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Weekend Law: H-1B Visa Fee Struck Down & How Lawyers Use AI · Bloomberg Law

0:00
Speaker 1: This is Bloomberg Law.
0:02
Speaker 2: Employers frequently exploit the weaknesses in the law.
0:05
Speaker 3: Courts are going to be asking questions about separation of powers.
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Speaker 4: One by one, Google settled with all of these other plaintiffs.
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Speaker 1: Interviews with prominent attorneys and Bloomberg legal experts.
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Speaker 2: Joining me is immigration law expertly on Fresco, First Amendment
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Speaker 2: law expert Caroline Malick.
0:19
Speaker 1: Corbin, and the analysis of important legal issues, cases and
0:23
Speaker 1: headlines that.
0:23
Speaker 4: Trial judge, you may well want to hold a hearing.
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Speaker 5: They have never said this case.
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Speaker 3: Should never have been brought in the first place.
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Speaker 1: Bloomberg Law with June Grosso from Bloomberg Radio.
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Speaker 4: Welcome to the weekend edition of Bloomberg Law. I'm Amy
0:40
Speaker 4: Morris in for June Grosso. June is off this week.
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Speaker 4: Coming up this hour, how Amazon is using a special
0:47
Speaker 4: program to decide the fate of sellers with very little oversight.
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Speaker 4: We'll also take a look at how lawyers and others
0:53
Speaker 4: in the legal system are using and sometimes abusing artificial intelligence.
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Speaker 4: All of that on the way on Law, But first
1:01
Speaker 4: we start with a roundup of the latest headlines in
1:03
Speaker 4: immigration law. Earlier this week, a federal judge struck down
1:07
Speaker 4: President Trump's one hundred thousand dollars fee for H one
1:10
Speaker 4: B visas. They're often used by large tech companies to
1:13
Speaker 4: bring in skilled workers from overseas. Joining us now is
1:16
Speaker 4: Leon Fresco, a partner at Holland and Knight. Leon, thank
1:20
Speaker 4: you for taking the time with us today. We want
1:22
Speaker 4: to start with the H one B visas. The Trump
1:24
Speaker 4: administration has already said that it will appeal that ruling.
1:28
Speaker 4: So what happens now.
1:30
Speaker 5: Well, what happens now is that the case will then
1:33
Speaker 5: now go to the First Circuit Court of Appeals. There's
1:36
Speaker 5: also a case that's happening where we're waiting for a
1:39
Speaker 5: decision from the DC Circuit. And this is a decision
1:43
Speaker 5: that was entered into in the District Court of Massachusetts
1:48
Speaker 5: where there was a lawsuit filed by the state of
1:50
Speaker 5: California and twenty other states saying that there was a
1:54
Speaker 5: one hundred thousand dollars fee that the Trump administration had
1:59
Speaker 5: placed into the H one B visa program. The H
2:03
Speaker 5: one B visa program is a program where employers want
2:07
Speaker 5: to hire skilled workers from abroad, and there's a two
2:10
Speaker 5: pronged test. The test is, first of all, is the
2:13
Speaker 5: occupation one that requires a specific university or master's or
2:19
Speaker 5: PhD degree in order to perform that job. For instance,
2:23
Speaker 5: does you know, for lawyer that requires a law degree
2:26
Speaker 5: in order to do that job? And then the second
2:29
Speaker 5: prong of the test is does the person have the
2:31
Speaker 5: degree that's necessary in order to perform that job. And
2:36
Speaker 5: so what the Trump administration did is that they use
2:39
Speaker 5: their same authority that they have under the travel ban,
2:42
Speaker 5: which is an authority to ban people from entering the
2:45
Speaker 5: United States, meaning people from abroad. And what they said was,
2:49
Speaker 5: let's see if we can use this not to ban
2:52
Speaker 5: people who want to come in from abroad on H
2:54
Speaker 5: one B, but instead say they can only come in
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Speaker 5: if they pay a one hundred thousand dollars fee. So
3:01
Speaker 5: it'd be like a quasi band. So it's a ban
3:03
Speaker 5: unless you do something, which is in this case, pay
3:06
Speaker 5: a one hundred thousand dollars fee. And so what the
3:09
Speaker 5: twenty States did is they used the Supreme Court president
3:13
Speaker 5: that happened in the Tiraffs litigation, where they said that
3:16
Speaker 5: when the President was imposing these tariffs pursued to the
3:20
Speaker 5: statutory authority that the President claimed he had, he was
3:23
Speaker 5: actually in fact levying attacks that only the Congress could
3:28
Speaker 5: actually levy. The President couldn't actually sort of create a
3:31
Speaker 5: new tariff out of nowhere, and so they said that's
3:34
Speaker 5: what he was doing here, and the District Court of
3:37
Speaker 5: Massachusetts agreed. The District Court said, yes, in fact, this
3:41
Speaker 5: one hundred thousand dollars fee isn't a band. The ban
3:44
Speaker 5: could be done because the ban has been approved by
3:47
Speaker 5: the Supreme Court in the context of the original Night
3:51
Speaker 5: twenty seventeen travel band that was in the Trump versus
3:54
Speaker 5: Hawaii case. But instead ban is okay. But a one
3:59
Speaker 5: hundred dollar fee is not okay because that's actually a tax,
4:03
Speaker 5: and so the tax couldn't be done unless Congress passped okay.
