AI and legal services – something big is happening

Since the release of ChatGPT 3, and more recently 4, there have been countless posts on all social channels about whether and if so, how this technology will change the legal profession.

In my opinion, the answer to this is “surprisingly” short and clear:
This kind of “artificial intelligence” is not a “gamechanger”, but it completely ends today’s “game” (game over for “legal practice 1.0”).

Why? Up to now, the activity of providing legal advice has been based to a large extent on “human legal knowledge sovereignty” in the creation, processing and assessment of documents and facts.
Until now, legal knowledge has been an essential prerequisite for identifying necessary text components, e.g. for a legal letter or a contract, by subsuming the facts, validating them , if necessary using legal databases behind paywalls (with often ” limited” search functionalities), and finally creating or reviewing the document.

“Artificial Intelligence” solutions, based on Large Language Models now make it possible, through clever wording in the questions, to create or analyze the aforementioned documents in a surprisingly accurate way, even without in-depth legal knowledge .
Can one be sure that the results of ChatGPT 4 are legally correct? Certainly not. Verification of the results by “human professionals” is very useful and mostly necessary.

Nevertheless, the expectations of clients towards law firms will essentially change by the possibility of ChatGPT to create first drafts or to analyze existing documents.

Who will still pay the previous fees for “human manual work” for contract drafts or matter analyses if AI – from the client’s point of view – delivers quite acceptable results, at least for not overly complex scenarios?

Even in challenging legal projects such as transactions or restructurings, the new electronic capabilities will significantly reduce the number of lawyers involved compared to today’s teams (reductions of 50% and more are not unrealistic), as many subtasks within such engagements (e.g., summarizing collections of contracts or reporting on risk assessments) can be automatically created and processed using AI without lawyer assistance.

Since AI will therefore drastically change the current business models of law firms of all sizes in the future, it is important to start now to build the foundations for a changed working environment that integrates AI solutions.

While we are just at the beginning of productive usage of AI in the legal market, using software (with or without AI) effectively within a law firm or legal department requires more than simply licensing the appropriate applications.

Since lawyers usually “love” checklists ;-), the following are the measures necessary in short form from my point of view:

  1. Process analysis and optimization
  2. Pimp up your law firm software, especially migration to cloud-based solutions
  3. Implementation of automated workflows and document generation
  4. Establishment of an internal knowledge management system which, beyond the simple administration of text templates, also includes the analysis of as many key indicators as possible relating to the practice of the legal profession
  5. Permanent market observation with a view to suitable AI solutions and agile permanent evaluation and testing of services and applications that appear to be appropriate.
    (More detailed information on some of the points mentioned can be found in other posts on my blog).

This general catalog of actions for a digital orientation of the law firm organization and IT infrastructure for the productive use of AI solutions should also make clear that for the meaningful use of AI software, some preliminary work must be done in (not only) technical terms.

Exciting times are ahead for all participants in the legal market and the cards will be reshuffled in many areas of legal advice (Goliath beware: David will now become a real permanent challenge as the headcount will no longer be so crucial).

Personally, I am very much looking forward to these changes and am curious to see whether and how the current market players will react to the challenges.

This post is also available in: Deutsch (German)