The business case for AI-enabled legal technology

Many firms currently utilising AI cite its ability to automate and accelerate certain legal tasks. Among survey respondents using AI-based tools, 45% are using eDiscovery, and 38% are using document automation. Meanwhile, 47% are using AI-driven document review to catch errors legal professionals might miss when performing the task ‘manually’.

The applications above are among the highest cited in the survey, possibly because they are advances in long-established digital capabilities. Lawyers and laypersons alike have been using automated quality-control tools, like spelling and grammar checks, for decades. Modern professionals have come to rely on their computers to suggest improvements or flag potential errors in certain tasks. Whilst the technologies driving modern iterations of, for example, document review are remarkable, their appearance and implementation are quite familiar.

The survey also reports that litigation strategy tools are being used by 36% of law firms that have introduced AI into their practices. These tools can examine data points from past case law, win/loss rates and trends, and patterns in a judge’s history. This information allows law firms to respond confidently to questions that have formerly been obscure, subjective, or at the very least, time-intensive to answer, such as “Does my opposing counsel have certain behaviour patterns I can use to my advantage?” and “Are there judicial tendencies I should know about?”.

This type of work has certainly been done in the past. The justification for an AI-enhanced approach, however, is twofold. First, subjectivity is reduced and clarity is enhanced. Using AI to scan across entire libraries of dockets eliminates the risk of missing key information due to human factors such as mental endurance and personal bias.

Second, are the far more obvious increases in the speed and efficiency of employees engaged in litigation analysis. Any lawyer that has slogged through docket filings and judicial decisions will see the advantages inherent in this technology.

The business side

Law is a practice, a profession, and a discipline. A law firm is also a business. One of its primary business goals is client acquisition and retention. The Thomson Reuters AI survey results suggest potential clients may increasingly expect their legal representation to demonstrate they have the latest and most powerful technologies in their toolboxes.

In fact, 92% of survey respondents agree that “lawyers will need to be more tech savvy in the future” while 19% stated clients are asking for proof of efficiency or adoption of technology. That percentage is likely to grow, and perhaps very quickly, as clients become more aware of the technologies available to legal practitioners. Even now, the survey results suggest firms that are not technologically up to speed could be failing to meet the expectations of a significant number of potential clients.

AI-enhanced legal tools can be a selling point to clients in several ways. For instance, AI-driven litigation analysis can be used to help set and manage client expectations by illustrating judicial behaviours or litigation strategies that may inform the process or duration of active litigation. Among Thomson Reuters survey respondents, 32% reported using AI-enhanced litigation analytics platforms.

AI-enhanced analytics also can be trained on a firm’s own experiences, revealing insights into their strengths, weaknesses, and competencies. This information can help “win” the business of customers with an objective message regarding your experience. Perhaps just as valuable, individual performance data — aligned with intelligence regarding specific types of legal matters — can help determine whether a firm needs to deploy its flagship attorneys on a particular case, if the case is safely within the capabilities of other staff, or even if the case is worth taking on.

AI technology can also help diagnose symptoms of client attrition. Over time, a data-driven approach to client management has the potential to identify patterns within a firm involving time, costs, types of legal matters, outcomes, or client profiles. AI-powered analysis could help law firms assess the health of client relationships and reveal opportunities to act before a client takes its business elsewhere.

Then there are the firm’s back-office functions, which are intertwined with client management and retention. Here, too, AI tools can provide measurable benefits.

For instance, a law firm may be finding that clients are pushing back on hours billed. AI’s efficiencies in areas such as research can allow you to bill fewer hours. That kind of efficiency might result in less revenue in the short term, but considering corporate clients in particular identify legal fees ranking among their biggest expenses on their income statement, charging status-quo billable hours can put a firm in a risky position. Highlighting the firm’s efficiency through its use of AI tools may be necessary to maintain the long-term health of the firm’s client relationships.

Conversely, a law firm might be seeing alternative fee arrangements shifting the cost burden back to your firm, thus challenging its ability to maintain profitability. AI-powered insights into the firm’s billing data can help rebalance that burden. When the firm has a clearer view of the costs — and the firm’s own processes and timelines – it’s easier to establish price structures that are fair to both client and firm. Similarly, a view into past litigation data can help by more accurately defining litigation budgets.

AI-enhanced tools also can help firms make smarter business development decisions. The data points and analyses these technologies gather and generate can reveal useful, actionable insights into issues such as the following: 

• Where are lawyers/employees strongest? Where are they weakest? These insights can reveal what types of additional training certain lawyers/employees need, for instance.
• Which case types are appearing most often? The answer may represent a growth opportunity or a chance to build capacity.

With a clearer, objective sense of a firm’s strengths and weaknesses, the firm’s management can better determine where to take the business in the future and what areas would be better off avoiding. These are the types of strategic business decisions that AI-driven insights can help law firm leadership make.

One of the strengths of AI tools is that they are evidence-based and continuously gather more and more of that evidence. This is a characteristic any lawyer will appreciate.

Scope and limitations: Successful implementation

Even with these potential uses and advantages, lawyers will ask some tough questions. Some of these will involve the scope of what might be termed the firm’s AI ’project:’ What are the goals? How long will it take to achieve them? What actions are required to meet these objectives? Responses to these concerns will depend upon the firm’s business objectives. The scope and time to implement will be unique to the firm’s current setup and future plans. The most widespread use of AI-enhanced tools that the Thomson Reuters AI survey identified is legal research. This can be a very simple application to introduce, manage, and maintain. For roughly half of U.S. law firms, all that is required is the latest version of Westlaw Edge, which is continually being updated.

To see a return on their AI investment, firms must ensure that the tools become part of the employee workflow.

Other applications of AI-enhanced tools include performance dashboards that can track tasks, measure financial performance, and report on case activity both internally and with clients. Tech-savvy law firms might opt to incorporate these AI-assisted data tools into their client portals to create greater transparency with clients. Indeed, clients may demand this kind of information access.

If a law firm has engaged in any formal project implementation process, it will know that one of the areas the strategy needs to address is the potential limitations of introducing a major new technology or approach to conducting business. Typically, this will require a close look at the risk factors.

Successful onboarding — training employees how to use the tools and how to use them correctly — is among the largest risks law firms face when implementing new technology. To see a return on their investment, firms must ensure that tools become part of the employee workflow. That requires a mix of internal promotion, process change and individual buy-in. Firms must ascertain that the partners, associates, and support staff that might use these tools understand how they work and the insights they can generate. Clients and prospects need to be assured that the firm not only has the latest tools, it is using them productively – for their benefit as well as your own.

Budget: Can we afford it?

One of the biggest objections to address will relate to the price. The cost to implement AI-enhanced technologies was a frequently expressed worry among the firms Thomson Reuters surveyed in late 2019. Of the larger firms surveyed (those with 180 lawyers or more), 60% identified the cost to implement as their chief concern. (For midsize and small firms, the percentages citing cost as the top concern were 57 and 77, respectively.)

The case for AI must include some forward-looking financial analysis — critical information in making any business case for a technology investment. The two questions most likely to arise are “How will we pay for it?” and “How and when will we see a return on investment?”. Firms must demonstrate, using as much numerical data as they can gather, that the purchase of AI-enhanced tools will more than pay for itself.