Guest post: The AI revolution – on pricing, performance and partners

Artificial intelligence (AI) is working its way into the legal services market at an increasing pace.  As robots decide what paragraphs to include in legal contracts and traditional lawyers struggle to maintain the old order, what are the implications for the industry?
There has been litigation support software for years, but intelligent software has now moved on to smarter search and discovery, contracts, analysis and more. We are fast reaching the point where documents will never see a human eye.
Last year Mark Carney, governor of the Bank of England, talked about the hollowing out of jobs and some professions being pushed to the point of extinction.  While most firms understand about automated documents, few really understand the breadth and depth of changes about to hit them.
Pricing revolution
Legal services have been priced based on headcount and hours.  Lawyers have been past masters at this skill. To date, anything legal has had an implicit premium because lawyers are qualified and carry large personal professional liabilities. For now, automation requires lawyers to set up the frameworks for the processes – still requiring their professional qualifications and expertise.
However, AI is capable of learning at a ferocious rate and already surpassing the human brain in some areas.  It is not just automating existing processes but starting to add value from its own ‘brain’.  AI-based automation is not cheap so perhaps clients will be happy to continue paying for contract drafting, compliance assistance and litigation support based on traditional structures for now – but very soon legal services contracts will need completely restructuring, pricing and renegotiating.
If a business has a complicated piece of litigation, they are happy to pay handsomely to sit with the senior partner of a top law firm to discuss the likely outcome of a case and the probabilities of various options.  The advice a partner gives is based on years of experience, using a mix of past history and emotional intelligence to predict decisions.
AI is now being used to see patterns in data and weigh up probabilities and give predictions. Its ‘professional advice’ will be based on more information and computations than any one brain can process.  So how do you charge for this sort of advice?  Initially it will be expensive to source and programme the information, but once the start-up is done what will clients expect or be prepared to pay?
Contracting for disruption
While full-blown AI is probably five to ten years away, are lawyers up to predicting the future and anticipating future legal needs for clients?
Disruption is becoming the norm. Apple is set to be the world’s largest bank through ApplePay. Amazon is already lending to approved online sellers.  These corporates have such enormous balance sheets, they do not need to take deposits in order to lend money – and can therefore side-step many of the rules of lending legislation.
Lawyers need to help clients understand, articulate and mitigate risks.  Disruptive businesses are now in every walk of life from Uber and AirBnB to Snapchat and Netflix.
Changing law firm structures
One of the biggest challenges facing legal firms is how to manage people and skills over the next five to ten years, including the total number of employees, recruitment levels, developing skills, new roles and succession planning.
Very few junior lawyers will be needed over the coming years, in the role of a traditional ‘articled clerk’.  What will be needed is far more tech-minded entrants – but they may end up doing really tedious jobs, such as watching and minding AI.  Trainees of the future will have to train AI; use AI as an assistant, a team mate and eventually a manager; be assessed and reported on by AI; take suggestions and recommendations from AI; and include AI in plans and specifications.
Lawyers will no longer be gaining skills and judgment by working their way up through the ranks.  So how will they gain these skills?  How will directors and partners of the future be developed?  And how do you capture the experience and judgment of senior people – which is needed for AI – before these people retire?
AI is developed, partly by watching what employees do and, in the process, it is probably assessing and identifying potential performance problems. There is an element of Big Brother in this. Just think of the legal and HR implications of employees accepting instructions from AI and being managed by it.
Social AI and the democratization of expertise
AI is one enormous opportunity for lawyers as it brings new risks and changing contract requirements.   But the biggest threat is also the most exciting for consumers.
Over the past decade, the Internet has democratized information. Once, information was only available to a select few – typically the wealthiest or best educated.  Today, just about everyone can access information on almost everything. What is lacking is access to expertise for the masses.
We all know people who cannot afford legal advice – let alone the best advice – for their divorce, child custody battle or defending their reputation when wrongly arrested or slandered.
But the new face of law will be Social AI.
There are companies out there creating intelligent robots to provide legal advice for everyone.  Just as the internet democratized knowledge and learning, AI will democratize expertise and make specialist knowledge such as the law and medicine, available to all.
AI holds considerable risks for lawyers, but for those who really start understanding and addressing them now – they are also great opportunities. Can the leaders of law firms imagine this future and reconfigure and protect their firms for the future?
What is needed are new mindsets to rethink current business models – at present firms are too often trying to shoe-horn technology into existing models.
Sarah Burnett is vice president of research at global management consultancy and research company Everest Group.
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