High-Stakes Tech Litigation: Michael Jacobs of JAMS on Billion-Dollar Cases, Mediation, and AI

Michael Jacobs0:00
So we go from mainframe software to Linux to Android to smartphones and then to artificial intelligence. What stayed the same and what remains different? All right. Number one thing that remains the same is the challenge of interpreting this foreign language to a lay audience, to lay decision makers. It is the principal task, I think, of a great IP litigator to be able to analogize things.

Cecilia Ziniti0:29
Welcome back to CZ and Friends, where we talk with legal leaders, technologists, and operators who have been in the room where the big decisions get made. I'm your host, Cecilia Ziniti. Today my guest is Michael Jacobs. Michael spent decades at the center of the biggest technology disputes of our time, cases like Oracle versus Google, Apple versus Samsung. These were the cases determining policy and law for the tech that we use every day. For context, Michael was the, I think he was the managing partner of the firm or of the San Francisco office when I was a baby summer associate back in the mid-2000s. He was a mentor to me, and I feel so lucky to have him on the show today. Michael has what is known in the valley as some of the best judgment and one of the best litigators around. But part of what makes him so great is this deep obsession and understanding of tech, of dynamics, of things in society. We're gonna get into it. It's gonna be so much fun. Michael, welcome to the show.

Michael Jacobs1:27
Thanks, Cecilia. It's great to be here with you. It's great to see how things have progressed since those early days. I actually knew you when you were at Yahoo. And so our careers together have spanned the life of the internet.

Cecilia Ziniti1:39
Literally, yeah. So I started off my career. Yeah, incredible. So I started my career as a paralegal Yahoo, and Michael was our outside counsel on some big cases. So that's literally how long we've we've been working together. Incredible.

Michael Jacobs1:50
If you think about it technologically, we've spanned from category search to AI-based search. And so we we've we've seen a lot.

Cecilia Ziniti1:59
Incredible, incredible. And literally Facebook did not exist, I think. Or Facebook was pretty new and still doing corporate invites and college students only at the time that Michael and I met. Quite a lot of context, but big cases, I guess like what I would ask is um how do you let's see, let's so let's dive in. Let's go, let's go straight straight to the heart of one. You worked on multiple billion-dollar cases, billion-dollar plus cases, Oracle v Google, Apple versus Samsung, of course, huge, famous kind of household name cases. When you've got a litigation where billions are on the line, put us in that moment. You get the call from the client and then kind of walk us through what that's like.

Michael Jacobs2:40
Among the things that it's like is an effort to think down the road as far as you possibly can, even at those initial stages. So when you're drafting the complaint, what are the implications of pleading this cause of action versus that cause of action? These are pretty basic lawyering tools. But when it's a case like the one you're describing and you're on the plaintiff's side, you're there's a lot of drama associated with those initial decisions and a lot of back and forth with the client about what it all means. I think one of the other things about a big case like that is the difference between your interactions with your, say, your interface, and then what you know is going on behind the scene. In software terminology, we're talking about a lot of information hiding going on. You're dealing maybe with the head of litigation, sometimes with the general counsel, but behind that person are all these discussions with the executive team. What I tried hard to do when I was representing clients is understanding the nature of my immediate contacts duties internally. I was trying to give that person the right words to say to their internal audience. And that's just key because you have to look behind, to look behind what you're seeing right in front of you and understand the dynamics of a corporation. Even at the board level, there may be discussions that are pretty serious about big cases.

Cecilia Ziniti4:04
So you reference the general counsel, who of course is a lot of our listeners. In a case like that, where have you seen general counsel perform the best? And you mentioned that, like understanding the dynamics, understanding the board, you know, a case like Oracle v Google, there was of course the famous email that was like the smoking gun email that I love. And we'll drop it in the show notes. But TLDR was an email that said something along the lines of uh, you know, we got to get a license. And that was the issue in the case. So, where have you seen GCs really just like be amazing? And in particular when that many dollars are on the line. How do you how do they do it? And how do you help?

Michael Jacobs4:45
Well, so it's a it's a big allocation of resources, obviously, financial resources. These cases are really, really expensive to litigate. We submitted a fee bill in one of those cases at the end of it of approximately $50 million. So that was after That was in one month? Yeah, it's Wow.

Cecilia Ziniti5:02
All right. Oh no, no, no.

Michael Jacobs5:06
No, no, no, no. Fifty million dollars for the case. Totally bill.

Cecilia Ziniti5:09
Okay, all right. I feel a little bit better about that. I mean, I remember back patent cases was like half a million a month, and that was like huge.

