Copyright The Times
Hyperbole and artificial intelligence go together like robots and irritating mechanical voices. But one recent survey on the nascent technology stands out: it shows about four out of five of the largest City solicitors’ firms are marketing their use of AI to corporate clients.
Researchers at Thomson Reuters found that 78 per cent of the 40 largest law firms in the UK by earnings “now actively promote” their use of the technology when pitching services to inhouse legal department chiefs — a rise of nearly 20 per cent in the past year.
In addition, more than half of the 20 largest firms were training their lawyers and staff in the use of artificial intelligence tools, and 45 per cent of that top tier had appointed a head of AI, a rise of 10 per cent over the past year.
With the bots marching on City legal practice to that extent, it is time to take notice. And other figures from the survey demonstrate why: 65 per cent of the top 20 practices have launched internal divisions dealing with AI issues, 75 per cent have implemented a thirdparty AI programme, while 45 per cent have built their own AI tools.
Perhaps equally instructive, according to the researchers, only 35 per cent of that top tier in the City have drafted ethics advice for clients on the use of artificial intelligence.
It should also be noted that Thomson Reuters has some skin in this game.
While it is a respected purveyor of databased research for the legal profession, it is also a business with its own collection of AI packages for lawyers.
Raghu Ramanathan, a senior executive at the company, says the research demonstrates that “a large majority of law firms now promote their distinction in the use of AI, just as they promote their expertise in specific service lines and industry sectors”.
In Ramanathan’s view, “top law firms recognise that it’s not just a question of adopting this technology but also ensuring training programmes are in place to use it effectively and responsibly”.
He also notes that “clients are concerned that the use of generalist AI tools will bring an increased risk of AI hallucinations and decreased security”.
In addition to the relationship between lawyers and their corporate clients, AI could have a profound impact on the structure of City law firms.
Increased use of the technology could remove swathes of more mundane legal work on mergers and acquisitions and other transactions, which have historically been palmed off by partners on to junior associates.
And there may already be signs of a recalibration. This month, Freshfields, one of the City’s five “magic circle” firms, announced that it was making about 20 redundancies at its paralegal services centre in Manchester.
The firm told the website Roll on Friday that it was “evolving our business to keep pace with a fast-changing legal market — investing in technology, building key skills in-house and adapting our model to meet future client needs”. And while no qualified staff were affected by this round of sackings, it is arguable that the writing is on the wall for City firms more generally.
Some may cite a sense of déjà vu: 15 or so years ago there were similar claims that the traditional pyramid structure of City law firms — a small group of elite partners at the pinnacle, supported by a wider group of senior associates and then a base of junior solicitors, trainees and paralegals — was going to be shaken to its core by outsourcing, and even “nearsourcing”.
The argument ran that modern communication technology — email — meant that City law firms would be fools to hand the mundane end of commercial work to relatively highly paid junior associates, when well-trained lawyers in India or the Philippines could be employed at about a third of the cost. In the case of Indian lawyers, they were even qualified in what was effectively the English common law.
Cue a burst of international “legal processes outsourcing” by the City firms — and nearsourcing as well, to centres in Manchester and Belfast, as demonstrated by Freshfields.
But many of those international outsourcing deals were brought back to nearsourcing centres and the core structure of City law firms remains relatively unchanged. Indeed, not only have junior lawyers not been driven to extinction, they are the subject of a salary war fanned by the UK offices of American law firms.
But the advent of artificial intelligence is potentially different: the pyramid structure could crumble under the weight of the robots. In theory AI is more manageable because it does not involve hundreds of human beings toiling away in distant jurisdictions.
More importantly, AI is more pervasive — it is likely to affect areas of business far wider than just commercial law.
“In time, AI will fundamentally change the business models of law firms,” predicts Richard Susskind, a legal profession technology expert and former adviser to the senior judiciary.
He forecasts that AI will force firms to move “away from charging for the time of their people to licensing systems and content to clients. While law firms understandably hope that AI will increase their profitability, it is more likely that the savings will mean lower costs for these clients.”
Translation? The big shakedown of the structure of City law firms may have been delayed, but it is coming.
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