Olswang LLP

Artificial Intelligence and the legal profession

Question

How will current developments in the field of artificial intelligence (AI) affect lawyers?

Answer

AI was defined by John McCarthy, one of the founders of the field, as, "the science and engineering of making intelligent machines". Developments in AI over the past 20 years have captured the imagination and attention of the world. In 1997, the IBM computer Deep Blue beat world champion Garry Kasparov at chess, and in 2016, the Google computer AlphaGo beat international champion Lee Sedol at the complex ancient Chinese board game, Go. AlphaGo's victory was viewed as a major development because it used algorithms based on the human brain, learning how to win by playing millions of games and absorbing the techniques of human experts.

The legal profession is still at an early stage of incorporating AI into working practices, but AI systems are now being used by several law firms to provide legal research, data analysis and project management support. RAVN ACE, a cognitive computer platform developed by RAVN Systems, is able to convert masses of unstructured data into structured, analysable information within hours. This would normally take teams of junior lawyers several months to complete. Ross, a legal research tool developed by Ross Intelligence using IBM Watson technology (the technology that defeated champions at the US game show Jeopardy!), is able to extract facts and conclusions from over a billion documents a second, and provide pertinent answers to questions posed using ordinary language rather than keyword searches.

Amidst these developments, lawyers are beginning to grapple with the question of how to approach AI. Should they view AI as a welcome development capable of assisting them with monotonous tasks, or as an unwelcome intruder capable of eventually taking their jobs?

The legal profession is currently undergoing changes to several aspects of working practices, with many law firms moving toward flexible working, open-plan offices and an increased emphasis on knowledge sharing and project management. AI is an integral part of this process and can help standardise processes, reduce drafting errors, preserve knowledge and speed up transactions, all at a lower cost to clients.

Karl Chapman, CEO of Riverview Law and creator of the AI virtual assistant, Kim, predicted in a 2014 interview that by 2020, “technology will have taken over standardised legal work, standardised documentation, due diligence, process analysis, [and] process management”. Andrew Arruda, CEO of Ross Intelligence, estimates that Ross has the potential to save lawyers about 30% of their time. Arruda notes that the aim of Ross is not to replace lawyers with machines, but rather to assist lawyers with their research, thereby allowing them to carry out their jobs more efficiently.

There are many tasks which lawyers currently carry out in their day-to-day work that would benefit greatly from AI assistance. When working on transactions, crucial information must be extracted from a variety of different sources, such as emails, term sheets, data from previous transactions and so on. These tasks remain susceptible to human error, with incorrect data occasionally extracted or information misinterpreted. The development of AI, which can understand the data it accesses, will enable these types of tasks to be carried out more efficiently. Unlike humans, AI does not sleep and does not need to carry out the same test twice. Thus time consuming, data-heavy tasks can be carried out by AI very quickly and accurately, and can then be sense checked by a lawyer if necessary.

In the article "Law firms, artificial intelligence, and smart contracts" published in the March 2016 edition of Butterworths Journal of International Banking and Financial Law (the article), Charles Kerrigan, head of the finance department at Olswang and Katharine Lammiman, a trainee solicitor at Olswang, comment that as AI continues to make headway into the legal profession, the use of smart contracts in complex financial transactions will become possible. Smart contracts are computerised deal protocols which, once coded, automatically implement contractual terms. The article explains that "a smart contract consists of the following elements: two or more parties, the transfer of value from one to another, and implementation of the contract without human involvement". A vending machine is used as a simple example. The article also points out that "the technological infrastructure created by virtual currencies such as Bitcoin and the development of the blockchain [a public ledger for all Bitcoin transactions] … gives rise to opportunities for financial transactions to be effected using smart contracts". In addition, "the logic of smart contracts can be applied to written financial contracts. The agreement sets out the terms of the contract but the lending bank's internal software code implements the contract: producing statements, applying rates and calculating interest".

The article notes that smart contract transactions require a great deal of work to ensure that all terms and possible eventualities are coded precisely and as planned. At the outset, therefore, smart contract adopters will have to put in a lot of work to anticipate unintended outcomes: "For example, smart contracts cannot be intentionally ambiguous, so parties wanting flexibility to avoid locking themselves into restrictive obligations will need to think again". On the impact this will have on a lawyer's role, the article states that "it is possible to foresee that the role of lawyers will evolve as a result of the need to work with coders and to communicate effectively to clients the terms of the contracts and the practical issues arising from the self-executing nature of the contracts, for example, the fact that the contracts are non-voidable". However, on the upside the article points to "the potential advantages in reduced transaction costs, increased security, improved audit, and the avoidance of disputes relating to identification and ownership".

The above example demonstrates how AI is likely to change lawyers’ roles. However, while these roles may change, it does not necessarily follow that there will be any less need for lawyers. Junior lawyers would be geared toward understanding the business needs of clients from an earlier stage in their careers and would be given greater responsibility to handle more complex tasks, with more laborious, low-level tasks being carried out by AI.Personal brand and the capability to cultivate relationships with clients will become even more important. Although technology will be able to replace the research, document production, matter management and legal reasoning parts of the job, emotional intuitiveness, business acumen and an ability to develop relationships cannot be outsourced to AI.

Companies in many sectors are adopting AI technology and other modern working practices. The legal profession must keep pace with the technological advances being adopted by other sectors or risk losing competitiveness. Clients expect their lawyers to be using state-of-the-art technologies and will not be willing to pay lawyers for work delivered in an inefficient and expensive manner. A law firm's ability to carry out research and document analysis quickly and inexpensively is a big advantage and firms who do not adopt AI will find it difficult to compete. With a growing amount of law firms investing in AI, those who fail to do so will be left behind, unable to compete with their AI-focused competitors which provide a faster and better service for less.

Just as computers and the Internet have changed the role of lawyers during the course of the 20th Century, so too AI will re-define the role of lawyers in the 21st. Law firms cannot afford to ignore current technological advances today any more than they could the computer, email or the Internet. At a time when clients increasingly want transactions completed in shorter time frames while also being wary of the amount spent on legal fees, the introduction of AI into law firms' working practices will enable firms to meet these demands by analysing data and providing answers to complex questions at high speed, and at a lower cost to the client.

Regardless of whether lawyers are enthused or dismayed by the developments in AI, it is something they will have to learn to live with. I believe that lawyers should welcome these technological developments. AI will not replace lawyers, rather it will enable lawyers to work more efficiently. In an economic environment where clients demand value for money and added value from their lawyers, this should be seen as a welcome development that enables lawyers to focus their attention on high-level advisory work, while leaving the mundane process work to AI systems.

Joshua Mirwis is a trainee solicitor in the finance department at Olswang LLP.

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