The Future of AI in Law Firms: The Evolution of Support or The Revolution of Representation?
Introduction
The extent to which AI is being tested and implemented in law firms is becoming increasingly prevalent, especially amidst the digital era, where technology is significantly more advanced. Many law firms have become aware of the need to incorporate AI systems, with the uprising of new legal technology. However, as always with the arrival of any new artificial technology, comes a large plethora of unanswered questions and anxious speculations. This article will explore a key question regarding the relationship between AI and the legal sphere: will it serve solely as a support tool in law firms, or will it grasp a larger role, taking over legal representation as a whole?
Part 1: Revolutionizing Legal Practice: an insight into the current adoption of technology in law firms
The first step in deciphering AI’s role within the legal sphere, is to consider what changes have already been made. In today’s modern, digital landscape, technology continues to significantly shape various industries each year; yet the legal sector seems to prevail. In a recent Financial Index Quarterly Report published by Thomas Reuters, which tracks the financial state of law firms, it was revealed that tech spending growth was 4% higher overall, compared to expense growth. Most notably, the report highlighted that technology spending experienced the most rapid expansion, marking ‘the fastest expansion in our data’s history’, amongst all other aspects of a firm's operations. This reveals a crucial question: what are the significant driving forces behind law firm’s annual escalation in spending?
First and foremost, technology offers law firms a seamless pathway to achieve their goals more readily, notably impacting key goals like enhancing work flexibility, and reducing labour-intensive tasks, with technology serving as a covert efficiency enhancer. This, in turn, provides a better client-centred experience, and improves the accessibility of legal advice itself. As technology begins to permeate throughout the legal sector, there is little doubt that it will replace more minor and robotic forms of tasks in the law firm such as the filing, drafting, and reviewing of legal documents. AI is a tool that can be categorised in several ways, including by its capabilities, the technology it uses, and its real-world applications falling into several different types. Therefore, firms must select which type of AI to use according to its function and whether that particular AI would be applicable to the firm. Thus, law firms are known to use a plethora of AI systems, the most significant arguably being robotic process automation, Natural Language Processing, and virtual assistance. However, the most significant type of AI being heavily invested in is generative AI tools, due to its potential to streamline repetitive work. The Thomson Reuters 2024 GenAI in Professional Services report, found that the main reasons for GenAI use in 327 surveyed law firms were primarily to simplify routine tasks, including legal research, drafting and document summarization. Yet, the report also revealed a nuanced challenge: law firms not only have to determine the most suitable type of AI to adopt, but also must grapple with varying priorities across different sectors within the firm, regarding the desired outcomes from AI implementation. Both conclusions demonstrate the fact that AI is the new cutting edge and profitable tool, against a competitive landscape for law firms. Generative AI fosters the automation of legal document drafting, whilst enhancing research and contract review, consequently accelerating case analysis, client communication via AI-powered chatbots, and predictive analysis for better litigation strategies. This therefore helps to make the legal sphere more profitable. Its ability to summarise large documents and provide smaller bite-sized insights, which could have perhaps been missed, indicates how this type of AI can help lawyers focus on high-value tasks, boosting efficiency and service quality. Hence, it is no such surprise that investment in legal technology by law firms has been substantial and is continually rising.
Considering the Perceived Negative Impact on Smaller Law Firms
Although this all seems to be a positive outlook on AI, should any prospective disadvantages be considered? The most stereotypical connotation of artificial legal technology is the anxiety about how smaller law firms would adapt to the advancing competitive commercial landscape. This is because larger firms have already integrated technology to enhance their effectiveness and profitability in today's competitive business environment. While automation may streamline and improve efficiency in certain aspects of legal work, it also has more extensive implications regarding the role of lawyers and the nature of legal practice in smaller law firms. The use of automation through generative AI has a more significant impact on repetitive or process-driven tasks, that are typically thought to be used in large-scale transactions within litigation. As a result, it appears that this artificial technology is more beneficial to lawyers in larger firms. According to the Lexisnexis Bellwether 2023 Report, the top 5 challenges facing small law firms circle around the main points of: attracting new businesses, keeping working practices and systems up to date, retaining current clients, continuing demands of compliance regulations and cybersecurity. Smaller law firms seem to rely more on their local reputation, via positive referrals from their clients, as a well-trusted law firm, therefore, it could be argued that over-reliance on legal technology could be counterproductive.
Disrupting Traditional Dynamics: Could legal technology change the traditional economic relationship between larger and smaller firms?
