Trends in the legal service industry — the rise of artificial intelligence

The term “artificial intelligence” conjures different meanings depending upon one's perspective. If you are Elon Musk of Tesla fame, you view artificial intelligence in apocalyptical terms, as something that could lead to “a fleet of artificial intelligence-enhanced robots capable of destroying mankind.” While we hope it will not be lethal, the increasing use of artificial intelligence in the legal services industry poses its own challenges.

Law firms accustomed to using lawyers to perform certain tasks are now encountering technology, including artificial intelligence, that can perform tasks in seconds or minutes rather than the hours spent by a human counterpart. Although there are a growing number of firms using alternative fee arrangements, the majority of law firms continue to rely upon the billable hour as the source of their revenues. As technology and artificial intelligence continue to improve and threaten the traditional revenue model, law firms must assess how to use these technologies and consider other means of billing.

What exactly is artificial intelligence? Webster's Dictionary defines it as: 1) a branch of computer science dealing with the simulation of intelligent behavior in computers; and 2) the capability of a machine to imitate intelligent human behavior. In the context of delivering legal services, artificial intelligence includes the following applications:

Legal research: Use of computer programs to perform automated legal research, including the ability to provide relevant case law based upon a brief submitted by the client.

Document automation: Assembly of contracts, legal briefs, employee handbooks and related documents after the attorney inputs responses to a series of questions.

E-discovery: Identification of privileged, sensitive and relevant documents in connection with litigation discovery by keyword search, as well as filtering and sampling (predictive coding) of potentially responsive documents.

Contract analysis: Extraction and summaries of key provisions from contracts, known as abstracts. Technology firms have developed programs that can extract the relevant terms from a lease and prepare a summary report. Lawyers then can use abstracts to identify key contract provisions and compare them to industry bench marks.

Acquisition due diligence: Review of key agreements provided in the due diligence process to identify significant contract provisions that can influence key deal points in an acquisition, including indemnification and the nature of representations and warranties.

Legal analytics: Aggregation of litigation data, including an analysis of historical trends to determine, for example, how likely a judge may grant or deny a specific motion, how long cases take before a judge may grant a permanent injunction, or whether a judge will find infringement of a patent.

Many companies offer these services and others. Firms leaders frequently are lawyers who practiced at large law firms and observed inefficiencies in the traditional law firm delivery model, adopting the Jeff Bezos ethos that “your margin is my opportunity.”

Although advances in technology will change the way legal services are delivered and adversely impact the traditional billable hour-based law firm model, all is not lost. Lawyers need to keep in mind that clients retain their services to solve problems. If a law firm can use technology to help this process, it should do so. However, technology cannot, at least for the foreseeable future, replace the following valuable services that lawyers perform:

• Legal advice. Technology tools can aid a lawyer in advising clients, perhaps to lend support to a position that the lawyer is counseling his client to take or, perhaps more important, not to take!

• Negotiation. Technology will aid but not replace negotiations between attorneys, whether in efforts to avoid or resolve litigation, close a business transaction or resolve a dispute among estate or trust beneficiaries.

• Counseling. A computer is not going to replace an attorney who is available to discuss a solution to a client's deepest personal or business problem, whether that be a dispute with a business partner, the death of a parent, child or other loved one, or the divorce of a spouse.

• Actual court appearances. Attorneys perhaps armed with technology, including predictive analytics, must still appear in court before judges and advocate on behalf of their clients.

The emergence of technology is also creating other markets for lawyers, even though other traditional areas of practice have been disrupted in a number of ways. Take cybersecurity, for example. Lawyers now must negotiate agreements that concern modern technologies that did not exist when they started practicing. Lawyers, too, frequently are called on to counsel clients on cybersecurity protection, evaluate cybersecurity protocols during due diligence, and assert or defend a claim for a cybersecurity breach.

Technology is advancing on the legal services industry at a pace that will overwhelm law firms if they ignore or resist it. However, if they can embrace artificial intelligence and use it to complement solving clients' problems, they will not only survive, but prosper.

• This information is intended for general purposes only and does not constitute legal advice. Readers should not act upon the information in this article without individual professional counseling.

• Ken Clingen is the managing member of Clingen Callow & McLean LLC, a full-service law firm with offices in Lisle, Chicago and Geneva. Contact him at clingen@ccmlawyer.com.