Welcome back to the Big Law Business column. I’m Roy Strom, and today we look at how law firms stack up to other companies deploying generative AI tools. Sign up to receive this column in your Inbox on Thursday mornings.
A lot has happened since the world met ChatGPT in late 2022. It’s dominated headlines, minted billions (or trillions) in the stock market, and, in the surest sign yet that it’s captured the zeitgeist, even generated more work for Elon Musk’s lawyers.
It might feel like the AI revolution is well underway. But for all the excitement, generative AI has not yet transformed many businesses. In fact, very few companies use it to make products or sell services and only a relative handful of companies expect they will do so in the near future.
This puts lawyers—notoriously maligned as something near Luddites—in a rare spot: They might be ahead of the curve on adopting a new technology. At the very least, it’s hard to argue law firms are lagging the broader economy when it comes to putting AI tools to good use.
In February, a mere 5.4% of American companies said that within the past two weeks they had used AI to produce goods or services, according to data from the US Census Bureau, which began asking about companies’ AI-fueled products in September. (Some 28,000 companies responded to the Census questionnaire in February.)
Professional services companies, which includes law firms, were more likely to have put AI to good use: 13.1% of such businesses told the Census Bureau they’d used AI to produce goods or services in February.
While those numbers are not lawyer-specific, they are roughly in-line with a Bloomberg Law survey last year that found 7% of lawyers had used AI to perform a work task.
The Census Bureau also asks companies whether they will be using AI to produce products in the next six months. Only slightly more companies answered affirmatively: 6.6% of all companies and 16.1% of professional services firms.
But across the economy, fewer companies are answering “no,” suggesting they’re at least tinkering with AI.
Law firms are still finding their footing. But examples abound of firms who say they are using AI to help clients.
Allen & Overy said around 3,500 of its lawyers had asked an AI program around 40,000 queries for their day-to-day client work—and that was over a year ago. DLA Piper has paired data scientists with lawyers to use AI to test large language models for bias or legal problems. Dechert has rolled out a suite of internally built generative AI offerings branded DechertMind.
Blake Rooney, chief information officer at Husch Blackwell, said his job has changed significantly in the past 18 months. Used to an internal role, he’s now getting face time with clients to talk about how his law firm and its data science team can use AI to provide better services. He was in client meetings in Minneapolis last week and in Nashville the week prior.
Rooney’s firm has had plenty of projects for AI pop up in recent months. In one example, a client facing a deadline to file a temporary restraining order asked the firm to pore over hundreds of voicemails. The firm used an AI program to transcribe and index the messages, turning the project around the same day, Rooney said.
“We’re starting to see a good number of projects like that where if it was a human effort it would be enormous, but using technology we can get good answers in good short order,” Rooney said.
Companies that are curious about AI tools are often turning to their legal departments as a place to try new products, said Richard Punt, global leader of Deloitte Legal.
“There’s quite an interesting subset of companies who are saying, ‘Can we find something that’s more back-office we can practice on?’” Punt said. “And it’s surprising how often legal is the area that they want to practice. You’re seeing legal [departments] come to the front of the queue inside companies.”
Lawyers are constrained in their use of AI by ethics rules and privacy concerns. Buying AI tools can also be expensive, which could prevent smaller firms from making early investments.
That would also be like the broader economy. Companies with 250 or more employees are more likely than smaller businesses to have used AI to sell products or services, the Census data show.
Warren Hodges, who leads an AI task force at 200-lawyer Hanson Bridgett, said his firm has stayed up-to-date on generative AI tools. It’s studied the ethics of using AI for client work, and Hodges said the firm’s lawyers are convinced it can provide “incredibly powerful” solutions.
The firm is “not under the illusion” that it won’t eventually invest in something, Hodges said, but for now it’s taken a wait-and-see approach.
“The products will get better and cheaper over time, and it’s not easy to roll out anything new companywide,” Hodges said. “Every company faces that and law firms are no different.”
Staying Ahead
There’s no guarantee law firms will succeed in adopting AI tools. And it will no doubt present challenges to law firms’ hourly billing model. But they’re at least off to a decent start relative to the rest of the business world.
One way to ensure they stay ahead of the curve is to educate more employees on generative AI tools.
Law firms would be wise to invest more in training programs like those offered through Coursera, an online education platform, said Tracey George, a Vanderbilt Law School professor who oversees an interdisciplinary generative AI team for the university.
She said many of the most sophisticated technology companies provide Coursera classes for employees, many of which are free. She has particular insight into popular GenAI classes offered by Vanderbilt, and she said few if any law firms have used them.
Using a similar model for pro bono work, George suggests law firms provide a billable hour credit for lawyers spending time learning about AI. Law firms that pledge their lawyers would spend 40 or 50 hours learning about the technology would send a strong signal to clients that they’re serious about performing work more efficiently, she said.
“The equivalent of one work week would make a difference,” she said.
Worth Your Time
On Legal Fees: Objectors to a $185 million fee won by Quinn Emanuel are seeking to drastically slash the award to roughly $12 million to $23 million. The most recent court filing in the long-running dispute also shed light on a judgment preservation insurance policy Quinn Emanuel purchased to protect the award.
On SPACs: Nicola White details the travails of Lottery.com Inc., which she reports came to represent “all the hubris and excesses of the special purpose acquisition company era.” The company had phantom revenues, multiple CEOs hired and fired, accusations of forged documents, an alleged check-kiting scheme, and more.
On DEI: Business is booming for DEI lawyers as companies try to figure out what’s legal in wake of the Supreme Court’s ruling, Bloomberg’s Simone Foxman reports.
That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.
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