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AI a Necessity for Law Firms


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An interview with Erin Hichman, senior analyst at ALM Legal Intelligence.

 

 

What are the applications of AI in law firms?

Applying AI in the law firm has benefits for both the practice of law and business of law. For the practice of law, AI reduces the need for manual and labor-intensive tasks, improves available information for decision making, and greatly enhances accuracy. For the business of law, AI reduces repetitive constant costs, enables certain practices to scale with increased speed, and captures the subject matter expertise of attorneys. Additionally, client-facing applications can improve the user experience and engagement while creating differentiation from competitors and creating ancillary revenue streams for the firm. Client-facing AI-powered applications also provide a more efficient and scalable method for introducing new services to existing clients and penetrating new geographic, practice and industry markets. 

The following table illustrates how wide-reaching AI is within the law firm.

 

 

Practice of Law

Sample Uses

Benefit

Contracts

  • Contract due diligence
  • Contract review
  • Contract management
  • Smart contracts
  • Greater scale and accuracy of contracts review
  • Drastically reduce time spent on contracts
  • Reduce costs
  • Automatically read, interpret and extract key information
  • Classification of content

eDiscovery

  • Information collection
  • Review and organize information
  • Draft responses
  • Auto-redaction for privileged information
  • Powering ECA
  • Smart labeling
  • Cost savings
  • Reduce time spent on eDiscovery
  • Improve accuracy

Legal Advice

  • Client intake
  • Early case assessment
  • Compliance, regulation, policy advice
  • NDAs
  • Automate expertise, workflow automation
  • Support clients 24 hours per day
  • Improve accuracy
  • More consistency
  • Reduce tedious tasks to allow for higher value focus
  • Offer self-service services for low-risk legal work
  • Create revenue through subscription services

Legal Research

  • Identification of relevant cases, statutes, regulations
  • Information extraction
  • Stay up to date on developments
  • Reduce time spent
  • Receive more precise information
  • Automatically track items related to a matter

 

Litigation Strategy

  • Develop a case strategy
  • Budgeting
  • Enables more informed decisions
  • Predict the likelihood of success
  • Create realistic and manageable budgets

IP

  • Patent filing process
  • Reduce time and improve the accuracy of existing designs/patents

Business of Law

Finance

  • Expense
  • Billing
  • Pricing
  • Identify patterns in expenses and bills
  • Automated timekeeping
  • Insight into time and billing data
  • Determine ideal pricing to maximize win rates based on history, capacity, benchmarks, public records, social media
  • Supports establishing a standardized pricing strategy across offices and practices

HR

  • Resume screening/sorting
  • Find specific candidates
  • Schedule interviews
  • Predict departures and performance
  • Track employee sentiment/ engagement
  • Smart on-boarding
  • Speed-up resume review
  • Quickly identify specialized and hard to find talent
  • Know of a planned departure or performance before it happens
  • Predict success or risk of a potential hire
  • Understand employee engagement and satisfaction
  • Streamline on-boarding and training process

IT

  • Cybersecurity
  • IT operations
  • Employee tech support
  • Efficiently, quickly and more accurately identify anomalies and suspicious behavior
  • Reduce redundant and labor intensive/mundane tasks
  • Reduce the workload of IT professionals to allow focus on higher level tasks
  • Improve response times and availability of tech support

RFP/Proposals

  • Build proposals
  • Respond to RFPs
  • Reduce tedious and time-consuming tasks

Marketing

  • Target and build the business
  • Improve client relationships and client experience
  • Monitor social media/ track sentiment
  • RFP Go/No-Go decisions
  • BD communication
  • BD target analysis; predictive opportunity prioritization
  • Better understand how the buyer thinks and makes purchases
  • Create more purposeful interactions; know which clients are more likely to expand based on particular actions
  • Client risk assessments; know which clients are at risk of leaving
  • Which partners are most successful at generating revenue and why
  • Automate communication

 

Conversely, there are numerous firms making larger and more advanced investments in AI, showing their commitment and broad applicability of AI in the law firm:While many law firms are in the three middle stages – investigation, pilot and initial adoption – there are still many law firms that are currently making no effort in AI. 

