The Significance While it’s clear that generative AI is fast reshaping the legal tech landscape, what is still a matter of some debate is whether the industry and its investors are getting ahead of themselves. It’s still relatively early in the generative AI era, and for many legal professionals, the technology is still out of their price range or not yet up to their standards. Concerns over generative AI’s viability in the legal market were expressed as early as last year, when AI-fueled funding and acquisitions were just starting to ramp up. “AI is a really expensive operation … [and] that is why me and some others are curious about how some of these investments and acquisitions will pan out,” said Raymond Blyd, founder and author of Legalcomplex. However, it’s clear that there is strong demand for generative AI legal tech tools—and by extension the nascent startups and newly consolidated companies that develop them—from some sections of the legal industry. For instance, The 16th annual Law Department Operation Survey from the Blickstein Group and Deloitte, which surveyed 77 in-house legal and legal ops professionals from separate companies, found that legal departments see generative AI as a key way to lower legal costs and improve legal services. A large number also said they want their outside counsel to leverage generative AI—though that sentiment is far from uniform across all legal departments. Still, many legal departments welcome what they see as generative AI’s ability to automate more rote, lower-level work, such as answering legal questions from other departments or drafting NDAs. “People are finding they spend a lot of time on low-value work so there is a hunger there for something that is going to answer the question they answer 70 times a day,” said Joy Sherrod, director of discovery and associate general counsel at Intel at the Legal Innovator’s conference in San Francisco in June. Some law firms also welcome such automation as well, especially those outside of the Am Law 100 who see the technology as a competitive boost to their capacity. “[Generative AI] does help the smaller firm punch above its weight on projects and matters that require a lot of people. I like to view [generative AI] as a host of co-workers that can immediately jump into something and assist,” said Fisher & Phillips managing partner John Polson. But with in-house clients expecting to take on more work themselves thanks to generative AI, and expecting lower legal service costs, for law firms this potentially means more competition for less profit. So it’s little surprise that some will slow-walk generative AI adoption. In fact, that is already the case with some AI-powered legal tech tools that threaten the billable hour. Jim Sullivan, founder of e-discovery service provider eDiscovery AI, sees this first hand. ““The biggest hurdle we have is the vested financial interest in using attorneys to review documents.” he noted. “A lot of people have significant investments in that—that’s going to cause significant challenges to disruption … There’s a lot of financial incentives around using lawyers.”
And with concerns about the accuracy of generative AI tools far from abating, it’s unlikely that more law firms will become comfortable relying on technology for additional tasks any time soon.
The Information Want to know more? Here’s what we’ve discovered in the ALM Global Newsroom: AI Will Ramp Up Intense Big Law Battle for Talent, Client Share 'Everyone Is Swamped': In-House Lawyers Hopeful Gen AI Will Help Them Come Up for Air Law Firm Leaders Say Gen AI Can Level Playing Field Between Large and Smaller Firms AI 'Leverage' Means Some Firms Are Getting Less Work, In-House Lawyers Say Legal Departments Want Their Firms Using Gen AI—and Expect Cost Savings Generative AI Is Bringing Waves of Funding to Legal Tech. Can It Last? Once Ignored by Investors, Justice Tech Market Sees New Opportunity Gartner Predicts Legal Tech Market Will Hit $50 Billion by 2027. Is That Realistic? The Forecast At the end of the day, it’s easier to build AI tools than it is to reorient an entire industry and centuries-old pricing structures and traditions. How long legal professionals take to catch up to the realities of generative AI will show just how smart, or shortsighted, these acquisitions and investments were in retrospect. Of course, some are likely to be more receptive to the flood of generative AI legal tech tools than others. But while generative AI may not be welcomed as fast as legal tech companies are hoping, neither can it be ignored, as some defenders of the billable hour are likely hoping. With clients already wanting to see greater efficiencies with generative AI, and many excited over the tangible and readily apparent benefits the technology can bring, it’s clear that leveraging generative AI will eventually become a necessity for legal professionals across the board. But just when that will occur, is anyone’s guess. It may happen too slowly for many legal tech companies who fast positioned themselves to capitalize on this innovation, and too fast for those unable to adapt to a reality that requires more creative billing alternatives and a new way of working. | 