Could AI replace lawyers?
Staying on the topic of technology ahead of Dorset Chamber‘s Technology and Innovation Forum on Friday, we’ve been continuing to look at how technology might disrupt the World around us. According to specialist legal-tech company, ThoughtRiver Ltd, the UK’s legal sector might be next.
Currently the British legal industry is still basking in a continued period of growth with top 200 law firms reporting revenue rises of £13.5 billion to £23.5 billion over the last decade, (up 73% since the 2007 recession). However, the rate of this growth is slowing every year since 2013 with UK law firms seeing average revenue growth rates of just 2.3% to 3.7% in 2017. As competition is hotting up, it’s vital that the legal firms remain vigilant if they want to thrive. There is more than one threat to the status quo:
- Alternative legal service providers (ALSPs) are battling for market share and are taking business and profits away from law firms.
- Companies are establishing in-house legal teams more than doubling internal resource from 13,000 in 202 to nearly 28,000 in 2017. And,
- Technology could decrease revenues further by reducing billable hours.
Today, on average, lawyers are charging 13 less billable hours per month than in 2007. That doesn’t sound much until you do the math. It works out at 156 billable hours per year, or an average of £56,650 per lawyer per annum. Consider the impact for a large law firm with 150 lawyers, over a staggering £8.5 million a year in ‘disappeared revenue’.
It should be no surprise that forward-thinking law firms are increasing investment in smart technology. This is not only to operate more efficiently and cost-effectively, but to generate new revenue streams and power positive growth. 65% of law firms have ramped up investment in technology last year:
- 35% increased technology spend by up to 10%
- 24% boosted technology spend by between 10 and 20% and
- 6% increased technology spend by more than 50%
On average, 25% of total tech spend was allocated to what last year was considered ‘innovative technology’. This is expected to grow to 33% over the next three years with 65% investment headed to prioritising AI and 50% spend to cyber security. See ThoughtRiver’s infographic exploring the stats behind slowing growth rates, and how firms are using innovation to get ahead
Forward thinking online community Law Technology Today (LTT), launched reports that AI is currently being used in the following areas:
Legal research and due diligence
A great example is a contract technology for business, co-developed by ThoughtRiver and Cambridge University mashing together NLP and machine learning and creating the world’s first artificially intelligent legal assistant, ROSS. According to CEO, Andrew Arruda in his TED talk, “ROSS can read over a million pages of law in a second, finding the exact passages [lawyers] need.” ROSS is one example of how AI is significantly reducing costs (and therefore) billable hours when it comes to legal research.
Reviewing documents and contracts
AI “can review documents and flag them as particular to a case. Once a certain type of document is denoted as relevant, machine learning algorithms can get to work to find other documents that are similarly relevant. [See more at How AI And Machine Learning Are Transforming Law Firms And The Legal Sector]
Predicting legal outcomes
AI has the ability to store decades’ worth of legal data and can sift through it all in seconds to advise lawyers their chances of winning relevant cases.
Technology investment could deliver deeper insights and greater knowledge within areas of specialism, allowing firms to offer new consultative services to existing clients – and attract new ones. But only 13% of law firms say they utilise data-driven insights for this purpose!
The legal profession is not known for its progressive-thinking culture, but it’s hard to see how it can escape unscathed from without a substantial step towards embracing this digital-machine revolution. Adopting AI or similar machine-learning tech will be critical to a law firm’s success.
We can’t help thinking that firms who invest AI-technology into their service delivery models will win the race. It will be an interesting space to watch.Tags: AI, billable hours, Dorset Chamber, lawyers, Machine learning, ROSS, Technology and Innovation Forum