An Opportunity Rich Horizon – How AI Could Shape the Exponential Future of Law Firms – Lawyer Monthly | Legal News Magazine

An Opportunity Rich Horizon – How AI Could Shape the Exponential Future of Law Firms

Article written by Rohit Talwar, CEO and Alexandra Whittington, Senior Foresight Researcher at Fast Future Publishing.

AI and the New Business Agenda

As futurists, we focus on helping leaders to drive exponential growth by anticipating and exploiting the forces, ideas and opportunities shaping the future. Exponential growth is now a viable goal – across every sector, businesses are harnessing the power of Artificial intelligence (AI) and related technologies to drive step change improvements compared to industry norms. AirBnB handles 90 times more bedrooms per employee than the average hotel group; Tangerine serves seven times more customers per employee than the typical bank; Broad Group in China can erect a 57 storey building in 19 days; and Local Motors can develop new designs for its 3D printed cars at one thousandth of the cost of a typical competitor and manufacture each car 5-22 times faster. These firms are now increasingly asking their lawyers what they are doing to deliver a similar scale of improvement. After the shock wears off, lawyers are beginning to see the growth potential an exponential approach enables – and AI is increasingly seen as a key to help unlock the opportunity.

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Two years ago, law firms would laugh when we suggested putting AI on the agenda in our future strategy workshops. Today it seems to be pretty much the only thing they want to talk about. Why? Well they are beginning to acknowledge that AI has the potential to disrupt all industries and the legal sector in particular. The next 5-10 years could see a total transformation in how the sector operates and in the scale of legal opportunities emerging from AI and other exponential technologies disrupting existing industries and spawning new ones. While some worry about the application of these technologies eroding the US $650 billion global legal sector, others are captivated by the opportunities resulting from AI and its cousins reinventing the US $78 trillion global economy – which could grow to US $120 trillion by 2025 – with over 50% of that coming from fledgling firms and companies and sectors that don’t yet exist.

So what is this magical new elixir that could bring down governments and reinvent the global economy? Artificial intelligence is a field of computer science focused on creating intelligent software tools that replicate critical human mental faculties. The range of AI applications include speech recognition, language translation, visual perception, learning, reasoning, inference, planning, and decision-making.

The pace of development is accelerating and astounding even those in the AI sector. In March 2016, Google DeepMind’s AlphaGo system beat the world GO champion, demonstrating the speed of development taking place in machine learning – AIs core technology. The board game GO has over 560 million possible moves – you cannot teach the system all the rules and permutations. Instead, AlphaGo’s powerful machine learning algorithm observed thousands of games to deduced the rules and possible moves. This same technology can now be used across the various datasets held by law firms. A wide range of legal applications is emerging – such as inferring case outcomes, determining optimal contract structures, suggesting how to approach a new matter, or identifying emerging risks by analysing and interpreting data drawn from across the web.

Truly transformational impacts arise when AI is combined with accelerating science and technology developments in neuroscience, large scale databases, super-computing hardware, network communications, blockchain distributed ledger systems, digital currencies, the Internet of Things (IoT), 3D / 4D printing, and cloud computing. For law firms in search of growth, this is key – these exponential technologies are transforming old industries, enabling new ones and generating concepts that require new legal thinking e.g. self-owning assets.

 

A Technological Revolution Means New Opportunities for Law Firms

A good example of innovation driving law firm growth comes from US-based Perkins Coie. Dax Hansen, a partner specialising in IT, payments and international transactions spotted the growth opportunities presented by digital currencies such as Bitcoin and their enabling technology – the blockchain. In May 2013, Hansen established the first legal blockchain practice, which now has over 40 lawyers advising on blockchain in areas such as digital currencies, capital markets and distributed applications. This type of foresight is exactly what law firms need to remain relevant in the dawning technological revolution.  The three previous revolutions gave us steam-based mechanisation, electrification and mass production, and then electronics, information technology and automation. This fourth era of smart machines is fueled by exponential improvement and convergence of multiple technological fields – driving new opportunities for legal.