4:07
Speaker 4: There are a lot of immigration related cases from the
4:11
Speaker 4: Trump administration, many policies that the administration is putting forth
4:15
Speaker 4: that are facing court time. One judge has blocked a
4:19
Speaker 4: series of those policies. They were adopted after the shooting
4:23
Speaker 4: of National Guard members in DC last year. Those policies
4:27
Speaker 4: were about holds on work permits and asylum grants, keeping
4:30
Speaker 4: people from being able to work, or at least those
4:33
Speaker 4: permits and grants being stuck in limbo interminably until a
4:39
Speaker 4: judge ruled that that would be illegal as well. Are
4:42
Speaker 4: you finding that there are so many cases and so
4:45
Speaker 4: many things coming up because the Trump administration seems to
4:48
Speaker 4: keep pushing stuff forward that keep facing challenges in court.
4:53
Speaker 4: That is correct.
4:54
Speaker 5: Every week there is a new administrative effort, whether it
4:58
Speaker 5: be a regulation or a policy memo, or a proclamation
5:02
Speaker 5: under the ISNA Section two twelve f travel ban statute,
5:06
Speaker 5: or a pause. So in that case, this was a
5:10
Speaker 5: combination of things. So first, after that shooting near the
5:14
Speaker 5: White House, there was a ban that was issued for
5:18
Speaker 5: over thirty nine countries for their individuals to come into
5:22
Speaker 5: the United States. But then what the administration tried to
5:25
Speaker 5: do is to say, fine, we know we have the
5:28
Speaker 5: authority to ban people from those thirty nine countries from
5:31
Speaker 5: entering the United States again for the same reason we
5:34
Speaker 5: discussed earlier, which was the original twenty seventeen Trump versus
5:38
Speaker 5: a Y travel baned US Supreme Court decision. Let's see
5:41
Speaker 5: if what we can also do is to then ban
5:45
Speaker 5: the internal processing from inside the United States for people
5:49
Speaker 5: with those cases. And so what was happening is or
5:52
Speaker 5: it continues to happen because this decision hasn't really yet
5:55
Speaker 5: been implemented, so there's going to need to be further
5:59
Speaker 5: litigation here. But what ended up happening is you have
6:02
Speaker 5: a lot of foreign students who are already here from
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Speaker 5: a lot of these countries, and a lot of foreign
6:07
Speaker 5: people on other visas like H one B, the work
6:10
Speaker 5: visa we talked about, or l visas, which is that
6:13
Speaker 5: they were transferred from abroad into the US for specific work.
6:17
Speaker 5: They were already here. There was tens of thousands of
6:19
Speaker 5: people already here, and they've been trying to renew statuses
6:23
Speaker 5: that they have or change from student visa to other workers'
6:27
Speaker 5: status applications, and all of those applications have been put
6:31
Speaker 5: on hold. They've simply been tucked into a drawer and
6:34
Speaker 5: nothing has been done. So people finally sued saying, what
6:37
Speaker 5: are you going to do? You can't just take how
6:40
Speaker 5: you can't have taken all of these people's fees and
6:43
Speaker 5: decided not to do anything with it.
6:45
Speaker 4: Well, exactly because even as some cases are in appeal,
6:50
Speaker 4: it appears that the administration is finding other ways to
6:52
Speaker 4: go around it. For example, the Department of Homeland Security
6:56
Speaker 4: just this past week said it would be restricting certain
6:58
Speaker 4: immigrants access to permits because they would have to demonstrate
7:03
Speaker 4: economic necessity for their employment, putting more restrictions on allowing
7:08
Speaker 4: immigrants to work in the US regardless of what their
7:11
Speaker 4: status is. It seems almost like whack a mole for
7:15
Speaker 4: the court system to try to figure out which case
7:17
Speaker 4: is going where and at what time, and who is
7:20
Speaker 4: bringing this one, and then which agency is involved with
7:22
Speaker 4: that one.
7:23
Speaker 5: Yeah. Correct, It's very complicated. And the fact is there
7:27
Speaker 5: are many lawsuits having to be filed all throughout the
7:30
Speaker 5: United States. Because the Supreme Court ended earlier this year
7:34
Speaker 5: the process where you could file one case that would
7:37
Speaker 5: sort of have a nationwide injunction and then you could
7:41
Speaker 5: then just take that case directly to the Supreme Court.
7:43
Speaker 5: The Supreme Court said you had to file different cases
7:46
Speaker 5: for different parts of the United States, and then those
7:50
Speaker 5: cases would work their way up to the Supreme Court.
7:53
Speaker 5: So what ends up happening is you end up having
7:55
Speaker 5: a slower and also fragmented area where it perhaps in
8:00
Speaker 5: one part of the country something is legal and in
8:03
Speaker 5: another part of the country something is illegal. You see
8:06
Speaker 5: that now, for instance, with regard to whether the administration
8:10
Speaker 5: can detain you and your human body while you are
8:13
Speaker 5: in deportation proceedings. In some circuits that's allowed, meaning if
8:19
Speaker 5: you are here and you are in a removal proceeding,
8:22
Speaker 5: they can keep you detained without any possibility of bond
8:26
Speaker 5: at all. And in other parts of the country that's
8:28
Speaker 5: not possible because those circuits have said, no, they have
8:30
Speaker 5: to give you a bond. And so this is the
8:33
Speaker 5: same with the work permit case that you've talked about,
8:36
Speaker 5: which is that the administration is now trying to say
8:39
Speaker 5: to about a million people who currently have work permits
8:42
Speaker 5: that their renewals are going to be taken away unless
8:45
Speaker 5: they can show an economic necessity for their work permit.
