Feature
Artificial intelligence (AI) is poised to revolutionize the legal industry, as nearly half of all legal tasks could soon be automated, according to a report by Goldman Sachs. This shift presents both exciting opportunities and significant risks for legal professionals. While AI technology is still relatively nascent, the quality of output and analysis from AI models continues to improve with each new launch. Law firms and in-house legal teams need to balance the adoption of AI technology that is still affected by hallucinations with the risks of doing nothing. Therefore, they may lack the internal processes and infrastructure to take quick advantage of more advanced AI models that are released. Here, we look at some of the top applications of AI in law.
1. Administrative Tasks
Given the importance of maximizing billable hours in law, administrative tasks can be a significant distraction. In one poll, 20% more lawyers saw the value of ChatGPT and other AI tools as being primarily for administrative tasks versus legal tasks, according to Thomson Reuters. More than 50% of generic “administrative tasks” can be automated across industries, according to the Goldman Sachs study. Even when AI doesn’t address legal issues specifically, it can free up more human capacity by assisting with legal administration, including improving legal billing and automated spend management.
2. Client Service and Support
The conversational nature of AI chatbots can improve access to legal information and streamline client communications. The chatbots can provide initial legal advice, answer common questions and assist in client intake processes, which can be time consuming for expert lawyers. A notable example of a chatbot-based legal company is DoNotPay, which provides legal assistance for small claims consumer needs.
3. Case Research
Understanding precedent and complex regulatory considerations is a time-consuming part of legal research. Often delegated to junior employees, AI is increasingly becoming an option to accelerate research. AI tools can rapidly analyze vast databases of case law, statutes and intellectual property (IP), providing lawyers with relevant precedents and insights that would take hours, days or longer to find manually. Harvey and Casetext, for example, are startups focusing on augmenting base AI models with case law, among other legal tasks, and LexisNexis released its own tool to accelerate legal research.
4. Due Diligence
AI tools can streamline due diligence in mergers and acquisitions by rapidly analyzing and summarizing vast amounts of text. Due diligence stage is a key focus area for AI integration in M&A among attorneys, according to a poll by Bloomberg Law. An analysis by EY suggests that as AI is increasingly used for due diligence applications, it may change the nature of legal terms, such as “fairly disclosed.” Fairly disclosed, for instance, traditionally references human capabilities and not machine-driven attention and analysis, EY says. Underlying legal expectations may need to change.
5. Drafting Documents
AI's text-generation capabilities offer potential efficiency gains in drafting legal filings, which can be hundreds of pages long. However, the sanction of a lawyer using ChatGPT to prepare court documents, which cited imaginary cases, highlights the risks. While startups like Harvey.AI are working to reduce inaccuracies, human oversight remains crucial.
6. Contract Review and Negotiations
Reviewing contracts and providing guidance in contract negotiations are key opportunities for AI. AI tools can quickly scan and analyze contracts to identify key clauses, potential risks and inconsistencies. AI can review proposed changes by both sides and then rapidly incorporate the changes into acceptable legal text. As an example, the U.K. legal organization Allen & Overy developed ContractMatrix, which reportedly reduces contract review time by seven hours.
7. Case Simulations
AI chatbots are effective simulation tools that have many applications within the legal industry. The chatbots can role play to help practice witness deposition, court arguments and logical analyses. To train legal associates, organizations are beginning to lean into experiential and real-world learning fueled by AI. For instance, hands-on training with AI is accelerating the skills and capabilities of some recent law school graduates.
8. Custom Legal AI With RAG
While base AI models, such as ChatGPT and Claude, may be prone to hallucinations, the implementation of retrieval-augmented generation (RAG) offers the ability for law firms to augment the generative abilities of AI models with their own repositories of documents. This integration and accessibility of a firm’s know-how may allow legal teams to rapidly leverage previous internal insights for current and prospective cases. For more information on RAG, see this basic guide.
9. Litigation Funding Tool
Litigation funding is a growing asset class that provides financial support to law firms engaged in complex and lengthy litigation processes. Litigation funders provide financial support for the legal process in exchange for a contingent return in a major case payoff. AI, with its ability to identify trends and opportunities, may increase the amount of capital available for law firms to pursue complex cases as well as help improve the prediction on legal outcomes.
