and blood sugar levels using the Fitbit App, although none of these are actively monitored by the device.

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If you are the competitive type, the Fitbit App allows you to compete with your friends and family showing a weekly step level.  As you near your goal levels, the Fitbit sends you words of encouragement. When you to hit your goals, it sends you an electronic certificate of completion.

The Fitbit Flex comes in a variety of colors and interchangeable sets of bands only are available so you can coordinate colors with your wardrobe. The Fitbit Flex can be purchased at most big box stores, Best Buy and Amazon.com (see above).  It normally sells for about $99. The scale is about $120. The App is free: iPhone/iPad or Android.

Let’s Get Moving!!

Lawyers Get Organized With Microsoft’s OneNote

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Microsoft’s OneNote is an easy-to-use electronic notebook and organizational system (Windows, Mac, iPad, Android, Windows Phone and Kindle) that is one of the most useful tools in my electronic arsenal.   Heavy in features, OneNote is totally integrated with the Microsoft Office suite, so you likely already have it installed if you use a Windows PC with Outlook.  If it is not installed or you use a Mac, you can download it for free using this link.

Envision a shelf of hard copy case notebooks, divided into labeled sections and organized for efficient access to case materials.  OneNote works the same way, only the notebooks are electronic.  The way I use OneNote, each notebook is a case or matter file that contains the usual sections of a litigation notebook such as general information, pleadings, discovery, witness files, motions and orders, attorney’s notes, etc. You can also create sub-notebooks.

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Practically any type of file can be drag and dropped into these OneNote sections for ready access. With OneNote, there is no more searching for one of the ten legal pads I have used over time to take notes in a particular case. My notes (and key case documents) are neatly filed by matter, date, subject, witness, or any other criteria I want to choose. Alternatively, I can do a word searches across all of my OneNote matters to find anything in the database. OneNote’s integration with Outlook allows for the easy and intuitive transfer of emails to appropriate OneNote notebooks. You can also email almost anything directly from the notebooks (e.g., sharing notes with a colleague). Task and calendar functions can also be linked and cross-referenced between OneNote and Outlook.

OneNote clipping demo

One of my favorite features is a screen capture function which provides “what you see is what you get” snapshots of your computer screen with optional reference stamp (date/time/source). OneNote then prompts you for instructions for an appropriate place in one of your case notebooks to store the screen clipping, or you can send it to your clipboard for pasting into documents, emails, etc. I used this feature to capture the screen shots for this article.

OneNote can also record audio and video (camera required) and insert these into your case files in real-time. OneNote can even correlate your typed notes with recorded video/audio in real time. This allows you to click on a particular portion of your notes and go directly to the audio/video that corresponds with the notes.

As you might expect, you can use OneNote on the go, synching across all of your mobile devices—iPad, Android, Windows Phone and even the Kindle with the free OneNote Apps. You can take handwritten notes on touch-enabled devices and save them in your OneNote files. OneNote notebooks can be shared with others for online collaboration with your case team.

I have created a simple litigation template to give you an idea of how a typical trial lawyer’s OneNote notebook might be set up. You can download it with my compliments then modify it to fit your needs. The template is a OneNote file designed to be opened in Windows. If you have OneNote installed, it should open right up. If not, install OneNote and then try again.

This article has just scratched the surface of the many possible uses of OneNote for attorneys or anyone that needs to organize large amounts of information and have ready access to it, any time, any place. Highly Recommended!

Dragon NaturallySpeaking 13 Premium – Video Demo and Review

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Nuance has introduced Dragon NaturallySpeaking 13 – the latest and greatest of its voice type dictation programs. In the linked video, I demonstrate the accuracy of the program and the ability to dictate and control your computer by voice. The major improvements are a claimed 15% greater accuracy over Dragon NaturallySpeaking 12, the ability to switch microphones with less hassle, and the ability to use product without extensive time spent reading text to train the program in your voice patterns.  From my limited testing to date, DNS 13 fulfills all of these promises.  RECOMMENDED.

US Law: Commercial vs. Recreational Use of Drones

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In a post last Fall, I demonstrated the capabilities of my inexpensive drone and suggested that an imaginative attorney could find lots of ways to use such a drone in a law practice. I did not, however, address the legalities of using private drones for commercial purposes.  For now, it is an open question whether the commercial use of drones in any manner is currently permissible in US airspace.

