Legal technology and AI

Imagine a line of cars on an interstate ramp. Everyone knows they need to get on the highway; everyone can see they’ll go faster when they do. But many are waiting for another car to make the first move. Similar to hesitant on-ramp drivers, law firms know they need to embrace GenAI yet are reluctant to merge into this new lane of technology.

Let’s start with how the legal profession sees the potential of AI. In the second annual Future of Professionals Report from the Thomson Reuters Institute, there’s a striking finding: more than three-fourths (77%) of over 2,200 respondents said they believed AI would have a high or transformational impact on their careers, up from 67% who agreed with either sentiment when asked in 2023. Those who said transformational were 42% of respondents, up from 34% in 2023.

Regulations, staffing issues, the potential for a recession, and generational leadership changes are all areas of concern for respondents. But it’s AI that has captured the industry’s attention most, and not only that of working lawyers. Zachary Warren, Technology & Innovation Insights Lead for the Thomson Reuters Institute, has seen substantial interest in GenAI across the board, even from those who hadn’t shown great interest in technological developments before. “We’re seeing people from the C-suite, and law firm COOs and CFOs, all talking about generative AI for the first time.”

Per the report, professionals expect AI to affect the strategy of nearly all (94%) corporations. Its most significant areas of influence are likely to be in operational strategy — 59% of C-suite respondents — and in product or service strategy (53%).

When asked what their highest priority is for the next 18 months, about half of legal respondents said it would be exploring AI’s potential and implementing it.

The rise of “fast followers”

The ground began to shift in 2022, with the widescale release of large-language models (LLMs) powered by AI — that’s when, essentially, AI “went public.”

Before the rollout of these LLMs, “In the legal industry, if you wanted to use AI, you needed to develop a point solution,” says Andrew Fletcher, Director of AI Strategy and Partnerships at Thomson Reuters Labs. “You had to look at the data you had and use that to train a model to solve a particular problem. If you were using a general-purpose solution, it probably wouldn't have worked that well in your specific legal use case.”

Now, lawyers are getting quality results even from out-of-the-box AI solutions. This capability leads them to consider how much more they could improve their efficiencies by adopting professional-grade, legal-oriented AI systems.

“We’re seeing a lot of transformational change in a short period of time,” Warren says. “AI is going to have some shake-up effects on how professionals do their daily work, and it may change what it means to even be a lawyer, in some cases.”

To be sure, many legal professionals aren’t fully on board with AI yet. About 50% of respondents to the Future of Professionals Report said that, while they believe AI-powered technologies will typically provide a basic starting point, they also think professionals will still need to do much of the work themselves. Another 28% said AI was a strong starting point.

There’s also concern about the extent to which legal professionals should use AI in their practices. In a recent report on generative AI and professional services, a survey found that, while 85% of respondents believe they could use GenAI for legal work, only about 55% think they should use it for legal work.

Yet when asked if they anticipated AI becoming a part of their workflow within three years, roughly 50% said yes, citing both open-source GenAI programs like ChatGPT as well as legal-specific generative AI solutions.

Questions remain as to the accuracy, reliability, and security of AI systems and how a lawyer using AI will remain in compliance with ethical and regulatory policies (see Chapter 2). There also remains a lack of awareness in the legal sector about AI technologies and their potential. Only about one-fourth of lawyers said they have used open-source solutions like ChatGPT, and only about 10% said they are actively using legal GenAI systems.

One way to describe these more reluctant law firms is “fast followers.” Many aren’t eager to be the first among their peers to leap into AI. However, they also want to move fast once the market shifts in that direction.

It’s a race to be second. It makes strategic sense for smaller law firms to keep an eye on their deeper-pocketed rivals to see how they adopt AI and what results they’re posting. The problem, however, comes when a fast follower waits too long to start its own adoption. That’s why lawyers should be familiarizing themselves with the practical usage of AI now. The more fluent they are with AI-fueled technology, the easier their firm’s widescale adoption of the technology becomes — because the learning curve will get steeper every month.

One area of concern for many legal professionals is whether using an AI-powered technology for a legal matter could put them in violation of any ethical or professional codes of conduct.

It’s a murky picture, as guidance is only slowly emerging on a state-by-state basis. For instance, the California State Bar has issued “Practical Guidance for the Use of Generative AI in the Practice of Law,” and other state bars — including New York, Florida, and a few other states — have followed with similar releases.

