ChatGPT is Three – What Has Changed?

So, ChatGPT is three years old. Before November 30, 2022, few in the legal world had even heard of generative AI, today, few have not. But, what has changed?

Have Law Firms Really Changed?

The short answer is: no, despite some great marketing efforts that have to be commended for their enthusiasm, and many individual lawyers inside firms taking up AI tools with vigour (see below), the fundamentals of Big Law – for now – remain the same.

Traditional law firms, or rather ‘trad legal vendors’ if you want to use the latest terminology, have not changed in a substantive way. Not yet. (Give me a call in 2037, see below).

‘We have a chatbot and we’re going to use it!’ is a great headline, but if the fundamentals of most legal vending organisations, (AKA law firms), have not changed then what’s the big deal?

This is the thing: if AI doesn’t really change the economic model of how a large part of the legal market operates, then has it had any real effect? Does making lawyers more efficient, sometimes more effective, and even more tech-enthusiastic, in itself launch a new era for the legal world? Well….no, it doesn’t. Not in itself.

Real change comes when we can see substantive structural transformation of the Big Law business model. So, not relying on large volumes of junior labour to create time-based billables….when in reality what the client really wants is the top insights of the best partners and for the work to be done on time and of course, to crush their risk. The labour pyramid is just there because that is ‘the way it’s always been done’ – and as the saying goes, that’s not a great reason to keep doing something.

We have seen some firms tinker around the edges, e.g. rebranding innovation lawyers as ‘AI lawyers’ or something similar, but which are basically doing the same job as they did some years before, and we have seen law firms launch a PR blitz to tell the world they’re using A or B tool, or have developed an internal chatbot that taps the main AI models….but, as noted, does that fundamentally ‘change the game’? And again, no. It adds some new aspects to the game, but the game remains the same….

….for now.

A New Hope

But, there is hope. What AL saw at the Legal Innovators conferences recently made a big impact. Speaker after speaker lined up to tell the audiences in the US and UK about how much AI had changed their own work and how it was now part of their lives.

This was a huge change from previously. This was not theory. This was not conjecture for a conference audience. This was real, it was hard facts, and practical in every way. And that is a huge change.

So, how do we navigate this contradiction?

Fact 1) – law firms have not structurally changed despite some great PR.

Fact 2) – many lawyers in the same law firms have truly changed how they work and are seeing significant benefits to using AI.

How can these two facts be true at the same time? The answer, AL would summize, is that the ‘super-structure’ is not moving even if management teams are keen to send the ‘right message to the clients’; meanwhile individuals inside the super-structure are evolving very rapidly.

One could say it’s a bit like many other radical changes driven by technology. At some point in the movement from horses to cars there were just a few cars. Eventually though the roads filled with cars and the horses departed. Because of this the economic and regulatory framework of transport finally flipped and within a few decades we get motorways and multi-storey carparks….and an entirely new transport ecosystem.

But, the super-structure of the horse and cart stayed in place for a long time…for decades even, when one considers the first cars arrived in the late 1800s (1885 to be precise), but the transport infrastructure and governance around it doesn’t really change radically until several decades later.

Or, if you want another metaphor, think of a caterpillar that changes into a chrysalis. Inside the cells are mutating and changing. From the outside it looks like nothing much is happening. And then….yep…..wow, the chrysalis breaks open and you have a whole new entity there.

Legal Tech Is Transformed

While Big Law is going through its transformation pains, which AL reckons won’t reach their culmination for another dozen years, i.e. 2037 for complete evolution across the global legal market, the world of legal tech has changed incredibly fast.

And we have to thank companies such as Harvey for relighting the legal AI fire that now burns so brightly in almost every legal tech company on the planet.

By mid-2022 it felt as if the energy of innovation was plateauing in legal tech. AL wrote about how a visit to Legal Geek that year had felt strangely flat and no-one had anything new to say. Roll on to November 2022 and ChatGPT, and then soon after the arrival of Harvey, and everything did really change in this market.

LLMs brought immediate value. People said to me: ‘This is the AI I have been waiting for.’

