Artificial Lawyer caught up with Canadian legal consultant and futurist Jordan Furlong of Law Twenty One and asked him about his perspective on what opportunities and challenges AI faced in the legal sector.
Do you see a strategic advantage for the law firms that embrace AI? If yes, how would that advantage manifest itself?
We should probably begin by creating a working definition of ‘AI’, which is a term applied so broadly in the legal sphere that, as Ryan McClead has pointed out, it might as well just be written as ‘magic‘.
Michael Mills of Neota Logic has suggested instead the term ‘cognitive technologies‘, which encompasses a wide range of tech applications including machine learning, natural language processing, and expert systems.
Michael goes on to state that “AI techniques enable lawyers to devote more of their time to more valuable (and interesting) work. Mining documents in discovery and due diligence, answering routine questions, sifting data to predict case outcomes, drafting contracts — all are faster, better, cheaper and becoming more so with the assistance of intelligent software.” That seems like a good starting point.
Using these understandings and definitions, I would say that law firms embracing AI gain both tactical and strategic advantages. The tactical advantages are straightforward: firms using AI can perform segments of their client tasks in a less costly, more efficient, and higher-quality manner, each of which represent potential competitive edges over firms that do the same tasks only with humans and therefore more expensively, less efficiently, and with more risks to quality.
Strategic advantages to using AI would depend on whether the firm has a defined strategic goal and intends to use AI techniques to help it achieve that goal. For example, if a firm’s strategic objective is to become the dominant labour and employment law firm in its chosen markets, it might elect to incorporate AI techniques into both its everyday client activities and its marketing and business development efforts to help secure that outcome. Certainly, Littler Mendelson would appear to be an example of such a firm
Is AI software something only for the very largest law firms, or should all commercial law firms be looking at this now?
Given the price points of many AI applications right now, I suspect that large firms (or large commercial law departments) are in the best position to pursue AI solutions. These entities have the budgets to manage a potentially significant investment in what is still largely nascent technology and the scale to diffuse that investment across a large platform.
Smaller law firms and legal providers might want to let the big dogs help AI providers work out the kinks and further develop the products, unless these smaller firms are making a major investment in automation and high-efficiency systems themselves, or unless they focus on a particular niche area that could only be developed in close collaboration with an AI provider.
But AI price points will come down, and sooner than we think. I remember when VCRs sold for $2,000 each, and I remember when they later sold for 5% of that price. Even smaller commercial firms that aren’t in a position to dive into the AI waters today should keep a close eye on informed industry commentary in this area, so that they have the knowledge and awareness of when they should step in themselves. It might very well be sooner than they think.
Who do you think will make greatest use of AI as it becomes more mainstream, law firms or in-house legal teams? And, who will drive adoption of AI, law firms, or in-house lawyers, i.e. the adviser or the client?
As things stand now, it will certainly be in-house legal teams. Corporate law departments, unlike law firms, are financially structured to seek the most effective and productive outcomes with the least use of effort and resources. Cognitive reasoning technologies are designed to achieve exactly this kind of outcome, so the alignment of interests between AI and in-house is clear and substantial.
The vehicle by which AI adoption in law departments will be driven is corporate legal operations, or “legal ops” personnel. These are expert professionals (some lawyers, some not) whose objective is to continuously increase the productivity and improve the effectiveness of legal departments. As the rapid growth of the Corporate Legal Operations Consortium (CLOC) shows, the match between what legal ops need and what legal AI offers is too attractive to ignore. Law firms could learn a lot by watching and adopting what in-house legal ops people do.
Will AI improve the top and bottom lines of law firms or the contrary?
That depends entirely on whether and how law firms adjust their financial structure to reflect the use of efficiency-enhancing tools. To the extent law firms continue to sell their services in billable-hour increments, the introduction of AI tools and techniques would damage their profitability. If your inventory is ‘time spent’, and AI reduces that inventory, you naturally will have less to sell. I’d go so far as to say a law firm bent on continuing to value, price, and bill its work according to effort expended by lawyers shouldn’t bother with any AI investments. But then, that firm also shouldn’t bother looking beyond a time horizon of ten years for its own survival.
But if a law firm restructures itself, financially and culturally, to value, price and bill its work according to client outcomes and solutions delivered, then yes, AI makes perfect sense as an important profitability tool. Fixed-price work is a magnet for AI techniques, because it engages the firm in an effort to deliver the highest-quality outcome with the fewest allocated and consumed resources (i.e., at the lowest cost), and AI is perfectly positioned to assist with that. The problem, of course, is that financially and culturally restructuring a large law firm is an overwhelming challenge.
Do you see the Big Four accountants making better use of AI than law firms, given their already considerable experience at process management?
Absolutely. Unlike most law firms, the Big 4 accounting firms look at their own activities and operations through the lens of their clients’ business needs and ask themselves what they need to do to help meet those needs. The compliment most frequently given by corporate clients to their accounting firms is that ‘they understand our business and look at everything from the perspective of our business goals’.
This is, of course, in sharp contrast to law firms, which tend to look at everything through the narrow spyglass of legal issues, and which tend to believe that risk is something to be eliminated rather than something to be identified, measured, and managed.
What do you see as the main obstacles to law firms adopting the use of AI?
There’s a host of obstacles, of course, but think these three are the most important:
- the fundamental opposition between the nature of law firm productivity (more billable activity on all matters) and the nature of AI productivity (less time and effort expended on routine matters);
- the extraordinary difficulty of recasting the operational systems of a large law firm towards the strategic interests of clients, rather than the financial interests of the firm’s partners; and
- the generally high level of technophobia among lawyers, compounded by imprecision and ignorance about what ‘AI’ really means in the legal context.
Do you think that young lawyers should be taught to code, so they can play a greater role in the development of legal AI?
I think that all lawyers would benefit from a half-day ‘how to code’ CLE that explains what code is, roughly how it works, and how to create a simple function based on a very straightforward coding effort. But I don’t think coding should be considered a key lawyer skill, unless that lawyer intends to dive deeply into the programming of legal applications and technologies. I think it’s enough for a lawyer to understand what the term ‘coding’ means and how it’s central to myriad legal and non-legal 21st-century technologies.
AI should be helping lawyers move up the value chain by removing from their dockets the most mindless and mundane tasks that have consumed so many billable hours over the last few decades. Lawyers who have great skills in analysis, judgment, advocacy, risk assessment, or risk prevention will benefit by escaping the billable demands of drone work and developing higher-priced, higher-value offerings that are not subject to automation or algorithm. Lawyers who don’t have these skills need to learn them. And that’s why every law school, bar admission program, and CLE provider in the world should be gearing their curricula to building these skills immediately.
Jordan Furlong (law21.ca) is a leading analyst of the global legal market and forecaster of its future development. Jordan is based in Ottawa, Canada.
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