Alyson Carrel is a Clinical Associate Professor at Northwestern Pritzker School of Law.
Over the past four decades, scholars have debated the impact of private settlement on the broader public good. However, advancing technology in multi-party computation (MPC) presents an option to reimagine how society settles disputes, transforming it from a debate mired in the choice between public or private to a system of pluralistic options, each of which offers parties the choice to settle with varying degrees of both private and public elements. This article uses the cases against Harvey Weinstein and the recent revelations of non-disclosure agreements (NDAs) concealing rampant sexual harassment to demonstrate how a settlement mechanism built on MPC could present a set of pluralistic options that no longer result in the unfortunate choice between prioritizing the interests of individuals versus the needs of society.
The debate about the impact of private settlement is not new. In 1976, Professor Frank Sander spoke at the second Global Pound Conference and advanced the argument that courts moved too slowly, cost too much, and were at times inaccessible to the litigants that needed it most. He described the need for courts to adopt a multi-door approach providing multiple avenues for resolving disputes, including arbitration, mediation, and facilitation. Proponents of these alternative processes argue that not only would it alleviate backlog on court dockets, but that private settlement provides significant social justice benefits. These benefits include i) individual autonomy and self-determination over the outcome of their case, ii) confidentiality to speak freely during settlement discussions and protect individuals from potential reputational harm, iii) creativity and freedom from the limitations of legal remedies, iv) the potential to improve relationships, and v) the ability to have a voice, especially for those that may not have the financial resources to utilize the court system effectively. However, this push for alternatives outside traditional adjudication sparked criticism that expanding the use of private settlement would unnecessarily harm society because it denied the courts its role as protector and reflector of the broader public good. Removing cases from the public court system and placing them in the confines of private settlement distorted society’s understanding of society’s ills, and more generally, placed too much emphasis on the individual resolution and not enough on the society and the systemic impact inherent in a dispute. The resulting debate essentially became one about whose interests to prioritize: the parties, or the broader public good affected by structural harm that the matter represented.
The recent revelations of sexual harassment and assault concealed by Harvey Weinstein and other famous individuals, through private settlement and non-disclosure agreements (NDAs), pointedly demonstrate this debate. Women publicly began to describe previously clandestine incidents of sexual harassment and assault, starting with the Ronan Farrow article in the New Yorker; they named the perpetrators and demanded accountability (of both the perpetrator and the organizations and industries supporting them). This was the first time these women had spoken publicly about the harassment; some women had never reported the harassment in the first place, and others had reported it but agreed to a private settlement that effectively concealed the harassment behind an NDA. The predictions of private settlement’s critics proved prescient: private settlement had prevented individual accountability, failed to change behavior nor protect others from suffering the same harm, and hindered a societal understanding of the larger systemic issues and prevalence of sexual harassment in society. Without formal reporting and knowledge of the perpetrator’s actions, the court could not perform its duty as protector nor reflect and enforce the social and moral norms of society. In this new context, critics once again argued against private settlement and advocated for states and organizations to prohibit the use of NDAs in sexual harassment disputes. They argued that, given these recent revelations, states should prioritize the societal interests of protecting the broader public good over allowing individuals to pursue private settlement, and prohibit the use of NDAs in sexual harassment disputes. They wanted to ensure perpetrators could no longer conceal their harmful behavior from others and protect future third parties from suffering the same harm. Accordingly, California passed such a law prohibiting NDAs. Other states, including Maryland, have passed laws making NDAs in sexual harassment disputes unenforceable, null, or void. Some businesses and employers such as Conde Nast decided to voluntarily declare they would not use NDAs in sexual harassment disputes. Although these new laws and policies limited an individual’s right to choose a private settlement, they did so to ensure bad actors could no longer conceal their behavior.
