Will the future of legal practice be driven by AI-boosted creativity?
Yesterday's significant developments in legal tech featured TPG's Elite Technology's cloud shift, Florida Bar's collaboration with Nota, and OECD's warning about AI risks. Experts stress the need for understanding and managing AI's ethical implications in this rapidly evolving sector.
Welcome to your Law Tech briefing for July 14, 2023, covering what happened in legal tech recently.
TLDR; Listen instead:
Have less than a 1 min? Three takeaways from yesterday
- Legal firms must significantly consider increasingly adopting cloud-based services and AI technologies, such as generative AI, to harness the benefits of digital transformation. This adoption should also include software solutions that enhance compliance, such as legal trust accounting software.
- However, while adapting to new technologies, legal knowledge workers need to be mindful of the potential risks and job security concerns related to AI, as pointed out by the OECD. Employees should be trained to manage AI tools effectively and to comprehend their ethical implications, ensuring the right balance between technological advancement and job security.
- As the demand for digital transformation in law firms grows, so does the urgency to address related privacy and security issues. Awareness of potential regulatory oversight for firms employing AI tools is crucial, and legal professionals need to ensure data accuracy and tackle privacy concerns proactively. This calls for a renewed focus on developing digital acumen and a deep understanding of new technologies among legal professionals.
Briefing
Among the latest updates, TPG's Elite Technology outlined its growth strategy around digital transformation and a shift towards cloud-based services during its London summit. In other tech news, Tangibly, a cloud-based platform for managing trade secrets, has secured $6.5m in a seed funding round led by Madrona Venture Group.
Meanwhile, Florida Bar set a precedent for state bars by collaborating with Nota to provide their members with access to legal trust accounting software. Also, the Organisation for Economic Co-operation and Development (OECD) warned about the risk AI could pose to many professions, including the law. In the wake of this, Olga Mack emphasizes the need for lawyers to understand AI tools, manage data and algorithms, and understand the ethical implications
TRENDS
The industry's reshaping and growth are attributable mainly to technological progression, such as AI and cloud-based services. Florida Bar's initiative to offer its 111,000-plus members access to legal trust accounting software highlights a novel approach for the legal sector to enhance compliance with rules and prevent public errors by leveraging technology.
Legaltech startup DeepJudge's KnowledgeSearch, an AI-driven solution for precision searches, and Lexis Nexis' report indicating an expected increase in generative AI adoption by law firms are instances of AI's unfolding potential. This is juxtaposed with the increasing necessity to address related privacy and security issues.
ANALYSIS
As tech continues to influence the legal industry, businesses need to redefine their strategies and align them with emerging trends. While the benefits of AI and advanced technology incorporation seem significant, the warnings issued by experts should be taken into account. Firms may need to reach a balance between technological advancement and job security, given the OECD's warning on AI posing a threat to 27% of jobs (although this is criticized by some). Additionally, the FTC's investigation of OpenAI points towards potential regulatory oversight that firms employing AI tools may face, underlying the critical importance of data accuracy and privacy concerns. In the larger scenario, lawyers equipped with digital acumen and an understanding of AI tools' ethical implications have an opportunity for substantial growth in the evolving legal-tech landscape.
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Key stories
Law Unlimited: Welcome to the re-envisioned legal profession (Jordan Furlong)
The advent of artificial intelligence (AI), particularly Gen AI, has been argued to pose a direct threat to the legal profession with its ability to conduct complex knowledge and reasoning tasks. This argument suggests that Gen AI might render more than 90% of the legal services carried out by law firms deficient, leading to their extinction. Yet, the implementation of AI in law services does not necessarily predict doom for legal firms. Instead, it marks the onset of a shift in legal practice — from purely traditional to AI-boosted creativity. AI-powered creativity will not only launch underexplored concepts but also intensify lawyers' creativity. A shift between fixed and growth mindsets among lawyers will determine how AI's challenges are met in the legal profession. Ultimately, by leveraging AI to access atypical opportunities to serve clients, the legal profession could undergo an enormous change, defying common perceptions associated with lawyers' capabilities and the operations of law firms.
Despite the uncertainty surrounding the impact of generative AI on the legal profession, a new report by LexisNexis reveals a generally positive outlook on the technology’s role in the industry. A large portion of in-house counsel (49%) foresees the adoption of generative AI by their law firms within a year, and a resounding 95% of legal professionals familiar with these tools believe they will influence the practice of law. Currently, only around 36% have employed generative AI personally or professionally, but the survey suggests a potential increase in adoption, with 39% exploring opportunities. Efficiency gains were identified as a key benefit of the technology, which could be harnessed in legal tasks such as research, briefing documents, and document analysis. There remain concerns around the use of AI, including data security and ownership rights, highlighting a need for clear policies and robust assessments in implementing these tools.
All stories
Elite’s London Summit: Key takeaways and an interview with new CEO Mark Dorman (Legal IT Insider)
Elite Technology, now owned by TPG, held its inaugural London summit where CEO Mark Dorman and head of product Elisabet Hardy outlined their focus on growth, digital transformation, and customer support. They stressed the shift towards cloud-based services and the potential of generative AI. They also highlighted the importance of vendor integration. However, concerns were raised about the process of cloud migration and the accessibility of new modules for clients not using cloud services.
