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Ready or Not: Artificial Intelligence and Corporate Legal Departments

Ready or Not: Artificial Intelligence and Corporate Legal Departments

Lawyers have long been characterized as technology Luddites who are slow to change and wary of innovation. For corporate counsel, though, this stereotype may be fading. According to the results of a new Thomson Reuters report, “Ready or Not: Artificial Intelligence and Corporate Legal Departments”, corporate counsel believe they are tech savvy but acknowledge that their comfort level and confidence with technology have limitations, specifically around artificial intelligence (AI).

The applications and impact of AI are growing, and AI tools will undoubtedly affect how the legal profession practices over the next decade. Consider how dramatically technology inventions have already changed the practice of law: From typewriters to computers and from fax machines to email, each advance has been transformative in the law. Lawyers have accepted and adopted each of these evolutions. AI is the next frontier.

To better understand corporate counsel’s knowledge of and comfort with the use of artificial intelligence in the profession, Thomson Reuters conducted a survey of 207 in-house attorneys to measure current perceptions regarding the use of AI in corporate legal departments and the perceived benefits of AI once adopted.

Of the respondents, 51% came from legal departments with fewer than six attorneys, 14% worked in departments with six to 10 attorneys, and 35% worked in departments with more than 11 attorneys. Respondents’ roles in their departments broke down as follows: 26% as assistant or associate general counsel, 23% as general counsel, 22% as counsel, 12% as attorneys, 5% as deputy general counsel, and 12% as “other” roles. Demographics

Defining AI in legal

Developing a better understanding of AI starts with getting to know the language. This brief primer can help corporate counsel become more familiar with the basics of this technology.

Algorithm: A formula or set of rules for performing a task; AI software uses algorithms to make predictions from the data sets it analyzes.

Artificial intelligence: An area of computer science focused on developing software that can make decisions and problem solve.

Bots: Technology that simulates human conversation; also known as “chatbots.”

Deep learning: A type of AI that attempts to mimic the activity of neurons in the human brain in order to recognize complex patterns in data sets.

Machine learning: The capability of algorithms and software to learn from data and adapt with experience.

Natural Language processing: The capability of algorithms and software to structure, interpret, understand, and generate human languages, focusing mostly on written text.

AI and cognitive computing or machine learning are generally interchangeable terms that all refer to how computers learn from data and adapt with experience to perform tasks. In-house attorneys’ anxiety over AI often stems from concerns that it will replace them or the work they do. Where the evolution of AI can play a significant role in the legal industry is by augmenting lawyers’ work and help increase their productivity – not replace them.

AI has the potential to genuinely transform how lawyers in legal departments work. Already, machine learning – a type of AI – is used for legal research and for pilot programs attempting to predict litigation outcomes. AI is helping lawyers automate repetitive types of tasks – like drafting lower-exposure or lower-liability agreements like NDAs. AI is also empowering in-house counsel in areas such as predictive coding, by saving attorneys time by using samples of data to identify relevant documents in connection with e-discovery requests. AI software also is automating processes and tasks, such as finding and collecting clauses for review during transactional due diligence.

Corporate counsel’s perceptions around AI range from positive to skeptical to unaware, with most in the latter categories. The survey initially asked about comfort levels with mainstream technologies within legal departments. Confidence in trying new technology

Roughly two-thirds (67%) of all survey respondents stated they are confident and ready to try new technology. Only 2% reported not feeling confident when it comes to trying new technology. Current and planned use of AI

Not surprisingly, larger departments were the most receptive to adopting AI tools. Only 26% of respondents in departments with more than 11 attorneys believed their departments were not interested in AI. Larger legal departments tend to be more technologically advanced and have the resources to commit to drive adoptions of new tools.

Compare large legal departments’ responses to their smaller counterparts: 67% of respondents who work in legal departments with six to 10 attorneys reported their departments are not interested in AI technologies, while 62% of respondents in legal departments with fewer than six attorneys indicated their departments aren’t ready. Current perceptions of AI use in corporate legal departments

The survey inquired about other perceptions surrounding the use of AI in legal departments. For instance, is the technology so sophisticated that it should only be used by large departments? Some respondents believed that AI will most likely be implemented by larger departments, with one respondent saying: “For larger companies, a significant role; for smaller companies less so.”

Overall, small and midsize departments’ relative lack of interest may be related to a lack of awareness; almost half (45%) of those in departments with fewer than six attorneys indicated they are not familiar with the use of AI in corporate legal departments. Similarly, 27% of attorneys in both departments with fewer than six attorneys and those with six to 10 attorneys simply didn’t have an opinion about the use of AI in corporate legal departments.

Many respondents were too unfamiliar with AI software to have an opinion. Numerous respondents characterized their current perceptions along these lines: “I don’t really have any. I have not thought about this subject at all.”

“Many legal AI products are based on technologies that are well established in knowledge management, including text analytics and business process automation. What pushes them into the AI category is the degree to which they incorporate intelligence into their functionality, including the ability to learn and to process Natural Language inquiries.”

