Legal Tech, Artificial Intelligence, and the Practice of Law in 2018

Due in part to a better understanding of available artificial intelligence legal tech tools, more lawyers will adopt and use AI technologies in 2018 than ever before. Better awareness will also drive creation and marketing of specialized legal practice areas within law firms focused on AI, more lawyers with AI expertise, new business opportunities across multiple practice groups, and the possibly of another round of Associate salary increases as the demand for AI talent both in-house and at law firms escalates in response to the continued expansion of AI in key industries.

The legal services industry is poised to adopt AI technologies at the highest level seen to date. But that doesn’t mean lawyers are currently unfamiliar with AI. In fact, AI technologies are widely used by legal practitioners, such as tech that power case law searches (websites services in which a user’s natural language search query is processed by a machine learning algorithm, and displays a ranked and sorted list of relevant cases), and that are used in electronic discovery of documents (predictive analytics software that finds and tags relevant electronic documents for production during a lawsuit based on a taxonomy of keywords and phrases agreed upon by the parties).

Newer AI-based software solutions, however, from companies like Kira and Ross, among dozens of others now available, may improve the legal services industry’s understanding of AI. These solutions offer increased efficiency, improved client service, and reduced operating costs. Efficiency, measured in terms of the time it takes to respond to client questions and the amount of billable hours expended, can translate into reduced operating costs for in-house counsel, law firm lawyers, judges, and their staffs, which is sure to get attention. AI-powered contract review software, for example, can take an agreement provided by opposing counsel and nearly instantaneously spot problems, a process that used to take an Associate or Partner a half-hour or more to accomplish, depending on the contract’s complexity. In-house counsel are wary of paying biglaw hourly rates for such mundane review work, so software that can perform some of the work seems like a perfect solution. The law firms and their lawyers that become comfortable using the latest AI-powered legal tech will be able to boast of being cutting edge and client-focused.

Lawyers and law firms with AI expertise are beginning to market AI capabilities on their websites to retain existing clients and capture new business, and this should increase in 2018. Firms are focusing efforts on industry segments most active in AI, such as tech, financial services (banks and financial technology companies or “fintech”), computer infrastructure (cloud services and chip makers), and other peripheral sectors, like those that make computer vision sensors and other devices for autonomous vehicles, robots, and consumer products, to name a few. Those same law firms are also looking at opportunities within the ever-expanding software as a service industry, which provides solutions for leveraging information from a company’s own data, such as human resources data, process data, quality assurance data, etc. Law practitioners who understand how these industries are using AI technologies, and AI’s limitations and potential biases, will have an edge when it comes to business development in the above-mentioned industry segments.

The impacts of AI on the legal industry in 2018 may also be reflected in law firm headcounts and salaries. Some reports suggest that the spread of AI legal tech could lead to a decrease in lawyer ranks, though most agree this will happen slowly and over several years.

At the same time, however, the increased attention directed at AI technologies by law firm lawyers and in-house counsel in 2018 may put pressure on law firms to adjust upward Associate salaries, like many did during the dot-com era when demand for new and mid-level lawyers equipped to handle cash-infused Silicon Valley startups’ IPO, intellectual property, and contract issues skyrocketed. A possible Associate salary spike in 2018 may also be a consequence of, and fueled by, huge salaries reportedly being paid in the tech sector, where big tech companies spent billions in 2016 and 2017 acquiring AI start-ups to add talent to their rosters. A recent report suggests annual salary and other incentives in the range of $350,000 to $500,000 being paid for newly-minted PhDs and to those with just a few years of AI experience. At those levels, recent college graduates contemplating law school and a future in the legal profession might opt instead to head to graduate school for a Masters or PhD in an AI field.

The AI Summit New York City: Takeaways For the Legal Profession

This week, business, technology, and academic thought leaders in Artificial Intelligence are gathered at The AI Summit in New York City, one of the premier international conferences offered for AI professionals. Below, I consider two of the three takeaways from Summit Day 1, published yesterday by AI Business, from the perspective of lawyers looking for opportunities in the burgeoning AI market.

“1. The tech landscape is changing fast – with big implications for businesses”

If a year from now your law practice has not fielded at least one query from a client about AI technologies, you are probably going out of your way to avoid the subject. It is almost universally accepted that AI technologies in one form or another will impact nearly every industry. Based on recently-published salary data, the industries most active in AI are tech (think Facebook, Amazon, Alphabet, Microsoft, Netflix, and many others), financial services (banks and financial technology companies or “fintech”), and computer infrastructure (Amazon, Nvidia, Intel, IBM, and many others; in areas such as chips for growing computational speed and throughput, and cloud computing for big data storage needs).

Of course, other industries are also seeing plenty of AI development. The automotive industry, for example, has already begun adopting machine learning, computer vision, and other AI technologies for autonomous vehicles. The robotics and chatbot industries have seen great strides lately, both in terms of humanoid robotic development, and consumer-machine interaction products such as stationary and mobile digital assistants (e.g., personal robotic assistants, as well as utility devices like autonomous vacuums). And of course the software as a service industry, which leverages information from a company’s own data, such as human resources data, process data, healthcare data, etc., seems to offers new software solutions to improve efficiencies every day.

All of this will translate into consumer adoption of specific AI technologies, which is reported to already be at 10% and growing. The fast pace of technology development and adoption may translate into new business opportunities for lawyers, especially for those who invest time to learning about AI technologies. After all, as in any area of law, understanding the challenges facing clients is essential for developing appropriate legal strategies, as well as for targeting business development resources.

“2. AI is a disruptive force today, not tomorrow – and business must adapt”

Adapt or be left behind is a cautionary tale, but one with plenty of evidence demonstrating that it holds true in many situations.

Lawyers and law firms as an institution are generally slow to change, often because things that disrupt the status quo are viewed through a cautionary lens. This is not surprising, given that a lawyer’s work often involves thoughtful spotting of potential risks, and finding ways to address those risks. A fast-changing business landscape racing to keep up with the latest in AI technologies may be seen as inherently risky, especially in the absence of targeted laws and regulations providing guidance, as is the case today in the AI industry. Even so, exploring how to adapt one’s law practice to a world filled with AI technologies should be near the top of every lawyer’s list of things to consider for 2018.