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The release of ChatGPT in November got the legal sector buzzing. This generative AI technology had the potential to streamline tasks like drafting contracts and reviewing case law. However, despite its ability to generate humanlike text and enhance existing documents, widespread adoption has been delayed due to certain limitations. Legal professionals are cautious because there’s a risk of chatbots producing false information or using copyrighted terms.
Following OpenAI’s success with ChatGPT, big tech companies like Google and Microsoft (which supports OpenAI) have launched their own chatbots. Small start-ups, such as Harvey and Robin AI, are also developing products specifically for the legal sector. According to PitchBook, the legal software market is projected to reach $12.4bn this year with an annual increase of around 5%.
Kerry Westland, head of innovation and legal tech at law firm Addleshaw Goddard, acknowledges the rapid emergence of these companies in the legal tech space. However, she admits that staying up to date with all the new developments has been challenging. Addleshaw Goddard has reviewed AI offerings from over 70 companies and has selected eight for pilot projects, including legal tech software and other AI solutions.
During the pilot projects, lawyers at the firm can use generative AI to review documents, extract specific details, and translate complex contracts into plain English. Nevertheless, Westland acknowledges some flaws in the technology. Sometimes it offers different answers for the same request or becomes excessively verbose in its responses.
This issue is part of a larger problem with generative AI: its tendency to “hallucinate” and present sentences or references as facts. In June, two lawyers and a law firm in the US were fined because the legal brief they submitted included invented cases from ChatGPT.
Another concern revolves around the handling of information entered into AI systems, especially sensitive client data. Addleshaw Goddard allows its lawyers to use ChatGPT but not with confidential information. Travers Smith, a UK law firm, has decided to block the tool altogether. Shawn Curran, director of legal technology at Travers Smith, explains that they recognized the risk of sensitive information being inputted into the model.
While Travers Smith still experiments with the technology through its open-sourced YCNBot, which utilizes Microsoft and OpenAI’s enterprise software, they refrain from using AI on client data or tasks related to clients. Instead, they test it for contract review and fictional litigation disputes. Curran emphasizes that the journey to using AI more safely is ongoing, acknowledging the inherent risks involved.
Curran foresees more value in “extractive” uses of AI technology rather than “generative” applications. For example, the tool could review several emails related to a specific dispute and identify relevant content for a legal argument. Such applications will be introduced to clients in the coming year.
Sijmen Vrolijk, IT director at law firm NautaDutilh, believes that AI will change how lawyers work but dismisses fears of widespread job losses as overhyped. According to Vrolijk, the initial excitement around generative AI is fading, and he doesn’t see any mind-blowing technology in that domain.
However, lawyers who are eager to test legally-focused generative AI software are facing difficulties in procuring it. Westland shares her frustration, saying that she has never been in a position where vendors need to be convinced to demonstrate their tools or work together.
Evaluating the value of contracts is also a concern since these tools come at a significant cost. The traditional time-based billing model in law is being questioned, and clients are asking how to assess the value of legal work. If the technology can deliver something in three days instead of three weeks, is it more valuable for urgent deals with deadlines? These are the intriguing questions being asked in the legal sector.