How will artificial intelligence (AI) affect law firms?

Jan 24, 2023

Written By Isabella Rzym

AI is the theory and development of computer systems to perform tasks normally requiring human intellect. At a business level, it can be thought of as a computer program which can make useful decisions using a spectrum of technologies in order to support businesses and their practices.

What are the possible impacts of AI on law firms?

From a practical point of view, AI currently affects and will continue to impact law firms by streamlining and digitalising traditional methods of working.

A good example is the process for reviewing contracts, which has seen a drastic change in the last decade. If we see the review of a contract as not the end goal, but rather the beginning of a lawyer’s interpretation and explanation of the contract’s content, then it is fair to say that the process of manually reviewing, editing, and exchanging redlines is a largely tedious part of the process.

Where AI helps is by using machine learning to identify pieces of information and acts as a contract review software, expediting the tedious aspects of the contract review process. This allows lawyers to focus on their analysis of said contract and how advice is delivered to their clients.

On a less measurable level, AI may impact how legal functions are viewed. With innovation through technology, legal functions may no longer be seen as defenders of business but instead drivers of financial results, measured against key performance indicators to signify success.

This means that innovation and change will likely occur, enhancing various functions in the legal sector.

Are the effects of AI on law firms positive or negative?

On a granular level, AI will affect law firms by increasing productivity through AI-powered systems and processes, while also reducing the need for certain legal functions. Indeed, there is a general push to do more with less, using automated solutions and other productised legal services to complete work typically undertaken by lawyers and legal professionals.

A positive result of AI is increasing efficiency and streamlining functions, using machine learning to ensure accuracy and reduce human error. However, on the flip side, this could result in a loss of job functions who traditionally carry out such roles. What this could mean is a reduction in expertise and diversity of skills.

Therefore, the natural questions arising are: while AI may drive down costs in law firms, is it as simple as this? Instead, could this result in a bottleneck effect for creativity in law firms if AI replaces human knowledge and expertise?

Perhaps the answers to these questions are not black and white. While some legal roles within law firms may disappear, this could be the start of an evolution in legal job functions. New roles may begin to appear which work with AI, rather than in competition in it. This offers opportunities to harness the new skills that individuals will need and prompt an upskilled legal workforce.

Key takeaways

AI’s use seems inevitable in all sectors, from financial to legal institutions, and it is clear that change has and will continue to occur on all levels of businesses.

AI will clearly affect law firms throughout their business model, from contractual reviewing to litigation, where AI-powered legal prediction engines have been developed to predict case outcomes. While law firms and legal functions have traditionally been seen as cost centres, AI seems a natural progression in changing this stereotype, driving down costs and increasing efficiency.

Clearly, AI will not completely replace the need for lawyers and legal professionals, however it may mean law firms will need to shift their perspectives on their employees and the kinds of skills they have and, more importantly, how employees can work in tandem with AI.

For individuals embarking on a career in the legal sector, it is an uncertain time where an awareness and understanding of AI is necessary.

To completely ignore the current effects and potential impacts of AI on law firms would be an oversight, particularly given various reports suggesting that by 2030, AI may result in fewer law firms. Law firms which are slow to adapt, or perhaps do not have the critical mass to invest, may be the ones to fall by the wayside in these predictions.

Therefore, it is a time for both individuals entering the field and law firms to be aware of this growth potential and stay ahead of their competitors.

If AI is viewed as a vehicle transporting institutions to increased monetary, efficiency, and knowledge-based destinations, then its potential seems boundless and its rewards plentiful. What law firms need to harness is this capability, seeing it as enhancing and evolving current ways of operating, rather than overhauling such traditions.

Legal Technology