AI explained: AI and law firms

Gregor Pryor of Reed Smith’s Entertainment & Media Group in London describes why it’s important for law firms to train their lawyers in how to use AI. Although AI-powered tools do not exceed living lawyers in all aspects of legal practice, their powers of calculation bring immense yields in efficiency and can be a powerful accelerator for law firms delivering services.

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Transcript:

Intro: Hello, and welcome to Tech Law Talks, a podcast brought to you by Reed Smith's Emerging Technologies Group. In each episode of this podcast, we will discuss cutting-edge issues on technology, data, and the law. We will provide practical observations on a wide variety of technology and data topics to give you quick and actionable tips to address the issues you are dealing with every day. 

Gregor: Hi, everybody, and welcome to our new series on artificial intelligence. Over the coming months, we'll explore some of the key challenges and opportunities within the rapidly evolving AI landscape. And today we're going to focus on artificial intelligence within law firms and hopefully give a bit more context about how Reed Smith is deploying artificial intelligence in the delivery of its services to clients. The first thing I would say is that certainly in my day job as an entertainment lawyer, AI has been a very controversial subject, mostly as it pertains to training. And as we'll discover as I explain more about how Reed Smith is using AI, training and the ability for law firms to use data that it obtains, is highly contingent on clients agreeing to that training or being comfortable with the manner in which law firms are deploying the technology to improve and make their services more efficient. So the first thing I want to talk about is how we are using AI and what our future plans are. So there's a whole lot of buzz and hype, I think, about how AI is impacting the way that law firms are operating. There's been a number of surveys. phase, most of them say that AI will transform the business of law and having been in the business of law for 25 years. I've heard that for the whole 25 years, but now feels like the time when it actually is happening and the decisions that firms are making to adopt AI are having an impact on how they perform. Most of the global 200 firms have policies about how they use generative AI. There's a high level of governance and risk management concerning client data, as I mentioned. But not all of those firms have a policy concerning how they use AI. We've been working and have worked on ours for a number of years and continue to iterate as the technology improves and client perspectives on the use of AI change. We think that there's likely a gap between preparedness and managing risk and the implementation of AI and we've been being very careful as we prepare our infrastructure to integrate and use AI carefully. Obviously the bigger the law firm, the more they are able to leverage AI and invest, but not that many firms are working with clients on AI projects. We've just finished a trial of about seven different providers. We've used them on a beta basis through limited rollout. We're not putting all our eggs in one basket. We're trying to figure out which AI has proper utility, which machines generate real-time efficiencies and help us in the delivery of our service. I think it's fair to say that some of them are nowhere near as impressive as we'd hoped, but we are still continuing to invest. One of the things that we've been very careful about is organizing our data and making sure it's hygienic. That means not using client data for AI without permission and also making sure that we have organized ourselves so that our data doesn't get unnecessarily or incorrectly commingled. One of the other topics that comes up is how AI can improve efficiency and productivity. I think there's some really obvious ways, such as summarizing documents, helping translate things, creating text or drafting. It gets a bit more complex. I think decision tree software has been around for a long time, but that's evolved so that you have a much more of a chatbot style interaction with AI. Of course, how do we address ethical, security, confidentiality concerns? These are all going to be developed in conjunction with clients. We don't think that we have the right or privilege of dictating to our clients how we use technology. But we do want to be a first mover where we can be because that will give us an advantage over other providers, other firms. We think that training our lawyers how to use AI is almost as important as the technology itself. It's no use having these incredible tools, but not being able to have lawyers that are well-versed in using them. And indeed, that is a trend that we're seeing within our clients as well. So we've been delivering prompt training, use case training for lawyers, because unless lawyers themselves change the way they work and adopt the use of the machines, then the machines will be pretty useless. One of the things I often get asked is whether I perceive AI as a competitive advantage for law firms. I'm not sure that it's necessarily only AI. And I do think there are quite tight limits on the use of AI. One bit of feedback we had from a particular client was that they preferred their lawyers to understand how the law works. And just reading case summaries generated by AI