However well-intentioned, these prohibitions of NDAs disadvantage survivors. As discussed in the debate, there are social justice benefits to private settlement. For some individuals, it is imperative to have the autonomy to settle a claim without going through the costs and perils of going to court. Survivors of sexual harassment often want to deal with the matter quickly and move on. They do not want this experience to follow them in their career and potentially ruin their professional or personal reputation. They often use confidentiality as leverage during settlement negotiations as a bargaining chip with perpetrators who need privacy as well. There is a cruel irony when protecting potential future victims by prohibiting NDAs unintentionally harms the survivors. States recognizing this irony limited the prohibition to the perpetrators by carving out an exception allowing NDAs if the request for the NDA originates with the victim.
Many sexual harassment victims do not report the behavior. They may be afraid they will not be believed or that they will face retaliation if they report. Because of this, some women have relied on more informal and extra-legal mechanisms for reporting sexual harassment and assault, such as the “traditional whisper network,” where they share information among colleagues without ever filing a formal complaint. New mechanisms have developed as well, such as public online forums where individuals post about their experience anonymously (some naming the perpetrator while others do not), and private forums, whether online or offline, where individuals post without anonymity but with the protection of a forum closed to the general public. These extra-legal mechanisms, however, come with limitations. Because they are unofficial, they may not lead to perpetrator accountability. If the identity of the accuser becomes public, the accused may threaten to sue the reporting individual for slander or libel, which may re-victimize the victim regardless of the outcome. Further, individuals accused of sexual harassment in these extra-legal mechanisms voice concern about the injustice inherent in such unregulated sites and the lack of process through which they can defend themselves or ensure their reputation is not unnecessarily damaged.
None of the solutions mentioned above, legal and extra-legal, allow victims to both maintain their privacy while ensuring the public is sufficiently informed about the harm. But the harm is real and so are the calls for solutions that not only protect individuals, but also protect and inform society. The described attempts to develop new mechanisms addressing the need to ensure that NDAs are not concealing ongoing sexual harassment and assault demonstrate a need for a system with pluralistic options that allows individuals who require privacy to feel comfortable reporting while keeping the society informed of the harms. Advancing technology in multi-party computation (MPC) presents the possibility to design such a set of pluralistic options and reimagine settlement.
MPC is a method by which parties can evaluate encrypted secret information to compute results without ever knowing or revealing the underlying data. Owners of the data never relinquish control of their information even though it is used in the computation. MPC scholars often explain the concept using a simple example called Yao’s millionaires’ problem.In this example, two millionaires want to know which one of them has more wealth than the other, while neither of them discloses their wealth. Using MPC, a machine can compute the encrypted data and reveal who has more, without ever revealing, or “knowing” the amount of either millionaire’s wealth. The machine accesses a set of encrypted data, ensuring privacy is maintained while still informing an outcome. Of course, this is an over-simplified example to demonstrate how MPC works. It is not the computation that is remarkable, but the ability to keep the underlying information secure. A trusted third-party could be utilized to house and compute this information, but such information would be susceptible to data breaches or leaks. Because MPC utilizes encrypted data, it is far more reliable in protecting private information. In the sexual harassment context, the question Yao asked – “who has more wealth?” – might become “has this person settled a sexual harassment claim before, and if yes, how many times?” MPC opens up the possibility that parties can settle privately and feel confident their settlement is confidential, while still allowing courts, states, organizations, or society to use that data to compute specific information that could protect the broader public good.
A modified version of MPC has been used on college campuses to provide sexual assault survivors a reporting mechanism for allegations that maintains their privacy unless a subsequent victim alleges an assault by the same perpetrator. This mechanism allows survivors to report the harm without being subjected to the potential for disbelief, retaliation, or reputational damage that might come with publicly reporting an accusation. It also provides a sense of solidarity when a subsequent act is reported and decreases the likelihood that the survivor will be disbelieved. This matching function provides a layer of protection for survivors wary of publicly reporting the harm by allowing them to report it privately as an initial step until they have an ally with which to bring it public. Scholars have proposed a similar step-wise approach to civil sexual harassment settlements that allow individuals to enter into private settlements, with NDAs, if those settlements are “deposited in an information escrow that would be released for investigation by the EEOC if another complaint is received against the same perpetrator.” In other words, individuals maintain their autonomy to choose a private reporting mechanism that only prioritizes the broader public good once there is an indication the perpetrator is a repeat offender. While these proposed systems for sexual harassment cases improve upon the traditional “public” or “private” dichotomy, they still remain problematic. Ian Ayers points out these systems can create a “first-mover advantage,” essentially giving perpetrators a free pass. They also focus exclusively on repeat offenders. Limiting reporting to repeat offenders reinforces the problematic notion that to believe a sexual harassment or assault survivor, there must be multiple allegations. This system does little to inform society about the extent to which sexual harassment and assault is occurring because it is only limited to repeat accounts instead of all accounts.