8:49
Speaker 5: And that's going to be completely discretionary decision that the
8:53
Speaker 5: agency makes. And so now all of these individuals are
8:56
Speaker 5: going to have to file different lawsuits in different parts
8:59
Speaker 5: of the country unless and until finally one of the
9:03
Speaker 5: cases makes it up to the Supreme Court.
9:05
Speaker 4: Is this such a tangled web that this is probably
9:09
Speaker 4: something the courts are going to still be dealing with
9:11
Speaker 4: even after this Trump administration is done.
9:14
Speaker 5: Obviously will depend who the next president is. But let's
9:17
Speaker 5: say the next president is from a different party than
9:20
Speaker 5: President Trump's party and tries to unwind a lot of
9:24
Speaker 5: the Trump administration's efforts. What you will actually end up
9:28
Speaker 5: seeing is so, yes, some of them will be more
9:30
Speaker 5: easily unwound than others. But then you'll have people from
9:34
Speaker 5: the perspective of President Trump who will sue saying that
9:38
Speaker 5: the unwinding of the efforts that the Trump administration implemented
9:43
Speaker 5: also violate the Administrative Procedure Act. And so all of
9:48
Speaker 5: this is going to be so tangled that it won't
9:50
Speaker 5: just be so easy for some future president to deactivate
9:54
Speaker 5: what President Trump did.
9:55
Speaker 4: What is the bottom line for the courts? Then they
9:57
Speaker 4: just have to keep on keeping on through this. Is
10:00
Speaker 4: any recourse I mean, can they? I don't know. I
10:03
Speaker 4: don't think Congress can get involved at this point because
10:05
Speaker 4: now this is firmly within the jurisdiction of the courts.
10:09
Speaker 4: But the way you described it, it's not just the
10:12
Speaker 4: Supreme Court, and it's not just the state supreme courts.
10:15
Speaker 4: It is now down to the different district levels.
10:19
Speaker 5: Well, absolutely, the courts. I think the best thing that
10:22
Speaker 5: the courts can do in these situations is work through
10:25
Speaker 5: these cases as quickly as possible to try to get
10:27
Speaker 5: people finality on all of these important issues. As quickly
10:31
Speaker 5: as possible, even if that turns the court system into,
10:34
Speaker 5: you know, an immigration focus system, but that is where
10:37
Speaker 5: a lot of the case law and a lot of
10:41
Speaker 5: the memos and a lot of the policies are being
10:44
Speaker 5: focused on. To other administrations have other focuses, but this
10:47
Speaker 5: administration has an immigration as a very very large focus.
10:51
Speaker 5: So that means that a lot of the cases that
10:52
Speaker 5: the courts are going to need to be doing are
10:55
Speaker 5: immigration related. That certainly wasn't what a lot of the
10:58
Speaker 5: Supreme Court justices ever came on the bench to do,
11:01
Speaker 5: or a lot of these appellate court or district court justices.
11:04
Speaker 5: But now that this is the highest area of regulation
11:07
Speaker 5: that the government is engaging in, they're going to have
11:10
Speaker 5: to move these cases faster.
11:11
Speaker 6: Now.
11:11
Speaker 5: One thing interesting, Congress can actually get involved in fixing
11:16
Speaker 5: a lot of these policies and saying that certain memos
11:18
Speaker 5: can or cannot be done. But the problem is they
11:22
Speaker 5: refuse to sort of get involved in that as part
11:25
Speaker 5: of the appropriations process to say we're going to defund
11:29
Speaker 5: a certain memo or say you can't do a certain policy.
11:34
Speaker 5: And so it'll be interesting to see if the Congress
11:38
Speaker 5: changes hands, will there be more of this attempt for Congress,
11:43
Speaker 5: in terms of future appropriations bills, to say that they
11:46
Speaker 5: will not fund. Now here's the problem. They can't say
11:49
Speaker 5: they're not going to fund the Department of Homeland Security
11:51
Speaker 5: because now that's been funded for the remainder of the
11:55
Speaker 5: Trump administration. But perhaps they can say that they won't
11:58
Speaker 5: fund other parts of the government unless certain appropriations memos
12:04
Speaker 5: happen that say, hey, look, you can't just refuse to
12:08
Speaker 5: do immigration applications anymore, or you can't refuse people from
12:12
Speaker 5: certain countries, or you can't refuse to do work permits,
12:16
Speaker 5: that kind of thing. So we'll have to see where
12:18
Speaker 5: the Congress wants to go.
12:22
Speaker 4: Our thanks to Holland and Knight partner Leon Fresco for
12:25
Speaker 4: joining us fascinating discussion. Now up next, we're going to
12:28
Speaker 4: turn to Amazon and a special program designed to protect
12:31
Speaker 4: sellers against copyright infringers and how it could be overstepping
12:35
Speaker 4: a bit. You're listening to Bloomberg Law. I'm Ami Morrison
12:38
Speaker 4: for June Grosso. This is Bloomberg. You're listening to Bloomberg
12:54
Speaker 4: Law with June GROSSEO from Bloomberg Radio. Thank you for
12:58
Speaker 4: listening to the weekend edition of Bloomberg Law. I'm Amy
13:01
Speaker 4: Morris and for June Grosso. Amazon has a special program
13:05
Speaker 4: that's designed to quickly weed out sellers that violate patent
13:08
Speaker 4: law and maybe ripping off other legitimate sellers. But Amazon
13:12
Speaker 4: size as the largest online retailer and the lack of
13:15
Speaker 4: oversight on the program has some legal experts worried that
13:18
Speaker 4: the company may be wielding too much power. Bloomberg Legal
13:22
Speaker 4: reporter Annalie's Levy has a story on this. She joins
13:25
Speaker 4: us now, Analise, thank you so much for taking the
13:27
Speaker 4: time with us.
