Friday Focus - How Gen AI Is Shaping the Legal Landscape
(Friday Focus discusses industry and technology insights within and outside of LegalTech)
Introduction
The legal profession is undergoing an AI-driven transformation, and it's not business as usual anymore. Last week, I had the privilege of attending the Sandpiper Partners LLC Conference on "Disruption and Innovation in the Delivery of Legal Services Conference 2023." This conference brought together legal industry leaders, law firm partners, and corporate law department leaders to discuss the impact of AI and Gen AI (AI designed to sound truthful) on the practice of law. Having been in the AI space for years, Legal Decoder is no stranger to this concept and the discussions I had with people in the room proved the industry is focused both on the economic impact of AI at a law firm and shed light on the rapidly evolving nature of the legal profession and its implications for the next generation of lawyers.
A significant point of discussion at the conference was whether AI would replace associates and how to advise aspiring lawyers. The consensus was that AI would handle routine tasks, allowing lawyers to focus on higher-value work. There will likely be fewer associates, making competition for employment fiercer. Aspiring lawyers are encouraged to excel in law school, ranking in the top 20% of their class, to secure their place in the evolving legal landscape. Soft skills such as customer service, specialized industry knowledge, problem-solving, and communication will be more important than ever for associates.
Favorite Quotes from the Panel
"AI won't take your job, but someone who understands AI will!"
"Gen AI was not designed to be truthful - it was designed to sound truthful."
These quotes underscore the importance of lawyers staying on top of the latest technology, including AI and Gen AI, to remain relevant and competent in the legal industry.
AI Tools for Drafting
Experienced lawyers and partners can benefit from AI tools like Harvey or ChatGPT for document drafting because unlike their more junior colleagues, they can quickly identify errors and hallucinations. However, less experienced associates may wind up taking longer verifying the accuracy of the information than writing it from scratch and stand to learn more by drafting documents themselves. Insofar as AI can handle a lot of routine work, senior counsel can simply review what is written, not unlike the partner review process for junior associate work.
The Transformation of AI
Gen AI language model applications, such as ChatGPT and Harvey, have transformed AI accessibility for the masses, akin to how web browsers revolutionized the internet. Through the power of natural language queries, they've made it possible for everyone to use AI, creating a profound shift in how legal research and document drafting take place.
The Future of Human Review
As AI gains trust and proficiency, the demand for human intervention in routine tasks is anticipated to decrease in the coming five years. Nevertheless, legal professionals will remain essential for overseeing these processes to guarantee accuracy, much like the presence of doctors and pilots during automated surgeries and auto-piloted flights. As I spoke with various people in this conference, it became clear, many routine tasks in the legal domain, such as bill reviews and the categorization of legal work according to UTBMS or Sali Codes, can be automated using Legal Decoder AI software tools.
The Necessity of Gen AI Tools
In the rapidly evolving landscape of the legal industry, the choice is clear: Law firms that wholeheartedly embrace Gen AI tools are poised to thrive, while those resistant to change risk losing not just business but their competitive edge. Clients, increasingly astute to the efficiency and cost-effectiveness offered by AI tools, are no longer willing to foot the bill for manual processes that are not only time-consuming but also less effective. More Clients are using technology such as Legal Decoder to disaggregate their legal work to determine what will be done by what legal resource (law firm vs. in-house vs. ALSP vs. technology). Law firms should be doing a similar analysis to ensure the right skill level is applied to the right work – and some of that skill level will be an AI solution like Harvey.
Impact of AI on Law Firm Economics: The Role of Legal Decoder
The widespread adoption of Gen AI is set to revolutionize the traditional billable hour model, and in this transformation, Legal Decoder solutions emerge as key players. Legal Decoder's Data analytics software is instrumental in ensuring billing compliance and efficient data categorization. It has a proven track record of evaluating billions of dollars in legal fees for their adherence to prevailing legal standards.
As a result of this AI-driven shift, law firms will need to adapt swiftly, restructure their hiring practices, streamline their organizational setups, and set higher competency standards for associates right from the start of their careers. Amid these changes, the focus on fee reasonableness becomes paramount, urging law firms to deliver greater value to their clients' investments.
Conclusion
In the realm of legal ethics, Rule 1.1 emphasizes the importance of competence, stating that lawyers must provide proficient representation to their clients. This includes legal knowledge, skill, thoroughness, and adequate preparation.
Comment 8 of Rule 1.1 underscores the need for law firms to embrace Gen AI responsibly. It emphasizes the importance of staying informed about technological advancements, engaging in continuous education, and complying with legal education requirements.
The legal profession is undergoing a transformative shift with the emergence of Gen AI and AI technologies. This future is characterized by automation, a focus on high-value work, and the development of soft skills and problem-solving abilities. Law firms that resist this evolution risk becoming obsolete, while those embracing Gen AI tools are poised to thrive in this dynamic legal landscape.