The Federal Aviation Administration (“FAA”) takes the position that drones, such as the one I demonstrated, are not subject to regulation and are perfectly legal to operate for recreational or hobby purposes within certain parameters discussed below. However, it is illegal to use the very same drone for commercial purposes (unless a rare individual exception is approved by the FAA) until the agency finishes developing the regulations for commercial use due out by September 30, 2015.  So, if I want to take an aerial picture of farm as part of my hobby as an amateur photographer, as far as the FAA is concerned it is perfectly legal to do so. However, if I am the farmer and want to check the health of my crop from the air using the same drone, that would be a commercial purpose, would be illegal, and could subject me to a $10,000 per violation fine.

That said, the FAA’s current authority to prohibit the commercial use of drones has been called into question in recent court rulings.  In the agency’s initial attempt to enforce its claimed regulatory authority in this area, the FAA fined one Raphael Pirker $10,000 for using a remote controlled model power glider to take aerial photos for advertising use on the University of Virginia campus. The FAA relied upon a 2007 FAA Policy Statement that requires commercial drones to obtain a Certificate of Airworthiness and be subject to the Federal Aviation Regulations which include operation by a licensed pilot. The agency cited Pirker for violating its ban on commercial drone usage, for operating the drone “in a careless and reckless manner,” pursuant to 14 C.F.R. § 91.13, and operating the drone without a pilot’s license. Pirker challenged the agency’s regulatory authority to enforce the commercial drone ban.

In Administrator v. Pirker, FAA Case No. 2012-EA-210009, NTSB Docket No. CP-217 (2013), a federal administrative law judge held that the power glider used by Pirker was not an “aircraft”—rather, it met the requirements for a “model aircraft” even if it was engaged in commercial operations. More significantly, the Pirker Court held that the FAA had no authority, absent regulations properly adopted through the regulatory process, to regulate this model aircraft whether it was being used for commercial purposes or otherwise. The $10,000 fine was vacated and the case dismissed.

The FAA has appealed the Pirker decision, and staying the regulatory holding pending review by the full National Transportation Safety Board (“NTSB”).   Even if the NTSB agrees that the commercial use of drones operated within the model aircraft rules is currently unregulated, as discussed below, once the FAA has properly promulgated commercial drone regulations in place, it will have the regulatory authority necessary to take enforcement action against violators.

The Statutory Framework

On February 14, 2012, the President signed into law the FAA Modernization and Reform Act of 2012 (” the Act”) into law (P.L. 112-95). One purpose of the law is “to establish a roadmap for getting [drones] integrated into the national airspace,” Regulations are to be in place to allow for the use of commercial drones by no later than Sept. 30, 2015, although some question whether the FAA will meet this deadline. It is anticipated that the new regulations will require some type of pilot licensing and airworthiness certification for drones used for commercial purposes.

In contrast to the regulatory restrictions on the operation of drones for commercial purposes, section 336 of the Act provides for a “special rule for model aircraft.” This section prohibits the FAA from promulgating “any rule or regulation regarding a model aircraft, or an aircraft being developed as a model aircraft” if the following statutory requirements are met:

  • the aircraft is flown strictly for hobby or recreational use;
  • the aircraft is operated in accordance with a community-based set of safety guidelines and within the programming of a nationwide community-based organization;
  •  the aircraft is limited to not more than 55 pounds unless otherwise certified through a design, construction, inspection, flight test, and operational safety program administered by a community-based organization;
  • the aircraft is operated in a manner that does not interfere with and gives way to any manned aircraft; and
  •  when flown within 5 miles of an airport, the operator of the aircraft provides the airport operator and the airport air traffic control tower … with prior notice of the operation….

P.L. 112-95, section 336(a)(1)-(5). Note that no pilot training, licensing or drone air worthiness certification is required or even permitted.  Also note that a 55 pound drone could inflict some serious damage/injury if it plummets from 400 feet above– just saying…

One aspect of the FAA’s interpretation of the Act particularly controversial with the hobby and recreational community is the requirement that the drone operator be able to see the drone with his or her own unaided eyes:

By definition, a model aircraft must be “flown within visual line of sight of the person operating the aircraft.” P.L. 112-95, section 336(c)(2). Based on the plain language of the statute, the FAA interprets this requirement to mean that: (1) the aircraft must be visible at all times to the operator; (2) that the operator must use his or her own natural vision (which includes vision corrected by standard eyeglasses or contact lenses) to observe the aircraft; and (3) people other than the operator may not be used in lieu of the operator for maintaining visual line of sight. Under the criteria above, visual line of sight would mean that the operator has an unobstructed view of the model aircraft.

To ensure that the operator has the best view of the aircraft, the statutory requirement would preclude the use of vision-enhancing devices, such as binoculars, night vision goggles, powered vision magnifying devices, and goggles designed to provide a “first-person view” from the model. Such devices would limit the operator’s field of view thereby reducing his or her ability to see-and avoid other aircraft in the area. Additionally, some of these devices could dramatically increase the distance at which an operator could see the aircraft, rendering the statutory visual-line-of-sight requirements meaningless.

