How AI Is Making Its Mark On The Legal Profession

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.