Artificial intelligence (AI) is having a significant impact on the traditional law firm model, forcing law firms to adapt and change their approach to legal services.
These are not LawFlex’s words, they were formulated by generative AI.
Who better to ask about generative AI’s impact on the traditional law firm model than generative AI itself?
The rise of generative AI systems has ruffled many feathers in the legal industry. Legal professionals are concerned about the threat the integration of generative AI systems poses to job stability and lawyers are weary of the legal implications.
This concern is not without good reason. The economists at Goldman Sachs predict that 44% of legal work could be automated by AI.
From streamlining the contract review process to automating document discovery, generative AI is already being used to improve efficiency and reduce costs in the legal profession. However, this is just the tip of the iceberg when it comes to the potential impact of this technology.
As AI continues to advance, it has the potential to revolutionise the way lawyers work and fundamentally change the legal landscape and law firm model.
First things first. What is generative AI?
Generative AI is a branch of artificial intelligence that creates new content. That may be text, images, or audio, by learning and mimicking patterns from data. The dream of automating legal tasks has been realised, significantly improving efficiency and reducing the workload for legal professionals.
How has this impacted the legal industry?
Generative AI has significantly changed the workload and workflow processes of lawyers:
- Contract analysis – AI tools can review contracts to identify important clauses and suggest sound legal revisions based on best practices, reducing the risk of disputes. There are many software companies who have designed AI tools specifically to be used for contract analysis. Kira Systems, LawGeex and eBrevia help manage and sort contracts faster and with fewer human errors.
- Document drafting and review – Generative AI can assist in drafting legal documents by using pre-defined templates and data. It can also help review existing documents for inconsistencies or potential legal issues. Like many traditional law firms, White & Case has turned to AI to assist with document review for discovery. The firm uses Brainspace and Relativity eDiscovery software solutions that offer case assessment, fact management, review, production and analytics.
- Due diligence – In corporate transactions, generative AI can help automate the process of reviewing large volumes of documents, identifying potential legal risks and issues, and generating due diligence reports. According to Business Insider, recent levels of M&A deals have prompted some Big Law firms to turn to AI tools to keep pace with the volume of transactions. Shearman & Sterling have turned to due diligence tool Kira, machine learning software that automates the extraction and analysis of key provisions from contracts.
The adoption of generative AI has also had broader repercussions on the traditional law firm model itself.
1. Client relationship management
Chatbots and virtual assistants can now handle routine legal inquiries, providing clients with faster and more convenient access to legal services. This can help to improve client satisfaction and retention, as well as reduce the workload of lawyers.
Through AI-powered tools, law firms can analyse data on the time spent on legal tasks, allowing them to provide more accurate pricing estimates and improve their billings practice.
Generative AI also encourages legal departments to shift towards value-based billing models, which focus on the outcomes and results delivered, rather than the time spent on a project. This can provide greater transparency and predictability for clients, while also incentivising lawyers to work more efficiently.
With cost management being one of the biggest gripes that clients have with law firms, AI democratises the billing process and allows clients to retain some degree of control over the work being carried out.
3. Alternative Legal Service Providers (ALSPs)
AI is enabling law firms to expand their services beyond traditional legal practice areas. For example, some law firms are now using AI-powered tools to analyze data related to intellectual property and patent applications, allowing them to provide strategic advice to clients in these areas.
Law firms offering alternative legal services be it in tech, consulting or regulation, are offering their clients more holistic strategic advice whilst staying ahead of the competition.
What are the critics saying?
Despite all the benefits generative AI offers the legal community, it has not been welcomed with open arms. The legal industry seldom coalesces to change, and many industry stalwarts are united in their opposition to embracing generative AI.
Their concerns are not unfounded. Many law firms regard generative AI as a death sentence to the billable hour and an end to junior training through observation that is often billed to the client.
However, history dictates that when law firms embrace new technology, their value proposition to their clients and talent only increases. As generative AI becomes more widely adopted, it will put pressure on the legal function to shift from defense to offence. Rather than creating reasons to restrict their use, the legal function will be constrained by business and government to focus on leveraging generative AI to help create saleble solutions to a wide array of legal challenges.
Friend or foe?
The adoption of generative AI is shaping the law from the inside out. Internally, it is automating contract analysis, document drafting and the due diligence process. Externally, it is reshaping the law firm model as we know it. It has democratised a system that has historically been gatekept by law firm partners, senior corporate counsel, judges and regulators. Clients are experiencing a greater say when it comes to pricing, increased accessibility to legal services through chatbots and law firms are using AI to develop alternative legal solutions to the challenges facing their clients.
Harnessed correctly, generative AI will be a friend to the legal industry. Traditional law firms that effectively leverage emerging AI technologies will be better adept at meeting the everchanging needs of their clients.