Monday, March 31, 2014

Are Machines Ethical?

(thanks to Rockwell Center)

In an episode of Jonathan Creek (don't bother to find it, it's not good) a woman spilled her mother's ashes on the floor. She went to get a vacuum cleaner from another house but on her return she found the ashes had been stolen. Of course, they hadn't. Her mother had a robot vacuum machine that came out at intervals and sucked up the ashes. And no, you can't ask if this machine was ethical because it wouldn't make sense.

There have been a number of articles recently about machine-based activities in the legal sphere--document assembly, e-discovery and case analysis. This follows from things like Google's driverless car which by 2012 had achieved 300,000 accident-free miles. The use of High Frequency Trading in stock trading (see Michael Lewis, Flash Boys: A Wall Street Revolt). And machine-controlled laser surgery for eye correction. It's clear this is a growing trend, possibly exponential.

Despite whether or not we are approaching the point of singularity (arguments both ways), huge resources are being put into the mechanisation of law. In part it is because machines, robots, algorithms can do repetitive tasks more efficiently than humans, and also because machines tend to be cheaper than humans. From a Marxist perspective it makes sense to move to machines from labour. The returns to capital are much greater.

To approach my question in the title, ethics are concerned with good, proper behaviour that accords with standards and principles that a profession abides by. They are also concerned with things that go wrong: mistakes, malfeasance, mischief.

Paul Virilio, the French philosopher, articulated the essential paradox of technology--that to invent something is to invent its negative. Invent ships and you invent shipwrecks, invent railways and you create derailment, and create the car and you invent the pile-up. Every advance in technology and machines creates its negative form. It is never a matter of if but only when. Modern society operates so quickly that the vital variable is speed.

Glitches in software and algorithms occur and have worldwide effects--for example, the collapse of the commodities and stock markets in 1987. Program trading went out of control resulting in Black Monday. Even allowing for unintended consequences, we have to build in rules for machines to decide what actions to take when faced with catastrophic choices.

Tom Chatfield puts the trolley problem at the centre of the issue. A tram runs out of control and the driver sees that he is about to hit five men working on the track. However, he can turn onto a siding but in doing so he will kill a single man. Without delving into the deep void of the trolley problem, and its variants (the fat man), I suggest we need to start thinking about this in the legal sphere as machines and algorithms become more common, especially in the face of legal aid cuts and the like. (For further information on the trolley problem et al go to Experimental Philosophy.)

Given that automation is rising, given that computer-based legal services are increasing, how are we going to program machines for errors? Ultimately who will be responsible for those errors? Chatfield refers to two modes: automatic and manual. Humans are capable of both. We can adjust our behaviours to the moment, almost automatically, but we are also capable of thinking out the longer term consequences of our actions in manual mode. We bring heads and hearts together.

Algorithms don't do that. They are usually designed to maximise the effects of certain conditions. If I'm in a driverless car that by some accident is about to plough into a group of people, it could decide that veering off and killing me is the preferable outcome. I would disagree, of course.

Some might argue that the algorithm's decision is ethically superior to my wants. But it is not thinking that way; it has a utilitarian viewpoint, to my cost. In a way the algorithm is superior because it isn't letting sentimentality intrude. Some artificial intelligence experts have argued that there is nothing wrong here as long as the programming is transparent and we can all understand what the consequences will be. We take our risk here.

What is more likely, however, is that we will outsource more activities to machines believing we've overcome the difficulties without actually investigating this. Chatfield says
As agency passes out of the hands of individual human beings, in the name of various efficiencies, the losses outside these boxes don’t simply evaporate into non-existence. If our destiny is a new kind of existential insulation – a world in which machine gatekeepers render certain harms impossible and certain goods automatic – this won’t be because we will have triumphed over history and time, but because we will have delegated engagement to something beyond ourselves.
We know the consequence of this kind of delegation. We see it in the privatisation of prisons, health, and, more dangerously, in security.

As more areas of law come within the sphere of algorithms and machines, we will need to carefully consider the ethical problems that will inevitably arise. Accidents will happen and people's livelihoods, liberty, property might all well be at stake. How easy will it be to correct mistakes in online divorce with children, property, and pensions and the like? Who or what will be culpable? How will errors be discovered? Who will have the authority to declare errors? Or will we subscribe to a utilitarian ethos that it must be for the greater good, so we should just lump it?

We don't have to wait for the point of singularity to start working these out.


Tuesday, March 18, 2014

A Brave New Regulatory World

(thanks to

[This is an opinion piece published in The Lawyer March 12, 2014]

Can international law firm regulation keep up with the seismic legal market changes? It won’t be easy.