The California bar guidance includes:

• A warning against perceived overreliance on AI tools “as the end all be all to legal research and analysis” and that a lawyer “has a non-delegable duty of professional judgment, which remains the lawyer’s responsibility at all times.”
• Breaking down the difference in billing between the approved — lawyers charging “for the time actually spent on the work product, such as refining AI inputs or prompts, or reviewing GenAI outputs” — and the unapproved — billing “the client the time saved due to the use of GenAI.”

Some courts have considered AI-related actions as well. The U.S. Fifth Circuit Court of Appeals had proposed Rule 32.2, which required that attorneys certify the extent to which they used GenAI in drafting and that any AI-generated content be reviewed for accuracy, but ultimately decided against issuing it. The U.S. District Court for the Eastern District of Texas also adopted a local rule mandating that attorneys verify AI-generated content and attest that they have maintained independent legal judgment. The American Bar Association cited the rule as providing “guidance on the use of GAI (GenAI) in court filings while remaining able to adapt to GAI’s rapid advancements.”

On the legislative front, while there have been no notable Congressional actions to date, the European Union’s recent AI Act lists “assistance in legal interpretation and application of the law” as falling into the high-risk AI usage category — one that requires registration in an EU database.

The American Bar Association (ABA) weighs in

Questions abound as to what constitutes an ethical AI usage policy in a legal context. If an attorney uses GenAI to advise a client, are they employing a service that some jurisdictions may deem ineligible to provide legal counsel? Can a firm use GenAI and charge a client the same rate to do work they had formerly done manually?

Issued in the summer of 2024, the ABA’s Formal Opinion 512 provides one set of guidelines. The ABA said lawyers using GenAI should be mindful of several existing rules in the ABA Model Rules of Professional Conduct, including:

• Competence (Model Rule 1.1). Lawyers must understand all benefits and risks associated with the technologies they use to deliver legal services to clients.
• Communications (Model Rule 1.4). A lawyer should reasonably consult with clients about how they accomplish the client’s objectives. Lawyers could interpret this rule as requiring them to describe to clients when and how they will use GenAI in their dealings with them.
• Fees (Model Rule 1.5). A lawyer’s fees and expenses are required to be reasonable. In some circumstances, this could mean that the lawyer should not charge a client for any time spent learning how to work a GenAI tool. That said, if “a lawyer uses a GAI (GenAI) tool to draft a pleading and expends 15 minutes to input the relevant information into the program, the lawyer may charge for that time as well as for the time necessary to review the resulting draft for accuracy and completeness,” the ABA said.
• Confidentiality of Information (Model Rule 1.6). Any lawyer using GenAI “must be cognizant of the duty to keep confidential all information relating to the representation of a client, regardless of its source, unless the client gives informed consent.”

Legal departments are developing AI usage policies that can be summarized roughly as follows: AI should be “A legal assistant. It’s there to be your co-counsel, working alongside you,” Fletcher says. “But you, as the legal professional, are the one who’s in control and ultimately making the decisions. You are the one who has built a relationship with your client, and you understand what's best for them.”

That’s why verifying AI-generated results for accuracy is essential. There’s the potential for a malpractice suit if a law firm uses any GenAI program that hallucinates — using inaccurate or fabricated case law or citations for its findings. Having a strong peer review and fact-checking system is paramount for any legal operation using GenAI. A good way to regard an AI system is as “people plus technology,” Warren says. “Not as a technology that’s in any way designed to replace critical thinking in lawyering.”

Each law firm will have to establish its red lines. What are the things that your firm doesn’t want AI to do? What would you consider to be a step too far for AI?

In a recent survey, Thomson Reuters found some consensus agreement that AI should not be used as a final arbiter for any legal action but is considered appropriate for lower-stakes work like document generation and research. Respondents said they felt secure about using GenAI tools for non-legal work within a law firm, such as question-and-answer services or administrative tasks. Almost 68% of respondents said they thought firms should apply GenAI to non-legal work, compared to 55% who said they felt firms should apply it to legal work.

Predictions state that, in the next three to five years, at least half of all legal professionals will be using some kind of GenAI-powered tool. So, it’s fair to say that there could be a cultural shift in this timespan in terms of how people regard GenAI. The technology will go from being seen as an interesting option to a must-have for a legal business — a primary means by which professionals will get some types of legal work done.

A good comparison is the internet search engine. Around 1997, someone who used a search engine to look up facts, addresses, and businesses was considered experimenting with an interesting, next-generation technology. By the mid-2000s, using Google had become a daily fact of life for every professional.