Michael Jacobs5:16
So No, that that was a realistic amount, but this was no for the for the life of the case at the end after we won. So and and the leader at the client, whether it's the general counsel or the head of litigation, or in one of the biggest cases I did, just an executive who was tasked with running the case, they get heavily invested and they want to know everything that's going on. They without micromanaging. I mean, that's a that's a trick of this, right? Is being fully informed and aware and involved in key decisions, knowing when to ask for involvement. I would like to be involved in that, knowing, but at the same time, having a relationship mutual respect. I think the best word is partnership, a genuine partnership between the leader of the team on the client side, let's call it the general counsel for the moment, and the leader of the team on the outside counsel side of things. You know, there's some other little techniques. It's important to know who the staffing is, it's important to know who the day-to-day contact is versus the person running the case at the highest level. I tried very much, as lead counsel, to stay involved from the beginning through the end and to be up on everything that was going on. I think that's something that a style point about lead counsel that in-house counsel should be aware of when they're choosing lead counsel that facilitated that partnership.

Cecilia Ziniti6:39
Any good, um, you know, obviously you'd have to generalize, but any good stories on that point. So I'm thinking, you know, so I was involved in Apple Samsung, and it was probably not a surprise that, you know, there were, I think, uh maybe half dozen law firms on each side. And, you know, the number of discovery motions, I think I was excited to that I got to like write one or something. So like hundreds of discovery motions, you know, very, very complex, multi-jurisdiction, multi-statute, multi-defendant, you know, huge. Any stories on that on that point around kind of keeping things apprised? Obviously, you don't want to surprise people, but has it ever anything to share with the audience about it going right or wrong?

Michael Jacobs7:18
More some things we saw on the other side. Uh you go.

Cecilia Ziniti7:21
All right, let's go, let's go. Let's go. Litigators, let's go.

Michael Jacobs7:24
So there were some serious problems with the other side's client management, maybe internal management, including management of time. We were on a time trial and we we came in with a couple of minutes to spare, and the other side was scrambling for time. There were some issues with managing discovery updates in the case that led to important evidence exclusions. And I attribute that somewhat to a lawyer-client relationship in which the lawyers were not encouraged to come in right away, learn all the facts, get all the details, pick up the best and most important documents so that they were able to chart out how the case was going to go and what the big defenses were going to be. So, and I think the lawyers were, my interpretation was the lawyers were kind of kept at a distance. And that that uh made it hard for them to plan, hard for them to strategize. They were capable lawyers. They there was a little bit of a hamster wheel going on on the other side as well, a lot of activity for activity sakes. But when I think about some of the big strategic moments, I attribute it to a lack of a good partnership between law firm and client.

Cecilia Ziniti8:34
I love that. So would you see it as kind of a flavor of just management in general, right? So like I when I think about we we had uh in my career, I had a an executive that that I that I worked with and uh I've worked with in the past and seen this happen where you know the the person wants to kind of build an empire and not you know, not not be a good partner to peers and it's just fatal. Like it's just just like it's not, it doesn't, it doesn't work. Is it a flavor of that dynamic? Or like if I want to get good at that, so I am let's say the let's just pick a name with the leader of the case on the other side in your case, you attribute it to this error. Like what should they what should they be doing? And is it is it like any other kind of management, or is there something specific in litigation context?

Michael Jacobs9:25
There are specifics, but I think you're onto it. I used to describe the launch of a big case on either the defense or plaintiff's side as opening a new line of business. And you should think about their certain range of outcomes, there are certain risks, there's certain opportunities, you do a SWOT analysis, you do the classic things that you do when you're thinking about venturing into a new market or launching a new product. And similarly, the amount of communication that should take place, the authority that's given, where do decisions reside? Who is the decider? Classic question in internal politics, right? Who's the decider? And so I think you're you're right on. And the same kind of errors can occur. Would we open a new line of business and spend millions of dollars in that without doing A, B, and C, where A, B, and C are basic tasks of what we would call litigation management, but I think you're you're dead on. It's management.

Cecilia Ziniti10:18
Yeah. No, that's fantastic. I mean, I think it it's interesting because that phrasing of would you open a new line of business? I still remember. So my first startup where I was head of legal Anki, um, it raised a series D and then ultimately um, you know, uh stopped operations. We had, you know, and and this is public, the series of uh basically patent cases. And there came a there came a question whether we should sue others on patents that we had. Funny enough, it was part of the reason I got the job, was that I had had been a patent litigator at at MoFo. And so that was actually my GC journey. So side note for listeners like random stuff in your background will absolutely help you get the GC role. There's not a linear path. But separate from that, my first day I walk in, they're like, all right, we're gonna sue Mattel. And I was like, okay, so Mattel has at the time 150 lawyers or 150 folks in the legal department. They're very serious about enforcing IP. You know, you they've sued artists over Barbie, of course, the Barbie Bratz case, which I also build on. But, anyways, lots of cases. And I didn't phrase it that way of do we want to open up a new line of business? But I knew it was a bad idea. Like I was kind of like, you know, like it just does not make sense to be a plaintiff here. We're a startup, we're gonna try to win in the market, and we were winning in the market at that time. But that raises the question of like, is this just a Fortune 100 company game? And when you get clients deciding whether to be the plaintiff, have you ever discouraged them from filing suit?