Arguably, the legal sphere’s traditional economic model has always been linear, indicating that the economic value of a firm is directly proportional to the quantity of attorney labour. Considering this, it can also be argued that AI will bring a transformative economic change to smaller law firms that is instead, beneficial. However, emerging technologies are known to be troublesome, and its application into the legal world will be no different. These technologies adopted by law firms, can disrupt the traditional commercial landscapes of the legal world, where such technologies enable lawyers to increase their own productivity. However, one might also argue that by lawyers accomplishing more in the same amount of time, they will bill less, and thus bring in less revenue, but this will instead, allow law firms to serve a larger volume of clients, while maintaining profitability. It is also crucial to note that as law firms incorporate AI technology, this will generate a bill that accounts for both the time invested and the disbursement for technology expenses, thereby suggesting that profit margins per case may not decrease as significantly as anticipated. Conversely, clients utilizing such technology, will comparatively, pay lower legal fees. This therefore demonstrates how legal technology can create a more mutually beneficial relationship between clients and firms.
Revisiting the assumed negative challenges faced by smaller law firms in the age of technological advancement, technology instead possesses the capacity to disrupt the traditional linear model, based on the interplay between practice area and firm size.
Emerging technologies do not depend on economies of scale based on the number of lawyers: take legal research- law firms of all sizes can access and subscribe to legal research platforms. If smaller law firms adopt AI in a similar manner that larger firms are doing, this will help to rapidly improve their efficiency and profitability. The accessible nature of legal technology therefore helps to shift away from the negative connotations that surround such economies of scale, in the legal sphere.
Part 2: The Future - The destined future of legal technology: how big of a role will it play?
Unlocking Potential: Legal Technology's Capacity for Human-like Tasks
Addressing the second part of this issue, a key question arises in technology’s broader implications, in whether it will ever transform into occupying a large role within a law firm. The basic definition of AI is that it is a technology that allows machines and computer applications to mimic human intelligence. Therefore, the goal of AI is to build a computer system that is capable of mimicking human behaviour to use human-like intelligence to solve complex problems. If successful, such goals would make the use of AI as a legal representation in law firms a promising cost-effective feature. Previously, we have assessed legal technology’s current capabilities and its usages within law firms, yet as technology is a rapidly adaptable, ever-changing new entity, its future within law firms should be questioned too. The first issue of part two of this article, is the extent to which AI could mimic human thinking effectively, modelling the same degree of complexity human decision-making encompasses. This is essential in the legal sphere, and demands adaptable, nuanced critical thinking, to have a significant impact on the inner functioning of a law firm.
Discussing the ethicality of legal technology
To assess the usefulness and practically of AI use in law firms, it is important to consider the ethicality of such use. AI would have to meet a high level of emotional intelligence to deal with clients in a confidential, professional, and empathetic manner. It is first important to discuss how AI fundamentally functions. AI systems work by combining “large sets of data with processing algorithms to learn from patterns and features in the data that they analyse”. These highlight how fundamental the data provided to the AI system is, to its development process. Subsequently, an issue of ethicality arises in the quality of data being provided to the AI system. To make sure ethicality does not pose an issue, law firms would need to ensure that they provide the legal technology with quality data that is relevant. Legal technology by itself is powerless. Its transformation rests solely on the individuals who uphold it, shaped by the resources and inputs they provide. In this way, ethicality weighs heavily in the hands of the lawyers using and supplying the legal technology. It is crucial that ethical duties and responsibilities apply to the use of AI by lawyers through 1. competence and diligence, 2. communication, 3. confidentiality, and 4. supervision. Firstly, with respect to the moral duty of competency, this particularly applies to the scenario of providing quality data. This is because working lawyers abide by practices evident in Rule 1.1 of the ABA Model Rules of Professional Conduct, which states that “a lawyer shall provide competent representation to a client”. Furthermore, this very duty “requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation”. The duty of competence requires lawyers to be informed and up to date on current technology as well as the current legal issues and case law that they are dealing with. Therefore, lawyers have the duty to not only ensure that appropriate technology is used to represent the client, but also in ensuring that the data supplied to the AI, that relies on large amounts of data to find patterns, is of relevance, updated and of quality - particularly to any new case laws as the law is also constantly changing in precedent. However, it is not only the quality and relevance of data being supplied to legal technology that affects ethicality but also confidentiality. This is because the process of supplying data could also be unethical, given the sensitive and confidential nature of legal data. This addresses the third ethical objective mentioned above, where, under ABA Model Rule 1.6, lawyers owe their clients a general duty of confidentiality which ‘requires a lawyer to “make reasonable efforts to prevent the inadvertent or unauthorised disclosure of, or unauthorised access to, information relating to the representation of a client.’ Although most law firms use advanced technology that keeps information secure, including encryption, lawyers must take reasonable steps to protect client information from unintended recipients, as AI applications retain queries and share inputs with third parties. Therefore, lawyers need to ensure that they understand the AI system’s operative security policies and the terms and conditions, taking the appropriate steps to ensure that their clients’ information is kept confidential. Furthermore, as legal technology relies on legal data to be continuously supplied to it, to allow for its development and relevance to cases, lawyers need to ensure the consent of data given to AI is received from their clients. Incident response plans, and a basic framework needs to be developed and maintained to keep to the fine line drawn between constantly supplying legal data for legal technology to continue to progress, whilst safeguarding client information.
