The legal profession has not generally been quick to embrace change. That was until the EU Referendum. A result of the Brexit vote was an increase in the uptake of technology, particularly artificial intelligence (AI).
For example, international law firm Pinsent Masons developed a three-step tool for large-scale contract reviews. The technology enables clients to identify risk in existing portfolios, address Brexit risk in future contracts, and any business-critical supply chain risk.
The tool brings together SmartDelivery and Cerico platforms to provide an end-to-end review service. These platforms already support many of the firm’s client relationships. An AI component streamlines this review process.
Dentons is another firm that is finding modern ways to address the Brexit challenge. The global law firm has partnered with AI software company RAVN Systems to develop technologies to deal with the Brexit challenge.
Dentons has adopted similar technologies to assist in contract review. Their technology applies a cognitive engine robot that automatically reviews high volumes of contract documentation. It will then identify provisions that could be affected by the United Kingdom’s withdrawal from the EU.
This shows a trend towards AI being used by legal service providers to respond to market changes. By systemising large-scale contract reviews, providers are able to give their clients a low-cost actionable assessment of existing portfolios. This meets their clients’ more-for-less agenda and them, the providers, benefit from the resulting efficiencies.
A Win-Win Situation?
It was feared that the profitability of large law firms would drop following the Brexit vote. This was because low-value advisory work was in high-demand and high-value transactional work was in low-demand.
However, the efficiencies generated by using AI could increase the profitability of otherwise low-value work – so long as the volume of work can be sustained. This means that law firms can continue to profit from low-value work and support their bottom line. Pinsent Masons reported a 5.5% revenue growth on the previous year despite market uncertainty in the post-Brexit period.
Law Adopting AI
Other big law firms have also developed software in response to market changes. Allen & Overy partnered with Deloitte and launched MarginMatrix in response to the 2016 over-the-counter derivatives market challenge. The system is designed to help banks manage post-financial crisis regulations.
It does so by codifying the law in various jurisdictions and producing automated draft documents. Allen & Overy reported that the system significantly reduced the time it takes for them to process the approximately 10,000 contracts that an average bank holds. It would have taken the firm fifteen years to process the same number of contracts manually. With AI software it can take just twelve weeks.
Pinsent Masons developed their AI systems in-house through its R&D team. Similarly, Dentons developed its suite of software in union with NextLaw Labs. Both firms yield hundreds-of-millions of pounds in turnover each year, some of which can be reinvested into sophisticated AI systems.
However, not all law firms have the financial resources to invest in AI. An alternative for smaller firms, which command fewer recourses, could be investing in software packages designed to respond to market challenges. Although, investing in software packages carries with it the risk of stacking up costs. This is because smaller firms cannot update (or grow) their software packages at the same rate as their competitors.
This trend towards the systematisation of legal services is indicative of a more responsive legal industry. This begs the question: to what extent can the work of lawyers be undertaken, more quickly, cheaply and efficiently, but to a high quality using AI?