A robot in full gown pleading in court, that’s the future of law. Or at least that’s what many peope think when discussing legal tech and automation of legal services. Robots and artificial intelligence receive much attention and their usage is rising, for example to challenge parking tickets or to review non-disclosure agreements without human intervention. As more and more of such services appear, this raises the question: what is the future going to bring?
Rise of legal tech
Legal tech, a beautiful phrase. Hip and technology oriented, and focused on a sector that has gained a lot of attention in the past ten years. Harvey Specter meets Mission Impossible. But actually, the phrase legal tech refers to all kinds of technology, in particular information technology, that touches upon the work of the legal service provider. The recent rise of big data and artificial intelligence have put legal tech on the map, but the technology as such is obviously older.
Automation of course is no new phenomenon. For decades legal providers have put efforts in automating aspects of their work. Timekeeping, file management and formatting documents, to name a few. This provided a huge efficiency gain, but did not fundamentally change the way of working of the legal professional. A good recent example here is the legal keyboard: a computer keyboard with many lawyer-specific typographic options available as special keys. The paragraph and copyright symbols for example are directly available and the press of a single button transforms the document from single to double line spacing. Even adding footnotes is possible without having to navigate complex menus.
The second step in legal automation comes closer: automatically retrieving references and case law. Online databases made acquiring sources and searching for arguments and substantiation that much easier. Model contracts provided inspiration for drafting agreements, and document assembly tools allowed creation of tailored texts by simply answering questions and having appropriate fragments inserted. Still, the work remained the same with a significant efficiency gain.
The third step is what we call legal tech: a change in the legal work itself. Analyzing cases with big data for example: which strategies might be useful, what do we know of this judge given his earlier rulings and what did other dealings with this counterpart teach us in negotiating tactics? Files can be mined for so-called red flags or attractive candidates for review. An artificial intelligence can review letters from the other party: is there anything special here, can we respond with standard arguments or can we ignore the letter altogether?
Artificial intelligence or AI has gained in popularity tremendously. Automatically reviewing texts and spotting anomalies is something computers are very good at, and this happens to be an activity often requested from lawyers. However, the way computers work is completely different from the human approach. Computer systems do not understand a word of the text they review, but they are trained to recognize clauses or problematic formulations from many earlier examples. This way it can recognize issues that look very similar to earlier problem clauses.
AI therefore works utterly different from humans. In the words of computer scientist Edsger Dijkstra: “The question of whether machines can think, is about as relevant as the question of whether submarines can swim”. Machines operate fundamentally differently. They can analyse texts, mine data and identify correlations. These can be relevant to base decisions on, but the process then is incomparable to the human way of working. An AI for instance would, given a prospective court case, identify similar precedents and conclude that in 90% of those the case was lost. However, this would be based purely on statistical similarity or correlation. A human lawyer would also base his conclusion on the sensitivity of the subject today, the relationship of the parties and so on.
AI software from JPMorgan does in a few seconds what used to take 360.000 hours of manual labour, as reported recentlyby Bloomberg. The COIN package (Contract Intelligence) reviews money lending agreements on various points, and of course can do so much more efficiently than lawyers – and never asks for holidays or takes time off for drinks, as the article takes care to point out. For attorneys and other lawyers this appears to be the beginning of the end: will they too now be automated by these tools?
This type of technology is being deployed in more and more fields. Recently the Dutch company JuriBlox Labs launched the lawyerbot NDA Lynn. This bot analyses the non-disclosure or confidentiality agreements (NDAs) that are a staple of business transactions. The NDA is perceived as a standard step in doing business, something to sign before negotiations can begin. From a legal perspective one couldn’t be more wrong: every contract is different and should be checked in detail from beginning to end. However, getting a lawyer to review an NDA takes a lot of time and can be prohibitively expensive, so many businesspeople avoid this step. At the same time, no one wants to blindly sign a legal agreement that may create negative consequences. Lawyerbots such as NDA Lynn can provide automated analysis with a clear practical advice on how to move forward. The entrepreneur uploads a document in Word or PDF and receives a full overview of issues including an analysis of the impact. NDA Lynn only asks one question: are you going to give information or receive it? All the other intelligence is in the system itself.
The new role of the attorney
More and more, tools such as NDA Lynn or COIN will enter the market and eat away at the legal services offered by its traditional providers. After all, if one can get an NDA checked for free or a due diligence process carried out by software, one doesn’t need to pay high-priced attorneys by the hour. Does that spell the end of lawyers? Of course not. These services are a limited part of the legal work. A recent estimate by the New York Times is that only four percent of lawyers’ time is spent on such reviews. Most of this work is already being outsourced anyway, so it is more a shift of the work than a change. More importantly, these trends are hard to generalize. The fact that a robot can perform one specific legal function does not mean an AI system will soon be pleading in court or draft an entire legal agreement.
