“Although automation is having an impact on legal services, LawTech is lagging behind other sectors, such as FinTech and RegTech.” This was one of my key takeaways from a recent AI for professional services event that helped contextualise the progress that the legal sector has made in adopting new technology.
Despite this slow rate of development, there are now over 100 LawTech companies based in London and, as a result, the city has an excellent opportunity to establish itself as a global hub for legal technology. These companies are working on several different areas including document review, litigation prediction, legal research, contract analysis, risk and compliance, document management and expert systems.
Swimming in a sea of data
According to one panellist, information could soon be as valuable as the services that professional firms currently provide. Firms need to embrace this data revolution and realise that their value can be built or undermined by their use of data.
However, although data is often available, it is not always usable. Data requires careful curation, analysis and interpretation, and firms need to think carefully about how to make the best use of it. AI requires structured data and there are now several companies (such as Clickworker) that use human workers to train AI by categorising data so that it can be used by AI.
AI threatens the traditional partnership model (in the long-term)
Traditional professional services firms are now competing with technology-first companies and law firms, in particular, are facing increasing competition from alternative legal service providers. Although law firms acknowledge the need to adopt technology to meet these challenges, they are having difficulties integrating it into their pricing structures.
AI has so far had a limited impact on the traditional law firm model but, in time, it will lead to law firms hiring fewer lawyers and instead looking to recruit other professionals, such as data scientists, legal engineers and software programmers. The lawyers that are hired will concentrate their efforts on high-value work, while AI will be used to undertake much of the low-value work now performed by junior lawyers or paralegals. Junior lawyers will still need to do some of the old-fashioned “grunt” work to gain experience and understanding of less complex tasks, but not in the same volumes as previous generations of lawyers. AI is also likely to increase the pace of the move away from hourly billing to a more outputs focused approach to billing.
In-house lawyers are currently unsure which LawTech start-ups to work with as they are not certain which of these new businesses will survive and prosper. Law firms have an important role to play in explaining what these new technologies can offer and acting as an intermediary between the start-ups and their clients.
Where are you on the AI journey?
Although AI early adopters may gain a competitive edge, they also run the risk of burning through cash quickly and ending up without a tangible result at the end of the process. Event delegates were therefore keen to hear advice on how they should approach their first move into AI.
There were essentially two schools of thought. The first favoured taking a systematic approach and encouraged in-house lawyers to focus on a particular problem (or opportunity) and then identify a specific technology that could be used to solve or exploit it. Measuring the impact of the technology and demonstrating a return on their investment was also recommended.
The second suggested a more entrepreneurial approach that encourages innovation, is prepared to experiment with AI and is unafraid of changing direction, where necessary. With this method, it’s important to publicise pilots that have worked and ensure there are lots of different initiatives in the pipeline. Expectation setting is also vital. The organisation needs to appreciate that AI can sometimes go wrong and not allow one setback to kill off innovation elsewhere within the business.
With either approach, it is important to identify early adopters and those who are likely to be resistant to change in the organisation early on.
Making Legal the most effective sales forecaster within the business
A multinational telecoms provider gave an insightful presentation on how it has used AI in the development of a single “front door” for the business to access legal advice. The company uses a triage and self-service system that allows chatbots to deal with general legal queries and allocates contract support requests to specific legal team members.
As in any business transformation exercise, stamina, patience and determination were all required in abundance, but one of the main reasons for success was the high quality design of the customer interface. Good design also enables the legal team to visualise detailed contractual data on engaging dashboards. The legal team now has the opportunity to make itself the best sales forecaster within the business due to the wealth of information contained within contracts.
When selling the concept to the business, it was vital to highlight the business benefits, rather than just those the legal team would enjoy. For example, demonstrating that the sales teams would get a better quality and quicker response to their legal queries, and explaining that the contractual data can identify potential cross-selling opportunities.