The Florida Bar is offering its 111,000-plus members access to legal trust accounting software in an effort to aid compliance with trust accounting rules and prevent public errors. This initiative, spearheaded by new bar president F. Scott Westheimer, is a first for a state bar. The software is made available through a collaboration with Nota, a legal financial management firm owned by M&T Bank.
The Organisation for Economic Co-operation and Development (OECD) has warned that AI could threaten 27% of jobs, including law. It suggests AI tools like ChatGPT could replace tasks traditionally done by lawyers. However, critics argue that AI lacks the nuanced understanding of human lawyers and will likely be used to enhance efficiency by tech-savvy lawyers, rather than replace them.
How lawyers can embrace the challenge to supervise AI (Legal Dive - Latest News)
The article highlights the growing responsibility of lawyers in managing artificial intelligence (AI) to ensure it adheres to ethical, professional, and legal standards. Olga Mack, the author, emphasizes the need for lawyers to comprehend AI tools, manage data and algorithms, and understand the ethical implications. She underscores the importance of continuous learning and collaboration with AI experts, marking this as a significant shift in the legal profession's history.
A US District Court Judge has rejected the FTC's attempt to halt Microsoft's acquisition of Activision Blizzard due to lack of evidence that the deal would harm the video game industry's competitiveness. The decision was influenced by Microsoft's pledge to maintain popular Activision games on competing consoles. Despite facing a challenge in the UK, Microsoft can now proceed with the acquisition, with a compromise expected following the US ruling.
DEI data collection may pose compliance challenges (Legal Dive - Latest News)
The Global Inclusion Online Forum highlighted the legal challenges and safety issues in collecting diversity, equity, and inclusion (DEI) data, particularly regarding LGBTQ+ individuals. The discussion also questioned the legality of diversity quotas, and suggested that omitting DEI data during recruitment may better serve DEI objectives. The forum emphasized the need for companies to adapt their strategies in countries where homosexuality is criminalized to ensure the safety and inclusion of all employees.
Legal tech startup DeepJudge, founded by former Google employees, has launched KnowledgeSearch. This AI-powered solution lets legal professionals conduct precise natural language searches within their document management system. The AI categorizes documents for more accurate search results. The company also appointed Kennan Samman, ex-global sales director of Kira Systems, as Chief Revenue Officer. DeepJudge guarantees no data sharing with external parties and compatibility with existing systems.
Tangibly, a cloud-based platform for managing trade secrets, has secured $6.5m in a seed funding round led by Madrona Venture Group. The investment will be used to develop its Patent X-Ray tool, an AI-powered feature designed to identify potential trade secrets within patents. The tool, currently in internal testing, will also aid users in the patent drafting process. Tangibly's platform is the first to systematically assist firms in identifying and cataloging trade secrets.
Cybersecurity Litigation Is Booming (Technology Archives - Above the Law)
The article reports a rise in federal data breach class actions over the past year, though no specific percentage increase is given. Legal demands are increasingly straining private funds' in-house and external legal teams, indicating a need for digital transformation. The article forecasts a continued increase in data breach litigation.
AI-sia: What’s happening in Asia on AI? (Technology's Legal Edge)
The article examines the state of AI regulation in Asia, noting that many countries lack AI-specific legislation but are promoting AI innovation and adoption. China, South Korea, and Japan are leading in AI development and regulation. However, the absence of a standardized approach across the region poses compliance challenges for businesses due to differing regulatory frameworks.
Innovation is overrated (Fringe Legal)
The author argues that innovation in business is often overvalued and suggests companies should focus on enhancing existing products or services. Using Costco and Southwest Airlines as examples, the author highlights the importance of efficiency and reliability over groundbreaking innovation. The article also emphasizes the necessity of aligning innovation with a company's strategy and goals, and the crucial role of hard work in actualizing ideas.
Legal tech company Legalsense has named Allard Hoeve as its new Chief Product & Technology Officer (CPTO). Hoeve, with 18 years of entrepreneurial experience, including running a hosting company and working as a Product Manager at Ultimaker, will lead the firm's product strategy and roadmap. This move is in line with Legalsense's growth strategy, as it aims to expand in the Netherlands and globally.
FTC launches investigation of OpenAI about data issues (Legal Dive - Latest News)
The Federal Trade Commission (FTC) is investigating OpenAI for potential unfair or deceptive data security practices. The probe, which requests information on OpenAI's data usage, personal information retention, and model development, follows similar investigations in Italy, Canada, France, Australia, and Spain. The investigation increases risks for organizations using OpenAI’s models and generative AI models. This development underscores the growing demand for regulatory oversight of AI systems.
Leading law firms shift to handling more transactional work (Legal Dive - Latest News)
Over the past decade, law firms have seen a shift from litigation to transactional work such as M&A, real estate, and tax, with transactional practice growing to 42% in 2022, a 7% increase from 2013, according to a Thomson Reuters Institute report. However, Q1 2023 saw a decrease in demand for transactional practices and a resurgence in litigation demand.
Trolls to hit companies with AI infringement claims (Legal Dive - Latest News)
As AI-generated code becomes more common, legal experts anticipate an increase in patent troll-like challenges, alleging proprietary content inclusions. The widespread use of AI applications such as ChatGPT and Copilot may exacerbate the issue, with potential attempts to corrupt code for harmful purposes. Determining liability presents a challenge, and until definitive legal precedents are set, AI-created code liability is likely to be treated similarly to human-created code.