Law is a global practice and yet its regulation is mostly domestic. There are international codes of practice such as those promulgated by the International Bar Association, but they say little about international practice and more about the concerns of the individual lawyer and client. Legal regulators rarely look beyond their own boundaries. New York State imposes its rules on its admitted lawyers wherever they are whereas the English bar tends to relax its rules once the barrister steps outside the UK. With lawyers who do international business, whether transactions or arbitration, the problem of ‘double deontology’ is perpetual.

Consider a lawyer appearing before an international arbitration tribunal. The lawyer has witnesses, so how should the witnesses be prepared? For an American attorney witness preparation is vital and he would be negligent if he didn’t. Witness preparation helps witnesses understand the case and their role in it. For English lawyers preparing witnesses can be tantamount to rehearsing and influencing them so it’s prohibited. The two sets of professional rules oppose each other. What then should happen in an international arbitration? At present there are no rules that decide these issues.

The problem with external regulation is that it is crude, post hoc and slow. When Arthur Andersen’s partner was convicted in the Enron debacle, the entire firm imploded. Later KPMG was on tenterhooks in case it was to suffer ‘death by indictment’. Modern regulation depends on internal firm-wide characteristics of culture and compliance. Big law has the capacity to take on the role of regulating global practice because of its international reach. It is unlikely that a large law firm would let one of its senior partners be caught out in conflicts of interest dilemmas as was Freshfields Bruckhaus Deringer’s Barry O’Brien in the 2004 hostile takeover attempt of Marks & Spencer by Philip Green. We still catch occasional glimpses of this in Clifford Chance’s review of RBS with questions raised over the perception of possible conflicts. And of course there are the car crashes like Dewey & LeBoeuf.

The big law firm is now more international than domestic. Some of the Magic Circle firms have more ‘foreign’ lawyers than ‘English’. We still think of them as London firms but they are as much a London firm as Barclays is a London bank. The key centres for big law firms are, however, still New York and London because their particular laws are heavily used in cross border transactions. Moreover, in relation to capital markets the major financial institutions are based there. This is not to say competition from Asia - Singapore, Shanghai and Hong Kong - isn’t happening. Domestic law remains important but in cross-border transactions the ultimate governing law may still be English or New York.

How then are big law firms creating a new global regulation? It’s happening through a number of channels: education, compliance, and financialisation. Law firms are transaction-producing factories these days. Recent American research has shown that the average sovereign wealth contract takes three and a half minutes to produce because of boilerplating. Law firms have huge banks of firm-specific documentation to call on, which all their lawyers are trained in using. This training never stops. The law firms also contribute their expertise—and capture future work—in the creation of documents used by international organisation such as the International Swaps and Derivatives Association. These enormous knowledge banks are constantly updated and modified.

Alongside document construction is outsourcing by big law firms whether to Belfast or Mumbai. Intellectual property renewals and document reviews, for example, are handled by cheaper lawyers without drawing on expensive law firm lawyer time. The professional support and education and training roles in big firms are crucial to their successful operations, creating and adapting the firm’s knowledge to changing circumstances.

Compliance is essential. All big firms have general counsel who combine the roles of mother hen and mistress. They have to ensure that all lawyers (and support staff) throughout the firm understand the firm’s needs and plans. It is they who must instil a common culture in all offices. Some of them have official compliance reporting duties to regulators. But their prime aim is make sure everyone works to minimise the need to report.

Because of their scale and complexity big firms are complicated creatures to manage especially in partnership form. Financialisation has changed the substance if not the form of partnerships. Executive authority lies with management committees who set targets, monitor performance and agree remuneration. And who may be tasked with removing underperforming partners. Large firms have become quasi-industrial complexes.

Outside the firm there lies unexplored territory. The Legal Services Act in the UK has brought in external investment, non-lawyer ownership and alternative business structures (250 at the last count). It’s still early days for the impact of these to be clearly felt. Law firms are now talking to financiers and private equity about going public or accepting external investment, which will put new pressures on regulation, both domestic and international. In the finance sector new banking regulation is being felt in law firms through regulatory overspill.

New models of legal practice such as Axiom, Radiant Law and Lawyers On Demand are evolving that don’t follow traditional ways. They have the potential to challenge the big firms and appeal to corporate counsel because they’ve abdicated hourly billing.

The most undetermined sector is the development of online legal services that doesn’t rely on locality but cyberspace. Many of the most basic transactions - wills, divorce, leases - are available and we have online deal rooms where international transactions occur. As we approach Kurzweil’s point of singularity and true artificial intelligence becomes possible, how will cyberspace be regulated and what will be regulated? The robot, the software? Will it be any different from high-speed trading algorithms used in financial services? Regulation is about to enter new spheres that we are just beginning to imagine.


Tuesday, March 04, 2014

Transnational Legal Ethics Seminar