MPC presents the possibility of creating a much broader reporting system for private settlements not just limited to computing perpetrator matches. A policy could be adopted requiring all private settlements to be maintained and encrypted for computational analysis that opens up the opportunity to leverage the answers to new questions such as: “has this organization settled a sexual harassment claim before, and if yes, how many times?” Or, “how many private settlements dealt with sexual harassment last year?” Or “how many sexual harassment disputes involved an alleged assault?” The possibilities are endless. In her paper “Beyond #MeToo,” Professor Deborah Tuerkheimer argued that survivors need a “wider array of pathways” for reporting sexual harassment. MPC presents the opportunity to develop this array of pathways because it can utilize more than just private settlements and compute more than just information matching.
For instance, instead of prohibiting NDAs, parties could include encrypted information about their private settlement in an MPC mechanism for a court to enforce the private settlement, including any agreed to NDA. This maintains the parties’ autonomy and right to choose settlement but ensures that society can, to varying degrees, evaluate those settlements to ensure the broader public good is protected. Innovations present more questions than answers, and a settlement system built on MPC is no different. Could the parties decide which of the settlement elements to report or would policy dictate the entire settlement be included? Will employers view a reporting system built on MPC as an enhancement over recent laws prohibiting NDAs? How can this system reflect those private settlements in which a court would have never ruled against the employer, but where the company wanted to save money by settling? What will be the appropriate reporting threshold to prevent people from using the mechanism to spread formalized rumors? Will survivors lose settlement leverage if employers know the final settlement must be included in this system and some element of it will be potentially made public? Do parties have to sue before accessing results from the MPC system? Could a settlement system built on MPC change the way society views sexual harassment? The list could go on and on. This article does not have all the answers but simply wants to point out that the technology exists, today, to reimagine settlement.
It is beyond the scope of this short article to identify the entire array available, but here is a brief list of some broad utilizations of MPC. In each example, survivors retain the autonomy to address the harm however they choose, including private settlement, without concealing the impact of these harms from society.
1. Information Escrow for repeat offenders
As already described, MPC is a form of information escrow, in which parties may settle privately unless a subsequent victim files a settlement with the same perpetrator. MPC can provide notice to plaintiff in a subsequent settlement that the defendant has settled a similar claim previously, without disclosing the name of the accuser or precise details of the prior settlement. This example protects the privacy of the individual while still informing future third parties of the settlement and thus the offensive behavior.
2. Information Escrow for repeat organizations defending offenders (even if a single act)
MPC can also be a form of information escrow that informs a plaintiff in a subsequent settlement that the workplace or organization in which the harassment occurred has settled a claim for similar behavior, even if with a different perpetrator. This use of MPC systems expands the value of the information escrow by no longer limiting it to situations in which there is a repeat actor and including situations in which an organization may be harboring or concealing the behavior.
3. Reporting totality of acts in their aggregate
A settlement system built on MPC could also capture information that educates society about this behavior, whether or not the behavior is from a repeat offender. Instead of computing for matches, the system could look at the data in its aggregate to determine the extent of the problem in society and its potential impact on the broader public good. MPC can allow for automatic, cross-jurisdiction aggregations that provide higher-level information about trends in industries. In this way, there is not only accountability for repeat offenders but also anonymized data that can inform the public and raise awareness of widespread behavior, revealing no underlying data about the accuser or the accused. This reporting system mirrors the impact of the informal reporting systems while ensuring the privacy of the individuals.
