In the latest of our “Future of Law” dinner series, industry leaders gathered to dissect and debate the practical applications of Generative AI amid the flurry of headline grabbing claims and the general hype surrounding it. As usual, the event offered valuable insights into the evolving perceptions and practical considerations surrounding this transformative technology:
- A shift in perspective
Since the previous gathering in September, there has been a notable shift in the both the understanding and mindset towards Generative AI, reflecting the pervasive nature of the technology. The applications and use cases across the legal sector are now clearly understood and, dare we say, considered somewhat passe. Participants quickly adopted a more forward-looking approach and speculated how, with later releases and established vendors expanding services, the true potential would be realised. Attendees exhibited a deeper awareness of both the potential capabilities and inherent challenges of Generative AI, including the phenomenon of hallucinations and how erroneous output emphasises a current necessity for fact-checking and validation. While benefits are clear the trust is still being established.
While Generative AI holds promise, attendees acknowledged certain limitations, particularly in its ability to provide transparent explanations for its decision-making processes. Instances where ChatGPT effectively identified relevant information in eDiscovery cases underscored its utility but also highlighted the need for greater clarity regarding the reasoning behind its conclusions.
In summary, the well-documented and somewhat anodyne statements about operational efficiencies are now simply the table stakes. The challenge for firms is to consider how to define and to deliver measurable value and to be genuinely innovative in how service is currently being provided.
- Generative AI’s role in supporting legal work
One of the pivotal takeaways from the event was the evolving role of Generative AI as an integrated, support tool in the legal landscape. The advent of an AI legal assistant, while it currently serves as a complementary administrative resource requiring validation by legal professionals, the future releases from major vendors as well as the development of proprietary applications, reflects the true potential and a paradigm shift. Law firms are increasingly integrating Generative AI into their operations but beyond that, considering the access to more trusted or indeed proprietary data sources, the possibilities expand significantly beyond current use cases.
Moreover, there was a notable uptick in technical literacy and familiarity among attendees. This is also reflected in the investment in hiring leaders with expertise in Generative AI both from technical standpoint as well with an understanding of future opportunity and transformation. This trend underscores a growing comfort with leveraging advanced technologies and integrating them seamlessly into existing infrastructures. Perhaps a precursor to the lawyers and firms of the future.
In addition, client expectations are driving adoption, albeit balancing the constant pressure on fees with the concept of trusted legal brands and trusted legal advisors.
The perception was that there was an uncharted battleground where a convergence of services could be had across other advisory groups and failure to embrace this technology could leave firms disadvantaged in this rapidly evolving landscape and perceived as a weakness in a competitive market.
Unsurprisingly, the downward pressure on fees remains a threat and concern. Attendees debated the impact this technology will have on billing and whether their clients would be expecting lower fees with chargeable hours reduced by technology. There was an acknowledgement that charging models are already changing and while this will remain a consideration, clients are still seeking and more importantly, will pay for the right advice and the right outcome. However, this concern appears to be supported by a recent survey from Lexis Nexis where 52% of in-house counsel expect bills to be reduced as a result of generative AI, compared to 40% of those at law firms, rising to 53% of large firm lawyers.
- Generative AI and Professional Indemnity Insurance
Despite the optimism surrounding Generative AI, it has raised questions about how insurers and particularly regarding their Professional Indemnity (PI) insurance coverage, perceive usage as a potential risk and a catalyst to a rise in claims. Attendees quoted examples where insurers were proposing somewhat arbitrary increases in premiums without validation of risk. The complexity of insuring against risks associated with AI-driven processes has prompted pre-emptive negotiations and discussions well in advance of policy renewals. This raises questions about the accessibility of PI coverage for smaller firms, potentially exacerbating disparities in the legal landscape.
- Generative AI’s impact on small law firms
An intriguing development highlighted during the dinner was the the potential lowering of barriers to entry and the emergence of new entrant, leaner law firms underpinned by technology, including Generative AI, to deliver comprehensive services via Saas and cloud models. The suggestion was that experienced partners could establish practices quickly and efficiently, taking client relationships and delivering the same trusted advice but with considerably fewer resource requirements. This is not a new concept and resurfaces the debate on trusted brands but this approach challenges traditional notions of the need for support services and underscores the transformative potential of AI-driven solutions. However, whilst this may be true. One of the challenges that remains is the ability to originate new work and without the large brand strength, no technology will replace this necessity any time soon.
In summary, the sentiment surrounding Generative AI in the legal community has shifted from apprehension to anticipation. With new products and services constantly coming to market, the inclusion of more proprietary data and later versions of the technology inevitable, there is a growing recognition of the transformative potential of AI-driven solutions. Yet, as excitement mounts, it remains imperative to navigate the complexities and challenges inherent in harnessing this technology responsibly. As the legal landscape continues to evolve, embracing Generative AI presents both opportunities and challenges, underscoring the importance of informed decision-making and strategic planning for the future.