The adoption of artificial intelligence systems to review contracts and carry out other routine legal work could overturn the pricing model – along with the business structure – of law firms, according to a survey by a specialist consultancy.
However the report, subtitled ‘a reality check’, notes that AI-assisted contract review has ‘not yet won over many law firms’. Such reticence often has a rational basis, the authors, Jomati Consultants, conclude. ‘Hard-nosed assessments’ have shown there is not yet a compelling business case for investing, it notes.
When the technology does take off, it will have a big impact on the way that work is charged for – including the option to moving to a fixed-price offering, the report states. ‘However, it is also likely that clients will expect that a substantial percentage of any cost savings generated by the use of this type of LegalTech solution will be passed on to them.’
AI also raises questions about the future role of junior lawyers. ‘Will they be needed in the same number as before, if so, what skills will they be expected to have, and how will they be trained? What will be their career path? And will they wish to remain working in a traditional law firm environment rather than, for example, a LegalTech company?’
Jomati principal Tony Williams commented: ‘It is often said that the law firm partnership model hinders the ability of the legal sector to embrace change. The examples we offer in this report suggest this proposition is dubious, at best. Legal practices around the world are now investing significant amounts of time and money on technology and innovation, entering into new partnerships, developing new legal products, diversifying into new services and hiring the personnel required to deliver change.
‘These new ways of working will, ultimately, have a profound effect on the future success and business model of law firms and the shape of the legal market,’ he said.
Law Firm Innovation and the use of LegalTech – a Reality Check interviewed 29 leaders from 24 legal practices.