Is The Legal Industry Ready For AI?
It's crucial to consider these questions.
Ed. note: This article first appeared in an ILTA publication. For more, visit our ILTA on ATL channel here.
It was only a matter of time before the generative artificial intelligence (Gen AI) revolution came to the legal industry. The advent of Gen AI represents a significant leap forward in the potential for transformative change within law firms and legal departments, as they continue to incorporate advanced language AI capabilities into drafting, research, and data analysis tools. However, for law firms and corporate legal departments, it isn’t just a matter of deciding which flavor of AI tools to purchase and make available to users. There are a variety of factors that impact success. Before diving headfirst into Gen AI, it’s crucial to consider critical questions that can shape its impact and implementation within the legal vertical.
Is the legal industry ready?
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The legal industry’s readiness for AI integration is a complex issue. Historically, law firms have not been known for being at the forefront of adopting cutting-edge technology, often lagging in embracing innovations such as email, mobile devices, cloud computing, and other technologies that eventually became commonplace. Courts are frequently even further behind. Lawyers, known for their skepticism, are trained to scrutinize arguments and construct bulletproof cases for their clients, relying on their intelligence and deep subject matter expertise. Given their training and demanding workload, it’s understandable that lawyers may be hesitant to embrace AI, especially when it seems to encroach on their core competencies of writing and analysis. Acknowledging and addressing these concerns in the context of AI integration is essential. Who can blame them for raising an eyebrow at the notion of Gen AI tools that promise to produce a polished case brief or memo with just a simple prompt?
Beyond the cultural factors, the harsh economic incentives of law firm life don’t necessarily encourage associates to experiment with new tech. The billable hour remains a primary measure of success in law firms, leaving little time or incentive for non-billable activities. In fact, Gen AI can be viewed as a direct threat to traditional law firm economics. If producing work takes less time, that means fewer billable hours — even once humans review the AI-produced work.
Of course, one of the most substantial hurdles AI-driven tools face within legal sectors stems from the negative first impression embraced by many legal professionals in response to high-profile incidents where humans used the technology irresponsibly and did not review the AI-created documents for accuracy. Instances of AI-generated court filings with fictional “hallucinated” citations highlight the risks associated with AI. While AI researchers have long known about this limitation — models can confidently articulate complete fabrications when pushed too far — the issue was not well understood in the legal industry until these blunders were featured in the mainstream news. As AI continues to evolve rapidly, the legal industry faces the challenge of learning how to use it and how to use it responsibly.
Is your firm ready?
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It should come as no surprise that different firms and corporate legal departments vary wildly in their preparedness to adopt AI tools and workflows responsibly. On the leading edge are firms and forward-thinking legal teams that have invested strategically in dedicated knowledge management (KM) and innovation programs, legal operations teams, and sophisticated tech competencies like data science and machine learning engineering. These endeavors are not merely about adopting new technologies but fostering a culture of innovation and continuous improvement. For firms that have been diligently investing in these projects over the years, essentially making deposits into their KM future, the time has come for a significant payoff with the advent of Gen AI.
At the opposite end of the spectrum are firms and legal departments that have merely been “keeping the lights on” regarding technology, viewing IT and KM as expenses rather than investments. These firms will lack mature frameworks for data storage and governance. While they may utilize AI for research services or document drafting, they won’t be able to harness the full potential of their data and will be ill-prepared to assess associated risks.
Regarding risk, readiness to adopt AI isn’t solely determined by technical and organizational preparedness. The firm’s General Counsel and malpractice insurance carrier also play pivotal roles. Some malpractice carriers advise against using AI in client work due to its novelty in the legal sphere. Even if a General Counsel recognizes AI’s value, they may find their hands tied by the constraints of the firm’s insurance policy.
Is your practice group ready?
While every firm must assess AI readiness as an organization, different practice areas will encounter unique applications and potential roadblocks when considering whether and how AI should be applied to their work. For example, litigation groups accustomed to leveraging advanced tools like predictive coding to accelerate document review and discovery processes may find generative AI capabilities a logical extension of those efforts. However, even among tech-forward litigation teams, dedicated support staff often utilize and interact with technological tools more than practicing attorneys.
