Will artificial intelligence kill law firms?

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Artificial intelligence. In the last year hardly a week has gone by without a sensational headline on AI wiping out jobs , an AI film appearing (Ex Machina being the latest) or some of the world’s biggest hitters (Bill Gates, Stephen Hawking and Elon Musk to name a few) predicting AI could supersede humans.

Attention is now turning to law firms and I want to disagree with some of the predictions.  Law firms are notoriously slow to adopt technology but I don’t think they will be wiped out – at least for another five to ten years.

Pat Chapman-Pincher has written a thought-provoking white paper March of the robots … into the boardroom.  In this she looks at the impact of what she refers to as ‘intelligent automation’ on law firms.

She says:  “What I have failed to find is anyone looking at the profitability and structure of law firms of the future.  Much of a firm’s profit comes from the margins they make on articled clerks, newly qualified solicitors and paralegals.  One of the most prestigious global law firms said that one particular task that would have needed 80 lawyers just two years ago, now needs only 12.

“If a large number of these jobs disappear in a firm, you will turn the number of people employed on its head – instead of the classic triangle with more people at the bottom, you could have more partners who interface with the clients than you have people doing routine operations.  Who in the business is looking at this impact – which covers recruitment for the future, how senior people will gain skills if there are few juniors to move up the ranks and the profitability of the firm?”

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Now there are some valid questions raised in this but while a global law firm may be decimating the number of lawyers needed in some areas, this is just not the case for an average law firm.  And clients are still very happy to continue using law firms as they know them – and I think will for the foreseeable future.

A good case was some software we developed for a client over five years ago – essentially creating the first online solicitor.  It was focused on road traffic accidents and designed to give direct access to a barrister for particular cases and cutting out the middleman, the solicitor.  Road traffic law is very rule-based and has little room for discretion; there are very clear outcomes – usually a nine-month ban or three points on your licence – so you would say this was an ideal process to automate.

It was an excellent piece of software but ahead of its time.  Clients still wanted the reassurance of a human being to advise them in this most basic of processes.

And the thought that a client would be happy to go through a series of online questions for divorce or litigation just doesn’t ring true. Yet.

What is happening at the moment is “intelligent automation” within law firms. Predictive coding, which has just received a major boost from UK court approval, has been around for some time, and is a prime example of a “sort of” intelligence helping to automate routine (tedious) manual tasks. And although common for many years in high volume legal processes, automated document assembly is finally making progress in other areas of law.

I believe disruptive models for delivery of legal services online, using increasingly sophisticated automation, will appear in the next few years. However, the short term impact of this on the majority of law firms will be much less than the impact of other significant changes to the market such as consolidation and external capital.

Having said that, over the medium to longer term, the outlook is different and I do think Chapman-Pincher has some recommendations that law firms would do well to note.  The two that I would endorse are

1.      Get tech savvy people in your firm

The thrust of Chapman-Pincher’s white paper is that few boards or management teams in professional firms really understand or feel comfortable with technology.  And that means it is not being managed well and few strategies have addressed the future of technology in a robust way.  I heartily agree with this.

There is a danger in thinking this means you should promote your IT person to senior management.  Only a few IT people have the strategic vision needed.  What you want is probably a younger lawyer who is showing an aptitude and interest in technology – they could be a whiz at strategic social media or volunteer to lead a technology project.

But these gems are rare – and if you have one in your firm, hang on to them!  For most firms, you may need to bring in an advisor to work with you occasionally or develop the technology skills of a lawyer.

2.      Create an advisory board

Advisory boards are becoming increasingly common.  I think they are an excellent idea – getting top talent to look at your firm two or three times a year.  Keep them out of the management and governance and use their expertise for specific issues, particularly around strategy and future development.

I said in my last blog that many law firms still struggle with the whole commerciality of practices these days – and some still find the idea of a non-lawyer being appointed as managing partner a complete anathema.  So the idea of purposely creating a structure of outsiders to challenge  your partners will be a step too far for many.

What I hope this blog will do – and is certainly what Chapman-Pincher seems to be wanting – is to raise the issue of technology in law firms and recognise its knock-on impact that someone should be thinking about and managing.  Who in your firm is doing that?

Law Firm Practice Management System and Business Intelligence expert. Managing Director of Katchr.

If you’d like to discuss how large or small law firm software and legal financial reporting systems could help you run your practice more profitably, please give me a call on 0845 6806 843.