  • Allens Linklaters (Allens and Linklaters alliance), an international firm headquartered in Australia, created a real estate due diligence app, or REDDA, along with Kira, Neota Logic, and HighQ. REDDA performs lease reviews, identifies risks and provides a report of the results. Lawyers can now focus their time on the flagged issues, rather than spending 5+ hours reviewing one lease (real estate transactions can have 200+ leases).  
  • Allen & Overy's Fuse (technology innovation hub) brings together clients and legal tech companies to solve challenges across law, regulation, and deal-making. Companies involved in Fuse include Bloomsbury AI, Kira Systems, and Neota Logic.
  • Baker McKenzie has an AI platform personal assistant, Lancelaw, which provides lawyers with relevant and personalized news. Lancelaw was trained by two lawyers. Baker McKenzie also uses eBrevia for transactional due diligence.
  • One of Bryan Cave’s technology initiatives includes its TechX program – an incubator designed to help its attorneys better understand and use technology. This includes AI and learning how to apply it to their work and how it can be used with other technologies. 
  • Freshfields Bruckhaus Deringer, a Magic Circle firm, uses a mix of AI solutions, including Kira, HighQ, Neota Logic and HotDocs, to ultimately provide more transparency into their services in a more efficient manner.
  • Foley & Lardner offers clients a compliance solution it created using Neota Logic: FOLEY Global Risk Solutions (GRS). The solution is offered as a service through a fixed annual fee and includes risk assessments, relevant policies/procedures, up to date information on FCPA enforcement, training, legal advice/counsel on FCPA or bribery issue, quarterly and annual reports and risk monitoring.
  • Husch Blackwell’s Clery Compliance Toolset (using Neota Logic) is an online tool that provides clients 24/7 access to creating security policies/procedures, logging incidents, establishing if an incident needs to be reported and generating security reports.  
  • Ogletree Deakins’ O-D Comply is a subscription service that helps clients keep in compliance and on top of changes in federal and state laws. The web-based solution covers common compliance issue topics: background checks, employment applications, e-signatures, garnishments, state leave laws and state wage & hour issues. 

 

Does there need to be a culture shift to increase adoption of AI?

Perhaps the biggest challenge for law firms with AI is culture. AI requires flexibility, risk and an open mind to new ideas. Patience is also key – multiple test iterations are necessary to allow the system to learn before it is functional. These are all traits not typically found in the law firm. Also, AI opens the door to new revenue streams, such as online tools, that do not always require a human to be involved for services to be offered. This requires a new approach to compensation, billing, and team structure.

Culture is one of the five building blocks of AI. To be successful with AI, a solid foundation in culture, data, processes, talent and technology are necessary. 

 

What are the other obstacles to AI adoption?

Despite current hype and growing presence throughout the entire legal industry, AI presents a number of hurdles for successful adoption within many law firms. The AI building blocks of AI – culture, data, processes, talent and technology – can also be obstacles. Namely, having clean, prepared and reliable data; the right talent onboard; and fostering a flexible and open-minded culture. Other major roadblocks that law firms face include: 

  • Attorney Compensation: Many of the AI-based initiatives mentioned previously required systems to be “trained” by the legal subject matter experts, which can be time consuming. This process has the ability to impact billable hour attainment for some attorneys, so the time spent developing and training a solution that will reduce or eliminate repetitive knowledge tasks needs to be addressed by the compensation committee. Also, with AI other questions around compensation arise – how will the attorney compensation model change after AI is adopted to account for spending less time on matters? For on-demand, online legal advice and services offered through an AI solution – how are the fees credited?
  • Fee Arrangements: What will fee arrangements look like after AI is in use? With AI, paying for time does not make sense. Fees will need to be tied to expertise and results. AI also makes it easier to offer clients on-demand, subscription services, which better align to fixed monthly or annual fees. 
  • Unsolicited Changes: Lawyers tend to best respond when the client directly asks for something. In many cases, the client is not specifically asking for AI.
  • Securing Buy-in: Ultimately AI is a game-changer and not simply a tool for one specific task or group or department. It takes trial and error and commitment to training the tool. During this period of time, there are not any benefits, yet time and effort are required. A complete understanding of the investment necessary and buy-in from the top are needed for successful AI integration.

 

How will AI continue to impact on law firms? Will it make them more competitive?

AI for law firms is fast approaching table stakes status. In the short term, AI will create a competitive advantage for law firms, however it will be necessary for survival in the long term. The reason for this is pretty straightforward – there is quickly becoming a “new normal.” Law firms have a choice to make, they can adapt or attempt to continue on in their historical ways. The legal department is now savvier in terms of their operations, use of technology and overall business acumen. And, the legal department has a growing list of alternatives to the law firms for many of its services, and a growing pool of more technically advanced law firms to choose from. Law firms that continue to operate at the status quo are likely to face struggles and an uncertain future; while law firms that adapt and push their strategy forward will have the opportunity to outperform lagging competition. 

 

What about fears of automation or “replacing lawyers”?

AI is not a replacement for lawyers, but rather an augmentation tool to improve efficiency and accuracy that is changing how legal services and advice are consumed and delivered. Will AI take your job? Highly doubtful. Will AI change your job? Definitely. AI reduces, and in some cases, eliminated repetitive, mundane and time-consuming tasks. This allows attorneys to spend more time on higher level work, and more of it. 


What are the risks involved in using AI in law firms?

Having poor data hygiene as a basis for use in AI-powered platforms can be problematic. Data is the foundation for AI. The phrase “Garbage in, garbage out”, which illustrates challenges in learning from inaccurate data, only exacerbates existing problems if not addressed prior to launching an AI initiative. Without reliable data, AI will not add value, and will likely result in mishaps and inaccurate “insight.” It’s critical that internal data silos are broken-down, and that a firm-wide data governance framework is established to focus on capturing, cleaning, storing, security and disposing of data. The more data available that meets these qualifications will result in a better and more accurate experience when training the AI systems.

Additionally, with any technology, or cluster of technologies, there can be limitations, and it’s important that attorneys, firms, and legal departments all understand what those limits are prior to engaging with automation and AI.


 

Erin Hichman, senior analyst at ALM Legal Intelligence.