Michael Jacobs11:47
Yes. I'm thinking of one case where a major US industrial company came to us. This was after Apple Samsung, and they wanted a they wanted a replay. And we looked at the we looked at the record, and we had to tell them about some warts in their case that would affect the unfolding of this new venture, this new line of business. And in its the end, we're kind of pessimistic on this big case. And I felt very proud of us. This was a law firm basically saying to a client, don't spend a lot, a lot of money on us because we don't think this is going to well go that this is going to go as well as you want it to go and create the kind of boom that you want to create. And sure enough, the company decided not to go forward, which I think also was probably the right position.

Cecilia Ziniti12:36
Wow. What was that like as a as a you know, a leader in the firm to make that call? And did you have peers who who might have suggested otherwise? I mean, obviously I don't want to I don't want to reveal any information, but like I that's a hard call. So I we talked the other day. I a girl, a girlfriend of mine is at a big, a big law firm that is still litigating a bunch of tobacco and asbestos cases. And they had a partner who said, Hey, you know what? I'm not gonna take my partner's share of the tobacco cases and just made that call. And it was sizable. It was maybe let's say, I don't know, 10%, 5%, whatever, whatever it was of the share. And they calculated to the math. I viewed that. I was impressed with that, that this person had, you know, family history of of lung cancer and so on and decided to make that call. But similarly here, I mean, I guess it gets to the partnership thing, but did that client come back for other matters? Like put us in your head at that time.

Michael Jacobs13:29
The client did come back to us for other matters. And I um I I guess I believe very strongly in our ethical duties as lawyers to our clients to put their interests first, to put their interests over our financial interests. That's what it means to have a fiduciary duty. Also, the Morrison Forster ethos was very much that kind of sense of duty to the client, of placing the client's interests first. And so I had no internal pushback on that. By way of reference to your uh other comment, long ago Morrison Forster decided not to take on tobacco industry litigation. And you're you're right, those are big cases. There's a lot of financial implications to not taking those cases on. I I think the front, and I wasn't part of that decision, I was part of other similar decisions later on, where we just felt like, you know, if we're gonna be doing this, are we gonna be enjoying coming to work every day? And the answer was no.

Cecilia Ziniti14:26
Yeah, I love that. So you've been on these cool cases that mark kind of the history of tech, right? So Apple Sam song The Rise of Mobile, Oracle Google with, you know, open source and internet. It's of course public that Morrison Forster represents the, I think you represent the New York Times in uh the OpenAI. I'm sorry, OpenAI and the New York Times lawsuit against OpenAI, which is of course big case of our era on copyright over training data. What has changed about these big cases and what has stayed the same?

Michael Jacobs14:57
It's that's a good question. So just to expand the lens a little bit, my first big case, the case that actually made me into an IP litigator was for Fujitsu against IBM. And the issue was mainframe operating system software.

Cecilia Ziniti15:10
Wow. So really truly a walk, a walk down memory lane. I love it.

Michael Jacobs15:26
And then my what I think as the case I actually did the best lawyering on was a case for Novell involving Linux and Unix. And this was Sco Group versus Novell. It was uh Boy Schiller on the other side claiming a billion dollars in another billion dollar case, claiming a billion dollars in revenues from sales of Linux, which they claimed included Unix code, which they claimed they owned. So there are a bunch of claim, claim, claim in there, but it was a fascinating case. Tried in Salt Lake, one on summary judgment, reversed on appeal, tried in Salt Lake City, defense verdict affirmed on appeal, bankruptcy proceedings in which um we went after we were a plaintiff, all sorts of ancillary. There was even an arbitration in in Zurich for a while going on. So multifront uh battled great internal partnership, just the best relationship with the client, and we got a fabulous result. So that was all about Linux. So we go from mainframe software to Linux to Android to smartphones and then to artificial intelligence. What stayed the same and what remains different? All right. Number one thing that remains the same is the challenge of interpreting this foreign language to a lay audience, to lay decision makers. It is the principal task, I think, of a great IP litigator to be able to analogize things in a way that makes sense. I'll never forget Bob Van Nest wheeling a file cabinet into the courtroom on day one of Oracle Google and saying, these APIs are just like a file cabinet. And it actually wasn't that good as a technical analogy, but he kind of owned the physical space at the time, wheeling in a file cabinet. And Bob's a great trial lawyer. Over time, did very well in that case. So that's that's a challenge, I think, is the first challenge. The second related challenge is applying traditional legal principles to new technologies. That remains the same. In the Fujitsu IBM case, we had just decided as a country that copyright would apply to computer software. And there were very few cases explaining what the scope of protection was. And as each new case came out, the complexion of the R case would change because, oh, we got another, you know, we got another milestone on this. And now we fast forward to the, for example, the open AI litigation, on which I served for about a year, translating copyright principles of the most traditional variety to uh the most advanced technology, an A uh an LLM that is both ingesting and then processing. So that is ingesting, processing, and then outputting uh information. And at each stage, there's a potential uh claim that needs to be evaluated and and traditional uh copyright principles. I think what's new is the pace of change and the pace of new company formation around that change and the relative innocence, if you will, of those companies to litigation. So, of course, Fujitsu did not have a lot of lot of litigation experience. They were Japanese companies, but they were well developed as a company. I mean, they've been around for decades.