The recent revelation of individuals using NDAs to conceal rampant sexual harassment and assault demonstrates the importance of the ongoing debate about the impact of private settlement on the broader public good. Current unsatisfactory solutions are limited to a trade-off between whether to prioritize an individual’s interest in privacy over the public’s need for information. MPC presents an opportunity to reimagine settlement, moving away from the old dichotomy of either public or private, to a new set of pluralistic options that allow for both public and private: not only because MPC presents an opportunity to address the use and abuse of NDAs in the sexual harassment setting, but because it presents an opportunity to reimagine how the law interacts with settlement. As critics of private settlement have identified, any dispute between individuals may represent a systemic problem that society has an interest in understanding and protecting future third parties from experiencing. This need cannot come at the expense of the individual’s potential interest in privacy. MPC might allow us to collect data about many cases and run analytics to ensure society has a more accurate understanding of the extent to which certain behaviors are harming the broader public good. With advancing technology like MPC, the law must reexamine the assumptions on which it is based and begin reimagining what is possible, because it is.
 I am grateful to Lynn Cohn, Leonard Riskin, Daniel Gandert, Annalise Buth, Deborah Tuerkheimer, Xiao Wang, and Peter Chan for their support and insightful comments on earlier drafts. I am indebted to Noam Ebner for his leadership in the field and collaboration with me exploring the role of technology in dispute resolution. An earlier version of this article was presented at the Northwestern CS + Law Faculty talk series, organized by Professors Daniel Linna and Kristian Hammond, and the University of Oregon’s Experimental ADR conference, organized and hosted by Professor Jen Reynolds, and I thank all the participants for their comments and suggestions. [back]
 See generally,Owen M. Fiss, Against Settlement, 93 The Yale L.J. 1073 (1984); see generally, Carrie Menkel-Meadow, Whose Dispute Is It Anyway? A Philosophical and Democratic Defense of Settlement (In Some Cases), 83 Geo L.J. 2663 (1995). [back]
 This article approaches the problem from a survivor-centered point of view, but recognizes that settlement is only effective if defendants in civil sexual harassment cases find value in settlement too. [back]
 Frank E.A. Sander, Varieties of Dispute Processing, Address Delivered at the National Conference on the Causes of Popular Dissatisfaction with the Administration of Justice, 70 F.R.D. 79, 111 (1976). For a history of the Global Pound Conferences, see Traum, Lara and Farkas, Brian, The History and Legacy of the Pound Conferences, 18 Cardozo J. Conf. Resol 677 (2017). [back]
 Id. (This is commonly referred to as the “multi-door courthouse”). [back]
 Menkel-Meadow, supra note 2, at 2669-70. [back]
 See, e.g., Nancy Welsh, The Thinning Vision of Self-Determination in Court-Connected Mediation: The Inevitable Price of Institutionalization? 6 Harv. Negot. L. Rev. 1, 15-16 (2001). But see, e.g., Nancy Welsh, Do You Believe in Magic?: Self-Determination and Procedural Justice Meet Inequality in Court-Connected Mediation, 70 SMU L. Rev. 721, 721(2017). [back]
 Confidentiality is now protected to varying degrees by various court rules and law. See, e.g.,Unif. Mediation Act § 8 (2001). But see, e.g.,Christopher Honeyman, Confidential, More or Less: The Reality, and Importance, of Confidentiality is Often Oversold by Mediators and the Profession, Disp. Resol. Mag., Winter 1998, at 12. [back]
 See, e.g., Carrie Menkel-Meadow, Aha? Is Creativity Possible in Legal Problem Solving and Teachable in Legal Education?, 6 Harv. Negot. L. Rev. 97, 97-144 (2001). [back]