Funding into legal tech has gone through the roof, time to value has collapsed into a few seconds, companies that would spend years tinkering with NLP suddenly connected to OpenAI or Anthropic and had a whole new range of ‘AI skills’.

So, yes. ChatGPT and what followed among a dozen other LLM builders has changed the legal tech world.

Moreover, this is only getting started. Yes there may be an investment bubble in data centres etc…….of course. But, if you think that AI will ‘go away’, then you are dreaming a naïve fantasy of returning to the past. AI is going to spread and become more and more part of everything we do, in legal and outside of it.

AL would agree with many out there and say that we are moving to a new stage in economics and social organisation. What has happened since 2022 is just the opening phase of a movement that will alter everything human society does. It’s that seismic.

New Model Army

As explored last week, the New Model Army of legal vendors, or NewMods, are in many ways the ‘model of today’, in that they don’t rely on high volumes of manual legal labour. They focus on expertise and crystalising knowledge and workflows, via AI, and provide something that is fast, economical, and designed for now.

From Crosby, to Covenant, and others, these are the kinds of business model approaches that pair nicely with what AI can do. As Jen Berrent, co-founder of Covenant and former GC of WeWork, has told this site, the idea is simply to build a law firm on the basis ‘that AI exists’ and work forward from there.

And if you accept this, then everything about the business model changes, but….and this is the key part, the clients should be getting a work product that is just as good as from a trad legal vendor.

In this respect everything has changed in that area…but, the total revenue scale of these NewMods is – for now – a drop in the ocean. All of them combined would total not even one practice group of some of the global law firms. So, a very long way to go there before the market switches providers en masse.

But, surely the New Model Army are carrying the flame for the future legal vendor model? And the fact that so many new businesses of this type are now emerging is in itself proof of what genAI and ChatGPT in 2022 has triggered.

Last Word: The Clients

At the end of the day, this is all academic if the clients don’t change. Now, we cannot expect them to stop wanting legal services, in fact, as the world ‘complexifies’ and becomes ever more regulated and legalistic, demand will increase.

But, will clients demand change from law firms? And are they changing internally?

As seen at many events AL has been part of, the clients are changing. But, it’s rather like the law firms. I’m seeing GCs who on a personal level are really using AI with their work, and deploying a host of tools. C-suites are also demanding change within the legal function.

And yet…full transformation has not happened yet. GCs are not yet – as a whole – demanding total change in delivery from their law firms. Why not? In part it’s because the clients are cut from the same cloth as the law firms they work with.

Culture eats strategy for breakfast, said Peter Drucker. And culture eats legal tech as well.

But, will it change? Yes. For sure. In fact, the marketing efforts of law firms to underline their AI credentials suggest there is increasing pressure out there from the buyers. Plus, NewMods will keep making the buyers question the status quo, from pricing, to knowledge sharing, to workflow sharing, to increases in speed of delivery and more.

But, back again to culture. Inhouse teams have been served by Big Law in a particular way for decades. That won’t change overnight. But, AI is both the catalyst and means for this change. It will happen. The only question is: when?

Conclusion

Some believe we will see total transformation of the legal market in the next few years. They say: ‘Things change slowly, then all at once.’ But…..AL doesn’t buy that for legal.

The legal sector is very much a human-led sector and humans change slowly. You may be surprised that a site called ‘Artificial Lawyer’ and which is all about driving rapid evolution takes the view that total legal transformation i.e. a move to a completely new way of operating across all of Big Law globally, will take about another decade; but if you consider that everyone in a law firm today who has been trained to work in a certain way will be there for a long time to come, then we cannot expect sudden evolution, even if the tech available today is quite incredible already.

But, another 10 years or so is a blink of an eye in the grand scheme of things. Literally millions of lawyers globally will probably see this total transformation take place during their careers, and that’s an incredible prospect to consider.

And although legal AI – at least for this site – started in the mid-2010s, we have to say that the arrival of ChatGPT in 2022 was what really started the grand acceleration towards total legal transformation.

There’s much more to come and Artificial Lawyer is very excited to be on this journey with you all!

Richard Tromans, Founder, Artificial Lawyer, and Chair of the Legal Innovators Conferences in London, Paris, New York and California.