Exploring AI in Legal Tech

Chances are, your team uses more technology now than you ever have before. It can be difficult to manage everything on your plate — fulfilling internal requests, maintaining compliance, and managing every contract that comes through the business —- using manual processes. That’s why close to 80% of respondents to ACC’s 2023 Legal Technology Report believe that technology is a must-have for their legal department. 

It’s also why teams like yours are now setting their sights on AI and generative AI. Legal teams that don’t already know are quickly learning the kind of impact AI can have on your efficiency. In fact, Wolters Kluwer’s Future Ready Lawyer Report shows that more than 70% of lawyers plan to incorporate generative AI into their work over the next year, mostly in document management.

AI in legal tech gives legal teams across the globe the ability to automate tedious tasks like research, writing, and reviewing documents. It enables legal teams to keep up with the pace of business and contribute to the bottom line.

If you’re looking to explore AI more, you’ve come to the right place. Here’s what you need to know about AI in legal tech.

Legal tech landscape: From answering machines to AI

Legal technology has come a long way since dictation machines were all the rage in the 1950s. The text-heavy nature of legal tasks makes them super time intensive — hence the infamously long hours. Over the course of a few decades, legal moved from word processors, databases, and PDF contracts to using end-to-end CLM and AI contract analysis to move faster, improve accuracy, and reduce risk. Modern legal tech lets legal provide strategic support to other departments and to company leadership while increasing efficiency and output. 

In ACC’s Legal Technology Report, 52% of legal professionals said contract management is the most effective legal tool they use, while just under 40% reported e-billing, legal research, and matter management software as the next most effective. 

While these tools have helped streamline legal department operations, tasks like drafting and reviewing documents still take a lot of time. Fortunately, AI in legal technology helps your team take efficiency and productivity to the next level.

AI in legal technology

Legal AI amps up the good work of your other legal tech solutions. For example, while a contract repository lets you store important legal documents in a single location, AI takes that even further and allows you to search for the exact contract you need, extract variables, and generate a report based on the data within the contract.

Legal AI helps your department become more organized and efficient. In fact, a Salesforce x Litify report shows that 95% of individuals already using AI are saving time on their work — with 81% saving between one and 10 hours. Likewise, findings from the ABA’s Artificial Intelligence AI report say 44% of attorneys report saving time and increasing efficiency with legal AI.

Though some people might still think of legal as tech-averse, the industry is more aware of or familiar with AI than the general market. LexisNexis’ International Legal Generative AI report shows that awareness of generative AI among the general population is around 61% and at 89% for lawyers. The report also shows that 62% of lawyers use generative AI for researching matters and 46% of them use it to draft documents.

Teams like yours are becoming more aware of the power of AI to transform your legal department into a lean, mean, productivity machine.

How AI transforms legal work

One of the major areas of development for AI in legal technology is in document management. Efficient document management is key to not only protecting the business but also generating insights that enable data-driven decision-making. Wading through legacy contracts or digging through shared drives to find old approvals slows you down and increases the risk of human error. 

Instead of trying to manage your increasing workload through sheer force of will, AI can help you draft, edit, and review contracts with greater efficiency and a smaller time investment. In the Salesforce x Litify study, for example, 15% of legal professionals use AI to review and summarize documents, while 14% use it to draft documents. 

Here are four ways you can use AI to transform legal work.

Document creation

Drafting contracts, briefs, and other legal documents, while important, can take up a disproportionate amount of your valuable time. While templates can streamline contract creation, they’re not always the best for creating many other crucial legal documents.

Thankfully, AI enables legal teams to generate legal documents based on patterns it identifies in other similar documents. AI’s ability to recognize patterns and produce a contract, brief, or legal filing quickly gives legal teams the ability to move faster while maintaining accuracy.

Contract review

Contract review is another one of those tasks that can take forever — especially when there’s a lot at stake in terms of risk or revenue. Like document creation, contract review is a business-critical, but tedious task.

AI contract review — a staple of top CLM software like LinkSquares — takes the first pass at your contracts to ensure they accurately reflect terms that serve your business. Legal AI can give you quick insight into an agreement, without you having to read through it. It will analyze the contract, summarize its content, and surface key points. Or if you’re looking for something specific, just ask the AI a question about the agreement. This can be especially helpful when reviewing third-party contracts.

Redlining

If not managed properly, redlining can be one of the most time-consuming parts of the contract process. The constant back and forths between parties, particularly during a complex, high-value deal, can span weeks if not months. If that happens, the deal can lose momentum and stall out, effectively wasting all your efforts up to that point.

As with AI contract review, you can review an AI-generated summary of counterparty redlines to understand their position and changes at a glance. Or if you see language that violates your preferred playbook, let the AI know what you’re looking to change and it will generate suggested language for you.

Data analysis

Contracts are chock-full of insightful data that can give your business more competitive insight. Unfortunately, many legal teams aren’t measuring their efforts. Without technology to track metrics and KPIs, it’s hard for your team to prove your value or contribute to business strategy. 

