Is AI a Threat to Law Firms?

7 min read

Worried about how AI will impact your law firm? Here’s how you can embrace AI for lawyers while retaining your key team of modern legal professionals.

Unless you’ve been living under a rock for the past couple of years, you’ve probably heard about the power of AI. The ability to streamline tasks, enhance decision-making, and drive firm-wide efficiency and productivity rates are just a few of the claims. 

Yet, AI also prompts concerns about the future of human lawyers and the dynamics of legal services. This article asks the question: Does AI pose a threat to traditional law firms – or is it a gateway to innovation?  

How Is AI Used in Law Firms?

First up, let’s discuss the typical legal use cases for AI:

  • Extracting valuable data from digital documents: Create accurate records automatically and say goodbye to manual data entry and costly errors. 
  • Customizable questionnaires for rapid client intake: Store client information automatically in your records and accurately populate your documents. 
  • AI-powered document generation assistants: Create legal documents and answer questions effortlessly to meet your clients’ needs. 
  • Closing books with smart automated workflows: Send documents, collect signatures, and e-file – all in one place.
  • Database management: Find data faster and maintain more accurate records with a structured cloud-based database.

What Are You Worried About?

Elements of digital transformation are always a bit scary. 

We spoke to some law firms about their core concerns around introducing AI into their legal practice. This is what they said – do you feel the same?

(1) Will Lawyers Be Overtaken by AI?

Many legal professionals are concerned that their jobs will be made obsolete due to the efficiency, accuracy and cost-effectiveness offered by AI. 

The Harsh Reality

Deloitte predicts that within the next two decades, an estimated 114,000 jobs in the legal sector will have a high chance of having been replaced with automated machines and algorithms. These 114,000 jobs represent around over 39% of jobs in the legal sector.

How You Can Handle It

While automation may indeed streamline certain legal tasks traditionally performed by humans, it also presents opportunities for legal professionals to evolve and enhance their roles. 

By embracing continuing education and upskilling initiatives, you can empower your legal team to leverage AI technologies effectively, rather than being replaced by them. For example, gaining expertise in areas like data analytics, technology management, and strategic decision-making can position lawyers as valuable assets in a tech-driven legal environment.

Admittedly, AI is making rapid advances toward human-like capabilities, but it still cannot think for itself and cannot generate new information in the same way that a human can. AI-enabled legaltech’s sweet spot is automating repetitive manual tasks like research, contract review, document production, and entity management. None of these tasks relate to the core practice of law or the matter-specific legal work that lawyers excel at.

(2) Is Legal AI Ethical? 

Sensitive Information Concerns

The growing influence of AI in the legal sector promises efficiency and innovation, but it can also raise ethical and regulatory complexities. 

The first being that legal matters often involve sensitive information, so it’s understandable to think that AI tools analyzing vast amounts of data are a privacy and security risk. As legal professionals, you must adhere to strict ethical standards, which include supervising non-lawyers and being responsible for the legal work done on behalf of clients. 

Because AI isn’t a lawyer – but is performing legal workflow tasks formerly done by humans – the ethics can often seem murky. 

To address these concerns, make sure any AI tool you use is designed to comply with relevant data protection regulations. We understand that handling ethical and privacy concerns is crucial – which is why Appara is expertly designed to manage, process, and store data in accordance with these regulations. 

Appara has been and is regularly audited for compliance with ISO/IEC 27001:2013 Information Security Management Standards and ISO/IEC 27018:2014 Code of Practice for Protecting Personal Data in the Cloud by an accredited third-party certification body, providing independent validation that applicable security controls are in place and operating effectively.

Societal Biases and Hallucinations

Generative AI algorithms can inherit and amplify societal biases. This is something that can potentially lead to discriminatory outcomes in areas like risk assessment, sentencing, and employment law.

Another common concern legal teams have about generative AI is hallucinations – outputs that might seem plausible, but aren’t accurate or real. A real world example was in May 2023, when a judge sanctioned a New York lawyer for citing fake cases generated by ChatGPT in a legal brief. In this instance, the AI tool confidently fabricated six bogus cases. In a related incident in February 2024, a B.C. lawyer was reprimanded for citing fake cases invented by ChatGPT. The lawyer in question was ordered to pay costs for the opposing counsel for the time it took them to discover the precedent was an AI-generated ‘hallucination’.