Within law firms, applications are emerging across the legal lifecycle – encompassing opportunity identification, bid development, negotiation, matter research and execution, litigation, outcome prediction, legal analytics and decision support, risk assessment, client reporting, obligations management, and project management, process design and practice governance. As a result, there are now clear examples of law firms using AI to gain a competitive edge. For example, Denton’s, Baker & Hostetler and Latham & Watkins are all deploying Ross Intelligence in key business applications. Robolawyer Ross is an example of the exponential potential of legal AI software; it went from student project to global law darling in less than two years – highlighting AI’s potential to transform industries from the inside and out.  In legal, AIs transformative edge is that it creates new services which the firm can offer to clients whilst also forcing the evolution of business models to encompass new legal services and billing approaches. These are early indicators of an accelerating cascade of changes – which demand the development of a foresight mindset to help firms anticipate and navigate what’s next – effectively and profitably.

Business models for law firms are evolving in part because technology is proving adept at absorption of routine tasks like discovery, case research, and contract drafting. Automated services like Rocket Lawyer and LexisNexis are nothing new. As AI advances (and we actually do expect it will eventually become commonplace in every business), law firms will need to balance short term priorities with the more fundamental strategic shifts required to address the service opportunities emerging on the five-to-ten-year horizon.

Artificial intelligence is also reshaping legal services from the ground up – potentially bypassing traditional providers. For example, the acclaimed DoNotPay chatbot provides an automated online service to challenge parking tickets. Joshua Browder’s iconic contribution to the LegalTech ecosystem is the poster child for the future of DIY, mobile-friendly, tech-savvy legal applications. Solutions are emerging for applications as diverse as completing divorce proceedings, class actions, fighting homeless evictions and filing refugee visa applications. The disruptive impact of DoNotPay and others should inspire two questions in every firm: “When might these start to impact our firm’s work?” And, “Should we create the next one?”

 

Near Term: Where AI Could Go in the Next 3-5 Years

In the next three years, we expect the stakes to rise as AI penetrates deeper – with widespread and accelerating deployment of AI on core internal law firm processes, and clear evidence of smart technologies directly replacing lawyers. Equally, we’ll see AI extending beyond law firms; a significant range of AI-based solutions will emerge for in-house legal and online services for consumers, SMEs and highly automated businesses looking to control costs. Newer technology-centric firms will drive more widespread adoption of blockchain and smart contracts. The public and private sectors will start making use of “zero employee” fully automated distributed autonomous organisations (DAOs). Finally, the continued evolution of AI functionality, combined with innovative new legal service models, will result in truly AI-centric law firms.

In five years, we could reasonably expect applications emerging with near-human levels of intelligence (Artificial General Intelligence) in specific domains. Routine legal work will increasingly be automated with up to 50% of tasks completed with no human involvement. Technology-centric sector entrants will emerge to compete with Big Law for the business of firms that might not even exist today. We will see the first examples of true Algocracy – with countries moving to digitising, automating and embedding the law in our physical world – imagine cars that fined us for speeding and TV sets that automatically submit video testimony of domestic crimes. Finally, the use of AI will increasingly be mandated by clients.

 

On the Horizon: Legal Services in the Next 5-10 Years

New Clients

The exponential growth opportunity for law firms emerges as clients start applying AI to transform their organisations, develop new offerings and create entirely new industries such as drone transportation, vertical farming and human enhancement. Offerings grounded in cutting-edge technologies, from life-extension and blockchain to IoT and AI will involve taking risks that test ethical and legal boundaries – particularly for early adopters and investors. There is also a growing sense that unchecked adoption of AI could cause harm, erode privacy and infringe rights, all of which are sources of legal opportunity.