Cecilia Ziniti18:43
And IBM I mean, literally is like the hundred-year-old, whatever, nobody ever gets fired for hiring them, et cetera. Yeah.

Michael Jacobs18:50
And they had their relationship with Kravath. And in fact, what had happened is as a lawyer sociology matter, IBM had just, in a sense, prevailed in the US V IBM antitrust trial, the antitrust case, the biggest case to hit American technology up to that time. And so they took those Kravath lawyers who had represented them against the government for 10 years and turned them into IP litigators. And they came after Itachi, and they came after Fujitsu. And here, and so well-established companies, lots of resources, and at least in the case of IBM and Fujitsu via IBM, lots of litigation experience. Now you turn to what's going on in AI, for example. These are brand new companies doing brand new things, like trying to train an LLM with brand new relationships with lawyers. And so it's a, it's a, I think that creates a kind of a different, it's a different dynamic. Companies are doing things that maybe more established companies would have different procedures governing and different relationships with council, well-established relationships with council and that know the business. And so I think that's an interesting novel aspect of the current era.

Cecilia Ziniti20:05
Well, and I mean, you think about, you know, I I think OpenAI now they're in the thousands of employees, you know, and just a few years ago it was probably like a hundred. And similarly with anthropic um and all these other other companies, where when you've got, you know, three quarters of the company is new in the last year, just like who does what? Who do you even how do you even manage the case? Like that, I I hadn't really thought about that aspect. It was um somebody mentioned, okay, you know, pace that we have of AI adoption, we've got in the billions of users now for for at least Chat GPT. It would be as if the automobile came out and 18 months later everybody was already on automobiles, when in fact that change took a decade or two decades to happen. So I I hadn't thought about it on the litigation side. That's interesting.

Michael Jacobs20:56
Well, and if you think about it, so I'll go back to my Fujitsu representation. There was a guy who was responsible for that line of code. And so you knew ultimately, if you asked the right question, you would get to the guy who was responsible for that line of code. And he had been working with the company already for, say, 10 years, and he was gonna work with the company for another 25 years. And so it, in a sense, it was easy to get to the facts. It was, you know, looking back on it, of course, it was a huge challenge. But it was not a, it was not a challenge of there's, I don't just don't know how we're gonna do this. It was how do we get to the right person in a foreign language in a foreign country? Now think about the the companies that are litigating now and just how hard it is to find out what happened, who did what here.

Cecilia Ziniti21:48
Amazing. So you you were actually trained in diplomacy before you became a lawyer. You were in the Foreign Service. Tell us about that and how did that experience of literally being a Diplomat affect your litigation career?

Michael Jacobs22:02
It was a great experience. I was a young college graduate and I went into the Foreign Service having concentrated on Russia and Eastern Europe in college. And so they sent me to Jamaica as my first assignment, where I was a consular officer manning the visa line. And so I was a classic bureaucrat. And it was just an eye-opener in so many different ways. Then I went to Washington, D.C. and I was in the Bureau of Intelligence and Research working on arms control issues, which had some relationship, at least, to my areas of interest in college. And that was the Washington, in a sense, classic bureaucrat. And I mean bureaucrat not in a derogatory sense. I mean a bureaucratism is a government official responsible for adjudicating or working on projects. Number one takeaway that affected my work as a lawyer is understanding the client who the client is. I think this is a huge uh point of confusion that I saw in the Foreign Service. You really are kind of a lawyer for the government. And you're the government is your client, or the people are your client through the government. But you don't have a, or maybe shouldn't have, a strong independent policy view. Your job is to effectuate the elected officials' decisions about foreign policy. Now, having said that, there are interstitial aspects of the job where you have a ton of autonomy. There may not really be a client. And one of my favorite stories about the Foreign Service was when I was in Washington and I met the polar affairs officer. This is a guy who was responsible for the North Pole and the South Pole. And among his perks is he got to go to Antarctica twice a year to visit the multinational installations down there. And I talked to this guy and I realized, in a way, he in this obscure job, it's the best job in the State Department building because he's the guy. You know, he's the person. He's the officer in charge. Nowadays, the Arctic and the Antarctica are a big deal. So I suspect this isn't as true as it was then. But I think he just probably had a great time. He got to decide what our policy was for the North. That's great.

