The Legal AI ‘Barbarians’ Have Already Taken the Gates

This week legal AI company, Kira Systems, announced that it is being used by White Shoe, New York law firm, Davis Polk & Wardwell for transactional doc review. A day earlier, another global M&A powerhouse, Latham & Watkins, also told the world they were using AI for doc review, also in this case, Kira.

But, this isn’t a Kira alone story. Far from it. UK-based Luminance has gained an extra $10m in funding and now opened in the US. Eigen Technologies is already so well established it’s hiring the likes of former Slaughter and May partners to be internal legal advisers. eBrevia and many others are working with law firms all around the world, from San Francisco to Singapore. And Seal goes from strength to strength providing AI doc review and analysis services to the world’s largest corporates.

Meanwhile, India now has four companies developing legal AI technology. Germany is seeing new AI doc review companies emerge too. Australian law firms are working with AI and expert systems to create joined up applications more powerful than we’ve seen before. IBM is working with firms in Scandinavia on clause extraction platforms, as well as AI and blockchain fusion initiatives. And the US is giving birth to a series of new legal AI doc review companies, such as Legal Sifter and LinkSquares. The list goes on.

And of course, all these companies can operate in this space because…..well, someone is paying for their services, namely lawyers in most cases.

And, in recent research that Artificial Lawyer did with The Times of London, it was found that of those UK-based law firms sampled in the Top 30, all were either already using AI systems of some type for paid client work, or were piloting systems with that express goal.

Which leads us to the main point here: this has all happened rather fast, in fact a lot faster than many expected.

I’ll spare the blushes of some who back in mid-2016, when Artificial Lawyer started writing daily about this area, suggested it was all ‘hype’, ‘nothing really is happening’, ‘it’s all just marketing’, ‘real client work..? Come on, no one is actually using this stuff….’ And so on.

Not everyone was on board…

Or the more moderate commentators would say: ‘Well, yes, this does look useful, but it will be many, many years before law firms start to make use of AI-driven doc review and other automated technology.’

Cue additional clichés: lawyers are risk averse; clients don’t want this; partners can’t understand AI and so on.

But Then….

Move forward 18 months and now even the elite of the elite, such as Davis Polk, have seen clear benefits in automating some of their legal work via AI-driven doc review. Slaughter and May has upped its investment in Luminance. Allen & Overy has an incubator that includes iManage/RAVN and several other legal tech companies making use of automation.

Funny how sometimes things change a lot faster than we expect.

But Why?

Back in the early summer of 2016 I was in the audience at a legal tech conference. A person, (not one of the partners, it should be pointed out), from a global law firm was saying that the firm would never use AI to automate work they could charge for using manual methods ‘until the barbarians were at the gate’.

That comment both annoyed me and pleased me in equal measure. Though the pleasure came much later.

The negative aspect was it was so arrogant as to think that providing a better, more efficient, more valuable service to clients was something that had to be provided only at the last possible moment, almost at gun-point. It was if they were saying that law firms had some special right to offer, let’s put it bluntly, an exploitative value proposition to clients and say: ‘We define how we do things. Not you. You lot just pay for our inefficiencies.’

Some legal AI ‘barbarians’ at a gate

Guess what? Recently, the management of that same firm made a very public statement – almost a declaration of intent – that legal AI tech and the automation of parts of its billable work was going to be central to their strategic future and was pivotal to their relationships with clients going forward.

Wow, how things change.

So, what changed in the market to make a law firm do a 180 degree shift in business strategy?

Here are a few thoughts:

  • There is a heightened understanding of ‘legal data’ and process design, which in turn has proven fertile territory to then move up a gear into fully automating parts of ‘the legal production line’.
  • Once lawyers see their work as a process, with data as ‘fuel’ and AI doc review/prediction systems/research platforms, process automation and expert systems all performing legal work, removing friction and creating productivity boosts, then things start moving quickly.
  • AI systems that can analyse huge amounts of unstructured data are being seen as not just time-saving engines that might alter billing practices (and hence be a challenge to adopt), but tech that creates new value and new services that were not possible before.
  • That when clients hear so much about AI systems, and see their own companies using machine learning and NLP elsewhere in the business, then it’s hard for them not to wonder what’s going on and ask their advisers about it as well.
  • That law firms hate to be left behind, so when the top firms in the world embrace automation of legal tasks then the rest of the market needs to move as well or risk a significant strategic challenge.
  • That for clients, in part because of the rise of procurement oversight and the growth of legal operations teams inside or adjacent to inhouse legal teams, the focus on process and efficiency, and basically just getting good value, has become a real issue. After 20 years of many GCs often posturing about the subject, they are now faced with real change, catalysed by new, automating legal technology.
  • That…….OK, that’s enough thats.

As seen, the reality is that the reasons for change are multiple. There has been a convergence of causes and it’s all moving one way.

But, of course, the ‘data people’ in law firms will still dismiss AI, (often for reasons that seem a bit perverse and perhaps for protectionist ‘get off my lawn’ type reasons) and say it’s not really that important and that it’s ‘all about data…!!!!!’. OK. Of course the data is essential. But, to ignore the impact AI-driven systems are having by automating the work of lawyers is frankly silly.

The industrialisation of cognition in the legal market is here.

When you automate parts of the legal production line you change a legal model that has lasted for decades, if not centuries. Data is part of that. But ‘a part of that’ is the key point.

Strangely, it’s not the legal IT people in law firms who seem to have most grasped just how important AI and automation is, it’s the managing partners. This is because it’s their job to look at the bigger picture, the economic and strategic picture, not just how the machine functions day to day.

And, in the final analysis, things change at law firms because management teams make them happen. So, kudos to the law firm managers who have adopted legal AI systems and see how it will change their business model, which is an area my alter ego would be very happy to talk to you and your partners about.

Conclusion

Two years ago legal AI systems conducting doc review for M&A transactions were seen somewhere between a novelty and ‘robots’…(remember when people still used that term to talk about legal AI software…?)

As we approach the end of 2017 the technology is firmly ensconced at the highest levels of the market. It looks like ‘the barbarians’ have got through the gates, beaten the opposition and set themselves up in the throne room.

Of course, the total quantity of billable work going through all legal AI systems is still very small on a global level. This is just the beginning of a process that may take many years to complete. But started, it well and truly has.

Last word: The first Apple computer was sold in 1976, a few decades later it was the largest company on the planet by market cap and more than 2.5 billion people now own a smart phone. That’s something worth considering when you think about where legal AI tech is headed and where it is today.

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