Generative AI in the legal industry: Two years after the launch of ChatGPT, law firms are moving beyond hype to practical applications of AI technology, focusing on efficiency and cost savings.
- A report published by Deloitte this summer reveals a gap between client expectations and current benefits from law firms’ AI use, with 70% of clients anticipating cost savings and faster turnaround times.
- Early adopters are concentrating on key themes to integrate AI effectively in legal practice.
Data protection challenges: Law firms are grappling with privacy and confidentiality concerns when implementing AI systems, particularly in a global context.
- Regulations mandating local data storage and varying availability of AI models across countries complicate the use of one-size-fits-all AI solutions.
- Firms like Ashurst are cautious about using third-party platforms like Microsoft’s Copilot due to data sequestration and compliance issues.
- A&O Shearman is selectively rolling out AI features for specific clients and tasks to protect client data.
Customized AI solutions: To address data protection concerns, law firms are developing bespoke AI tools with enhanced security features.
- Hogan Lovells’ AI tool, Craig, employs auto-pseudonymisation, auto-encryption, and zero data retention to comply with local regulations.
- These customized solutions allow firms to offer varying levels of AI functionality to users based on jurisdictional requirements.
Efficiency gains: AI is being used to reduce tedious tasks and improve productivity in legal work.
- Cooley utilizes AI for summarizing long email threads, helping staff catch up on communications more efficiently.
- Hogan Lovells’ Eltemate assists with initial contract drafting and briefing documents, freeing up lawyers for more complex tasks.
- A&O Shearman reports 20-30% productivity gains in contract review processes using their ContractMatrix system.
Impact on legal jobs: Despite initial concerns about job losses, the integration of AI has not led to significant layoffs in the legal sector.
- Lawyers are reporting incremental efficiencies rather than widespread job displacement.
- Associates are currently the heaviest users of AI tools, as they are in high demand.
- However, concerns exist about the potential impact on junior lawyers’ skill development and long-term career progression.
In-house AI development: Law firms are opting for a middle ground between building their own large-language models and relying on off-the-shelf solutions.
- Firms are training algorithms on their own data sets and intellectual property to create tailored AI tools.
- Hogan Lovells’ Craig and A&O Shearman’s ContractMatrix are examples of in-house developed AI systems designed to meet specific legal needs.
- These customized tools help manage issues like AI hallucinations by providing source links for fact-checking.
Balancing AI adoption and legal expertise: As AI integration progresses, law firms are navigating the challenge of leveraging technology while maintaining the quality of legal services.
- There are concerns about associates becoming overly reliant on AI for tasks like drafting contracts, potentially hindering their ability to develop critical thinking skills.
- The legal industry is still in the early stages of determining how AI will impact business models and the long-term development of legal professionals.
- Firms are working to strike a balance between using AI for efficiency gains and ensuring that lawyers continue to develop the expertise needed to provide high-quality legal advice.
AI moves along ‘hype cycle’ to make its mark on legal profession