Cecilia Ziniti24:19
That's great. No, I know. It's always like here at SaaS, we're like, we have customers on six continents or whatever. Like, can we actually get Antarctica? Like, is there somebody buying software in Antarctica? Tell let me know. We'll we'll sell to them. All right, amazing. So that's obviously one of the things that you moved into then when you went into litigation was these like super high stakes matters, and you had the like who is the client and kind of how do you tease out that judgment. Um, in the prep for this, I was thinking, you've probably seen, and one of the things we've talked about here is um on this pod is like just this decision making at high pressure. And that as the GC, you're gonna have to deliver bad news, you're gonna have to make those calls. And we had one of one of my favorite episodes with my friend Rebecca Feich from the Securities and Exchange Commission. Now she does a basically white-collar litigation defense and uh investigates fraud. And so when she's coming in, she's like, she made a point to me that she said, when I call with the, you know, what's happening when the SEC investigates you, she's like, I actually don't really make too much of a friend with the GC or who I'm talking to. She's like, I'm pretty straight that like this is going to not be fun. This is how it's gonna be. This is pretty serious, you know, but I'm gonna help you and it'll be okay. But she does not bias too much on the it'll be okay side of things. Would you agree with her? And what would you say about those moments where you're you're delivering bad news or your client is somehow under what is objectively a ton of stress?

Michael Jacobs25:50
Yeah. I one of the, I think, a specific challenges of being a litigator, a trial lawyer is distinguishing your voices. Voice number one is your advocacy voice. It's a courtroom voice, of course, but it's also a voice of the client, in which you reflect the client's views and understanding of a situation so that they know that you are hearing them. And that you are their advocate, you are their spear carrier, you are their warrior. You are not there to second guess in that voice. You are not there to second guess them. You're not there to tell them all the warts in the case, you're not there to tell them all the downfalls and risks. You are there to demonstrate that you're going to be a strong advocate for their position. Voice number two is the advisory voice. That is the voice where you have to give uh honest, straightforward appraisal of the situation as you see it. And you can't sugarcoat it because again, this topic we had at the beginning of our conversation. There's an audience beyond your audience. Uh, and you have to be giving your audience the word, your immediate audience, the words to use for his or her audience. For the it, the the the if you're talking to the GC, you want her to know exactly what she should be communicating internally. You might even want to say this in hack verba. Here's what I think you should be conveying to your team. This is gonna be a long and difficult road. I don't want you, my GC client, to get caught up in sugarcoating it for your audience because they're gonna remember that. So let's give it to them straight. And then being clear both with yourself and with your client about which voice you're using in which moment, I think is a real, it's a really challenging thing to do. What I see I see both errors on both ends. I see lawyers who get into this mode with their client where the client's all revved up about things and the lawyers are like poo-pooing all over it. And and not first to demonstrating voice one, I get it. And let's go there. Let's take that, let's see where that argument goes. Let's run with it. And then, okay, now let's step back and let's get rational about this.

Cecilia Ziniti28:09
We did have one of our Diane, Diane uh Honda from the former CAO of Redis, who's been a GC of a bunch of software companies. She said she she physically has the other voice be like the other chair in the room, like the Amazon thing of like who is the dissenter, and literally just like makes a note to go ahead and do that. And I just anecdote on my side, I was actually opposite Morrison Forrester once and do not recommend zero out of five stars. But I was I was opposite Mofo on a case. And I would say this is probably one of my biggest regrets as a GC, is that we talked about the cost of the litigation, but I believed so vehemently that we were the defendant in that case, that the case was BS. Like it really, literally was. And we can transition to your being an arbitrator because literally it was to the point where the arbitrator told me, um, I said, you know, this is not just like what the heck is this? And she said something to the effect of like, sometimes you got to pay money to get crazy people out of your life. And I was like, what the heck? Like, anyways, it was a I believed to my to the core that this was a terrible case. But my mistake, and I think it was probably what you described, was that when I told it to the the client, the CEO and the board at that time, I said, here's what it's gonna cost. Uh, you know, but it no chance it's gonna cost that because we're gonna settle it early because it's it's BS. And so I had the number, the seven-figure uh number in there for what it was gonna cost. And seven figures at the time for the startup I was at was a lot. And that's exactly what it ended up costing. And in retrospect, I remember very clearly the meeting where I was like, oh, here. And I remember one of the board members to their credit was like, that's you know, that seven-figure number, that's a big number. And I said, Oh, you know, that's fine. Like I kind of I I I mean, sugarcoat is probably too strong, but I definitely did not underscore that point, even though it was absorbed. So I feel okay that I gave, you know, adequate advice. But in retrospect, I think if I was a more, it was my first GC role at the time, if I was more uh, you know, experienced and had that, if we'd had this pod before, I probably would have would have done this. So what have you seen? So so what do you, what do you how do you how do you do that? Like does it is it is do you do it in writing? Do you like any great examples of that? And then, you know, I guess it's worse, right? You know, seven figures of bills later and you're still losing and it sucks. It would have been better to be honest in the first instance, huh?

Michael Jacobs30:34
Exactly. I I really the moments, some of the most awkward moments are where we just underestimated. And and then the client's saying, Yeah, but you told me it was gonna be X. And now it's you know, it's way over X. And I said, I did the best I could at the time, but it is a very awkward situation. And in a competitive world, you're tempted to not overprice, if you will, not give an estimate that's high because the client is taking these estimates internally.