Indeed, these exponentially intertwined technological changes on the horizon create what are often referred to as “existential risks.” Welcome or not, AI will drive change – creating immense uncertainties about its impact on society, business and government. For innovators, the legal costs could be trivial compared to the potential pay-off as they race to create the next wave of global business powerhouses and trillion dollar sectors. These ten sectoral and functional examples highlight what’s on the horizon:

 

  • Healthcare – AI will make medical diagnoses and decisions, determine treatment regimens, decide our right to access, and enable doctorless hospitals. How will humans seek redress against AI’s decisions?
  • Transportation – If an AI based system makes a poor transport management decision causing a car crash, passenger death, or aircraft delay – who will be liable – the vehicle owners, the manufacturer, the developer of the underlying AI tool, the supplier of the system training data, those guiding the training, or the provider of the technology platform on which the AI runs?
  • Human Resources – How will workers respond to AIs supervising workplaces and automated HR advisors guiding line manager and employee actions? How should employment litigation be handled?
  • Financial Services – What happens when someone loses their life savings because of incorrect advice given by an automated financial advisor?
  • Internet of Things – The IoT will place sensors in literally everything – with objects in the room such as the coffee cup, TV, sofa and personal clothing verifying who was present at the crime scene. Opportunities might emerge from pre-emptive legal insurance and retainers to protect against future accusations.
  • Self-Driving Vehicles – Autonomous vehicles will herald an era of self-owning assets including buildings and public infrastructure – what issues does this raise around legal liability in the event of service failure and accidents?
  • Blockchain – How will blockchain be used to certify assets, possessions and cash and eliminate fraud?
  • Research and Development – If AI is increasingly used for scientific discovery and the system infringes a patent – who will be held liable?
  • Additive Manufacturing, or 3D Printing – Will 3D printing put copyright, trademarks and intellectual property at risk?
  • Civil Rights – ‘Precog’ systems are emerging that can predict an individual’s propensity to crime. What governance frameworks might be required for such AI-enabled ‘pre-crime’ units and for protection of individuals’ rights?

 

New Business Models

We devised the seven scenarios below to help visualise the divergent range of possible future law firm business models. Each draws on similar driving forces, but highlight different ways in which current and new players might choose to respond. The scenarios have an ETA of 2023-2028 – but many are achievable now.

 

  • Robolegal – These law firms fully embrace AI, replacing entry-level human positions with an army of robolawyers, while a few human lawyers handle specialised
  • Algocracy (algorithmic democracy) – In this future, “law is code” – digitised, automated and embedded. All public decisions and law making draw on big data and the law happens at the point of impact e.g. our car fines us automatically if we speed.
  • Smart and Distributed – Blockchain is upending the legal and financial sectors, with a proliferation of fully automated contracts and DAOs – robo-firms existing entirely in software with no employees. Legal pioneers in distributed law rise to the top, helping firms, industry sectors, regulators, governments, and law enforcement agencies adapt to a blockchain world.
  • Online, Open and Cheap – A future where the “Anti-Law Firm” employs a large IT innovation team creating fully automated, very low cost, smart, and accessible online AI and blockchain based applications.
  • The Cyber Guardians – A disrupted future where the Uber of legal reigns, offering preventative or preemptive legal service, and legal protection by subscription and on-demand. The firm serves individuals and businesses that want to protect themselves and their privacy from the risks and unintended side-effects of leading an increasingly open and digital existence.
  • The Bodyguard – Emergence of a legal service that operates strictly through AI-analyzed 24/7 surveillance of clients and their digital and real world activities. The technology is used to gather all the information required to anticipate issues, pre-empt risks and defend the client when legal problems do arise.
  • A Very Human Law Firm – Small, highly successful and very expensive boutique law firms that cater to specialised clientele seeking ‘rockstar’ human lawyers, who are now considered a luxury item.

 

First Step: Visualise the Horizon

Our role as futurists is to provide legal sector leaders with a rapid and intense mental and sensory immersion into different possible futures. The goal is to help them explore the logical options, test their emotional reactions and then identify implications and options that feel right for their firm. Which AI-enabled opportunities beckon, and which repel? Which futures would allow legal work as we know it to thrive, and which require radically different mindsets, competencies and approaches? The applications and scenarios shared here represent a small selection of the possible futures which firms could select or create. Experience suggests that the difference between those who reach escape velocity and achieve exponential growth – and the rest – lies in the willingness to envisage and create preferred futures where we shape both the nature of the game and the rules by which it is played.

 

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