The implementation of artificial intelligence in the legal field has reduced costs for law firms and improved the speed and accuracy of results while reducing the need for personnel (Handa & Papineau-Wolff, 2019). AI has the added value of being ideal for repetitive tasks involved in document review and legal research that can fatigue humans and lead to potential mistakes or inaccuracies in work products. AI does not have the same law of diminishing returns with repetitive tasks as humans do in terms of workload and fatigue.
There are limitations to legal artificial intelligence in that it requires human oversight for accuracy, the verification of results by humans, and training by system experts (Handa & Papineau-Wolff, 2019). As such, law firms can be reluctant to invest in the resources needed to produce, oversee, and verify AI. While the adoption of legal AI by law firms has been slow overall, clients are coming to expect the benefits of legal technologies that bring faster results and reduced expenses.
Law firms are under pressure to invest in technological innovation with increased competition in the legal market. While U.S. businesses generally invest 3.5% of their revenues in research and development, law firms on average spend less than 1% of their revenues on research and development (Sobowale, 2016). Law firms will need to prioritize and invest in developing their own artificial intelligence systems, integrating existing AI into their own IT systems, or outsourcing legal AI to remain competitive (Handa & Papineau-Wolff, 2019). The leading law firms are embracing technological innovations to streamline processes, reduce costs, and meet client expectations (Crook, 2016).
The growth of entrepreneurship in the legal sector
A “legal climate change” is now underway where alternative legal service providers and legal technology companies can offer legal services that provide less expensive and more innovative solutions for clients (Furlong, 2018). With new providers of legal services entering the market, clients are feeling empowered to challenge high price points for legal work from lawyers. The legal profession has been largely unsuccessful in preventing the growth of this new legal sector of providers and has failed to convince clients that only lawyers can solve legal problems (Hunter, 2020).
Clients are adopting legal technology at a quicker pace than lawyers and are completing legal tasks on their own to reduce legal fees (Dixon, Jr., 2015). For example, clients are taking advantage of expertise automation through software applications when seeking legal advice rather than consulting with a lawyer (Davis, 2020). Clients have also adopted the use of document creation tools through legal technology to complete forms or legal documents on their own. In addition, advanced online legal research tools have empowered clients to conduct their own research on legal issues.
Further disruption to the legal sector is expected as the growth of legal technology startups and the venture capital investment in such companies picks up pace. From 2018 to 2021, the venture capital invested in the legal industry has grown from $1 billion to $4 billion dollars with hundreds of new startups being launched (Arsneault, 2021). Many of these companies are less interested in selling or licensing directly to law firms but rather are looking at taking clients on as their own. The growth of alternative service providers is predicted to grow significantly through 2027, with client expenditures growing from $12 billion to $85 billion (Davis, 2020).
Legal publishers are additional threats to law firms as they grow their offerings of artificial intelligence legal solutions (Davis, 2020). These organizations consist of corporate structures that allow them to accumulate and invest in capital unlike law firms based on partnership models. One example is Thomson Reuters, a legal publisher who invested $650 million dollars to acquire the legal startup company, Casetext, in a long-term plan to grow generative artificial intelligence in the legal field (Reynolds, 2023). Casetext offers a legal AI research assistant through a platform called Co-Counsel, which provides legal research, document review, deposition preparation, and contract analysis within minutes.
The rise of legal technology companies and alternative legal service providers will continue to cause ongoing disruption to the legal profession. Law firms can choose to acknowledge the new legal landscape they are living in and take action, or they can let the legal sector slip away to other players in the industry (Hunter, 2020). Similarly, the legal profession can insist on a restrictive definition of the practice of law to the exclusion of new providers of legal solutions. Or they can expand to be more inclusive of new providers and work with them to incorporate the legal ethics and values that they’ve long revered in the law to better serve all clients.
Whether law firms chose to battle or embrace entrepreneurs invading the legal sector, they will need to be entrepreneurial in their approach to maintaining their relevance. Similarly, law schools will need to produce graduates with an entrepreneurial mindset to adapt and thrive in this rapidly changing legal landscape. “If they continue down the path they have been on, they will resemble the governing committee of an old school club, anxious to ensure that jackets and ties are worn in the parlour, oblivious to the fact that their membership is shrinking and no new members want to join (Hunter, 2020, p. 1223).”
The evolution of the legal profession and the future law firm
Author Richard Susskind has long warned the legal profession on the perils of ignoring the growth of technology in the legal sector, predicting that technology would “fundamentally change the practice of law (Dixon, Jr., 2015).” Susskind has also noted that lawyers will need to be more entrepreneurial in their work, learning how to be adaptable to change and agile in learning new skillsets (Ward, 2017). Law schools, law firms, and the legal profession as a whole will need to take steps to be more entrepreneurial in addressing these challenges in order to compete and maintain their relevance in their own industry.
While the future will need the law, it won’t necessarily need lawyers to provide it (Hunter, 2020). The future law firm will be multidisciplinary with fewer traditional lawyers and more non-traditional employees with skillsets in technology, data analytics, information governance, project management, and sales and marketing (Deloitte, 2016). By 2025, half of employees at law firms are projected to be non-lawyers with lawyers closing in on or becoming the minority (KPMG, 2021). New legal roles that combine law and technology have emerged in the legal field, including legal technologist, legal process analyst, legal data scientist, and legal research & development worker (Bullows, 2021; see Table 2).