13:29
Speaker 6: Of course, I'm really excited to talk about that story.
13:32
Speaker 4: It's a great story. First, let's get some background on it.
13:35
Speaker 4: It's the Amazon Patent Evaluation Express. How does this work?
13:39
Speaker 4: You and your story refer to this as a pseudo court.
13:44
Speaker 2: Yes. So it starts by a patent owner, and this
13:47
Speaker 2: can be a patent owner that does not sell products
13:50
Speaker 2: on Amazon. It can be anyone who owns a patent
13:53
Speaker 2: files a complaint against a seller, and the seller only
13:57
Speaker 2: has three weeks to respond, and their options include opting
14:02
Speaker 2: in to Amazon's patent court, which severely limits the defenses
14:06
Speaker 2: that they're able to present. They can take it to
14:10
Speaker 2: federal district court, which is an extremely expensive process to
14:15
Speaker 2: litigate a patent infringement claim, or they don't respond and
14:19
Speaker 2: their products are immediately taken down.
14:22
Speaker 4: Okay, So is it an actual court with all the
14:26
Speaker 4: rights and responsibilities and the legal that goes along with
14:29
Speaker 4: it or does it just work like that?
14:31
Speaker 5: Like?
14:31
Speaker 4: How does this work?
14:33
Speaker 2: There is a neutral evaluator is what Amazon calls it,
14:38
Speaker 2: who serves as the judge over these proceedings. It's an
14:42
Speaker 2: attorney that does not work at Amazon. They work at
14:45
Speaker 2: outside firms and Amazon selects them and assigns them to cases.
14:49
Speaker 2: And it is very similar to a court. Each party
14:52
Speaker 2: files briefs, they do not exchange evidence though, and like
14:57
Speaker 2: I said earlier, the defendants are very limited and what
15:00
Speaker 2: defenses they can present, So that is different from what
15:05
Speaker 2: would happen in a district court case. And it moves
15:09
Speaker 2: extremely quickly. These decisions are usually issued within a matter
15:13
Speaker 2: of weeks, whereas a case in federal court usually takes
15:19
Speaker 2: years for patent infringement allegations.
15:23
Speaker 4: Is that why the participants may be more inclined to
15:27
Speaker 4: use this evaluation process or quote evaluation express because it's
15:31
Speaker 4: faster and maybe doesn't cost as much as a regular
15:34
Speaker 4: district court.
15:35
Speaker 2: Yes, that's definitely one of the reasons that many parties
15:38
Speaker 2: opt in, and Amazon says that that's why they've received
15:42
Speaker 2: so much good feedback about the program. Another thing that
15:47
Speaker 2: is very big for patent owners is that they can
15:51
Speaker 2: essentially receive relief that they don't often receive in federal
15:57
Speaker 2: district court. And by that, I mean an injunction by
16:01
Speaker 2: having their competitors or this acused infringers' products permanently taken down.
16:08
Speaker 2: Federal courts do not issue those. Often patent owners have
16:14
Speaker 2: to meet a very high bar to qualify for those.
16:16
Speaker 2: They have to show that monetary damages would not be
16:19
Speaker 2: enough to compensate them if a defendant is shown to
16:25
Speaker 2: have infringed. But Amazon, they can get that relief.
16:29
Speaker 6: In a matter of weeks.
16:30
Speaker 2: And because so many businesses rely on Amazon as their
16:36
Speaker 2: number one sales venue, it essentially serves as an injunction
16:42
Speaker 2: that a federal court would issue.
16:44
Speaker 4: And you know, that's one of the pieces that you make,
16:47
Speaker 4: or one of the points that you make in your
16:48
Speaker 4: piece is that Amazon is really big. It has almost
16:51
Speaker 4: as much power as a federal judge. Because of the
16:54
Speaker 4: relief that it can give patent owners, and where is
16:57
Speaker 4: the danger in that? Though in your report, what have
17:00
Speaker 4: you found?
17:02
Speaker 2: I mean the danger is that they're wielding all of
17:07
Speaker 2: this power to essentially destroy sellers without the benefits that
17:15
Speaker 2: accused infringers typically have in federal court. And you know,
17:18
Speaker 2: there's no public docket for these cases. Amazon is pretty
17:23
Speaker 2: secretive about it. They make each party that participates agree
17:27
Speaker 2: that they'll keep everything that happens in the process confidential.
17:31
Speaker 2: The briefs aren't public, the decisions that their quasi judges
17:36
Speaker 2: issue are no public. So, as one law professor I
17:40
Speaker 2: spoke to you said, there could be a lot going wrong,
17:43
Speaker 2: but we don't know because we can't see it.
17:46
Speaker 5: Right.
