How Artificial Intelligence Is Changing Law Firms and the Law

This is Part I of a two-part roundtable discussion. Read Part II here!

Artificial intelligence is the latest legal industry buzzword. However, can AI-based tech tools and solutions transform legal industry services? How will individual firms and the broader legal profession adapt and benefit from AI in practical ways?

In this roundtable discussion, seven prominent leaders in law and technology explore the state of AI adoption in the legal profession and what the future holds.

Our Moderator

Nicholas Gaffney (NG) is the founder of Zumado Public Relations in San Francisco, CA and is a member of the Law Practice Today Editorial Board. Contact him at ngaffney@zumado.com or on Twitter @nickgaffney.

Our Panelists

NG: Results of an ABA survey released early this year indicated that only 10% of respondents used artificial intelligence-based tech tools for their legal work in 2018. The larger the firm a respondent worked for, the more likely they reported using AI; 35% of respondents from firms with 500+ lawyers used AI, compared to just 4% of respondents from firms employing two to nine attorneys. Do these numbers surprise you? Do you think law firms and legal departments are where they should be with their use of AI?

MU: Law firms traditionally benefit the most from the adoption of technology-based solutions in situations where there is a good understanding of the technology (including features and limits) and a detailed plan as to how the technology will be used/adopted by the law firm. However, the biggest risk for a law firm in adopting a technological solution is to focus on a technological feature/benefit without understanding how that will impact day-to-day operations (internal solutions) or how the perceived benefit/feature can be leveraged for the practice of law (external solutions).

The ABA survey results are not surprising. Currently, AI‑based solutions/technologies are likely limited to application in specific areas of practices or even specific types of activities within a practice. For example, conducting activities that require searching or data review. Additionally, while a number of service providers that can be leveraged to provide the computing resources and AI engines, AI solutions may still be prohibitively expensive for law firm implementation, especially smaller firms.

Finally, implementation and adoption of AI-based solutions require some technical expertise (in-house or through consultants). At this point, most law firms, especially smaller firms, do not have attorneys or personnel that have the practical AI experience for wider‑spread adoption.

KM: It’s not surprising to hear. AI technology is still in its early stages and being used by early adopters. So many vendors are now claiming they provide AI, but law firms are taking their time in selecting this technology. Many of them want to want to wait and see what actually works. We are starting to see success stories which will lead to higher adoption among firms.

Personally, we see firms with so many use cases. It can sometimes be difficult for them to know where to start. We’ve focused a lot of our efforts on working with them to identify the best areas to begin using our AI technology and then collaborate with them to scale this up in other areas of the business. Another factor that comes into play is the billable hour. It may not always be in the law firms’ best interest to increase their efficiencies. However, firms will be left behind if their competitors are seen to be offering new and improved services, facilitated by AI technology.

NE: I’m not that surprised. Adoption is slow due to a few factors. First, the effective implementation of AI is more challenging than practitioners anticipated. Second, AI is becoming increasingly complex. Third, courts, litigators, corporate legal operations and compliance professionals, and regulators—including the friendly folks who brought us GDPR—increasingly want evidence that AI operators know what they are doing.

Finally, best practices on the adoption of AI and the competencies needed to effectively operate it in legal functions are still being worked out, and it’s not an easy process. In electronic discovery, where AI has been used for well over a decade, even the task of measuring how accurate AI (TAR) is remains a challenge for most practitioners. Until there are standards and accreditations that allow effective procurement and operation, as is the case in data security, for example, adoption will remain slow.

BB: Given that AI-enabled technologies have been available in the legal market since about 1999 (with the introduction of DolphinSearch), I’m surprised that only 10% of respondents used AI-based tools in 2018.

I’m not surprised that respondents employed by larger firms are more likely to have used AI-based technology for legal work. Larger firms have more money to invest in initiatives that enhance or extend the delivery of legal services. Additionally, larger firms have the personnel with appropriate skills to support the effective use of technologies, such as sophisticated practice technology or litigation support teams with CAR/TAR technologies. Further, those firms manage large matters that benefit from the use of AI tools. While small firms can benefit from applying innovative technologies, they often do not have the resources to fund acquisition and support effective use.