What is actually happening here is in fact nothing more than a lot of catching-up in the legal sector that finally automates repetitive standard work. This is something to be applauded, as it creates room for lawyers to start doing the challenging work. People should be doing what they are good at: creative thinking to arrive at solutions never thought of before, not yet another review of boilerplate text.
From custom work to commodities
This transition is new but fundamental for the legal sector. Earlier the well-known British author Richard Susskind showed how this transition would occur. Traditionally legal advisors provided full custom work, just like the tailor of old that created a fully custom suit starting from a new bolt of cloth. Smart firms standardized their process and were able to deliver custom work based on standard clauses or easily adaptable model contracts. In the tailor analogy they had half-finished suits and pants off the shelf, tuned to the customer’s specific measurements.
One step further are the providers that offer their services as a fixed package, as an actual product. Standard clauses could for example be programmed in – a cloud service needs a data processing agreement, and the choices for the latter follow from the nature of the main cloud service agreement – to quickly arrive at a result. Confection clothing, with perhaps the pants taken in or a custom monogram on the sleeves. With such products, a provider can start bundling. For example, a customer would want a contract for its customers, which can be provided together with availability of a lawyer to help counsel and negotiate the inevitable feedback from these customers. Because the contract is a standard product, the lawyer can easily estimate the work he needs to add.
Commodification is the final step, according to Susskind. Here the product is entirely standard, and available in almost identical form from many sources. T-shirts in a clothing store; confidentiality agreements from the legal supermarket. It is possible to earn money in this phase, but it requires good attention to managing cost and making oneself unique compared to the competition. Are you the cheapest or the easiest, or do you have something special that makes people want you?
AI and robots mainly provide their advantages in these last phases. They allow significant cost reductions and operation time reduction, allowing their operators to quickly conquer the market. This doesn’t apply just to standard legal documents but also for other legal services such as negotiations, company takeovers or court cases. Legal tech thus is relevant for the entire sector.
Towards the future
But why only now? IT and innovation have been here for twenty years, why is it only now worthy of a hash tag that lawyers have started to automate their business?
The legal sector has an image of little change. For a large part, this is only logical: the work is fundamentally the same as, say, 400 years ago. Back then as now there were conflicts that needed legal arguments to be settled and agreements to be put on paper. While the subjects and the law may have been different, the principle remained the same.
At the same time, this is strange. Most lawyers are very much open to new developments, from the latest gadgets to large-scale developments in society. And again this is only logical, as keeping up with the world is needed to do legal work. If a lawyer can’t operate a fax machine, how can he provide legal advice on the status of fax messages, to name just one example. Novelties are part of the work. So why did the legal work remain the same for so long?
Many explanations have been proposed. The hourly billing system in particular supposedly blocked innovation: those who work more efficiently, could not claim as many billable hours. Add to this a system where the partners at the top of a law firm receive a percentage for each billable hour, and the result is a very strong stimulus against reducing the number of hours worked. But surely this is not the entire explanation: those who work more efficiently may make fewer hours on one job, but would have time available to work for other clients.
In my opinion the fundamental reason is the well-known expression “Don’t change a winning team”. Firms that do well, are very busy. Introducing fundamental change in a busy environment is not going to go over well. This takes time and concentration, and both are in strong demand. So the change will have to wait until next year.
But then why now? Customers are asking more vocally for change, for speed and cost savings. And there’s nothing left in terms of small savings, lowering the hourly rate or distributing costs. In addition, more and more firms see options to introduce legal services in innovative ways, threatening the traditional monopoly position law firms have enjoyed. This forces thinking about transformation.
Deploying AI is a way to go through this transformation. But this does not mean that an AI system or robot is going to do what a human did before. It is a different way of working to arrive at the desired result. As an example, consider how legal insurance providers handle legal claims. They rarely approach them as lawyers, identifying arguments and going to court. An insurer may easily choose to pay a claim to its insured from its own pocket, if that is cheaper than the court costs. This is a fundamentally different way of looking at a legal case. Developments such as AI will in no way mean the end of the traditional legal service. Parts will change, being take over by legal tech services. This moves the focus for the attorney and other legal service providers.
About the Author
Arnoud Engelfriet (1974) is IT-lawyer and patent attorney. He is partner at the dutch firm ICTRecht, and his website Ius mentis is one of the most comprehensive sites in The Netherlands on internet law, technology and intellectual property.