Lawyers may need tech skills as AI changes nature of legal industry

Lawyers may need tech skills as AI changes nature of legal industry

Jeffrey Tan
02/10/17, 10:53 am

SINGAPORE (Oct 2): Twenty-five-year-old Victoria is a trainee solicitor at an international legal firm. Her job involves meeting clients regularly to discuss their legal needs, and then drafting and redrafting legal documents.

It is a tedious job that Victoria, who asked not to be identified by her real name, thinks will soon become easier.

Her firm is expected to make a major announcement related to the use of artificial intelligence (AI) at its upcoming town hall meeting. “I think we see the need to move in that direction,” she tells The Edge Singapore.

Indeed, the legal industry is being swept by a wave of digital disruption. Technological advancements are enabling legal firms to be more innovative and efficient in providing legal services to clients.

At the Future Lawyering Conference in July, Senior Minister of State for Law and Finance Indranee Rajah impressed upon lawyers the importance of technology. “It is those lawyers who are able to innovate and adapt, and adopt technology who will win the future,” she said. “The penetration of technology into the practice of law is not something on the distant horizon. It is here and it is now.”

Among the tech innovations that have emerged is JPMorgan Chase & Co’s COIN, short for Contract Intelligence, an AI system that processes commercial loan agreements. Another, called ROSS, is an AI system built on International Business Machines Corp’s cognitive computer, Watson. It will be able to conduct simple legal analysis. Chatbot service DoNotPay, meanwhile, helps traffic offenders appeal against fines. It has so far had a 64% success rate.

International legal firms are beginning to adopt AI systems. Latham & Watkins is already working with IBM’s ROSS. Baker & McKenzie announced it will deploy AI as part of a global rollout plan. Slaughter and May is helping to design an AI system that will be trained to think like a lawyer.

In Singapore, Dentons Rodyk & Davidson is using ROSS as it found the AI’s cognitive computing and natural language processing abilities to be useful. “In practice, Dentons lawyers are able to ask ROSS questions exactly as they would ask them of another person, and the application searches through the law in order to supply evidence-based answers,” Philip Jeyaretnam, Dentons Rodyk global vice-chair and CEO, tells The Edge Singapore via email.

Legal firm Cameron McKenna Nabarro Olswang (Singapore) is using Brainspace, an AI platform that runs electronic discovery. “CMS is a technology-driven law firm and we are investing heavily in new technologies,” says Matt Pollins, head of commercial at CMS Singapore. “Our clients tell us how important technology is to them and we will continue to focus on this area.”

But while these new technologies have the potential to make the jobs of lawyers like Victoria easier, they could also render lawyers obsolete.

“You’ve seen this productisation-of-a-service [or] straight-to-consumers model in other industries: transportation — taxis versus Uber; hospitality — hotels versus Airbnb; finance — banks versus cryptocurrencies. Legal is ripe for that,” says Alexis Chun, co-founder of Legalese. Her start-up aims to replace contract-drafting lawyers with contract-drafting software.

Another start-up, FirstCOUNSEL, provides commonly-used legal templates as a “starting point” for use by entrepreneurs, start-ups and SMEs.

“We are working on some cognitive computing aspects for our platform,” says Azmul Haque, FirstCOUNSEL co-founder and CEO. “The technology is very nascent and we hope to evolve our platform as technology gets more usable.”

Changing legal structure
Ultimately, lawyers have to be prepared for a change in the nature of the legal profession. Any work that is repetitive, requiring minimal professional intervention or based on a template, will become the “sole province of software”, says Stefanie Yuen Thio, joint managing partner and head of corporate at TSMP Law Corp. This includes routine conveyancing, commercial loans, employment contracts, simple agreements and the less contentious criminal law cases, she says.

“In addition, any legal work that depends on collating and analysing historical data such as past judicial decisions, including legal opinions or evaluating likely litigation outcomes, will become the dominion of AI. No human lawyer stands a chance against the formidable processing power of a mainframe when it comes to sifting through voluminous data,” Yuen Thio says in an emailed newsletter.

Hiring at legal firms will change too. For one, those with expertise in IT and computer science may be in greater demand. “Law firms will hire more developers and contract executives, some of whom will not need all of the same qualifications as today’s lawyers,” adds Pollins of CMS.