Cecilia Ziniti30:58
And turning around and putting them in a board deck, yeah. Exactly, right? Yeah.

Michael Jacobs31:02
And so if you're the if you're if you will, the high bidder, even though it's not really a bid, I mean, there's some fixed price thing going on, but if it's not really a bid, but if you're a high estimator, then why are you choosing them? They gave you a higher estimate. Well, they're better. Really? How do you know they're better? What does it mean to be better? What does better mean?

Cecilia Ziniti31:18
So I mean, so that's a perfect segue, actually, to the future of legal. So you talked about alternative fee arrangements. This is the first time with AI where legitimately, you know, we get stories every day from GC AI users saying, you know, outside council law firm X quoted me 1K for this regulatory research. We turned around and did it in GC AI in two hours, and it was adequate and perfect and great. Tell me about law firm revenue in the age of AI and what what you think is gonna happen.

Michael Jacobs31:48
Well, let me let me describe what I think is the is the law firm challenge. And I'm indebted to one of my colleagues for having framed it, my former colleagues at Mofo for having framed it this way. The job of the law firm now is to deliver a product that's better than the AI product and to be demonstrable about that and to be and if I were in the law firm and my associates were as they should, starting out with GC AI or one of the other tools, I would say, I'd like to, I'd like to see what you got, and then I'd like to see how you improved it. And and so, and if you can't do that, yeah, exactly.

Cecilia Ziniti32:23
So it's true. And I mean, I think this is the thing is that, you know, I do the same thing with marketing. So when I get a blog post that I had written, and by the way, you know, I work in AI, so it's very, I can still tell. Very obvious AI tells. But if it's not bespoke enough, if it's not strategic enough, it does, if it doesn't connect with the customer enough. Of course, you all know I love to tell stories. We're sending out a marketing email this morning about our playbooks feature. You know, I'm talking about the the hairiest contract I ever read. So, like that ability to infuse that human element. That's what I see, at least on, you know, in other functions. So within legal, what would that look like? So tell me like a regulatory project in this scenario, they were looking at state-by-state laws around some kind of reimbursement of partners. And it was, it was in the transportation sector, so regulated both by the feds and the state. Anyways, what would it look like in that scenario for the associate or Morrison and Forster or any firm to add value over AI?

Michael Jacobs33:22
Well, there's there's first just the checking, right? There's the the quality checking to make sure that there are no mistakes. And we know that just as associates can make mistakes, AI associates can make mistakes. And I think that's the right way to think about the AI tool. The AI tool is a good second or third year associate right now. And and so whatever you would do with a second or third year associate if you're the partner is what you should do with the AI tool. Except you have to be doubly worried about just gross. We still have to be worried about hallucinations. They're being mitigated, but we still have to worry about that. Then I think you put your finger on it. I think strategy. I think that the the hum ultimately a human is dealing with a human. This is a part of the AI world that I don't think we've really grasped. But when you put together your panels, for example, for GC AI, you are having humans get on stage to talk to humans. And I could use AI to help me prepare for that panel, but ultimately I was taking that AI information and I was processing it for my voice, my human voice to talk to humans. And it's similar in litigation, ultimately. It's humans talking to humans. And uh thinking strategically then about what you want your voice, your human voice, uh, to be to that human audience is I think the the the deep layer of what humans add to artificial intelligence. And it's an ineluctable layer, as long as we're humans talking to humans. If it's AI talking to AI, well then no. But in court right now, it's still, I'm gonna say it again, humans talking to humans. In my mediator or arbitration role, I'm a human receiving briefs, and I have to process those briefs. I have to come up with what I think my view is. And the more those briefs are tailored to reflect a sense of strategy about what the lawyer is trying to convey to me, the better quality it'll be.

Cecilia Ziniti35:29
I mean, that human point is like we we recently had our GC AI summit, and and one of our investors, Ashton Kutcher, made the same point around commercial contracts, right? So everyone is very excited about AI for commercial contracts. And on the GC AI side, we have a plug-in and Word or a Word add-in where literally you just tell what to redline at redlines. We launched a playbooks feature where all of your positions that, you know, formerly painstakingly negotiated by humans, indemnity, limitation of liability, commercial terms, what have you, you know, the AI can basically apply the first draft. And it's not hard to imagine a world where you've got the AIs exchanging the drafts. But Ashton made the point, which I think is a good one, which is like you're gonna reach ultimately a contract is like the meeting of the minds, literally. And you're gonna reach this like basically impasse where what you're trying to communicate is what are humans gonna do together. And so, like at that point, like it's the same, it's the same thing where it's like the level, like in the case of the regulatory example, the computer does all the polling, but then like, okay, implementing it, advising on it, that might be a simple example where, okay, this particular client, the law is clear, the law is no longer paywalled, they know what they need to do in these 50 states. But like, hey, can you take the risk in Tennessee because the AG is asleep at the wheel? You know, maybe. I'm not saying, of course, you know, subject to ethical guidelines and so on, but where it's gray, where it's black and white, I think it's gonna be less hard. But where it's gray, that's where I think, you know, you can add the value. Or I always talk about my friend again, the the one at the Securities and Exchange Commission. You know, she she um she's got a high billing rate because she was at the SEC for 10 years. And she knows exactly all the human elements around securities law. So very similarly, similarly for for other kinds of law. All right. So now you are a judge. So you've got the real human element. Um, you said something at dinner the other night. We had a dinner for for the GCAI event. And you said something like, I told, I think I told you about my the BS case and my experience with the arbitrator. Then I said, Well, you know, what do you what what do you think of the case or something? You said something like, okay, to the to the plaintiffs, I always say, you know, this is this is a shitty, this is not a good case and you should settle. And to the defendants, I say, you know, this is expensive and you should settle. It's just something like that. But so what was your mantra? And then what is it like to be an arbitrator now or mediator?