 See, e.g., Deborah Thompson Eisenberg, What We Know and Need to Know About Court- Annexed Dispute Resolution, 67 S.C. L. Rev. 245, 248 (2016). [back]
 See, e.g., Nancy A. Welsh, Making Deals in Court‑Connected Mediation: What’s Justice Got To Do With It?, 79 Wash. U. L.Q. 787, 791 (2001); see generally, Nancy A. Welsh, Stepping Back Through the Looking Glass: Real Conversations with Real Disputants About Institutionalized Mediation and Its Value, 19 Ohio St. J. on Disp. Resol. 573 (2004). [back]
 See, e.g., Fiss, supra note 2, at 1075; Laura Nader, Commentary, in THE POUND CONFERENCE: PERSPECTIVES ON JUSTICE IN THE FUTURE 114, 115-19 (A. Leo Levin & Russell R. Wheeler eds., 1979); Harry T. Edwards, Alternative Dispute Resolution: Panacea or Anathema?, 99 Harv. L. Rev. 668, 668-69 (1986); Trina Grillo, The Mediation Alternative: Process Dangers for Women, 100 Yale L.J. 1545, 1561 (1991); David Luban, Settlements and the Erosion of the Public Realm, 83 Geo. L.J. 2619, 2622-26 (1995). [back]
 See generally, Menkel-Meadow, supra note 2, at 2663-71. [back]
 Ronan Farrow, From Aggressive Overtures to Sexual Assault: Harvey Weinstein’s Accusers Tell Their Stories, The New Yorker (Oct. 10, 2017), https://www.newyorker.com/news/news-desk/from-aggressive-overtures-to-sexual-assault-harvey-weinsteins-accusers-tell-their-stories. [back]
 See Fiss, supra note 2, at 1085-87; Luban, supra note 12. [back]
 See Prasad Vasundhara, If Anyone Is Listening, #Metoo: Breaking the Culture of Silence Around Sexual Abuse Through Regulating Non-Disclosure Agreements and Secret Settlements, 59 B.C. L. Rev. 2507, 2520-23 (2018). [back]
 S.B. 820, Cal. 2017-2018 Reg. Sess., 2017 CA S.B. 820(NS), ch.953 (Cal. 2018), https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180SB820. [back]
 H.B. 1596, 2018 Reg. Sess. ch.738 (Md. 2018). [back]
 Katie Robertson, Condé Nast to Limit the Use of NDAs, The New York Times (Feb. 21, 2020), https://www.nytimes.com/2020/02/21/business/media/conde-nast-nda.html. [back]
 See generally, Menkel-Meadow, supra note 2. [back]
 See, e.g., Or. Rev. Stat. § 659A.370 (2019). [back]
 Select Task Force on the Study of Harassment in the Workplace: Report of Co-Chairs Chai R. Feldblum & Victoria A. Lipnic, U.S. Equal Emp. Opportunity Comm’n (Jun. 2016), https://www.eeoc.gov/eeoc/task_force/harassment/report.cfm. [back]
 Deborah Tuerkheimer, Beyond #MeToo, 94 N.Y.U. L. Rev. 1146, 1168-74 (2019) (describing a new taxonomy for unofficial reporting in sexual harassment). [back]
 See Tuerkheimer, supra note 26, at 1167-74. [back]
 See Tuerkheimer, supra note 26, at 1188-91. [back]
 Xiao Wang et al., Revisiting Square-Root ORAM, 2016 IEEE Symposium on Security and Privacy, https://ieeexplore.ieee.org/stamp/stamp.jsp?arnumber=7546504. [back]
 Andrew Yao, Protocols for Secure Computations, in Conference Proceedings of the 23th IEEE Symposium on Foundations of Computer Science 160, 160-64 (1982). [back]
 Anjana Rajan et al., Callisto: A Cryptographic Approach to Detect Serial Predators of Sexual Misconduct, Callisto 1, 1 (Nov. 14, 2018), https://www.projectcallisto.org/callisto-cryptographic-approach.pdf. [back]
 Ian Ayres, Targeting Repeat Offender NDAs, Stanford L. Rev. Online (2018), https://review.law.stanford.edu/wp-content/uploads/sites/3/2018/06/71-Stan.-L.-Rev.-Online-Ayres-1.pdf. [back]
 See Tuerkheimer, supra note 26, at 1193. [back]
Alyson Carrel, Reimagining Settlement with Multi-Party Computation, JTIP B
Innovation is a process that can be learned, practiced, and mastered. Applying Everette Rogers’s Diffusion of Innovations Theory to solve problems in the American legal industry may hold the key to addressing critical issues such as access to justice and overwhelming legal complexity. This post explores diffusion theory from a student’s perspective and through an interview with Professor Bill Henderson conducted in November 2019.