Finally, based on the plain language of the statute, which says that aircraft must be “flown within the visual line of sight of the person operating the aircraft,” an operator could not rely on another person to satisfy the visual line of sight requirement. See id. (emphasis added). While the statute would not preclude using an observer to augment the safety of the operation, the operator must be able to view the aircraft at all times.

Interpretation of the Special Rule for Model Aircraft, 14 CFR Part 91 at 8-9.

This interpretation prohibits the drone operator from using augmented reality devices (such as Google Glass or Oculus Rift) as the visual means of controlling the aircraft. Looking at the limited field of view for these devices in the linked examples, suggests that the FAA’s interpretation is a wise one.  If you have an opinion on the matter the FAA has granted a 60-day extension for the public to comment on its interpretation of the Special Rule for Model Aircraft. The new deadline for comment is September 23, 2014.

While the FAA recognizes that it does not have the authority to regulate drones meeting the model aircraft criteria that are used are strictly for recreational purposes within the described guideleine, but asserts that it can regulate the same model aircraft used for commercial purposes:

Thus, based on the language of the statute, we conclude that aircraft that meet the statutory definition and operational requirements would be exempt from future FAA rulemaking action specifically regarding model aircraft. Model aircraft that do not meet these statutory requirements are nonetheless unmanned aircraft, and as such, are subject to all existing FAA regulations, as well as future rulemaking action, and the FAA intends to apply its regulations to such unmanned aircraft.

Interpretation of the Special Rule for Model Aircraft, 14 CFR Part 91 at 11. To clarify this, in its interpretation the FAA provides the following examples of recreational (non-regulated) versus commercial use (regulated and currently prohibited):

Hobby or Recreation Not Hobby or Recreation
Flying a model aircraft at the local model aircraft club. Receiving money for demonstrating aerobatics with a model aircraft.
Taking photographs with a model aircraft for personal use. A realtor using a model aircraft to photograph a property that he is trying to sell and using the photos in the property’s real estate listing.A person photographing a property or event and selling the photos to someone else.
Using a model aircraft to move a box from point to point without any kind of compensation. Delivering packages to people for a fee.
Viewing a field to determine whether crops need water when they are grown for personal enjoyment. Determining whether crops need to be watered that are grown as part of commercial farming operation.

While drones operated for recreational use under the criteria set forth above are exempt from regulation by the FAA, state and local authorities may impose additional restrictions.

While the difference in regulatory treatment of the same drone and same operator based only upon whether the drone is used for recreational or commercial use is not particularly logical, it arises from the desire of Congress to protect the recreational model aircraft community and not an effort to stifle the use of drones for commercial purposes (nor permit their unfettered and unregulated use).

One thing that is clear, while the federal regulatory bureaucracy may be slow in promulgating commercial drone regulations, the commercial use of drones is coming and will be big business.  It will also present many noval legal issues to be addressed by “hytech lawyers”

If you are interested learning more about the big future ahead for the commercial use of drones, I recommend the linked 60 Minutes (https://m.youtube.com/watch?v=kTZ94RujpEg) story which provides some excellent background information.

The Lawyer’s Tool Box– Litigation Task Based Budget Excel Spreadsheet (downloadable)

Cost-conscious clients demand that their litigation firms prepare and yes adhere to budgets, implement Legal Process Management (“LPM”) systems, and generally be more intentional in developing an efficient litigation plan. A basic part of that process is creating a litigation budget. In the old days you might get away with giving a ball park, seat of the pants, life of litigation estimate, all the while knowing it was probably low, because after all you did not want to scare the client. Those days are gone. Clients are insisting upon thoughtful, realistic, task based, process driven legal budgets

While hardly revolutionary, a specially designed Excel spreadsheet can be a very useful tool for creating detailed task based budgets, enabling you to easily see the results of changed assumptions on the bottom line. If you traditionally bill by the hour, but are asked to quote a fixed fee, an Excel spreadsheet budget template is also a useful tool to arrive at a price for which you can reasonably do the work.

Below is an image of one of the templates I use for preparing hourly rate litigation fee budgets (Click on the image to download a working copy):

Task Basked Billing Budget Template

In the template, we used the ABA Litigation Task Based Billing Codes. You input the names and rates of the timekeepers, and then fill out the budget using hours per timekeeper, per task. It automatically adjusts the totals as you change the numbers. Of course, you need to have the experience to reasonably estimate the time it will take to complete each task. Then, if your client agrees to the budget, you need to actively manage the case to stay close to the estimates. That is not always possible, but is more likely to happen if you are intentional in your planning and management of the litigation.