Michael Jacobs37:52
Well, I so the the I'm really enjoying it. I find the the role really satisfying in part because I I get to use all my experience and all my skills to try and either help people resolve a case or resolve a case in the case of mediation versus arbitration. And I had some clear ideas about neutrals when I was in practice, what I liked and what I didn't like. And and so I'm trying to now be on the other side of it. I'm trying to be the neutral I wanted when I was in practice. And the I one of my internal rules is that yes, I will say to the defendant, here are the risks, and I will say to the plaintiff, here are the weaknesses, but I will not say give different evaluations to each side. I I say to them to them, and sometimes I'll do it jointly, say to them, I want you to know I'm saying this to the other side about the case. And this is what I'm saying to you about the case. And they're in alignment. I don't believe in telling you you've got a weak case as a plaintiff and then going to the defendant and saying they've got a strong case. I just don't think that's it's not the way I want to practice in the case of mediation.

Cecilia Ziniti39:09
So have you so yeah, we had, I'm trying to think, one of my mediation experiences, it was I don't think it was a good mediator because it was about it was it was a mofo case and it was about additives. It was it was there's a lot of technology, it turns out, around that we can get clean salads now, right? Like basically, like you go and you buy like a bag of spinach or whatever, and you don't you don't have to rinse it. Like the turns out there's a lot of technology there. The mediator kicks off the case. This was two people, some kind of basically preservatives, like a fancy form of citric acid that would save, you know, make your box salad be last forever. He basically, or maybe his gas, I don't, I don't remember exactly the tech, but he kicks it off being like, I don't eat, you know, your crappy box salad. And like literally everyone in the room is like, well, now the mediator has insulted all of us. I think that comment set us back like three hours. It was crazy. But any any fun comments on mediation, either that you've been in, any like tactical stuff. I was told to bring granola bars, which I did. But any any like get real, like our our listeners really like practical. So what we're practical do advice you have on mediation, besides don't hire a mediator that insults everybody the case, which is a good idea.

Michael Jacobs40:15
Insults everybody in the case. That sounds like someone very inexperienced.

Cecilia Ziniti40:19
Yeah, no, I don't know. Like I said, zero out of five stars. Do not recommend.

Michael Jacobs40:23
Well, I I think cases nowadays are because clients are sophisticated in our in the realm in which I practice, and the lawyers are sophisticated, and it's a question of what value can we add, right? In this human-to-human process. They the the the lawyers have worked on settlement, maybe they've had settlement discussions. And so, where are we doing something that's different? That is why I have chosen generally to be an evaluative mediator. Some mediators refuse to evaluate. It's just this is what's the other the other side is saying. But I think, why are you hiring me? Why are you hiring me just to be a go-between? I think you're hiring a human because you want a human reaction. You know, you want a little mock jury in front of you or mock judge. And so that's one aspect that I have one way I've landed in sort of carrying out the role. On the arbitration side, I am I'm a careful reader of contracts. Think I think the space between contracts and practice in terms of adherence and conformity in many companies is really wide. And partly it's because it's been out the function of drafting them is outsourced to contract drafters. But it's actually managers online businesses who need to need to report in 60 days on what's happened. And and what what are you talking about? What's 60 day thing? I never signed up for that, right? If they're ever told about it at all. Uh so as an arbitrator, though, I think my job is really to do a careful job of contract reading. That is represents the meeting of the minds, to use your phrase, right? Whether it was lawyer to lawyer or business person to business person or AI to AI.

Cecilia Ziniti42:09
That's what it says. No, I know. And it's crazy because I've had, I litigated a case also where there was a typo on a document because it was in January, and they had the year of the prior year on it.

Michael Jacobs42:22
No.

Cecilia Ziniti42:22
Every deposition, everybody agreed it was a typo, but it was like every deposition, we had to say it because it was like, can you please confirm it says January 20th, 2025, but they met January 20th, 2026. Okay, yes. All right, move. But yeah, no, that I I think that's an interesting point. A lot of our listeners are commercial counsel. So your best advice, having litigated at this point, probably dozens, if not hundreds, of contract disputes, best advice for for people drafting contracts.

