Download Artificial Intelligence and the Legal Sector

Artificial Intelligence and the Legal Sector
The New Normal?
Siobhán Lewington
July 2016
Introduction
There is little doubt that the legal sector is entering a period of technological revolution. But what exactly is AI – how does it
work, and how much does it matter? This Fox Rodney Search thought leadership piece explores the future of the legal market
as it enters the high-tech era.
What is AI and why does it matter?
AI refers to the development of technological systems
able to perform tasks that would normally require human
intelligence. In many ways, the legal sector is perfectly suited
to the application of AI systems because at its core the law
is a framework of rules – something computer programming
is particularly adept at handling. In the context of a law firm,
AI entails programming computers to process those rules in
order to complete tasks historically performed by lawyers.
AI doesn’t change the nature of legal work - it enables lawyers
to focus their efforts on creating legal content (e.g. planning
a legal argument or crafting a bespoke contract) rather than
manually completing rote work. This is particularly relevant
at the junior end, where AI can be used to replace associates
and paralegals conducting (often un-billable) commoditised
work. Many such tasks, including document drafting, due
diligence and legal research, are actually better suited to
computers than humans. Computers are not only able to
handle this work much more efficiently than human lawyers,
they also complete it more accurately.
Examples of AI programmes
Dentons & ROSS: Dentons’ collaborative innovation platform,
NextLaw Labs, has teamed up with start-up ROSS Intelligence
to develop a legal advisor app using IBM Watson. The app
uses Watson’s cognitive computing and natural language
processing abilities to streamline legal research. In practice,
Dentons’ lawyers are able to ask ROSS questions exactly as
they would ask them to another person and the app searches
through the law in order to supply evidence-based answers.
The programme is aimed at providing legal start-ups with
more accessible and affordable legal options.
NextLaw Labs announced its second major investment with
Apperio, a legal technology start-up focused on enabling
clients to better monitor their legal advisors’ performances
and fees. Firms subscribed to Apperio include Taylor Wessing,
Olswang and CMS Cameron McKenna. NextLaw Labs has
also teamed up with IBM to develop a technology platform
programme using IBM Cloud.
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Berwin Leighton Paisner & LONald: In December 2015,
BLP’s investment in artificial intelligence was recognised
when the firm took home the ‘Best use of Technology’ prize
at the British Legal Awards. The firm’s Real Estate department
uses computer software company RAVN Software’s Applied
Cognitive Engine system to automate large volumes of (noncharged) work previously undertaken by junior lawyers.
The system, known internally as LONald, is tasked with
searching through and extracting information from Land
Registry Official Copies in order to produce and issue Light
Obstruction Notices (LONs) on behalf of firm clients. LONald
is able to do in approximately five seconds what previously
would have taken BLP’s lawyers five days. Having been
designed over two weeks at a cost of £8,000, the benefit of
automating this work is clear.
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How will AI impact the legal sector?
In some ways, the impact AI will have on law firms seems clear
cut: it will increase fee earners’ efficiency by reducing the
burden of rote work currently shouldered by junior lawyers. As
benign as that may sound, the implications for the legal market
are likely to be both profound and widespread, prompting some
commentators to go as far as to predict that AI will lead to the
disappearance of traditional lawyers altogether.
If this is true, what do the law firms of tomorrow look like?
Who will be the winners and losers in this new landscape?
What does a career in the legal sector hold in store for today’s
junior lawyers? The specific answers to those questions are yet
to be determined, but a number of likely trends can already be
charted.
The end of the traditional law firm structure
With sophisticated AI programmes already encroaching on the
work currently conducted by associates, paralegals and contract
attorneys, the traditional law firm pyramid structure seems
increasingly unfit for purpose. Firms are already anticipating
being able to replace many of their current paralegals and/or
contract attorneys with technology platforms in the coming
years. It seems we are now moving towards an era in which firms
across the board have fewer junior lawyers and lower leverage
models.
The implications of this shift will be widespread, ranging from
reducing the demand for junior legal professionals, to reshaping
the daily responsibilities and career trajectories of those junior
lawyers who still make the cut, to redefining the real estate
requirements of modern law firms. Such changes will certainly
influence the shape of law firms of the future.
New winners and losers in a bifurcated legal market
As AI increasingly commoditises legal services, we will also
likely witness the bifurcation of the legal sector, with firms
either steering into AI or away from it. Dentons and BLP are two
notable examples of firms that have teamed up with industry
providers to develop AI capabilities, hoping to develop strong
platforms while the relevant technology is still emerging. That
these firms have made such significant investments despite law
firms’ partnership structures encouraging a short-term view
on expensive initiatives is testament to how seriously they are
taking the AI challenge.
Other firms are responding to the rise of AI by targeting the
opposite end of the market, focusing on providing bespoke and
strategic advice in ‘bet the company’ scenarios. Already among
London’s most lowly leveraged and highly-profitable law firms,
this elite group is relatively well defined, comprising a select few
high-end US firms and (even fewer) UK firms.
As the market bifurcates, the firms most at risk will be those
left in the middle - those that continue to rely on their brand
names and institutional clients to generate business. Many such
firms have turned to near-shoring as a means of protecting their
bottom lines, but by avoiding the challenge of AI rather than
addressing it, these firms risk being overtaken by more agile
market contemporaries.
New and disruptive market participants
It is no surprise that many of the firms venturing into AI have done
so by teaming up with players ranging from industry titan IBM to
legal technology start-ups. As the increasing commoditisation
of large amounts of legal work shifts clients’ focus from the
purely legal to include technical expertise, law firms will need
to prepare to compete not just amongst themselves, but with
technology-based providers as well. There is a view that if law
firms aren’t quick to grasp the opportunities AI creates, those
opportunities may well be seized by industry outsiders.
A new normal?
While AI will never fully capture the complexity of human
disputes and negotiation - nor the lawyers who broker those
interactions - the impact it will have on the legal sector should
not be underestimated. Tasks currently being undertaken by
paralegals and junior lawyers will continue to be automated.
This means that junior lawyers will have a different kind of early
career experience, perhaps even better than before. The use of
AI will make law firms more efficient and this in turn will free
partners to spend more time advising clients and becoming even
more key strategic advisors.
Over the next few years, AI will no longer be a competitive
advantage but a ‘new normal’ in the legal sector. Firms that
don’t adapt to this new, high-tech era will not be able to go the
distance.
By Siobhán Lewington July 2016
For more information please speak to Siobhán Lewington [email protected], or your usual FRS contact.
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