Technology

AI, Pandas, And The Future Of Law

Blowing up the legal monopoly may revive AI as a major force in the industry.

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In my previous column, I examined Arizona’s decision to crack open the legal monopoly on law firm ownership and legal services. No one knows yet how impactful this experiment will prove. While some might predict an earth-shattering upheaval, others have been more bearish about the idea that opening up the practice to individuals and companies outside the traditional bar will change everything. When I spoke a few months ago to John Croft of Elevate, a UK-based ALSP, he likened breaking the monopoly to AI: despite the years of promises that computers would be taking our jobs, AI has so far underperformed on its promises of upending the industry.

The more I think about it, though, the more I wonder if Arizona’s experiment is precisely the jump-start AI needs to start living up to its hype in the legal sphere.

A Major Player

While it’s had a muted impact on law so far, in the broader business world artificial intelligence is a big freakin’ deal. Computers are learning to make decisions faster, smarter, and more accurately than their human counterparts on topics that previously were thought impenetrable to computer science. Industry after industry has been experimenting with and adopting AI solutions to improve its decision-making, production, and services. Most any industry you can think of, from transportation to science to art to your morning caffeine fix, is using AI and machine learning to change the way it does business.

To be sure, the science and practice of AI are still maturing and growing, and we’re still figuring out the strengths and weaknesses of our current batch of AI tools. If you don’t mind a tech-heavy, but funny read, I recommend the story of a programmer who took an AI neural network designed for image recognition and tricked it into declaring with 98.9% confidence that a picture of a panda bear was actually a vulture. AI is currently deeply powerful but in many ways also deeply limited. It’s powerful, but we’re not in danger of creating Skynet any time soon.

Those entertaining outliers shouldn’t fool you, though. AI is a major player in business, and it’s here to stay. Just this week, Nvidia, the most valuable semi-conductor company in the world, announced it was spending $40 billion to acquire semiconductor design company Arm. If you’re reading this article on your phone, chances are an Arm design is making that possible. Why would Nvidia gamble half a Warren Buffett on this deal? Per Nvidia CEO Jensen Huang, it’s all about artificial intelligence. Nvidia thinks that by marrying its ultra-powerful AI-enabling GPUs with Arm’s industry-leading energy-efficient designs, they can put serious AI computing power in our pockets and on our desktops and dominate a space that’s only going to grow.

Why AI Hasn’t Taken Our Jobs Yet

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Given that AI is so hot right now, plenty of thought leaders have been planning for AI to begin replacing attorneys and taking over an industry that, in many respects, seems well-suited to AI decision making. From routine attorney tasks like basic research, briefing, and calendaring, to more complicated concepts like risk assessment and case valuation, there are any number of candidates in an attorney’s practice for the kinds of automation and data analysis that AI provides.

Yet to date, the sky(net) has not yet fallen. Few lawyers, if any, have been replaced by computer terminals so far. The biggest adopters of AI so far have been vendors building tools to help lawyers, rather than put them out of work.

Why would AI have such a muted impact on law when it’s changing other industries to their core? My guess would be that lawyers are the gatekeepers of our industry, and lawyers by and large have little interest in killing their own jobs, or the jobs of high-billing timekeepers. Because only lawyers have been able to practice law, they can’t be replaced, so there’s been little reason for vendors or potential competitors to build the kind of tools that would render attorneys redundant.

Waiting For The Next Unicorn

In Arizona, though, attorneys’ cozy monopoly is being broken up, even if only partially. Big nonattorney-owned businesses may be looking for ways to break into this sector, and those companies have famously little love for the well-paid attorneys on their payrolls.

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Think about it: who in the world of private business actually wants lawyers to continue to be paid apart from other lawyers? Whether we work with firms or in-house, clients are constantly pressuring us to reduce our costs and billings. The lower ends of the market have been priced out altogether. There’s a huge market for cheaper alternatives to traditional legal services, one that ALSPs and the Big Four have only begun to scratch given the strictures on performing legal work without a JD. Properly harnessed, AI has tremendous potential to downscale the amount of attorneys actually needed to run a functioning legal business. As the barriers to entry come down, all it really takes is one smart coder with a good idea to change how our business is run forever.

In Arizona, that coder suddenly has access to an entirely new field of potential clients, and the new ability to raise huge capital from nonattorney co-owners. While lawyers have so far been hesitant to sell off equity in their firms, startups trying to break in probably wouldn’t mind at all having a billion-dollar hedge fund backing their disruption play. As industry protections against AI come crashing down, the chances AI fundamentally reconfigures our way of doing business increase exponentially.

If Arizona’s experiment in opening up law to nonlawyers spreads across the country, it could mean that AI’s days of underachieving in the legal space are coming to an end. If traditional law firms don’t take note and plan accordingly, don’t be surprised if you see the vultures start circling.

James Goodnow is the CEO and managing partner of NLJ 250 firm Fennemore Craig. At age 36, he became the youngest known chief executive of a large law firm in the U.S. He holds his JD from Harvard Law School and dual business management certificates from MIT. He’s currently attending the Cambridge University Judge Business School (U.K.), where he’s working toward a master’s degree in entrepreneurship. James is the co-author of Motivating Millennials, which hit number one on Amazon in the business management new release category. You can connect with James on Twitter (@JamesGoodnow) or by emailing him at James@JamesGoodnow.com.

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