February 11, 2021

Artificial Intelligence - An Underutilized Tool Or A Hurdle For In-House Legal Departments?

Artificial intelligence- an underutilized tool or a hurdle for in-house legal departments?

“Robots are not going to replace humans; they are going to make their jobs much more humane. Difficult, demeaning, demanding, dangerous, dull – these are the jobs robots will be taking." Sabine Hauert, Co-founder of Robohub.org

Lawyers have long been characterized as technology Luddites who are slow to change and wary of innovation. For in-house counsel, though, this stereotype may be fading. The legal industry and profession are on the cusp of a revolution in the practice of law led by the adoption of artificial intelligence (AI) computers – in particular by in-house counsel. AI has arrived in terms of assisting lawyers to do things faster, better, and cheaper. AI and cognitive computing or machine learning are generally interchangeable terms that all refer to how computers learn from data and adapt with experience to perform tasks. Legal tech has undoubtedly proved its value in recent years, helping law firms to become more efficient, cost-effective and agile, and also realize the benefits of advances such as artificial intelligence (AI), cloud computing, big data and automation.

Why In-House Counsels?

In-house lawyers are at the forefront of re-inventing the traditional, tedious and slowing legal profession. Uber General Counsel Salle Yoo encapsulates this spirit requiring quick results in between putting out legal fires: “I always tell my team, we are not here to solve legal problems, we are here to solve business problems. The law is our tool and it’s the specialty tool we have.”[1]

This holds true as the in-house counsels deal with legal matters that are faced by the business team and the business team is the driving force of any company.

AI trends

A survey of 207 in-house attorneys was conducted to measure current perceptions regarding the use of AI in corporate legal departments and the perceived benefits of AI once adopted.

Of the respondents, 51% came from legal departments with fewer than six attorneys; 14% worked in departments with six to 10 attorneys; and 35% worked in departments with more than 11 attorneys. Respondents’ roles in their departments broke down as follows: 26% as assistant or associate general counsel, 23% as general counsel, 22% as counsel, 12% as attorneys, 5% as deputy general counsel, and 12% as “other” roles.[2]

In-house attorneys’ anxiety over AI often stems from concerns that it will replace them or the work they do. Where the evolution of AI can play a significant role in the legal industry is by augmenting lawyers’ work and helping increase their productivity – not replace them. Below is the list of tasks that AI can do in-house, thereby making the legal process simple and efficient.  

1. Contract review and negotiation – Using AI as the first layer of contract analysis is very helpful as it reduces the burden of lawyers in mundane reviews of NDA’s and other standard contracts. With AI handling simpler processes and reviews, in- house counsels are freed up for more challenging jobs that require human brains, such as complex contract reviews, managing strategic planning collaborating across departments and developing creative solutions.

2. Due diligence reviews- A typical due diligence involves a bunch of lawyers going through a bulk of documents (hard copy or in an e-room) searching for real estate issues, complex litigation issues, dates, contract clauses, intellectual property etc. AI uses tools to simplify this task to a certain number of people and to specific hours/minutes to complete it. It helps in finding specific legal concepts and generating automated reports on it.[3]

3. Prepare contracts. The “Holy Grail” for in-house lawyers who draft contracts is the ability to create and use a standard/template agreement, i.e., one that has standard terms and conditions and requires (or allows) limited changes/customization. Standard contracts are huge time-savers and allow the company to have a consistent set of agreements. There are AI tools that can create contracts, using whatever set of parameters the legal department feels important.

4. Legal spend/Legal operations analysis- There is a wealth of information in the e-billing system but, unfortunately, many in-house lawyers are not good at extracting the information in a useful manner. AI is solving that problem, providing the capability to analyze what work was done, how it aligns with other work done by that firm, how the work/efficiency compares with work provided by other firms engaged by the company, and how the work/efficiency compares to the market generally.[4]

5. Legal research- More often than not, in-house lawyers either shortchange the research process because they don’t want to spend the time or money to do a complete job or pay a law firm to have a first- or second-year lawyer flail away on the question. AI will allow them to ask legal questions in plain language and get an answer back – an answer that includes researching regulations, caselaw, secondary sources and more.

Perceived Adoption hurdles

Top cited concern with adopting AI came down to cost. Several attorneys described that budget constraints are not allowing for the purchase of AI technology.

Also, people, especially lawyers, fear change. The hardest part will be shifting people from their tradition workstyles to new technology as their reluctance to change is tied to concerns over technological expertise.[5]

Conclusion

In-house attorneys must ensure that the potential hurdles — from cost and reliability to lawyers’ hesitancy to be early adopters, and they should not keep them from realizing the potential of AI to transform legal departments by enabling them to reduce costs, develop business strategy, minimize contract risks, and deliver better legal services. Indeed, the future is now and the benefits of AI in a legal department are many.

To use the tagline of AI prediction firm, Premonition, “those lawyers not adopting legal technology could ultimately miss out on “a very, very unfair advantage”.

[1] https://chatbotslife.com/how-in-house-lawyers-are-turning-revolutionizing-the-profession-2648963e1f4

[2] https://legal.thomsonreuters.com/en/insights/articles/artificial-intelligence-ai-report

[3]https://www.squirepattonboggs.com/-/media/files/insights/events/2019/01/artificial-intelligence-law-for-in-   house-counsel/artificial-intelligence-law-for-in-house-counsel.pdf

[4]“Artificial Intelligence (AI) in Law Departments: Opportunities,” LinkedIn® Pulse, posted October 5, 2016 (Peter Krakaur)

[5]Ready or Not: Artificial Intelligence and Corporate Legal Departments", corporate counsel believe they are tech savvy but acknowledge that their comfort level and confidence with technology have limitations, specifically around artificial intelligence (AI).

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