If you are already using the ABA Task Based Billing Codes, it can be a useful exercise to go back and do a post mortem on some concluded matters to get a feel for what it is costing your clients for you to litigate their cases. Savvy clients are doing just that analysis and comparing you to other firms.   While you are doing this review, look for inefficiencies that could be improved upon in your next case to make you more efficient

Detailed upfront planning is the key to litigating more efficiently. We hope the budget template is helpful to you and your clients in developing accurate task based budgets that can then be effective management tools as the litigation progresses.

The Lawyer’s Toolbox: MS Word, Excel and PowerPoint on the iPad

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In late March of 2014, Microsoft released its long awaited Word, Excel and PowerPoint Apps for the iPad. OneNote had already been released several months before. I have been using all of them since the introduction and have generally been impressed. The Windows 8 versions of this same software, with the exception of OneNote, are not touch screen optimized. The iPad versions on the other hand were designed from the ground up for touch screens and visually are works of art.   The irony is that the Word experience on the iPad is actually superior to the Word experience on Microsoft’s own Surface Pro.

The Office Apps are free to download (Word Excel PowerPoint OneNote), and as of the date of this post they have been downloaded over 30 million times. The catch is that unless you upgrade to an Office 365 subscription, you can only view documents—there is no editing capability.   The least expensive subscription option is a “personal” account, which costs $7 per month or $70 for 12 months paid in advance. This buys you use of the apps on both the iPad and one computer (PC or Mac), Plus 20GB of cloud storage through Microsoft’s OneDrive cloud service.

I purchased the “home” subscription which allows you to use the software on five computers (PC or Mac) and up to five tablets, with 20GB of cloud storage for each user. The cost for this option is $10 per month or $100 if you pay in advance for the full 12 months. I am running the apps on my iPad, a Mac, an Asus Windows 8 tablet and a laptop.

The advantage to the subscription model is that you always have the latest version of the software, you can use the software on multiple devices, and you have a respectable amount of cloud storage capability. The downside is that you do not own the software and must pay tribute to Microsoft every year.

Word for iPad

This is the opening screen for Word on the iPad. As you can see there are a number of eye catching templates available in addition to the blank document.

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Here is a view of an open document:

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Most of the core Word functions are available. Here are a few key exceptions:

There is continual spell checking, but no grammar check.

  • You can view, but not update footnotes and end notes.
  • YES- You can you can review and edit using track changes. However, there does not appear to be any way to insert comments.

Now you start a document in the office, work on it on your iPad while travelling and then finish it up on you home computer. OneDrive allows you to have a common secure storage place for your working documents. Once you have created you document you can save it to OneDrive, Email as an attachment, or email as a link to your OneDrive.  [Update: Email as PDF feature added with July 31, 2014 update]

Excel for iPad

Like Word, Microsoft packed the most important functions of its PC version of Excel into a attractive, touch enabled iPad version.   Over 400 formulas are available.   Creating charts and reports will be intuitive for experienced Excel users.

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There are some limitations and the following features are NOT supported for Excel on the iPad:

  • Split and multiple windows
  • Slicers data sorting and filtering
  • Timeline data sorting and filtering
  • Adding or updating conditional formatting
  • Adding or updating data validation
  • Adding, updating, sorting or filtering pivot tables
  • Running macros
  • Updating with external data
  • Adding or updating comments (but can view)

On the more positive side there are a number of preformatted templates:

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All in all, Excel for the iPad has most of the functionality that most lawyers will need on a regular basis.

PowerPoint

PowerPoint for iPad is the most disappointing of the three core iPad apps in the Office Suite. While it will allow you to display your PowerPoint presentations created in Windows, including animations, the tools for creating new PowerPoint presentations or editing existing ones are fairly limited. The following Windows version features are NOT available in the iPad version:

  • Playing, adding or changing video.  [Update this feature was added July 31, 2014]
  • Playing, adding or changing audio.   [Update this feature was added July 31, 2014]
  • Adding or changing animations (but will play existing ones).
  • Adding, removing or changing comments

If you need to create a PowerPoint presentation on the iPad a number of basic templates are available:

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Here is what the creation screen looks like:

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I prefer Apple’s Keynote to PowerPoint for iPad for presentation creation— especially since I tend to add audio, video and animations. But if you simply want to use a created PowerPoint (without video or audio) on the iPad, the PowerPoint iPad app will serve you well.

Overall Conclusion —while not perfect, the addition of the Office suite to the available iPad apps makes the iPad even more useable for legal work. Recommended.