Table 2
Emerging Legal Roles
- Legal Technologist combines law and technology for strategic adoption and effective use in law firms.
- Legal Process Analyst analyzes and organizes the operations and workflow of law firms created from technological adoptions.
- Legal Data Scientist analyzes and leverages data for systems and processes in law firms.
- Legal Research & Development Worker stays current on cutting edge technological solutions for law firms.
Note. The position descriptions are from The Law Teacher’s How Technology is changing the Legal Sector by Amy Bullows, 2021.
The rapidly changing legal environment now demands new skillsets from lawyers. Lawyers will be expected to analyze data and manage complex technology while being able to adapt to change quickly (Deloitte, 2016). Legal operations skills such as being able to analyze data, manage information, and develop strategies will become more critical to the lawyer’s role (Handa & Papineau-Wolff, 2019). Understanding and distilling data will become as essential as deciphering legal terminology (KPMG, 2021). In addition, lawyers who can identify new revenue streams and focus on prioritizing the client experience and improving legal services will have a competitive advantage (see Crook, 2016). A shift in culture in law firms and mindset in lawyers will be critical for sustainable success (KPMG, 2021).
As such, law school graduates will need an entrepreneurial mindset that helps them identify opportunities, solve problems for clients that create value, and foster innovation in law firms (see Hunter, 2020). Law school curriculum will need to be revised to include this new mindset and skillset to prepare graduates for the future law firm. Law school graduates with strong entrepreneurial, technological, and business skills will be in high demand for law firms (Deloitte, 2016). Many law schools continue to teach traditional skills that the legal profession once demanded when a new skillset is needed for law school graduates to compete (Hunter, 2020). A minority of law schools are starting to incorporate curriculum to improve technology competency for law students, but such course offerings lean toward the Ivy league schools like Yale, Cornell, and Georgetown. For example, Cornell’s law school offers a course called “The Business of Law in Today’s Tech Economy” (Coyer 2023). The course provides “an overview of the business of law firms, their internal and external strategic considerations and how technology has impacted every aspect of the business of law.” Even so, a gap remains between client needs and law graduates’ ability to provide technology skills necessary in the legal field.
Opportunities and challenges ahead
While some are concerned with artificial intelligence reducing the number of jobs available for lawyers, there is opportunity within this shift of legal work (Handa & Papineau-Wolff, 2019). Lawyers typically spend a great deal of time on tedious tasks such as reviewing, summarizing, and assembling data and documents. The automation of tedious work for lawyers frees them up to contribute to more analytical and intellectual legal work that clients are more inclined to pay for (Sobowale, 2016). Lawyers will be able to focus more on developing and delivering human skills such as advocacy, persuasion, and strategy (Handa & Papineau-Wolff, 2019). In addition, lawyers will be able to hone in on their human skillsets in “judgement, empathy, creativity, and adaptability” to supplement artificial intelligence solutions (Davis, 2020).
Furthermore, there are limitations to artificial intelligence that present challenges in adoption including the need for human oversight, the potential for biased results, the need for aggregated and complete datasets, the potential for reliance on outdated law, and ethical concerns relating to the use of predictive legal outcomes (Handa & Papineau-Wolff, 2019). In order to ensure trust in the results, human training and oversight is necessary to verify and confirm accuracy of artificial intelligence. In addition, artificial intelligence is likely to contain biased data from the past which could produce biased results. Therefore, systems must be put in place to address the potential for biased results. In addition, artificial intelligence is only as good as the data put into it, and it can be challenging to aggregate data that is confidential and proprietary in order for artificial intelligence to learn from it. An additional challenge is that the law is constantly changing, and artificial intelligence runs the risk of containing outdated law that could lead to inaccurate recommendations. Finally, artificial intelligence presents ethical considerations relating to litigation strategy and the prediction of legal outcomes of cases and whether this information should be available to the decision makers of cases.
While these challenges should be acknowledged, they are not insurmountable. Overall, the benefits of artificial intelligence seem to outweigh the costs needed to meet client expectations by reducing personnel needs, lowering costs in providing legal services, and improving the overall client experience. In addition, it provides a meaningful opportunity for lawyers to flourish in the analytical, intellectual, and human skillsets that they bring to the profession.
Conclusion
While the legal profession is being transformed through technology and entrepreneurship, law firms and law schools have been slow to respond. Meanwhile, alternative legal providers and legal technology startups are projected to grow significantly providing more cost-effective solutions to clients. Artificial intelligence is reducing the need for lawyers and growing the demand for other legal technology positions in the law firm changing the employee demographics of law firms. And law school graduates are not getting the mindset and skills needed to succeed in the future legal landscape. While the challenge is great, the opportunity is better. The legal profession is at a tipping point of being able to shift the trajectory if it is willing to leverage the adversity as an advantage, find new ways to create value, and redefine the business of law.
