Unleashing the true potential of AI

Unleashing the true potential of AI

Rohit Talwar on building growth in law firms with artifical intelligence (AI)

Artificial Intelligence (AI) represents both the biggest opportunity and potentially the greatest threat to the legal profession in history.

This is part of a bigger global revolution – where society, business and government are likely to experience more change in the next 20-30 years than in the last 500.

This large-scale disruption is being driven by the combined effects of AI and other disruptive technologies whose speed, power and capability are growing exponentially – or faster.

These technologies, which are all are fed by AI, include quantum computing, blockchain technology, the internet of things (IoT), big data, cloud services, smart cities, and human augmentation. All of these could be hundreds or thousands of times more powerful within a decade.

The resulting changes mean the total transformation of every business sector, the birth of new trillion dollar industries and a complete rethink of law, regulation, legal infrastructures, and the supporting governance systems for every activity on the planet.

In the dark

Currently, the scale of the opportunity is lost on all but a few forward thinking players across the legal ecosystem.

The majority are either unaware of what impact AI could have, or are obsessed with the internal applications of AI. A natural tendency towards risk aversion is leaving many firms paralysed by fears of declining revenues, commoditisation, depersonalisation of the sector, and the loss of professional roles. These fears drive reluctance to understand, let alone embrace the true opportunity presented by AI and its disruptive technology cousins.

Law firms can and should escape from conventional wisdom and drive exponential improvements in internal performance and market growth by exploiting the opportunities presented by AI and other emerging technologies.

Some in the legal sector are already working to understand what they are and their commercial potential. However, many are more worried about potential negative impacts of AI on the US$650 billion legal services market and are proceeding cautiously. I would argue that the real exponential growth opportunity lies in helping respond to the transformative impact of AI on the US$78 trillion global economy.

Driving internal transformation

The pace of AI development is stunning.

Google DeepMind AlphaGo’s resounding victory over the world GO champion in March 2016 demonstrated how far machine learning – core AI technology – has evolved. The system was not taught to play GO. Instead it was equipped with a sophisticated learning algorithm allowing it to deduce the rules and possible 560 million moves from observing thousands of games.

This technology can now be used across datasets held by law firms. A wide range of legal applications emerging from this include:

– Inferring the likely outcome of a case

– Determining the best structure for a contract

– Suggesting how best to approach a new matter

– Making sense of billions of data points across the web to spot new and emerging risks and legal threats

I envisage five broad categories for increasing use of AI within law firms in the next three to five years:

– Automation of legal tasks and processes

– Decision support and outcome prediction

– Creation of new product and service offerings

– Process design and matter management

– Practice management

We are also likely to see a growing use of AI by in-house legal teams and in a range of online platforms offering direct services to businesses and individuals. AI will also power developments using blockchain technology (the secure transaction encoding mechanisms underpinning most digital currencies such as Bitcoin) such as:

– Smart contracts encoded in software which require no human intervention

– Distributed autonomous organisations (DAOs), with no human employees, existing entirely in software

– Decentralised arbitration and mediation networks – effectively operating as ‘opt-in’ global justice systems for commercial transactions, sitting outside the existing national and global mechanisms

– Algocracy (Algorithmic Democracy) – creating global codes of legal transacting by codifying and automating legal documents, including contracts, permits, organizational documents, and consents

– Rewriting and embedding the law in software – e.g. automatic fines, drawing evidence from the IoT, standardized open source legal documents, and automated judgements

How might AI evolve within the sector?

Here is a plausible five year timeline of AI developments in the legal sector.

The Next 18 Months

– Growth of law firms establishing internal technology innovation labs, creating seed funds to invest in legal technology start-ups, and running joint experiments with technology providers and clients

– A number of firms and in-house teams will run trials and develop applications creating smarter internal processes

– A range of trials and applications of AI for lawyer decision support

– Launch of the first client facing applications and new AI-enabled products and services

– Growth of FinTech – rising pressure from financial services to embrace AI/ Blockchain technology – with legal cost reduction a key driver

– Emergence of Blockchain Smart Contracts and DAOs

The Next Three Years

– Clear evidence of lawyer replacement by smart technologies

– Widespread and accelerating deployment of AI on core law firm processes

– Meaningful penetration into in-house legal

– First truly AI-centric law firms

– Significant range of AI-based solutions offered direct to consumers and SMEs / Technology businesses

– Widespread adoption of Blockhain smart contracts in newer firms / Rise of DAOs in both the private and public sectors.

The Next Five Years

– Applications starting to emerge that display near-human levels of intelligence (Artificial General Intelligence) in certain domains

– First examples of true Algocracy – countries moving to digitising/automating/ embedding the law

– Blockchain/smart contracts/DAOs in widespread use in financial services and other sectors

– 20-50% of routine legal work by sector fully automated by clients with no law firm involvement

– New technology-centric legal sector entrants from the last five years competing head- on with Big Law

– AI in widespread use across law firms and frequently mandated by clients

Going for the Bigger Prize

While AI can clearly be disruptive within law firms, the real AI transformation opportunity lies in the broader marketplace. By focusing almost exclusively on the internal impact on the legal services market, the sector is missing the point. AI, combined with the other disruptive technologies, could redefine every existing business sector and drive the creation of new ones – leading to dramatic growth of the global economy in the next decade.

Here are some examples of new legal sector opportunities:

– Establishing the governing principles and regulations around the use and insurance of self-driving vehicles

– Rollback, recovery, contract review, and dispute arbitration for fully automated, blockchain based financial transaction systems

– Governance and ‘right of redress’ protocols where AI systems are replacing human decision makers in areas as diverse as healthcare, social security and legal dispute resolution

– Usage control and privacy protection within the AI systems that will manage and interpret the massive data flows arising from the IoT

– Creating regulatory frameworks to govern the conduct of and dispute resolution for DAOs

– Determining governance and monitoring frameworks for science research which is designed and conducted entirely by AI systems e.g. the creation of new lifeforms

Over the next five to ten years these and other opportunities will emerge as existing sectors transform and new ones develop. AI and related technologies will enable the creation of entirely new markets, commercial concepts, business models, and delivery mechanisms. For forward thinking law firms, these developments offer the potential to drive exponential growth in revenues – if we give ourselves permission to invest in understanding the technologies and their transformative potential.

Whether firms seize the opportunity or become paralysed by fear and indecision is ultimately a matter of choice and our willingness to step into the unknown and start learning.

Rohit Talwar is a global futurist, strategic advisor and the CEO of Fast Future Research and Fast Future Publishing. He is also the editor of a recently published book called The Future of Business www.fastfuturepublishing.com