17:46
Speaker 4: That was another point that you made in your piece
17:49
Speaker 4: is that the secrecy is pretty right. No public documents,
17:53
Speaker 4: You don't even know who the judges are when you
17:56
Speaker 4: enter this system. It also seems like it automatically favors
18:01
Speaker 4: the rights owner without really considering the story behind the
18:05
Speaker 4: alleged infringer, because, as you mentioned, there's only so much
18:10
Speaker 4: evidence that the defendant can present. Is that correct?
18:14
Speaker 2: Yes, the patent owners walk into these proceedings with huge leverage.
18:18
Speaker 2: One because they know that the risk for the accused
18:22
Speaker 2: infringer is potentially losing their business if all of their
18:26
Speaker 2: products are taken down. And two, they know that the
18:30
Speaker 2: accused seller can't argue that their patents are invalid, which
18:35
Speaker 2: is often a big argument that comes up in federal
18:40
Speaker 2: core cases. And the parties do know once a judge
18:45
Speaker 2: is assigned to their case, the parties are informed of
18:48
Speaker 2: who that is, but Amazon does not disclose who those
18:52
Speaker 2: judges are to the public. And the only reason we
18:55
Speaker 2: were able to get these documents is because parties that
18:59
Speaker 2: ride trying to avoid the Amazon process or we're upset
19:03
Speaker 2: with the decision that it handed down, filed these documents
19:06
Speaker 2: as exhibits once they moved the fight to federal court.
19:10
Speaker 4: Because this is all in the Amazon ecosystem and in
19:13
Speaker 4: the Amazon bubble. Is this legal? I mean, they can
19:16
Speaker 4: do this because it's their house right.
19:19
Speaker 2: Yes, they're policing their own platform. There are other large
19:25
Speaker 2: retailers that have IP complaint systems that patent inners can
19:32
Speaker 2: also use. Walmart has one, I believe eBay has one,
19:37
Speaker 2: but those don't appear to create a court, a mini
19:43
Speaker 2: court system, if you want to call it that. They
19:46
Speaker 2: don't hire outside attorneys to serve as evaluators. I don't
19:49
Speaker 2: believe the parties exchange briefs like they would in court.
19:54
Speaker 2: They're much different than why Amazon has created.
19:56
Speaker 3: Here.
19:57
Speaker 4: You go into a case between Lack and our Vlock,
20:02
Speaker 4: and these are folks who make locks for recreational vehicles,
20:05
Speaker 4: and our Vlock accused Latchet of infringing on their product,
20:11
Speaker 4: and they went to this case. When they went to
20:15
Speaker 4: this through this process with Amazon and Latch it lost.
20:18
Speaker 4: Is there recourse beyond that? I mean at that point,
20:22
Speaker 4: can they take it to a regular court? Is there
20:24
Speaker 4: an appeals process within Amazon?
20:27
Speaker 2: There is not an appeals process within Amazon. But Amazon
20:30
Speaker 2: has made it clear that if a party receives a
20:34
Speaker 2: conflicting decision, either from a federal court or from the
20:39
Speaker 2: patent office, that they will respect that decision. And I
20:43
Speaker 2: believe one of it, one of Amazon's vice presidents has
20:47
Speaker 2: testified at a congressional hearing about this and said, you know,
20:51
Speaker 2: we are aware that our decisions don't hold up like
20:56
Speaker 2: a federal court decision would, so we respect those if
21:00
Speaker 2: they conflict with the decision we've issued.
21:03
Speaker 4: So then the onus is on the defendant to come
21:06
Speaker 4: up with the money and the time and the lawyers
21:09
Speaker 4: to go to a regular court and then take all
21:12
Speaker 4: the time that may that they may not have then
21:16
Speaker 4: they certainly didn't have when they went into the patent
21:18
Speaker 4: evaluation express. That's why they went the Amazon route because
21:22
Speaker 4: it's cheaper and faster.
21:24
Speaker 2: Yes, And they if they even do go to federal
21:29
Speaker 2: court and decide to go that route, they know that
21:32
Speaker 2: they're losing money every single day that these products are down.
21:36
Speaker 2: I mean, one seller who had their products deed listed
21:38
Speaker 2: said they were losing upwards of seventy thousand dollars per day.
21:42
Speaker 2: So even if a party does want to take this
21:46
Speaker 2: bite to federal court, if they're upset with Amazon decision,
21:49
Speaker 2: they know that's going to be a huge financial investment
21:52
Speaker 2: and they're not receiving the revenue that they're used to
21:55
Speaker 2: from Amazon because their products are gone, Which is why
21:59
Speaker 2: men many parties appear to just settle these cases. They
22:04
Speaker 2: understand the huge threat of their products being delisted and
22:09
Speaker 2: come to the decision that it's probably cheaper to pay
22:12
Speaker 2: up than maybe bite a patent that they strongly believe
22:17
Speaker 2: is invalid.
22:19
Speaker 4: So they have the option then of settling, and they
22:23
Speaker 4: can still remain listed.
22:25
Speaker 2: Yes, that is one of the options that Amazon provides
22:29
Speaker 2: if a complaint is filed, if the parties work it
22:32
Speaker 2: out amongst themselves, then the patent owner can retract the complaint.
22:38
Speaker 2: But again, they only have three weeks to do that.
22:43
Speaker 4: So what's the bottom line here? What is are other
22:47
Speaker 4: attorneys kind of getting involved in this and kind of
22:50
Speaker 4: and red flagging it and hey, wait a second, let's
22:52
Speaker 4: let's see if there's a better way to do the system.