Given corporate counsel’s professed – or perceived – lack of awareness of AI, they may be surprised to discover they’re already using it outside of the legal arena. Consider Amazon’s Alexa and Siri® from Apple®, everyday technologies that use Natural Language processing, a type of AI that enables computers to “understand” spoken and written words. Within the profession, Natural Language processing has long been used in legal research too; for more than a decade, Westlaw® has applied Natural Language processing to improve legal research.

This may have, unknowingly, been many attorneys’ introduction to AI, but as KM World explained, “Many legal AI products are based on technologies that are well established in knowledge management, including text analytics and business process automation. What pushes them into the AI category is the degree to which they incorporate intelligence into their functionality, including the ability to learn and to process Natural Language inquiries.” Perceived value and benefits of AI in corporate legal departments

AI may best be applied toward helping legal departments better use their own data – especially activities and processes involving large pools of data. Generally, legal departments – particularly larger ones – are improving how they develop big pools of data. These pools of data may take form in vast repositories of contracts or billing data, for example. For departments of all sizes, data is useless unless it’s used to make decisions; AI can help in-house teams start to make these natural connections and use their own data to inform their work.

For example, almost two-thirds of survey respondents indicated their legal departments have access to data regarding outside counsel costs and legal costs, yet less than half (49%) feel they are effectively using this data. Similarly, only 29% of respondents indicated their legal departments are effectively using data extracted from contracts to develop business strategy or minimize contract risks. Legal departments’ access to data

“Hopefully, AI will be able to take over record keeping roles like entity and document management. I could see some significant AI document preparation as well.”

Less than 15% of survey respondents believed their legal departments are effectively using big data to deliver legal services. This intersection – where large pools of data exist but are not being analyzed to find ways to reduce costs, develop business strategy, minimize contract risks, or better deliver legal services – is where AI can make a significant impact on legal departments. For example, respondents noted the potential of using AI to “[a]utomate invoice review [and] complete contracts,” with one attorney specifying, “Hopefully, AI will be able to take over record keeping roles like entity and document management. I could see some significant AI document preparation as well.” Legal departments’ effective use of data

Survey respondents identified multiple use case scenarios, including everything from “analyzing trends and managing costs” and “pattern recognition features and data analysis deep dives” to “predicting future budgets, future number of issues, and explaining reason for data.” Several respondents highlighted the benefits of streamlining workflows and eliminating tasks, noting AI could help “offload simple decision making and laborious number crunching.” One said AI would mean “taking some of the menial work that I have to farm out to law firms and automating it in-house.”

“I believe AI can help improve efficiency within legal departments. I think many legal departments/firms will be reluctant to adapt to AI tools, but this will not necessarily replace jobs (although it could in certain roles), but it can serve as a method to reduce the time needed for certain legal tasks.”

Saving Time and Improving Efficiencies Respondents cited reducing costs and saving time as the top two benefits AI-enabled tools could provide corporate legal departments: “I believe that reducing costs will become the most important benefit, but in order to reduce costs, the AI solution must have the ability to improve overall handling time for legal tasks and generate more reliable results.” Others believed the top benefits would be “[m]aking work be more efficient and help identify corporate/legal risks. Perhaps even help support mitigation efforts for those risks” and “[a]nalysis of risk and means to control and allocate it. Secondarily, help to analyze effectiveness of lawyers, in particular settings.”

One respondent shared, “I believe AI can help improve efficiency within legal departments. I think many legal departments/firms will be reluctant to adapt to AI tools, but this will not necessarily replace jobs (although it could in certain roles), but it can serve as a method to reduce the time needed for certain legal tasks.”

Others believed AI would make a positive impact but were uncertain as to exactly how. One respondent noted, “There is significant potential, but much must be done to demonstrate the value of this technology.” Another respondent predicted AI “will grow in importance and will become a standard legal department tool in many industries.” Perceived benefits of AI-powered solutions by corporate legal departments

The long arc of adoption

“Certain tasks may become more automated/use AI, but I think the role is limited until further out – i.e., 20+ years out. The majority of current and future GCs graduated from law school when West[Law]/Lexis(R) were on one computer in the library and most research was done in books. [It] will be difficult to sell AI to the current and next generation of GCs.” So long as corporate counsel retain current perceptions of AI and fail to appreciate how it will be embedded in current technologies – rather than function as a stand-alone robot – the longer the adoption arc.

In terms of predicting when AI will make its full impact, respondents believed that AI is not on the fast track to adoption. Only 21% indicated AI will be mainstream in corporate legal departments within five years, while 39% predicted it will be within 10 years, and 37% believed it will take more than 10 years. Role AI will play in legal departments in the next 5-10 years

One respondent believed AI’s role will be “an increasing one, so long as the attendant cost savings can be demonstrated. But very few legal departments will be early adopters.” Respondents identified three main hurdles to corporate counsel embracing AI tools. Adoption hurdle […]

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