Law firms that have undertaken successful AI rollouts have a number of things in common. For one thing, they typically let their professionals take the lead in exploring AI systems. They encourage their legal teams to log all notable improvements in efficiency and productivity and share them with their colleagues. They’re letting their lawyers set the pace, not pushing them to use AI to meet any efficiency quotas. This organic adoption strategy allows lawyers to experience the benefits of AI firsthand, showcasing its value without pressure.

Tools like Thomson Reuters CoCounsel Drafting make bridging the gap between testing and adopting easy. CoCounsel Drafting uses professional-grade GenAI to help legal organizations overcome drafting challenges. Users have found that it enables them to cut drafting time by up to 50%. “There is substantial time savings when using CoCounsel Drafting,” says J.J. Ball, legal counsel at Systemiq. “When we are operating on an average turnaround time of three to four business days for a response, we can cut that down to one to two business days by utilizing the tool to get drafting work done.”

When it comes to return on investment (ROI) with CoCounsel Drafting, Ball adds, “The contract summary and clause summaries can be a massive time saver in higher-risk legal requests if leadership or GC wants a summary of a particularly large contract or contract with clauses.”

A good question is how law firms will verify and fact-check AI-generated sources of information. In some cases, there still isn’t enough quality data for fine-tuned legal AI training, as many firms face privacy restrictions regarding using client data for training purposes. This challenge will likely be one of the bigger issues in developing more sophisticated, legal-centered GenAI programs.

AI technologies in the legal industry address the challenge of managing vast and complex information efficiently. Their various capabilities extend far beyond legal drafting tasks, offering innovative solutions that transform traditional practices into streamlined operations. With the ability to process and analyze large datasets using AI, lawyers can quickly access critical insights, make more informed decisions, and navigate modern legal complexities with greater ease.

AI’s diverse use cases in legal work include:

• Summarization. AI tools condense lengthy documents into concise summaries, allowing lawyers to rapidly grasp essential information when dealing with extensive legal texts, contracts, or court opinions.
• Legal research. AI's natural-language processing capabilities allow it to search vast legal databases and identify patterns and trends, potentially predicting case outcomes and highlighting emerging legal issues.
• Contract analysis and management. AI-powered tools review contracts swiftly by identifying risks, inconsistencies, or non-standard clauses. This efficiency enhances accuracy and reduces human error.
• Predictive analytics. By analyzing historical case data, AI provides insights into the likelihood of success for legal outcomes and aids in the development of effective legal strategies.
• Compliance and risk management. AI systems monitor regulatory changes in real time, helping organizations stay compliant and mitigate risks proactively.

The integration of AI into legal practices offers a wide range of significant advantages. Law firms can enhance their operational capabilities while positioning themselves competitively in a challenging market. Additionally, with substantial time savings, they can have the bandwidth to focus on more strategic, creative, and interpersonal tasks. The future of law is undoubtedly intertwined with AI, promising a more efficient, accurate, and innovative legal sector.

The savings potential

Respondents to the Future of Professionals Report said they expected AI could save them about 12 hours per week in the next five years or four hours per week over the upcoming year — 200 hours annually. That’s the equivalent of adding a new colleague for every 10 team members on staff.

These time savings could mean a substantial return on investment — for a U.S. lawyer, something along the lines of an estimated $100,000 in additional billable hours. However, even more value could lie in intangible improvements to the lives of legal professionals.

When asked what they wanted to do with those 200 saved hours, some respondents said they hoped to devote more time to strategic work and planning. Some wanted to use the time for business development and marketing. But the top answer (24%) was to achieve a better work-life balance. Many legal professionals simply would like not to work 80- or 90-hour weeks, and they see AI as a way to eliminate and streamline tasks that consume too much of their time in the office.

So, while the potential ROI is impressive in terms of proposed cost savings, where AI could wind up having the most value for a law firm is in the firm’s personnel:

• More efficient means of onboarding new hires, both laterally and for associates coming out of law school, especially if the latter are already versed in AI technology
• Reduced junior lawyer burnout, as associates won’t be drowning in repetitive, unproductive tasks
• More energized senior lawyers who can devote more of their time to client advisory and helping to grow the firm’s client base

Once a law firm commits to infusing its operations with GenAI technology, the next stage is critical to ensure it uses the technology properly and regularly. There are two essential elements to achieving this:

1. Integrating the technology into the firm’s existing tech stack without experiencing substantial delays or causing excessive user confusion and frustration
2. At the same time, getting everyone’s buy-in — from senior partners to law clerks 

Legal professionals need to be on board with incorporating the technology into their day-to-day work, not paying lip service to using it or regarding AI as a costly new imposition from the C-suite.