It’s essential to remember that when AI provides an answer, particularly one key to an argument or case, it’s critical to fact-check it – either via independent research, or by using an AI tool that cites its sources.

The Reframe

But let’s stop listing all the concerns and reframe the narrative. Imagine AI not as a competitor, but as an efficient and powerful partner. 

How Will AI Impact Law Firms?

While AI will undoubtedly automate certain tasks, and some roles might shift, AI can actually empower your lawyers to shine where machines falter:

  • Strategic masterminds: AI excels at data analysis, but legal strategy demands human wisdom. The legal ability to navigate complex legal nuances, create customized solutions, and develop winning arguments becomes even more crucial with AI taking care of the manual and mundane data tasks.
  • Client champions: The human touch remains irreplaceable. Your lawyers’ empathy, emotional intelligence, and ability to build strong client relationships are still at the core of your firm’s value proposition in the AI age. Frankly, they will become even more important. 
  • Community-driven efficiency: Your firm becomes a hub for innovation, where AI rapidly handles tedious document review, due diligence, and compliance tasks – freeing up your valuable time and resources for complex legal strategy, collaboration, and knowledge sharing within your legal community.
  • Smarter workflows: Use AI to meticulously sift through mountains of data, identify key patterns, and surface relevant information instantly. Think faster research, more informed decisions, and a significant edge in competitive scenarios.
  • Empowered clients: AI-powered chatbots can offer basic guidance and resources, making justice more attainable for underserved communities. Your firm is positioned at the forefront of innovation with trusted advisors leading the way.
  • Ethical navigators: As AI adoption grows, ethical considerations arise. Your expertise in legal and ethical frameworks becomes invaluable – both to ensure responsible AI use and to safeguard client interests.
  • Competitive edge: With AI as your tireless research assistant, your team is armed with instant insights and data-driven analysis. Think faster research, informed decisions, elevated roles within your legal team, and a competitive edge for your entire community.

A Word of Warning

Before you leap into action with AI, it’s worth remembering that there are numerous add-on legal AI startups on the market today. 

Plenty of contract analysis solutions exist that focus on automating the contract review and negotiations process. Marking up, redlining, and providing suggestions to legal documents is the offering. However, these clunky “AI assistants” that just replace legal jargon with more legal jargon are very rarely the solution to introducing AI into your firm.  

The following are issues to watch out for:

  • Dependence on Microsoft Word: This integration might restrict flexibility and limit the product’s use to environments where Word is the primary document processing tool. This could potentially alienate users of other platforms.
  • Training data and bias: Combining a broad range of internet-based sources for training could introduce biases or inaccuracies into the AI’s output. It’s possible that this may affect both the reliability and trustworthiness of its suggestions.
  • Immediate insight generation: Immediate insight generation may not fully address the complexity and nuance of legal documents – posing questions about the depth and contextual appropriateness of the generated comments.
  • Risk identification: Keeping the AI’s risk identifications up-to-date with evolving legal standards and market norms is challenging. This could affect its ability to effectively identify and mitigate potential contract risks.
  • Automatic redlining and suggestions: Systems with general training might not fully capture specific user preferences or legal nuances. A possible result is suggestions that need substantial manual adjustments.
  • Broad training vs. specialized expertise: Training the AI on a wide range of sources, such as the internet, books, and Wikipedia, may reduce its legal expertise. This impacts its accuracy and relevance in contract analysis.

Legal AI: A Threat or a Partner?

AI can analyze patterns and help you make better decisions faster. 

It can help make predictions and automate repetitive tasks. 

But it can’t replace the human element; it can’t replicate the matter-specific expert work that your legal professionals were trained to do.

Embracing AI-enhanced legaltech doesn’t mean replacing your legal professionals. Instead, it means enabling them to do what they do best – allowing them to look forward to more strategic, analytical, and impactful roles in the future of the legal profession. 

The future of legaltech is not just exciting; it’s transformative.

Has your firm had enough of paper-based entity management and manual document processes? Book your demo of Appara today to discover how AI-powered document automation and workflow automation can breathe new life into your practice.

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