BL: The survey results do not surprise me. AI is still in its relative infancy, and legal teams are not generally early adopters of new technology. Yet it has been the larger law firms—and their most sophisticated clients—who have been leading the way in implementing AI-enabled legal technology solutions. That is impressive and leads me to believe that firms are right where they should be when it comes to their use of AI. I think that number itself represents a willingness to evolve and a recognition that, in order to be competitive in today’s landscape, law firms have to leverage technology in order to deliver the best and most efficient legal work possible. That will only become more important, and I think the industry recognizes that.

JO: No, unfortunately, these numbers are not surprising. Law firms and legal departments are behind when it comes to their use of AI. There is a misalignment of incentives in the traditional law firm setting when it comes to investing in cutting-edge technologies. Firms could make the investment but do not because of the negative impact on short-term profitability and reliance on billable hour business model. At Atrium we are making this investment in technology and aligning incentives with our clients through fixed-fee pricing and a subscription model. We are still in the early days of AI’s deployment in the legal industry and we expect these numbers to increase over the next few years.

JPG: I’m a little confused by these numbers. Anybody using Google for any sort of research is using one of the world’s most advanced AI-backed tools for legal work, whether they’re looking into an opponent’s business entities, combing through news articles for a quote to cite, trying to find the right government agency website for filing a form, or looking for a legal blog post summarizing the implications of an obscure subsection of ERISA they’ve never heard of.

The basic search engines of LexisNexis and Westlaw arguably use artificial intelligence as well. Regarding whether law firms are where they should be with AI, it doesn’t make much sense for law firms to invest in AI. The main purpose of AI is to reduce the time humans spend on tasks, but the business model of most law firms depends on billing as much human time as possible to clients, so law firms don’t need to invest in AI (or any legal process automation) until certain advancements are so ubiquitous that clients expect it. There are some exceptions—most associates still appreciate having a good search engine that quickly finds them what they want, even if it is bad for billing, and some AI may even open up opportunities to bill clients for new tasks, like image-recognition algorithms that allow lawyers to run trademark searches on foreign logo registrations—but administrative tech is what most law firms should be focusing on (HR and billing). In-house legal departments, on the other hand, should all have somebody on their staff actively seeking AI-based legal solutions because reducing time spent on legal processes benefits their companies and saves them money.

NG: Do you think the typical law firm leader understands the ways in which AI can currently be used to the firm’s benefit? What factors do you think influence this?

MU: Relative to other technologies, it may be more difficult for law firm leaders to understand AI-solutions, especially the more complex, deep learning AIs, and how they can be configured to address specific needs/problems. Identifying specific AI algorithms, selecting configurations for AI services, or culling data sets can often exceed the technological expertise of most typical law firm leaders. Law firm leaders may be best suited to define the desired result (e.g., I want to better understand the relationships between x, y, and z) and whether the law firm is willing to adjust their operation based on the AI-solutions. Partnering with consultants or in-house technical expertise is likely the best opportunity to determine when and how AI-solutions can be best leveraged.

Law firm leaders must also be cognizant of risk management issues associated with adopting a new technology or incorporating technology not previously utilized by the specific firm. With technology, such as AI, law firm leaders may be reticent to be first adopters of AI-based solutions without a clear understanding of the potential for error or bias.

KM: We meet so many law firms with an “AI budget” but they are still unclear on what AI can actually offer them. So many vendors are claiming to offer AI and the majority of this technology serves different purposes.

That’s not to say that everyone we speak to shares this view. Many emerging innovation departments and industry leaders really do their research into what AI solutions are and what challenges they can solve. More is being done to educate law firm leaders in terms of white papers, case studies, and events on the various differences.

