Exploring the Use of AI in Law: Opportunities and Challenges

November 1, 2022
November 1, 2022
Gary Sangha | Founder & CEO

Artificial intelligence (AI) promises to upend the status quo across industries, freeing workers from the shackles of tedious manual labor and opening the door to creative thinking and relationship building. But business leaders often wonder if their competitors are using AI in the same capacity, and if they’ll outcompete them in terms of efficiency and profitability by doing so. The answer isn’t so simple.

Yet, while the AI legal software market is predicted to grow by over 28% from 2021-2026, adoption has been relatively slow with only 20% to 25% of legal departments using AI in at least one area, according to a LexisNexis survey of legal departments.

The reason is simple: fear of the unknown. In the legal profession, there is little margin for error. It’s a place where crucial due diligence and human touch justify the long hours and high salaries. Technology’s vast potential, however, should not be ignored. As it stands, the use of AI in law presents both challenges and opportunities. Understanding both sides of the coin remains a crucial step in successful AI adoption and implementation.

Road sign reading “OPPORTUNITY JUST AHEAD,” signifying the use of AI in law)

The Challenging Use of AI in Law

When it comes to the use of AI in law, many old-school lawyers still aren’t convinced of its promise. According to one report, two-thirds of legal professionals said their executives weren’t supportive of modernizing their departments in a profession that relies heavily on precedent. Though AI technology is relatively new, best practices and examples do exist—for those willing to seek out answers and roll out implementation correctly. 

Let’s take a closer look at the hurdles legal departments encounter.

Lack of Foundation

Even in well-resourced legal departments, 25% of legal professionals say they simply don’t have the time to learn how to use new technology tools. The lack of commitment to adopting AI solutions poses a major issue as AI requires a strong business and algorithmic foundation to maximize its efficiency. In other words, the more good data a system has, the better the outputted results will be. AI can save legal departments money, yet the need for time invested in onboarding exists.

For instance, LexCheck’s software is built on a strong platform of data developed by Silicon Valley’s finest engineers and legal minds. It is loaded with proprietary best practices, but it can’t predict a company's preferred legal positions out of the box. It’s only after the system creates an AI Digital Playbook and continues to review agreements when machine learning mechanisms kick in and the AI performs to its full potential. 

Fear of Litigation

AI can handle many tasks very well, including scanning data sets, comparing drafts to standard templates, or even extracting context to help teams make better decisions. What it can’t do is fully replace human judgment. It can’t detect subtle nuances, take calculated risks, or view agreements through the lens of a longstanding business relationship.

AI isn’t completely free from bias either. It is, after all, programmed by fallible humans. And when compiling statistics, the logical choice on paper isn’t always the right one. Mistakes can occur when AI assesses raw statistics without regard for the human struggle. This reality can open the doors to litigation. At the heart of legal professionals’ fear  is a lack of understanding in what AI can or can’t do.

Ethical Considerations

Many lawyers still believe AI is not reliably equipped to handle ethical considerations—and they’re right. Legal departments face many ethical questions: Are these platforms truly secure? What if we miss key considerations because we’re leaning too heavily on technology? How will we be able to justify AI’s decisions if we don’t know the rationale behind why they are made? There are many unknowns.

Eventually, legal teams may have no choice but to get on board as the pace of digital transformation quickens. Pressure from staff shortages, increasing costs, and heavier workloads will likely make AI a foregone conclusion. As ABA Model Rule 1.5 requires lawyer fees to be reasonable, lawyers may need to eventually defend their decisions not to use AI.  

Opportunities Pertaining to the Use of AI in Law

Ultimately, there are more positives for the use of AI in law than there are negatives. There’s no denying that the future of AI is now, and while AI is not a panacea for every problem that plagues corporate legal departments today, it is a much-needed tool for resource conservation that frees up teams for more strategic, big-picture thinking. Change can be daunting, but it’s also often necessary.

Here are three main advantages of the use of AI in law:

Time Conservation 

Time is one of the scarcest resources in legal departments, which often shoulder the blame for corporate bottlenecks. If a contract can’t get signed in a timely manner, the company runs the risk of the deal falling through. Surveys suggest that poor contract management results in delayed revenue for 60% of businesses. Worse yet, half of companies miss out on business opportunities as a result of sluggish contracting processes. 

AI excels at analyzing large datasets, scanning and comparing agreements, and identifying common errors. What takes a human reviewer a week or more to complete takes AI only five minutes. Lawyers are susceptible to fatigue and distractions; AI isn’t. Combining the two can cut review times by 90% and the total time to execution by 33% or more

Risk Mitigation

Mitigating risk and ensuring compliance with preferred language and negotiating positions represent the biggest opportunities for legal AI. 

The best solutions can run an instantaneous comparison between newly uploaded drafts and existing standards. Others include version control, autosave capabilities, and document tracking automation to ensure that no contract is misplaced. A careless typo can create a huge operational risk, and AI is particularly suited to catching these mistakes.  Best of all, AI also helps teams prioritize risks according to their level of potential damage.

Cost Reduction 

Due diligence has gotten much more expensive in recent years, and few businesses can afford the current trajectory of staff turnover. Even when legal is outsourced, departments are paying anywhere from $300 to $1,000 for a single contract review and another $500 to $3,000 in negotiation costs. 

For these reasons, the use of AI in law is not just practical, it’s economical. Letting AI take the first pass at a contract review saves two weeks’ worth of salary, institutionalizes knowledge that would otherwise leave with former staff members, and saves on 99% of the training costs for new employees.

LexCheck Shows How AI and Attorneys Work Best Together

While the use of AI is reshaping the legal profession, it’s doing so in largely beneficial ways. Despite the concerns and uncertainty of technology adoption, incorporating AI into daily workflows is an inevitable reality. Investing in AI and understanding its automated capabilities can complement the work of lawyers and in-house counsel. 

Lexcheck is a great example of how technology is bridging the gap between AI and humans, uniting the two to solve complex organizational challenges. 

LexCheck’s use of AI in law lets you:

  • Redline and review drafts for errors, compliance, and best practices
  • Compare drafts to corporate legal playbooks
  • Assess risks to guide escalations
  • Extract context that can help justify decisions during negotiations
  • Implement changes at the click of a button
  • Program “if/then” rules to automate certain changes
  • Train new employees on company positions and preferred language
  • Reduce contract approval time by 80%

AI and lawyers work best together, and the work is more rewarding and profitable than manual processes that cause teams to burn out at alarming rates. 

LexCheck is committed to helping corporate legal departments experience the full benefits of the use of AI in law. Contact us at sales@lexcheck.com, or request a demo to see our technology in action.

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