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Law Practice Today

December 2023

Financial Impacts of AI

Anthony Novaes


  • As governments grapple with regulating generative AI, law firms have an opportunity to improve efficiencies with it.
  • Generative AI also promises improved client service, new service offerings, and potentially lower costs.
  • While the technology holds great promise, attorneys must use AI tools ethically and responsibly.
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The Massachusetts Institute of Technology (MIT) recently launched a Task Force on Responsible Use of Generative AI for Law, with the purpose of ensuring due diligence and responsible use of generative artificial intelligence (AI) for law and legal processes. This was done by putting together a group of experts and stakeholders for purposes of bringing legal assurance.

The task force focuses on the development of principles and guidelines for ensuring factual accuracy, accurate sources, valid legal reasoning, alignment with professional ethics, due diligence, and responsible use of generative AI for law and legal processes.

This initiative adds to others currently in force not only in America, but also in other regions of the world. In the midst of international discussions on the regulation of AI in regions as varied as the European Union, the United Kingdom, Canada and Brazil, the American government made public, on October 30, 2023, the Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence.

The order reflects U.S. participation in recent major international events: the G-7 Hiroshima Process; the Global Partnership on AI Summit 2023; and the UK Summit on AI Safety; and is the latest of several measures adopted by the federal government to deal with the challenges posed by AI, including Executive Order 13960, the Blueprint for an AI Bill of Rights, and the recently launched Artificial Intelligence Risk Management Framework at the National Institute of Standards and Technology (NIST).

In this sense, the order is possibly the Biden Administration's most ambitious step towards managing the risks generated by AI and directing the development of this technology in line with U.S. principles and interests, using regulatory tools as a mechanism for shaping market dynamics.

The legal landscape is undergoing a profound transformation, driven by the rapid advancement of AI technologies. Attorneys who embrace AI solutions ethically and responsibly stand to gain significant financial benefits, while simultaneously enhancing client outcomes and fostering a more efficient and effective legal system. Here are some of the practical impacts.

Enhancing Productivity and Reducing Costs

One of the most significant financial impacts of AI adoption in the legal industry is the ability to streamline processes, reduce administrative burdens, and free up attorneys' time for more strategic and value-adding tasks. AI-powered tools can manage repetitive tasks such as document review, contract analysis, and legal research, significantly reducing the time and resources required for these activities.

For instance, AI-driven contract analysis tools can automatically identify key clauses, potential risks, and inconsistencies within contracts, saving attorneys countless hours of manual review. Similarly, AI-powered legal research platforms can quickly scan vast amounts of legal information, providing attorneys with relevant case law, statutes, and regulations in a fraction of the time it would take to conduct manual research.

These efficiency gains translate into direct cost savings for law firms and corporate legal departments. By automating repetitive tasks, AI can reduce labor costs, streamline operations, and improve overall productivity, leading to a more cost-effective legal service delivery model.

Improving Client Satisfaction and Expanding Service Offerings

Beyond cost savings, AI adoption also opens opportunities for enhanced client satisfaction and expanded service offerings. AI-powered tools can provide clients with self-service options for legal tasks, such as generating basic legal documents, answering common legal questions, and conducting preliminary legal research. This can empower clients to take control of their legal needs, reducing their reliance on traditional legal services and potentially lowering overall legal costs.

Additionally, AI can enable attorneys to provide more tailored and personalized legal services, catering to the specific needs and preferences of each client. AI-powered data analysis tools can provide insights into client behavior, preferences, and legal risks, allowing attorneys to proactively address client concerns and offer preventive legal advice.

These enhanced client experiences can lead to increased client satisfaction, stronger client relationships, and improved brand reputation for law firms. Moreover, the ability to offer a wider range of legal services, including self-service options and personalized legal advice, can expand the client base and attract new revenue streams for law firms.

Ethical Considerations for AI Adoption in the Legal Profession

While AI adoption promises significant financial and operational benefits, attorneys must carefully consider the ethical implications of incorporating AI into their legal practice. It is crucial to ensure that AI solutions are used responsibly, transparently, and in a manner that aligns with the ethical principles of the legal profession. Key ethical considerations include:

Data Privacy and Security: AI solutions often involve processing substantial amounts of sensitive client data. Attorneys must implement robust data security measures to protect client confidentiality and comply with data privacy regulations.

Algorithmic Bias and Fairness: AI algorithms can perpetuate biases and discrimination if not carefully designed and monitored. Attorneys must ensure that AI tools are unbiased, fair, and do not discriminate against any protected groups.

Transparency and Explainability: Attorneys must be able to understand how AI algorithms make decisions and explain the reasoning behind those decisions to clients. This transparency is crucial for maintaining trust and ensuring that AI is used ethically and responsibly.

Human Oversight and Control: AI should not replace human judgment and decision-making. Attorneys must maintain oversight and control over AI-powered tools, ensuring that AI is used to augment and enhance human expertise, not replace it.

By adhering to these ethical principles, attorneys can ensure that AI adoption in the legal profession is conducted responsibly and ethically, maximizing the financial benefits for both law firms and clients while upholding the core values of the legal profession.