With AI contract analysis, AI extracts key data from your contracts and generates a report that visualizes the contract data. You can use AI to establish and track analytics that empower you to advocate for additional legal resources and justify business decisions.

While it doesn’t have the nuance and experience of law that you do, legal AI can take on the more tedious tasks that slow you down.

Benefits of using AI

Many legal teams already understand the potential benefits of AI in legal. According to Bloomberg Law’s Legal Ops and Tech Survey, 86% of legal professionals said that legal technology helps to improve productivity, and 88% say that legal tech is important for meeting client demands. Additionally, 32% said technology has helped them reduce their average time spent on tasks, while 61% said legal tech has helped improve their workflows.

Let’s break down three benefits of AI in legal.

Better accuracy

Excellent lawyers hone their skills after years of legal practice. However, as humans, to err is inevitable, and some mistakes are more costly than others — especially if it takes your team too long to find and correct the error.

But AI helps you to improve your accuracy. With the ability to do advanced computations on a large data set in a small amount of time, legal AI is the perfect assistant who helps you produce more accurate work in less time. Just make sure a human verifies the work. 

Move faster

Over the past several decades, legal technology has given legal teams the ability to speed up their work and deliver value faster. For lawyers, getting this time back is crucial. But as more things take their place on the to-do list, you have to keep finding ways to optimize your speed.

This is where AI comes in. By automating, predicting, and categorizing important tasks and documents, AI allows you to complete business-critical tasks in a fraction of the time it would take a human lawyer.

Increase efficiency

Many legal leaders agree that efficiency and cost cutting are the keys to success in 2024. This means improving upon processes and finding opportunities in your department operations to do more with less.

By completing tasks more quickly and accurately, AI helps legal increase efficiency. This reduces the amount of time you spend doing duplicate, low-value work. While there should always be a human checking AI’s work, proper AI training helps improve accuracy even more over time.

Addressing AI concerns with adoption best practices

While many legal professionals are familiar with AI, some of them still have concerns about what it could mean for the future of the legal profession.

As Goldman Sachs’ report claimed that 44% of legal jobs will become obsolete as a result of AI, more lawyers became distrustful and wary of AI. The Wolters Kluwer report found that 25% of survey respondents see AI as a threat, while 26% see it as both a threat and an opportunity. Still, many experts (including us) have debunked the myth that AI will replace lawyers. 

Some of the other concerns include security and data privacy, as well as the potential ethical implications of using AI in their practice. Bloomberg Law’s survey shows that while 59% are very or somewhat aware of what using machine learning technology can do, only 41% are very or somewhat concerned about it. 

Large language AI models can run the risk of hallucinating. This is when they see patterns that aren’t there and present fiction as fact. These concerns are understandable and are the reason you should follow best practices for using AI and generative AI.

Best practices for AI and generative AI adoption

Though AI has been around for a few years, it didn’t have this level of popularity until ChaptGPT and generative AI debuted on the scene. Generative AI is still relatively new in the market, so there’s a lot that businesses still don’t know about its long-term implications. 

There’s a lot to consider when adopting new technology — here are some things to keep top of mind.

• Keep an eye on the regulatory landscape: AI technology is developing faster than the regulations that should manage it. Despite the newness of generative AI, some companies are rushing to integrate it into their product without doing their due diligence. Keep an eye out for AI regulations, and do your research before integrating AI into your roadmap.
• Vet your vendors: Many law firms and in-house legal teams use AI to accomplish more work in less time. Before signing up with an AI service provider, determine what your in-house rules around a third-party vendor using AI are, as well as what you need to know about them security-wise to trust them with your business.
• Always have a human verify AI’s output: AI models can complete complex calculations in less than a minute, but they are still fallible and prone to making mistakes. This is why it’s important to always have a human check your AI’s output and verify its accuracy. Plus, the Model Rules of Professional Conduct state that lawyers must always treat work produced by a non-lawyer as if it were their own and fact check it within an inch of their life. 

Takeaways

The legal tech landscape has been flourishing and AI is now the star in its eye. AI and generative AI are transforming the way legal departments approach their tasks, how quickly they execute, and the complex work they’re capable of achieving. 

While legal technology like CLM, matter management, contract repository, and eSignature have enabled your team to do more with less, AI helps you do more with less — and better. Thanks to AI, legal teams can create, edit, and review documents faster and with greater accuracy. This gives your team a much-needed productivity boost.

Since the most recent generation of AI is relatively new, legal teams are still trying to figure out the best way to take advantage of its benefits without incurring additional risks. Because the regulatory landscape hasn’t yet caught up with the developments in this area, it can be risky to incorporate the technology without doing your due diligence or vetting your vendors. Most importantly, AI is powerful but not infallible, so always ensure that a human checks AI’s work.

There’s no limit to what you can accomplish with AI in legal.