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On the transactional side, corporate, commercial finance, and regulatory groups routinely comb through high volumes of contracts, SEC filings, and due diligence materials. While contract AI systems are helpful in quickly extracting clauses or visualizing key data points, generative models could potentially streamline or even automate entire drafting workflows from ingesting precedent examples. Commercially available AI-based tools deliver impressive results by automatically generating substantive contract language, annotations, and support memos when trained on suitable examples.
The biggest obstacle here is not the technology — it is overcoming lawyer unfamiliarity and skepticism. There is no shortage of AI tools available today, and plenty more are on the way, but whether to use them is a top-down decision, with practice group leaders setting the tone and agenda for their teams.
Are clients ready?
Just as firms and practice groups differ in readiness to embrace AI, clients are also at varying levels of preparedness. The level of AI knowledge and involvement varies across industries and companies, influencing the expectations placed on legal service providers. For example, clients may expect their law firms to invest proportionately in AI research and implementation in the financial industry, which has invested heavily in AI. Conversely, some clients may prohibit their firms from using AI on their matters due to its perceived novelty or concerns about data privacy and security.
Addressing these varying client expectations presents a significant challenge for law firms. They must navigate a delicate balance between embracing AI to remain competitive and respecting client preferences and concerns. This may involve obtaining additional client consent for AI usage, revising engagement letters, and ensuring adequate controls are in place to safeguard client data.
Is Information Governance ready?
The evolution of Information Governance (IG) from managing paper records to overseeing the entire information lifecycle within a firm or legal department reflects the increasing complexity of data management in the digital age. With the emergence of cloud storage and computing, the boundaries between what lies inside and outside the firm’s firewall have blurred. Copilot’s access to data within the user’s Microsoft 365 environment, including OneDrive, SharePoint, and Teams, marks a significant advancement for Gen AI. Copilot can tailor its responses and recommendations by leveraging the firm or department’s existing data to better meet users’ needs. However, this expanded access also raises concerns for IG, particularly regarding compliance with data security, access control, retention, and discovery rules.
IG professionals must now vigilantly monitor who has access to sensitive information and how it is used within AI models. They must also ensure that prompts and data provided by users are handled in a manner compliant with retention and discovery requirements.
Is IT ready?
Integrating AI into organizational workflows presents unique challenges that extend beyond the traditional scope of IT departments. While IT departments may be responsible for making AI technically available within the firm or legal department, their expertise and training often center around managing legacy technologies such as file shares and network hardware. This leaves them ill-equipped to fully support the implementation and utilization of AI, which represents a radical departure from traditional IT systems.
AI bears little resemblance to conventional technology applications, and its potential extends beyond simple technical implementation. It requires an understanding of data analytics, machine learning algorithms, and the integration of AI into business and legal processes — skills that may be lacking in traditional IT departments.
Given these challenges, a compelling argument exists for establishing a new department or function dedicated to AI implementation and management. Several Am Law 100 firms have recently taken this step, creating director- or C-level AI positions. For some firms, this organizational change can be addressed by augmenting (or perhaps combining) existing knowledge management and data science groups, but for others, it may be an entirely new entity. This department would be IT-adjacent, drawing on IT expertise when needed but free from the constraints of maintaining legacy platforms. It would be flexible to explore and experiment with new AI technologies, develop innovative use cases, and drive organizational transformation.
Are you ready?
Assuming AI development progresses at its current rate, it’s conceivable that nearly every computer-based tool will eventually integrate some form of AI, making it almost unavoidable. However, until we reach that saturation point, we retain the choice of whether to adopt AI and in what circumstances. This decision is nuanced and challenging, requiring lawyers to assess their readiness based on a range of factors. Debate and discussion within and between firms and their clients, as well as within the legal industry, play a crucial role in fostering an understanding of the AI landscape. These conversations allow stakeholders to share insights, exchange perspectives, and weigh AI adoption’s potential benefits and risks in the legal domain. You may even want to include your favorite AI chatbot in the discussion, but don’t expect it to have an unbiased opinion.
Joe Davis is the Manager of Knowledge Management Solutions for Davis Wright Tremaine, where he leads a team delivering internal and client-facing projects. He has spent over 20 years in legal technology at major law firms, in the corporate legal space, and at legal tech start-ups. He is a frequent speaker and author on a variety of legal tech topics, including artificial intelligence and enterprise content management. Prior to his IT career, Joe was a teacher, an entrepreneur, and a DJ in a flea market. Joe is Co-Chair of ILTA’s Programming Committee and is an active volunteer within the ILTA community.