The Legal Innovator’s Dilemma
Change is notoriously hard. From an early age, most people learn to fear the idea of “going out on a limb,” and organizations often cling to the safety of the pack. Yet despite a societal preference to resist change, good ideas eventually take root and become widely adopted. Moreover, the pace of change differs widely between industries.
Today, the medical and tech industries seem to deliver cutting edge breakthroughs every other day, while others such as the legal industry seem to lag far behind. Why is change so hard, and what makes the legal industry especially challenging? Further, what lessons can we learn from studying how different sectors respond to change? According to some, the answer to the legal innovator’s dilemma is hybrid seed corn.
Connecting Hybrid Seed Corn to Artificial Intelligence
What does a study on hybrid seed corn from the 1960s have to do with the proliferation of artificial intelligence in the legal industry in 2020? As it turns out, maybe a lot.
In the mid-20th century, farmers across the United States resisted an innovation – the hybrid seed corn. Although the innovation appeared to work as promised, researchers such as Everette M. Rogers discovered that the adoption of hybrid seed was more a function of a social system rather than technology alone.
In other words, the fact that hybrid seed produced superior crops was relatively unimportant. Instead, Rogers delivered an insight that mass adoption rested on the willingness of a few influential farmers to take a chance on buying hybrid seeds. With agriculture today, it seems obvious, but at the time in the 1950’s, buying seeds instead of planting your own was a radical idea. Once influential farmers bought into the concept, others followed. Rogers delivered his insights with the Diffusion of Innovations (DOI), quickly becoming one of the most widely cited works in social science.
Applying Diffusion Theory to the Law
Professor Bill Henderson, who teaches the course “How Innovation Diffuses in the Legal Industry” at Northwestern Pritzker School of Law, discovered Rogers’ theory after learning lessons the hard way as an entrepreneur with a legal tech startup. After realizing that Rogers’s work explained why his journey in legal tech was so arduous, Professor Henderson launched Legal Evolution to help entrepreneurs overcome the type of massive passive resistance that has become a hallmark of the American legal industry.
If influential farmers were the key to unlocking hybrid seed adoption, then the ability of an entrepreneur to identify influential decision-makers in the legal market could prove to be the difference between a successful business or another failed startup. Armed with this theory, entrepreneurs might be able to focus their resources on customers who are more willing to accept and spread innovations, rather than simply those with the most money.
A Case Study in Decision Making
Bob Meltzer’s experience with founding VisaNow, an innovative online immigration legal services platform, in 1999, provides an excellent example of the theory in action. VisaNow initially sold to enterprise customers but became bogged down in the sales cycle. With enterprise customers, VisaNow was spending its time trying to sell to risk-averse and consensus-based decision-makers.
However, Bob realized if he backed off and went to a smaller customer – where there was a single owner or manager who had the power to make fast buy decisions – he could overwhelm a niche market. His sales increased dramatically. He was selling to smaller customers, but the high volume enabled VisaNow to grow 100% year over year for three years. In a way, the successful adoption by small, yet influential customers made VisaNow’s sales to larger, more sophisticated customers easier, especially as innovation adoption continued to spread.
The Diffusion Theory Framework
Sounds great, but what is it?
As Professor Henderson explains in detail on the Legal Evolution blog, we can adopt Rogers’s regression model to understand how to reach mass adoption for a given innovation in the legal market.
