Written by: Arthur Bellamy-Rosser

Despite Artificial Intelligence (AI) existing since the 1950s, there has never been as much discourse on the technology as there is currently, largely due to the release of ChatGPT in November 2022. The large language model (LLM) introduced AI to the masses, and for the first time the general population experienced the possibilities afforded by it. However, while there has been a great deal of excitement about the opportunities in automation that AI presents, there has equally been a degree of controversy surrounding the technology, with many fearing its potential impact; an anxiety which appears to be far from baseless.

In a recent report Goldman Sachs detailed how automation through AI could lead to significant job displacement, even going so far as to suggest that nearly half of all work activities could be automated. They note that as many as 300 million jobs worldwide could be affected by this current wave of the technology. Moreover, in contrast to earlier waves of automation which had a significant effect on lower-paying and repetitive jobs, AI has the potential to automate more cognitively focused tasks. This is because AI is designed to emulate human cognitive functions, meaning that tasks such as the processing of mass data, examining patterns and drawing conclusions are all well within its capabilities. Thus, the legal sector is of no exception to the changes which AI is sure to bring to the modern working world and so legal professionals will have to adjust to the opportunities and challenges posed by the technology.

The Operation of AI within Law Firms

It would be impossible to consider all of the ways in which AI may be utilised within law firms, however there are a few tasks which have seen the greatest uptake of AI processes so far. AI has enabled legal research to undergo a significant transformation. Online legal databases such as Westlaw and LexisNexis already use AI-powered search algorithms to tailor results so that only applicable precedent is included, and it is foreseeable that this function only develops further. Furthermore, through AI powered document analysis software, firms are able to speed up the discovery phase of litigation to a great degree. The software, which is trained by a lawyer to look for specific matters, can assess and rank the relevance of documents far faster than is possible by more traditional methods, thus streamlining the process. Contract management and review are another set of tasks for which AI has already been introduced. Companies such as Lawgeex and Clearlaw have introduced tools that automatically analyse contracts. These tools are capable of detecting drafting issues, addressing concerns surrounding intellectual property, suggesting areas in which a contract can be improved and even accurately predicting the time a counterparty will take to approve a contract. Some software, like ThoughtRiver, can go even further than this and will automatically flag risky contracts.

Another slightly more controversial use of AI is for litigation outcome prediction. By analysing vast amounts of case law with similar facts to a current matter being litigated, certain AI software is able to undertake a statistical analysis on the trends and decisions of judgements and can resultantly be used to predict the outcomes of live litigation. It is thus evident that AI has the potential to significantly impact many tasks which legal professionals currently undertake. However, there are naturally knock on effects from such a great change to working practices, a notable one being the viability of the billable hour system being called into question.

AI and the Billable Hour System

The billable hour system has been used for decades and is still common in many law firms, both in the UK and globally. Within the system, fee earners bill clients based on the number of hours they have worked on a particular matter or case. As such, the amount of money that a fee earner brings into a firm under the billable hour model is dependent on the amount of time that they spend on their work for a client. Therefore, while clients certainly enjoy the advantages of the aforementioned streamlined AI services, it poses a challenge to the billable hour system as fewer billable hours will result in less total billing for the firm. This negative effect is further compounded by the expense of investing in these new technologies which may be required for a firm to remain competitive.

Validatum, a specialist legal services pricing consultancy, notes that while this is not a disaster, law firms may need to alter their billing practices to focus on what clients will still most require from a solicitor; the advice of more senior and experienced professionals. They pose that clients will be far more willing to pay good money for these services than ones which could be classed as ‘procedural’. Some firms have already made alterations to their billing models in order to benefit from developments in technology. For example, Littler & Mendelson, the largest employment firm in the US, has introduced a subscription-based cloud software which is accessible to all employers, even those who are not clients of the firm. The software allows employers to enter information and automatically receive a report on various legal queries.

AI Based Disputes

It is worth mentioning that at least in the short term, AI based disputes may provide firms with an increased volume of work as more and more companies seek to integrate the technology into their operations. We have already seen high level disputes concerning the operation of certain AI models. For example, earlier this year Getty Images sued Stability AI, alleging that the AI model was trained using Getty Images’ intellectual property. Furthermore, cases such as Thaler v Comptroller-General, in which it was found that an AI machine could not be accepted as an inventor for the purpose of obtaining a patent under the Patents Act 1977, are indicative of how ill equipped our current legislation is to accommodate the growing presence of AI within our lives. It can therefore be expected that similar disputes may arise as the role of AI increases.

Conclusion

It seems inevitable that AI is going to continually develop and as a result it is likely to have an increasingly great presence within the legal sector. Furthermore, with the rate at which AI software is constantly being developed, it is possible that the technology will impact the legal sector in ways that have not yet been fully realised. Resultantly, it is probable that law firms are going to have to adapt some of their practices so that they can make use of the technology for the benefit of their clients, but also ensure that they remain competitive.