However, integrating AI can also pose a logistical challenge. Most law firms have tech infrastructures that their IT staff have built up over the past decade or longer. That’s why a law firm must involve its IT staff at the start of the integration process, especially since they’ll need the questions answered:

• How does the GenAI technology operate?
• What sorts of resources will it require?
• What are its security protocols?
• How do you best fold the technology into the firm’s existing tech stack?

So, there’s a core element of trust needed between the law firm and its technology providers. Andrew Fletcher notes, “Law firms can be reticent to turn on some AI features because they want to be sure about what they’re going to do. There’s a need to have confidence in how those solutions are being delivered.”

Technology providers should be as transparent as possible about the role that AI is playing in their products. A good provider won’t obfuscate how its systems use AI — in fact, the very opposite is true. “Adoption becomes easier because of that trusted relationship and the fact that AI is sitting within the tools that you already are using,” Fletcher says.

A seamless, strategic integration is the best way to achieve everyone’s buy-in on GenAI among legal professionals. A GenAI system should be considered a vital piece of a legal professional’s desktop or laptop. What’s not ideal is for lawyers to regard AI as a stand-alone system they need to access separately from, say, working on a Word document or a contract form. Even the small cognitive shift required whenever a professional has to open a different window on their desktop to access an AI system may limit their AI usage.

As AI prompts become more seamlessly integrated into a legal professional's tools and workflow — and as intuitive to use as spellcheck — AI will become a routine part of their daily work.

GenAI could shake some bedrock concepts in the legal industry — what constitutes legal work and how law firms operate. For one thing, once GenAI usage becomes widespread, it could lead to a shift in mindset in how law firms hire and train staff.

Traditionally, a firm hires a junior lawyer. The entry-level lawyer has to handle the firm’s time-consuming grunt work for two to three years, often needing to work long hours on repetitive tasks. Only after that time will they start getting involved in strategic decision-making, becoming part of deal teams, and working on more litigation or other advanced types of work.

The challenge is this: law firms will always have first-year associates they want to groom into future partners. But if much of the grunt work becomes automated and substantially handled by GenAI systems, what is the role of these entry-level lawyers? Will their work center on being an evaluator and double-checker of AI-generated information? How will a law firm better incorporate its junior lawyers into more value-added client services?

While there are many questions to consider, there is not much consensus among law firms at the moment.

However, the concept of considering GenAI as something to think about using down the road may no longer fly with a law firm’s clients. Roughly three-fourths of corporate clients surveyed in the previously mentioned generative AI and professional services report said that they want their law firms to be using AI-powered solutions.

“What they want is for their litigators, their transactional attorneys, to put their critical thinking on top of the AI output, in order to get the best results possible,” Warren says. “By and large, clients are beginning to expect their law firms to be using these tools.”

This expectation means a change in philosophy for law firms. For a long time, legal operations could afford to downplay and even ignore some technological developments. After all, their job was to serve clients, often using tried-and-true methods that hadn’t changed much in decades. The attitude among some managing partners was, “We're a law firm. We're not a technology company. We’re not in the business of technology.” The question has now become: “Are you sure about that?”

“Clients will always want expertise. And they will always want their work to be done cheaper, faster, and better,” Warren says. “How are you going to do that? Through technology. As a result, technology starts to become a differentiator. Who has the best use of technology to get to what their clients want?”

One reason why there are professionals across the board in the legal space interested in this technology is that there’s a “growing recognition that for the law firm of the future, if they’re going to keep up with what their clients want and do it better than the firms they’re competing with, technology will, by necessity, play a big role,” Warren adds.

Whether they want to or not, law firms will be in the technology business. It’s only a question of how.

The time for law firms to embrace AI is now

AI is in the process of reshaping the legal landscape. As the technology continues to evolve, it has the potential to change relationships between law firms and their clients, between managing partners and junior attorneys, and between competitors in the legal space.

So, law firms must be proactive. The future is coming, whether they like it or not. So, it makes sense for a firm to get on board before its competitors do. Solutions like CoCounsel offer one way for a law firm to confidently embrace and adapt to what is going to be a generational change in legal operations.