The core model has five factors (known as the relative advantages) that account for between 49% and 87% of the variance in the rate of adoption. The five factors that should be analyzed include:
By learning how to evaluate the market with these five factors, the legal entrepreneur can identify which areas require attention and how to effectively approach issues.
For example, the Nature of the Social System factor requires an analysis of how to measure success. First consider who is in your system: Is the social system of your legal innovation comprised of the Am Law 100 firms, or is it each of the law librarians at every intellectual property firm on the North Side of Chicago? In one case the unit of measure for success might be adoption of your innovation by a firm. In the other case, the unit of measure might be the use of your innovation by each department head. Knowing the difference can help focus a business strategy and make efficient use of limited resources.
More case studies on innovation diffusion as it relates to the legal industry can be found at Legal Evolution.
Predictions on the Future of Legal Evolution
When pushed to make predictions about the legal market, Professor Henderson focuses his answers on culture, people, and processes more than any specific type of tech.
Technology, after all, is simply the application of scientific knowledge for practical purposes. If Oxford’s definition is true, then the development and implementation of a management technique is as much a technological innovation as the latest in-cloud tool.
Embracing Allied Professionals
In no particular order, Professor Henderson’s list of predictions starts with a change in culture, what he calls the “softening of the kind of the culture of law to embrace allied professionals.”
When explaining the concept, he says, “I think that we’re beginning to see the benefits of . . . opening up the social system to external intelligence. I mean, it makes us [lawyers] smarter to talk to accountants, it makes us smarter to talk to data scientists and software engineers.”
Management Techniques for Attorneys
A second prediction involves improved management techniques for attorneys. For example, consider CEO and founder of InCloudCounsel Ben Levi’s story. InCloudCounsel connects attorneys with clients through a novel cloud-based platform. To an outsider, the technology might resemble what Uber does for drivers and riders if they were executing hundreds of private equity contracts.
But the innovation is not about the software or a machine learning algorithm; instead, it’s the idea of implementing new management techniques. This primarily involved Levi’s use of net promoter scores (NPS) to evaluate attorneys. In some industries, NPS has become a popular tool to measure factors such as customer satisfaction and customer relationships. Though, is not often used in the legal industry, where tracking billable hours and revenue per lawyer is the main focus. Levi is taking a different approach.
Professor Henderson notes InCloudCounsel as one example of a legal company “bringing enlightened management to the law.”
Law Firms Will Win
Although the theory seems to suggest that large firms are slow and lumbering, in actuality, there are cases where large firms have the advantage in the innovation game. In addition to having a sheer strength in capital resources, large firms have all the units of measure that matter: the lawyers and other key influencers that determine outcomes in a social system.
To make the case, Professor Henderson recalls the case study on Clifford Chance Applied Solutions with CEO Jeroen Plink. As part of the case study, Jeroen guest lectured students about how he led an effort to develop in-house legal software solutions that are designed to increase efficiency and become profitable. Professor Henderson believes “Clifford Chance [and other law firms that invest in similar channels] will eventually get to a point where their tech business is perceived as more valuable than their services business.”
Professor Henderson stresses that “the tech business permits you to make money while you sleep” and could prove to be the more profitable business in the long run.
Impressed with the case, he went on to say, “I left that class with the conclusion that the law firms are going to win. And what I mean by that is, that they just have such overwhelming advantages. Number one, they’ve got deep enduring relationships with powerful customers. And number two, if they’re willing to set aside 1% or 2% to feed into it… they have an overwhelming advantage of basically being able to develop products with access to partners.”
For firms willing to invest, the idea that a traditional firm can win with relatively small investments is good news.
But for small startups, the big firm’s advantage also represents an opportunity. Firms still have to make an investment decision in the first place. Exploiting that decision space could be critical.
The observation that small innovators can win by paying attention to their users and acting on feedback is an important one. Despite their size, those talented enough and disciplined enough to develop innovations with the right product-market fit can still win. As Professor Henderson added, “you don’t need to be a Biglaw firm to pull this off.”
Justin Chae is a Master of Science in Law student at Northwestern Pritzker School of Law.