NE: Most law firm leaders have a sense of the risks and benefits of AI, but generally do not have the information needed to make evidence-based decisions when it comes to AI. And that is understandable, as the information they could rely upon for guidance often does not exist. For example, other than the groundbreaking NIST TREC Legal Track studies conducted when TAR was first entering the marketplace, there is no recent scholarship to answer the simple question any law firm leader should be asking: “Does this work?” The NIST studies showed that results varied widely depending on the tool, method, and operator. These factors will affect all other AI tools too, as will the match (or lack of match) between a tool and the use to which it is being put. Given lawyers’ professional responsibilities, a law firm leader will be warranted in treading cautiously while scientifically valid methods of evaluating the efficacy of such tools evolve.

BB: Law firm leaders often seem to use the term “AI” as a proxy for “all things that can modernize the practice of law.” But using AI-enabled technologies to streamline, enhance, or extend the delivery of legal services is only one of several uses that can benefit the firm and its clients. Law firm leaders are often excited by the concept of AI but do not necessarily understand the ways it can be used.

JO: Partners of traditional law firms do not understand the value that AI can bring to their business, much less the value it can bring to their clients. There is a lot of buzz about legal technology, especially machine learning and AI, intending to “replace attorneys.” This is false. It’s clickbait for catchy news headlines.

When done right, AI can greatly enhance the value and insight that attorneys can provide their clients. It can eliminate the time spent on mundane or administrative work so that attorneys can focus on providing informed and thoughtful advice on the issues and risks their clients face.

At Atrium, we’re building a platform that enhances the attorney-client relationship and provides deeper and better-informed advice. For example, with our technology, we have the ability to extract data and insights from corporate documents, which allow our lawyers to provide deep insights into our clients and their respective businesses.

NG: In what ways have law firms found the implementation of AI to be most impactful?

KM: The key to AI is automating frequent, routine, and low-value tasks. It doesn’t need to be in a specific area of law that you are automating, but legal tasks that tick all these boxes are where firms are going to see the most impact and the highest return. Using AI to automate more complex tasks is completely possible too, but you need to be prepared to put in the work to achieve this. At Neota, we stress the importance of leaving infrequent, high-value tasks to the lawyers, as this is what they have been trained to do.

NE: Two areas seem to be most impactful: M&A due diligence and discovery. The choice of the word “impact” is interesting. The impact in a given matter can be very beneficial for both law firms and clients: finding a smoking gun fast really matters! But the impact for the legal profession may go to the heart of what is considered a legal service and what services actually constitute competitive advantages.

Because trailing right behind due diligence and discovery are uses related to law firm management and AI’s more predictive powers: predictions of deal profitability, case value, and profitability, favorable judges/jurisdictions/juries. As AI becomes more sophisticated, I believe that law firms will be faced with the question of whether they can be both great law firms and great data analytics firms. The competencies to be successful at each of these tasks are very different and will become increasingly so as AI becomes more sophisticated.

BB: E-discovery was the first sandbox for the application of AI-enabled tools, using AI to accelerate document review during the discovery phase of litigation. Mergers and acquisitions are another area where AI-enabled technologies have been employed to support contract review during the due diligence phase. Contract analysis is the latest area to benefit from the capabilities enabled by machine learning. More nascent uses include blending predictive analytics and its algorithms, firm-specific intellectual property, and AI-enabled tools to create new proprietary tools.

JO: At Atrium we are building proprietary technology to increase attorney efficiency and provide our legal team and clients with a better experience. Thanks to Atrium’s technology, our attorneys are able to focus on high-impact advisory work. We see every level of the legal team as “up-leveled.”

In other words, routine work that an attorney may traditionally have to handle can now be completed by a paralegal (under the supervision of an attorney). Likewise, work that paralegals may traditionally do, like reviewing documents, can be done by practice assistants. AI makes many of these repetitive processes extremely efficient. For example, reviewing certain documents is about 10x faster with Atrium’s technology compared to the status quo way of working.

Additionally, we leverage operations teams to help define repeatable processes to operationalize our practice so that we can continue to scale our legal services with ease. This ensures that each legal team member is able to spend more time and attention to providing great service to our clients rather than managing administrative tasks.

Read Part II of our roundtable here!