The AI wave in law is not coming, it’s already here … and it’s already transforming law firms.
Change happens faster than we predict. It is also happening more frequently. Consider, China is launching an online AI arbitrator this year. The United Nations wants to improve access to justice through AI judges and has been actively working on this for four years. A handful of firms have built digital assistants to help legal team comply with case rules to reduce time and expenses that are actually not billable.
Now factor in COVID-19. While it has been a pox on our lives, it has also been a great accelerator for innovation. With physical courtrooms closed, it accelerated the adoption virtual courtrooms. Law firms that never though a remote workforce would be effective are now wondering why they need huge offices when people seem to be working more effectively from home. Both the courts and firms are also turning more to AI-powered solutions to improve operational collaboration and efficiencies as well as to establish deeper engagement with petitioners and clients.
Society has entered the fourth industrial revolution that will trigger massive changes in how all industries operate. Artificial intelligence (AI) is one the biggest drivers fueling this revolution. Most law firms, court systems, and government agencies agree that AI will have a huge impact in three areas:
- Policy, regulation, and legislation
- Legal operations
- The future of legal profession
The question, though, is where are we currently with AI in these three impact areas? Much further along than people probably realize.
For many years, there wasn’t much resonance in law firms regarding AI. Most of the interest was wondering how laws would change and anticipating how this would drive new legal matters. Through personal interactions with law firm leadership, there was lack of trust in the technology. Many managing partners expressed disbelief that a machine could do some of the things a lawyer does or possibly do them as well, if not better. “Even at 99% confidence level, lawyers ask about the 1%,” states Susan Wortzman, Partner at MT>3, a division of McCarthy Tetrault. She emphasizes the need to build truth and technology before firms will embrace adoption, and it is a much higher bar to get there than in other industries. That’s why MT>3 has focused on creating buy-in for so long. They make sure people understand the technology, and their process includes trust building activities and system validation. Wortzman also states that law firms must overcome the perception that AI is a pure corporate cost by emphasizing the industry pressures on better efficiencies in legal operations.
Wortzman outlines an effective (and effort intensive) approach. Asked to help one of the largest, international law firms, I was sitting in a room with a few of the managing partners and the firm’s Operations and IT leadership. Wanting to use AI, the firm had outlined a series of use cases ranging from better calendar management to timesheet management. Reviewing their list, I made the blunt statement that AI wasn’t really needed for these items. One of the managing partners pounded the table with his fist and said, “That what I thought! What’s the big deal with AI? It’s all hype right?”
Not to be dissuaded, I stated let’s see if there’s something that you need that AI could actually add value. So, I asked this partner what his biggest problem was, and it turned out to be was talent management. The firm had issues in recruiting and assessing talent. They could not effectively figure out if a person would succeed as a trial lawyer, rainmaker, etc. In fact, they had let go of people they thought were mediocre only to see these people turn into superstar lawyers for other firms.
Well, AI can help them with this idea, and I explained how AI could be applied to solve this problem. Their first reaction was disbelief. Even after walking them through similar success stories in other industries and explaining how the firm could implement this, there was still some skepticism that a machine could do this better… but the law firm moved forward with it.
...clients are fueling the move to AI by pressuring revenue model changes in law firms.
Then, something changed two years ago that triggered a tsunami of interest and investment by the law firms. I was suddenly getting a flood of requests to help firms figure out competitive advantages by building their own AI solutions. Even the mega firms were moving rapidly and launching several AI projects at once. Moreover, some established lawyers were slowing down their practice of law to pursue entrepreneurial AI ventures. What was the inflection point that triggered this rapid change? Well, it was a combination of a few things… starting with client needs.
“AI is like sex in high school… everybody says they’re doing it but very few actually are,” says Richard Robbins, Director of Knowledge Management at Sidley Austin. AI is a buzz word and it spurs interest and engagement from clients. However, clients are fueling the move to AI by pressuring revenue model changes in law firms. The past decade produced a lot of case rules on what can be billed or expensed. Now, clients want more cost certainty and fix bid pricing. To accomplish this, law firms are looking to streamline their legal operations, and they’re finding a powerful ally in AI tools. The AI software in e-discovery, case rules, and admin tools, such as timesheets and calendars, have reduced costs and freed up more resource time for things that are billable or that contributed to more robust firm cost estimates to make a confident fixed price for clients. Robbins stresses that people hire firms for the wisdom and knowledge of the lawyers. Thus, the more mundane, administrative tasks are immaterial so there is a natural fit in finding technology solutions and opportunities.