22:56
Speaker 2: I mean, many attorneys are definitely concerned that so many
23:01
Speaker 2: infringement decisions are being made by a quasi court with
23:06
Speaker 2: no oversight whatsoever. A good amount of attorneys I spoke
23:11
Speaker 2: to you said that they caution their clients about opting
23:16
Speaker 2: into the Amazon court because again, they don't know who
23:20
Speaker 2: these judges are until they're assigned. They may not have
23:24
Speaker 2: a background in the specific technolical area that their products
23:29
Speaker 2: are within.
23:30
Speaker 6: There's no appeals process.
23:32
Speaker 2: Within Amazon, so they're very wary about it, but they
23:37
Speaker 2: do acknowledge the why it's so enticing with the speed
23:41
Speaker 2: and price.
23:43
Speaker 4: Annalie's LEVI want to thank you so much for your
23:45
Speaker 4: time on this matter. This is a fascinating subject and
23:48
Speaker 4: it is a great article on the Bloomberg terminal. Thank
23:51
Speaker 4: you so much for taking the time with us. Annalise Levy,
23:53
Speaker 4: reporter for Bloomberg Law. She joined us and now up
23:56
Speaker 4: next we do a deep dive on the pros and
23:58
Speaker 4: cons of AI adopt in the legal world. I Amy
24:02
Speaker 4: morris in for June Grosso. This is Bloomberg.
24:12
Speaker 1: You're listening to Bloomberg Law with June Grosso from Bloomberg Radio.
24:18
Speaker 4: You're listening to the weekend edition of Bloomberg Law. I'm
24:21
Speaker 4: Amy morris in for June Grosso. June. We'll be back
24:23
Speaker 4: next week. The legal world is using artificial intelligence more often,
24:28
Speaker 4: but two mixed results so far. Bloomberg recently reported on
24:31
Speaker 4: two lawyers sanctioned over using AI in a federal case
24:35
Speaker 4: and failing to catch those mistakes. Justin Daniels is a
24:38
Speaker 4: shareholder at Baker Donaldson and focuses on technology and artificial intelligence.
24:43
Speaker 4: He joins us now for a deep dive on how
24:46
Speaker 4: AI is reshaping how lawyers work. Justin, it's a pleasure.
24:50
Speaker 4: Thanks for joining us today. You start your piece saying
24:53
Speaker 4: that when it comes to AI, the legal profession is
24:56
Speaker 4: measuring the wrong thing.
24:58
Speaker 3: What do you mean, well, everyone is focused on fewer
25:03
Speaker 3: billable hours. Work gets done faster, it's more efficient. And
25:07
Speaker 3: I think they're asking the wrong question.
25:10
Speaker 4: What's the question they should be asking.
25:12
Speaker 3: The question that they should be asking is how do
25:16
Speaker 3: I leverage AI tools to enhance judgment.
25:22
Speaker 6: To lead to better outcomes.
25:25
Speaker 3: I think the key thing is when I do work
25:31
Speaker 3: like I had a recent opportunity to help a client
25:34
Speaker 3: create a library of AI clauses for their new agentic
25:41
Speaker 3: AI offering, and their clients are in a regulated industry,
25:45
Speaker 3: I was able to leverage AI to create a better
25:49
Speaker 3: work product in less time than if I had no
25:55
Speaker 3: AI tool.
25:56
Speaker 6: But here's the key. If all the client sees is
25:59
Speaker 6: an bill with fewer hours.
26:02
Speaker 3: They don't see what they almost didn't get, which was
26:05
Speaker 3: a work product that isn't as good quality because I
26:08
Speaker 3: leveraged AI to improve my judgment, not substituted.
26:13
Speaker 6: And that's a really key distinction.
26:14
Speaker 3: When we talk about the two lawyers in this case
26:17
Speaker 3: that got sanctioned in a court case.
26:21
Speaker 4: I want to get some clarity on that. Of course,
26:25
Speaker 4: AI can be used to enhance a judgment and not
26:28
Speaker 4: substitute a judgment. That makes perfect sense. Where is the
26:32
Speaker 4: risk that those two might become conflated. It seems like
26:36
Speaker 4: it would be clear for an attorney to say, this
26:38
Speaker 4: is not my brain, this is just helping my brain
26:41
Speaker 4: do a better job.
26:43
Speaker 3: So I think where this is coming up and in
26:47
Speaker 3: litigation is a great example because let's step back and
26:50
Speaker 3: look at that process. When you're in litigation and you
26:54
Speaker 3: have to file court briefs with a court, the court
26:58
Speaker 3: is the umpire, so you necessarily have a human in
27:02
Speaker 3: the loop being the court to review all of what's
27:05
Speaker 3: filed with it to ensure authenticity, accuracy, and that these
27:11
Speaker 3: arguments in these court cases are truthful. So now lawyers
27:16
Speaker 3: and law firms have to have processes in place to
27:19
Speaker 3: make sure that if you're going to leverage AI, that
27:22
Speaker 3: you're going behind the AI to make sure that they
27:25
Speaker 3: don't hallucinate court sites or they don't hallucinate rulings, because
27:32
Speaker 3: if you don't do that, you have an actual umpire
27:35
Speaker 3: the court who.
27:36
Speaker 6: Is going to fact check because it's the role that
27:39
Speaker 6: they play.