Michael Jacobs42:50
Remember that some human being who is not a slightly not a transactional lawyer. I at least spent a couple of years as a transactional lawyer, so I did some contract drafting. But if it's a typical judge or if it's a jury, or even a typical arbitrator, they are not contract drafters. And so your audience in the event of a dispute is someone who is, are you really going to send them from the definition section to the to another definition, to another definition, and then have an embedded definition in the substantive clause itself? What are you doing here? How long does the decision have to be to explain how you get to the relevant question under the contract?

Cecilia Ziniti43:34
Yeah, yeah. No, I mean, this is something that I actually think AI has a role to play here because I tell people if your contract is easily readable by AI, it's probably also easily readable by a human. In which case, like we had, for example, again, we launched this playbooks product, and you know, the core um product is like some people have had playbooks for a long time, how they're going to negotiate. Contracts, they have fallbacks, et cetera. And we had a customer come to us that had a fallbacks guide with fallbacks nested eight layers deep. So if they say this, you do this, you do this. I'm like, are you really having nine turns? Like, and of those nine turns is the fourth one, like where maybe you should start. And so, like, just thinking about that, like, and it turns out, you know, we've got other customers that have playbooks that are just like a checklist. Does the contrast do this? Does it do that? Does it do this? And those react beautifully to AI. And to your point about API, it's like, what is the interface between these two companies? Is it simple for AI to understand? Is it simple for everyone to understand? And yet cover the detail that you need. Like I, that is probably the thing that I see people debate the most is like everybody wants the one-page contract, but then it's like, oh, well, what happens if this? What happens if that? And those things come up enough that okay, then you've got the human judgment of like, hey, you know, our main services agreement is, you know, eight pages and it's relatively detailed, but people like the assurance around, you know, that we don't use your data to train a model or things like that. And so it's been, it's been really interesting. That that's great advice. I love it. All right. So let's go to lightning round a book, idea, or mentor who shaped how you think.

Michael Jacobs45:10
Book. So if you, if you, if the uh camera goes wider, you'll see that uh we had a little poster contest at uh Morrison Forster for Reading Week or something like that. And the book I'm holding up is Zen and the Art of Motorcycle Maintenance, which was a very popular book many years ago. And what I took from it was the idea of quality. That quality is kind of a lodestar in the book after this long motorcycle journey that the protagonist takes with his uh neurodiverse son, and he and they and he's talking about the meaning of life, and it ultimately they land on quality. And I think quality is a great concept to keep as a North Star. It covers a lot of ideas, a lot of it has a lot of nested layers in it. But I've always found an answer if I ask myself, what is it, what is a quality result here? What does a quality person do in this situation? What does quality leadership look like? So that was a book and a and and an outcome. I had great mentors at Morrison Forster, and one of them answers a lot of the questions we were helped me answer a lot of the questions we were talking about earlier. It's Harold, McAlaney. Harold had an instinct for strategy. And I think part of the challenge of lawyers is they're giving bad news and they don't know, okay, now what? And what the client wants to know is, okay, do you have a strategy? And if you can you can deliver really bad news, but if you say, here's our strategy, the client retains their confidence in you because you've thought through to the next step. It's like a doctor giving you bad news and saying, but here is your treatment plan. But they just give you bad news, it's like, what are you doing? You know, what what next?

Cecilia Ziniti46:56
Exactly. No, no, no. Well, about like, you know, not sugarcoating, right? I always used to be frustrated when I was a junior lawyer and I'd go to the doctor or something and they'd be like, Oh, you have this. I'm like, well, what are the percentages that I would do that? And they're like, oh, you know, we don't know. It's like, no, you gotta tell me. Um, awesome. All right. Well, one more piece of advice, uh, two-liner advice you would give your younger self.

Michael Jacobs47:17
Two-liner, I would give my younger self is uh no shortcuts. There you really do have to dig in and learn the basics. When I joined the litigation department after serving in the business department, I was told I needed to read the California Code of Civil Procedure. That was really good advice.

Cecilia Ziniti47:36
And you do it. Okay.

Michael Jacobs47:38
It has a cognate, right? Of when you get into something, read the rules, read all of the rules, read the rules about the rules so that you're not caught unawares.

Cecilia Ziniti47:49
Love it. I love it. So good. Litigator's advice, read the rules. That's good. It's a good one. So then you can litigate and fight about them, break them. All right, good stuff. Michael, thank you for joining me and sharing such a grounded view of what um of litigation, of life, of advice. This has been really lovely. Thank you for joining me.

Michael Jacobs48:06
You're very welcome. I enjoyed it very much.

Cecilia Ziniti48:09
That was my conversation with Michael Jacobs, who has lived huge cases, lived high pressure moments, and given us great advice to think about in our uh careers as lawyers and business leaders. Follow CZ and Friends wherever you get your podcasts. To learn how legal teams are using AI to work smarter, lead with impact, and read the rules, negotiate contracts and meeting of the minds, visit gc.ai. Thanks for listening. We'll catch you next time.