was no substitute for human learning. And to a great extent, I agree with that. Although I do think that there are ways in which lawyers learn and the change in the way that we practice over the past 20 years has been huge. I remember, I'm making myself seem very old, but I remember going to photocopying rooms and delivering faxes and carrying around big bundles of documents. Things that seem very arcane to us now in the early 20s, but actually when I qualified 20 years ago they were real things that we had to do. We've seen some clients use AI in really interesting and clever ways. We're fortunate that many of the clients we represent, huge technology companies who already have very sophisticated artificial intelligence applications and utilities. So that gives us an insight into how they expect us to adapt and align with them. One of the challenges we face is that exact issue, given that many of our clients have their own thoughts, processes, ethics, rollout, timetables for AI, and we have to align our delivery with what they're doing. And then finally, I guess one of the things that I should talk about is the limitations of AI. What can it do and what can it not do? Where would we struggle to use it? I still think when it comes to advocacy and negotiation. Particularly live and in real time, there's still a very strong place for lawyers with talent, with a keen intellect, who are quick on their feet, and who can see through a client's objectives very capably. I don't see a computer doing that anytime soon. We can look at case predictors or outcome predictive models, certainly to try and streamline the transactional process or find a way to reduce litigation costs. But having lawyers that can think however powerful the AI is to human brains is typically much more powerful. And so long as we are able to leverage, educate ourselves, use the technology to our advantage, and leverage it for a better outcome for our clients, then I think AI can be an incredibly powerful accelerator for us in the delivery of our services at retail. Whether there are any particularly outlandish or wild predictions related to the use of AI in the next decade or so. I could see a couple of things. Firstly, I could see is for low-level legal services. The use of “robolawyers” or entirely automated services to conclude transactions or effectuate things that you want to do as a consumer or an SME, almost certainly that's going to happen we're already seeing it in the venture capital space we're already seeing it with some of the automated services you see coming out of silicon valley why would you pay hundreds of pounds of dollars or thousands for a lawyer when you can just have a machine that would give you an outcome that's if you know provided you're prepared to accept a little bit of risk I could see robolawyers being a standalone service that's one thing I could see happening. The other thing that I could see happening within the next decade is the abolition or at least firms operating with complete abandonment of an hourly rate. It's something that Reed Smith has been examining closely. We've got client value teams. We've got a bunch of alternative billing models. We give clients options and choices about how they might want to pay for what we're delivering. But for law firms, there's a real opportunity there. If we've invested in and can leverage technology to deliver something much more quickly or to a better standard than a competitor, it doesn't necessarily follow that we would charge less. It may be that we can deliver it for a lower cost and our margin would increase, but that doesn't necessarily mean we're going to price it. There's a race to the bottom on pricing. So I'm quite bullish on some of the opportunities that are afforded by AI if a firm can gain a competitive advantage. If everyone's using the same technology, then inevitably the prices will go down because clients will see, why would I pay more if you're all using the same thing? So the prize, if you like, will be for law firms who can figure out ways to create products or services more efficiently and to a higher standard, and then still be able to charge well for them and increase their margin. So law firms typically have a high margin, they're high margin businesses. We don't want to be greedy. We want to deliver great value to clients. But equally, if there are opportunities to make money through the use of AI, we'll pursue them. And I think one of the ways to do that is to really critically challenge and question the use of the hourly rate, which has a bunch of built-in inefficiency. 

Outro: Tech Law Talks is a Reed Smith production. Our producers are Ali McCardell and Shannon Ryan. For more information about Reed Smith’s Emerging Technologies practice, please email [email protected]. You can find our podcasts on Spotify, Apple Podcasts, Google Podcasts, reedsmith.com, and our social media accounts. 

Disclaimer: This podcast is provided for educational purposes. It does not constitute legal advice and is not intended to establish an attorney-client relationship, nor is it intended to suggest or establish standards of care applicable to particular lawyers in any given situation. Prior results do not guarantee a similar outcome. Any views, opinions, or comments made by any external guest speaker are not to be attributed to Reed Smith LLP or its individual lawyers. 

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