27:40
Speaker 3: And so I think what's happening here is when you
27:43
Speaker 3: hear about these sanctions in these court cases, the real
27:47
Speaker 3: issue is the governance over the process to produce the
27:51
Speaker 3: briefs or whatever it is that's getting filed with this
27:54
Speaker 3: neutral umpire. I have a different set of issues as
27:57
Speaker 3: a corporate m and a in tech practice, So when
28:00
Speaker 3: I use this, I don't necessarily have that court as
28:05
Speaker 3: an umpire. I really need to be doing that myself
28:08
Speaker 3: because the client may not know enough to be able
28:11
Speaker 3: to check, and candidly they're relying on.
28:13
Speaker 6: Me to do it. So I'm dealing with a different
28:16
Speaker 6: set of circumstances. But the reason you see it come
28:18
Speaker 6: up in the context of these court cases is because
28:21
Speaker 6: you're in a system where the court is playing the
28:24
Speaker 6: role of this neutral umpire ensuring veracity and authenticity of
28:29
Speaker 6: what's put before it.
28:31
Speaker 4: Do attorneys have to disclose to either the court or
28:34
Speaker 4: their client that they're using AI.
28:36
Speaker 3: So I think the answer to that is a lot
28:39
Speaker 3: of particularly enterprise organizations may have outside council guidelines that
28:46
Speaker 3: require it. But I also have other clients of mine
28:49
Speaker 3: who say, whether you use AI or not, my expectation
28:53
Speaker 3: is you're giving me accurate thought through work product, because
28:58
Speaker 3: ultimately it's the lawyer's job to be providing competent representation,
29:04
Speaker 3: and with our ethics rules, you know we're supposed to
29:06
Speaker 3: be leveraging technology, but we're supposed to be doing it
29:09
Speaker 3: in a way that conforms to our ethical obligations of competence.
29:13
Speaker 3: So the answer to your question is yes, some organizations
29:17
Speaker 3: have guidelines where they want it disclosed, but I've seen
29:19
Speaker 3: plenty of instances where they're like, hey, you have ethical obligations,
29:23
Speaker 3: whether you use AI or not, I expect the work
29:25
Speaker 3: product to be consistent with your ethical requirements under state law.
29:31
Speaker 4: So it sounds like the concern is that AI might
29:34
Speaker 4: make some attorneys I don't want to use the word lazy,
29:39
Speaker 4: but not quite as diligent as if they were doing
29:42
Speaker 4: the work themselves.
29:44
Speaker 3: I think that's a fair characterization because the opportunity with
29:48
Speaker 3: AI is it's so confidently wrong sometimes and if you're
29:53
Speaker 3: under time pressure, people might rely on it. To me,
29:57
Speaker 3: it's no different than when I'm doing a deal and
30:00
Speaker 3: we're going to wire, and I'm like, we are not
30:03
Speaker 3: wiring until we confirm the wire instructions. We call somebody.
30:08
Speaker 3: But when you're under the pressure of a deal or
30:10
Speaker 3: maybe litigation, maybe people don't go through that next step
30:13
Speaker 3: and then they end up filing something and you get
30:18
Speaker 3: hallucinations and you get courts who are now sanctioning lawyers.
30:21
Speaker 4: For it, explain to hallucinations when you use it in
30:24
Speaker 4: that context.
30:25
Speaker 3: So here's what I think people need to know. The
30:30
Speaker 3: best way to describe artificial intelligence at a understandable level
30:36
Speaker 3: is it is insanely good at pattern matching. It is
30:41
Speaker 3: great at predicting connections between words, paragraphs, documents. But you
30:49
Speaker 3: don't want to confuse probabilities with certainties. So AI is
30:54
Speaker 3: designed to try to be helpful. So I've had instances
30:57
Speaker 3: where AI will tell me, hey, in this negotiation, negligence
31:01
Speaker 3: is fine.
31:02
Speaker 6: That's a good standard. But I know in my.
31:04
Speaker 3: Experience as a lawyer, in most commercial transactions it is not.
31:10
Speaker 3: And so because of the way that AI is built
31:14
Speaker 3: and they're trying to do better, hallucinations are inherent in
31:18
Speaker 3: its design because it's ultimately based on probabilities, which are
31:23
Speaker 3: never certainties. So you're always going to have that kind
31:27
Speaker 3: of area of uncertainty, which is where the lawyer's judgment
31:31
Speaker 3: becomes so important.
31:34
Speaker 4: It sounds almost as though if you use AI, you
31:37
Speaker 4: got to be even more on your toes than if
31:39
Speaker 4: you were just doing all of the work yourself without
31:42
Speaker 4: the AI.
31:43
Speaker 3: I look at it as how can I use AI
31:47
Speaker 3: as a decision support tool to enhance my judgment, because ultimately,
31:52
Speaker 3: I think that's what clients are paying for. So what
31:55
Speaker 3: that means is I have to have the ability to
31:58
Speaker 3: ingest all the information that the AA is providing and
32:01
Speaker 3: be able to honestly evaluate it and push back where necessary.
32:06
Speaker 6: And I think that's the area where we.
32:10
Speaker 3: As a profession, law firms, lawyers, in house counsel and others.
32:14
Speaker 6: It's a real struggle.
32:15
Speaker 3: In my view, we're in like a Steve Jobs moment
32:18
Speaker 3: when it comes to clients.