Yet even if a balance is achieved and lawyers meet their ethical duties, the issue also lies within AI itself, in its ability to create hallucinations within the data supplied. AI hallucination is classed as “a phenomenon where a large language model perceives patterns that are non-existent to human observers creating outputs that are altogether inaccurate”. The definition of hallucination breaks itself into two key categories, the first being whether the output was factually correct, and the second being the concept of grounding: whether the output is grounded in taking in the facts of a particular situation. Although it may be difficult to differentiate between AI hallucinations and accurate legal responses, the two different categories of hallucinations have been classed into, helps mitigate this, where the concept of grounding separates the skill of the large language model and the actual content of the law. The key to lessening the risk of AI hallucinations, lies in the data we provide to the model, but also in making sure the model is grounded in successfully taking in the facts of a particular set of data given. Ultimately, despite technology potentially yielding unintended outcomes like AI hallucinations, the onus lies on us to mitigate these effects as only we can instruct and guide technology on how to operate effectively and responsibly. A key solution to this lies in informing the model of how to process data given especially on how to treat data that surrounds legal content. By providing a model with the right sources and instructions on how to process data, efficiency will be reached. The key to a profitable implementation of legal technology in law firms is to first, consider what data and sources we are providing the system, and secondly, the purpose for which we use legal technology within the firm.
The future: where is legal technology use heading
The growth of AI and legal technology within the digital age has expanded like no other, a rate of change in progression that has never been witnessed before. It is crucial to look at how rapidly legal technology has not only been developing, but also how law firms have been reacting to its advancement, to assess its implications for the future of the legal sphere. It is important to remember, that the future of legal technology will only ever develop if the legal landscape of work continues to adopt it within their firms and fuel its development. Hence, to measure the trajectory of the legal profession's technological evolution and the future potential prominence of legal technology within law firms, assessment of the level of investment these firms are dedicating to such technologies is required. Looking at how key technology is being used, is an essential way to identify vital macro trends. A large implementation of legal technology has already been seen; whether this may be in law firms using AI to sift through vast amounts of documents to identify relevant information for legal cases, or in legal research platforms like Westlaw Edge. Westlaw utilises AI like advanced natural language processing to “provid[e] highly relevant case law, statutes, and regulations quickly and accurately”, enhancing legal research. However, perhaps the most recent significant investment has been in open AI, the creator of ChatGPT, having invested in legal technology, series A and B in Harvey AI. Harvey AI, unlike ChatGPT specifically supports legal work, by being trained with ‘general legal data including case law and reference materials’. Harvey AI ‘when engaged by a firm…is then trained by the firm’s own work products and templates’, acting much like a new employee at a law firm. This large investment into Harvey AI, specially suggests that the future of the legal profession will be technologically enabled, leading many to wonder what this technology means for the future of law.
Conclusion
The legal profession is leaning towards a big wave of implementing legal technology, where AI will become a substantial feature, and tool, bringing with it a new ripple of challenges. Although the problem of ethicality still poses a challenge to law firms, where ethics has not quite yet caught up to the advances made by legal technology, the implementation and development of such AI is becoming ever-more advanced and greatly implemented. However, perhaps the most formidable hurdle lies in the imperative for law firms to adeptly navigate and comprehend the ever-changing and complex realm of legal technology, particularly in determining how best to integrate it ethically within the firm itself. The substantial investments into legal technology, such as in Harvey AI, made by prominent firms in the legal world, underscore a critical reality: for law firms, a notable risk looms ahead regarding the significance of the complexities and trends, within the evolving legal landscape. Therefore, the inevitable and pivotal question that firms will have to answer is, whether AI will merely serve as an assistant, or assume a more substantial role in their practices.
Lola Waczkow
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