Every school day, millions of parents wave goodbye as their kids get on a bus or into a carpool to head to school. Now fast-forward 20 years and replace the driver with an autonomous driving system. Will parents be comfortable letting their kids get in that vehicle? Should a 15-year-old be able to order a ride in an autonomous vehicle (AV) without parental consent? How about a 9-year-old?
Increasing mobility for those unable to drive is an important benefit of AVs. Experts and academics are exploring how to design AVs to be kid-friendly (and parent approved) given the technical and non-technical issues that can emerge when a child rides solo. Proposed features include two-way audio communication, seatbelt checks, and the ability to monitor the vehicle remotely. However, each new feature also raises a myriad of new questions or concerns around cybersecurity, authorizing access, overriding decisions, emergency interventions, and more.
While protecting riders’ and other road users’ physical safety is the foremost concern, AV riders’ privacy, and especially minors’ privacy, also deserves attention. The FTC’s recent $170 million settlement with YouTube for violation of the Children’s Online Privacy Protection Act (COPPA,15 U.S.C. §§ 6501–6505) highlighted concerns about minors’ online privacy and content access. COPPA protects those under 13 years of age from “unfair or deceptive acts or practices in connection with the collection, use, and/or disclosure of personal information from and about children on the Internet.”
At first glance, AVs seem outside the scope of COPPA. However, the law defines “online service” broadly. AVs are similar to other examples of online services in the FTC’s guidance such as internet-enabled location-based services and Internet of Things devices. Furthermore, AV companies should recognize the wealth of personally identifiable information that these vehicles collect on their riders, which will include children under the age of 13 and categories of information covered by COPPA:
Most uses of this information by AV companies comply with COPPA and seem in line with societal expectations of privacy, for example rider authorization and customizing the vehicle to its user’s preferences (temperature, radio station, and seat position).
However, AV companies might be tempted to make the same mistake as YouTube by marketing the information it has on its riders, knowing that some of its riders are protected by COPPA. For example, an AV company that infers a child’s favorite pizza restaurant based on analysis of his family’s past trips could sell this data to the restaurant or accept payment to intentionally take routes that passes by the restaurant. These applications may violate COPPA’s protections on disclosure of a minor’s identifiable information to third parties for any purpose.
AV companies interested in the “collection, use, and/or disclosure of personal information from children” for allowable ends under COPPA require verifiable parental consent. However, meeting the requirements of COPPA raises additional challenges:
These challenges will be compounded by state-level privacy rules, most notably the California Consumer Privacy Act (CCPA), which can require actual knowledge of a user’s age or place greater restrictions on the collection and use of data.
Even with parental consent, how data from AVs is managed and analyzed merits further consideration. For example, the Supreme Court’s decisions in US v. Jones andUS v. Carpenter (and other cases at lower levels) highlighted how location data can reveal or be used to infer one’s most intimate and sensitive personal information. Even anonymized and aggregated location data disassociated from the rider, regardless of age, is re-identifiable at high levels of accuracy when combined with other data sets. Therefore, an AV company required to share data with a city or state government (as is increasingly required and allowed under COPPA) that then makes this data publicly available could rightfully be concerned that their users’ identities can be determined.
Without additional clarity, AV operators may find it easier to place age restrictions on ridership, limiting these vehicles’ social utility. Unfortunately, these restrictions may also incentivize cheating or lying. For example, Uber and Lyft’s policies say that passengers under the age of 18 must be accompanied by an adult, yet enforcement is loose. Furthermore, future design concepts see vehicles becoming platforms for third-party application integrations and partnerships, similar to the app store on cellphones, some of which would target minors.
Therefore, to unlock the medium and long-term benefits of AVs for minors, lawyers and policymakers must recognize AVs are not just vehicles; AVs are directly connected to a broader ecosystem of technologies and policy areas. Especially as new regulations around privacy and the internet are considered, lawyers and regulators must recognize and account for the new era of connected products, like AVs, that will be affected.
Doug Lavey is a third-year student at Northwestern Pritzker School of Law.