32:20
Speaker 4: What sort of safeguards, though are in place? You talked
32:22
Speaker 4: about the ethics, you talked about the client expectation, you
32:25
Speaker 4: talked about the court's role, But what sort of hardcore
32:29
Speaker 4: safeguards are in place, guardrails that are there to protect
32:33
Speaker 4: the legal profession and the clients where AI may be involved.
32:37
Speaker 3: So when we talk about those guardrails, I think what
32:41
Speaker 3: you're really talking about is what is your AI governance program.
32:46
Speaker 3: One of the things I've seen consistently amongst the different
32:50
Speaker 3: clients that I work with and I'm out talking to
32:52
Speaker 3: a conferences, is there have been such a pressure to
32:56
Speaker 3: deploy AI systems that this entire around AI governance. Where's
33:02
Speaker 3: the IP, where's the data privacy security? That conversation didn't
33:09
Speaker 3: really happen. So now you've got all this stuff going on,
33:12
Speaker 3: and now you're trying to build your AI governance while
33:15
Speaker 3: the AI plane is in flight. But those are your
33:18
Speaker 3: guardrails because let's talk about my process or a litigator's process. Sure,
33:24
Speaker 3: you have to build into that process, how am I
33:27
Speaker 3: fact checking the information? How am I making sure these
33:30
Speaker 3: court cases are legitimate?
33:32
Speaker 6: It may be they.
33:33
Speaker 3: Create AI tools that will do that, but where we're
33:36
Speaker 3: at now, that's where the human has to be in
33:38
Speaker 3: the loop. To me, that is the key part of
33:40
Speaker 3: the AI governance. So everything that AI helps create in
33:44
Speaker 3: support of my practice, I'm reading it. I'm using it
33:48
Speaker 3: in areas where I already have a good level of expertise,
33:51
Speaker 3: Like nobody wants to hire me to do depositions, so
33:54
Speaker 3: I would never think to use AI for that purpose.
33:56
Speaker 6: I try to keep to things that I have an.
33:59
Speaker 3: Level of that expertise, so that I'm the human in
34:01
Speaker 3: the loop who can evaluate that output.
34:04
Speaker 4: Where would it be appropriate then to use the AI.
34:08
Speaker 3: So in my practice, I negotiate for a living and
34:12
Speaker 3: so what I ended up doing and we use Harvey,
34:16
Speaker 3: So that's our approved AI tool. I've built my own
34:19
Speaker 3: AI negotiation agent, and so what that does is is
34:23
Speaker 3: I stress test before I ever step into the room
34:26
Speaker 3: to negotiate the issue, the expected arguments of the other side,
34:32
Speaker 3: surfacing motivation that might be seen or unseen, and then
34:37
Speaker 3: tailoring the negotiation framing mind going to use to the
34:41
Speaker 3: personality of my counterparty. You know, everyone has a different
34:44
Speaker 3: kind of way they like to negotiate, and so it
34:46
Speaker 3: allows me to stress test that. So, as I said before,
34:49
Speaker 3: AI is enhancing my judgments so that I can negotiate
34:54
Speaker 3: better and get a better outcome than had I not
34:56
Speaker 3: been able to stress test and have this tool to
34:59
Speaker 3: help me be so much better prepared.
35:02
Speaker 4: Is this an example of the legal industry or the
35:05
Speaker 4: legal profession now in a position trying to catch up
35:08
Speaker 4: with the technology? You sort of use the analogy of
35:11
Speaker 4: building the plane in the air while you're flying it.
35:14
Speaker 6: I think what's happened is Chat came out in November.
35:18
Speaker 3: Of twenty twenty two, and now we're talking here in
35:21
Speaker 3: June of twenty twenty six.
35:22
Speaker 6: It's just four years. I mean, it's like going to college.
35:26
Speaker 3: And in my mind, where the technology is becoming so
35:30
Speaker 3: disruptive is it's taking tasks like doing legal research or
35:34
Speaker 3: drafting a memo that used to take hours and days
35:38
Speaker 3: and now it's minutes and hours. So to me, it's
35:41
Speaker 3: kind of making the legal profession reflect How do we
35:45
Speaker 3: add value?
35:46
Speaker 6: How do clients perceive that?
35:48
Speaker 3: And that's the real issue that we're really struggling with
35:52
Speaker 3: because in private practice, you know you have the billable hour,
35:56
Speaker 3: and what does that really measure? It measures how long
35:59
Speaker 3: it took you to do something. It doesn't necessarily measure
36:03
Speaker 3: the quality of the output. And if you've got AI
36:05
Speaker 3: that now helps you do a better work product in
36:08
Speaker 3: less time, that measurement doesn't really apply anymore. So then
36:12
Speaker 3: how are you going to show clients the Steve Jobs moment,
36:15
Speaker 3: show them the value that you are creating by making
36:19
Speaker 3: better decisions because you've been enabled by AI tools that
36:25
Speaker 3: enhance judgment, not substitute for it. That to me, is
36:28
Speaker 3: the key distinction.
36:30
Speaker 4: Our thanks to Justin Daniels for joining us. He is
36:33
Speaker 4: a shareholder at Baker Donaldson. You can read Justin's piece
36:36
Speaker 4: on the Bloomberg terminal that does it for this edition
36:39
Speaker 4: of Bloomberg Law, I'm Amy Morris and for June Grosso.
36:42
Speaker 4: Stay with us. Today's top stories and global business headlines
36:46
Speaker 4: are coming up right now