Beyond automation, AI solutions can also provide insight that might be invaluable for firms and clients. Consider the matter of the chicken and Walmart. A man (who ironically is a dentist) bought a whole chicken from Walmart. When he bit into the gizzard, he broke his tooth on a stone, so he sued Walmart for damages. Typically, Walmart might have settled this case out of court. However, they use an AI powered solution from Legalmation, a company started by three lawyers. Legalmation’s AI can ready court documents and generate interrogatories. In review this case, the AI called out that it was a material fact that when chickens eat, they eat stones which get stored in the gizzard. Therefore, by eating the gizzard, the plaintiff should have been aware of this fact and not hold Walmart accountable. This was the argument that allowed Walmart to get a favorable ruling. Now, how many lawyers might have unearthed this material fact? Or considered there’s enough promise to even do the research? This is the added value we can get from AI insights.
Changing competitors into clients is another driver for AI adoption and innovation for firms. Remember the gold rush stories and the people who actually got rich? It was the people who sold the equipment. It is not enough to be using these AI tools because most firms will be using them. A few firms have realized that if they build their own tools, then they would have a huge competitive advantage… which could then be licensed to other firms… turning them into clients.
Per Jeff Richardson, Partner and Chair of Technology Committee at Adams and Reese LLP, “Lawyers who use tools will be better attorneys and provide better quality of service.” In turn, firms that create the best tools will have a large pool of lawyers who would like to use those tools. It’s a model that is quickly taking root especially at a time when firms are starting to hire business executives to run the operations of the firm, in effect, treating things more like a traditional business.
Lastly, coming to grips on how rapidly law and the future of the profession are changing is a big driver for firms using AI. Consider the recent case in which Alexa was called as a “witness” in a double homicide trial. If you’re the defense attorney, how do you cross-examine Alexa? Now take this a step further with the on-going rise in the use of robots (which are already factory workers, bartenders, tour guides, hotel receptionists, elderly care takers).
Firms are starting to realize that the nature of the work is changing...
China is already rolling out an AI arbitrator in virtual courtrooms. The United Nations has been actively pursuing AI robot judges. Firms are starting to realize that the nature of the work is changing (less administrative to more complex tasks like case strategy or business development.) However, how do they get ready to try a case in front of a robot judge? What if the opposition counsel is a robot? As Richardson points out, “Law school teaches you to think like a lawyer but not really what it means to be a lawyer unless you’re in a clinical program.” In the near future, firms will be looking to AI to help create “information arbitrage opportunities” (as Robbins coined it.) That is, the firms that can better identify information sets (even something small like chicken gizzards) and transform that into actionable insights will be the ones sought by clients.
“In the future, firms not using AI will fall away,” states Workman. The AI wave in law is not coming, it’s already here… and it’s already transforming law firms. It’s a newer model, but one that aligns with the needs of clients, changing laws and regulations, and how lawyers will perform work. Any change is difficult, in part, because many people don’t like change. This, however, is a time of adapt-and-overcome or die. So where should lawyers start? As Chuck Rossman, Chief Operations Officer at MT>3, eloquently puts it, “Don’t be afraid of change. Don’t change for changes sake. Explore.” Firms need to marry legal, business, compliance, and IT as a collaborative team. The best AI solutions in law have come from the people looking to solve a pain point in the system or the firm by thinking beyond just automation (faster, cheaper, less errors) and finding innovation, a better way of performing legal services.
Neil Sahota is an IBM Master Inventor, United Nations (UN) Artificial Intelligence (AI) subject matter expert, and Professor at UC Irvine. With 20+ years of business experience, Neil works to inspire clients and business partners to foster innovation and develop next generation products/solutions powered by AI.