Azman Jaafar, deputy managing partner at RHTLaw Taylor Wessing, expects that fewer lawyers will be needed as the cost of implementing AI will be cheaper in the long run. “Law firms may incur higher capital expenditure upfront in order to acquire the AI capability. But with a reduced headcount, the running cost of the firm may be reduced as a result,” he says.

Will legal fees decline? And could law firms be forced to modify their business models?

Azman says fees are largely dependent on the complexity of a transaction and the desired outcome rather than the costs of achieving it.

But, he concedes that the automated components of legal work may become a little cheaper.

The use of AI could unlock new business models. Currently, most legal firms charge their clients by billable hours. CMS’ Pollins says in the future, contracts-as-a-service offerings supported by licence fee arrangements could be a model to adopt. “The shift to alternative fee arrangements will continue and I believe this will be a win-win for both law firms and clients.”

Reinventing lawyers
For those at the top of their profession, talk of technology should not alarm. AI cannot yet replicate advocacy, negotiation or structuring of strategic or complex legal solutions, says Yuen Thio of TSMP Law.

“While a computer can spit out comprehensive legal research that will help in a court case, the art of persuasion remains a wholly human province. Computers crunch past data; they cannot yet calibrate emotion or intuit hidden agendas. Top litigators need not hang up their court robes yet.

“For the same reason, corporate negotiators will retain dominance in the board room. And because AI shines brightest when predicting future outcomes based on the consistency of past precedent, legal structuring that has to take into account the often irrational desires of human beings will continue to be a human skill,” she says.

What of junior lawyers such as Victoria?

Jeyaretnam of Dentons sees AI reducing the burden of routine work shouldered by junior lawyers. This will allow them to focus on “more important” work.

But they could look to other ways of differentiating themselves. Pollins of CMS thinks lawyers will need to have a strong grasp of technology because many companies today are tech companies. “If they don’t have a good understanding of topics like data, cybersecurity and the Internet of Things, their clients will go elsewhere,” he says.

Also, in the same way that Tesla is now among the world’s most valuable auto makers, top law firms in the future may be those that put tech first. The way Yuen Thio sees it, tech companies that operate in cutting-edge fields could be the “future bastions of legal domain expertise”.

That is why lawyers will no longer be professionals armed with a law degree and “a sprinkling of industry knowledge”, she says.

On the contrary, their law degrees may just be one of many skill sets, and possibly not even the most important one. “Lawyers from Alipay and PayPal will be the future specialists in online payments and fintech; Google and Facebook will control much of the emerging expertise in cyber law and data. We might even see launching specialised legal services developed in-house.”

This article appears in Issue 799 (Oct 2) of The Edge Singapore which is on sale now

3 key reasons for UOB's confidence in PropNex despite 1Q earnings miss

SINGAPORE (May 22): UOB Kay Hian is maintaining “buy” on PropNex while lowering its target price to 60 cents from 66 cents previously. The new target price is based on DCF and 2019F P/E of 10 times with reference to its closest listed competitor, APAC Realty, and comes after cutting net profit estimates by 11% to 15% for 2019-21F to reflect a shift in gross profit mix as well as higher staff cost assumptions. UOB’s downwards earnings revision follows the release of PropNex’s 1Q19 results, which fell short of expectations due to lower project marketing contributions as a result of....

6 protesters killed as Indonesia election rally turns violent

SINGAPORE (May 22): At least six people were killed and hundreds more injured in clashes between police and supporters of Indonesian presidential candidate Prabowo Subianto in the worst political violence to hit Jakarta in two decades. Jakarta Governor Anies Baswedan appealed for public order and urged police to exercise restraint and avoid conflict with the protesters in the capital city. About 200 injured protesters have been admitted to various hospitals in Jakarta, Baswedan told reporters. The violence is the worst since to grip the city since the downfall of Suharto in 1998. Protest....

Margins weak for Riverstone but expansion plans on track

SINGAPORE (May 22): With margins under pressure at Riverstone Holdings, analysts say growth recovery would only be seen after 1Q19 given its expansion plans are on track. In 1Q19, Riverstone reported revenue grew 14.6% on the back of a higher annual glove capacity of 9 billion from a year ago. However, net profit declined 2.8% y-o-y to RM30.2 million, which CGS-CIMB deemed slightly disappointing at 21.3%/20.7% of its/consensus’ FY19F forecasts. CGS-CIMB analyst Colin Tan says the decline was mainly due to a drop in ASPs for healthcare gloves and higher taxation as a result of higher....