Generative artificial intelligence (gen AI) has been touted as a game changer for private legal practitioners and corporate legal departments alike, as the AI boom has many predicting a revolution in how lawyers work.
A potential future of automation promises to shake up all facets of the profession, from the training of junior lawyers to high-level drafting and reviewing work. According to the Future of Professionals Report published by Thomson Reuters, where 1,000 professionals in legal, tax and accounting, global trade, risk, and compliance in various organisations across Asia and emerging markets region were surveyed, 64 percent of professionals expected that AI will be transformative (35 percent) or have a high impact (29 percent) on their profession in the next five years.
Law firms are chuffed by the prospects of supercharged productivity and streamlined workflow. At the same time, Big Law management dreads the fundamental challenges the groundbreaking technology poses to service delivery and established pricing models, as well as some of gen AI’s well-publicised risks, as the technology is still in relative infancy in the context of legal work.
In comparison, more to the delight of in-house legal teams, which are bracing for unprecedented empowerment, chief legal officers are looking forward to heralding in a new era of corporate legal work characterised by automation-charged output, next-level efficiency, as well as reduced reliance on their external law firm partners on subject expertise and a more independent decision-making process.
According to the Thomson Reuters report, with AI adoption on the rise and the pressure to reduce spending on external advisory services continued, more than half (56 percent) of the respondents surveyed believed that in-house departments themselves will carry out a greater proportion of legal work in the next 18 months. In addition, in the next 18 months to five years, 39 percent of respondents believed a lower proportion of work will be carried out by in-house departments.
The report also showed that the introduction of AI has increased the appetite among in-house legal professionals for value-based or alternative pricing models from law firms, as AI-assisted work can be charged on a fixed-fee basis.
This changing perspective is posing a fundamental challenge to the lucrative billable-hour pricing model serving as the bedrock of private practices, and cannibalising profit margins at Big Law. As a result, a vast majority of professionals surveyed (86 percent) believed there will be a rise in new pricing models over the next five years.
The incoming revolution has called for a re-examination of how legal services should be delivered in the future as the adoption of gen AI by the legal profession continues to evolve and mature.
“Beyond merely liberating professionals from mundane tasks, automation frees up valuable time for higher-level work. Yet, the true opportunity lies in unlocking AI’s creative potential to deliver value that transcends our current imagination,” said the TR report.
As such, legal professionals wary of the rise of AI may breathe a sigh of relief if they manage to adapt and upskill with creativity accordingly.
In particular, only six percent of respondents believe that entry-level positions are expected to decline in the next 18 months. But that percentage shot up to a much higher 60 percent after the 18-month mark as three in five surveyed professionals anticipated a significant decrease in entry-level positions.
That means AI training is poised to become more essential, especially in educating junior-level employees. Over half of the respondents agreed – 51 percent of them expected changes in how they will train junior employees in the next 18 months, with 49 percent expecting basic-level AI training to become mandatory within the same timeframe.
However, surfing the AI waves might not be as smooth as anticipated due to still existing barriers hindering the pace of change. For law firms, that means weighing the return on AI investment carefully while keeping profitability intact.
That’s no small feat, as evidenced in the survey results. According to the TR report, risk aversion and fear of change were ranked in the top three barriers to rapid AI adoption for over three in five professionals (64 percent). Their apprehension could be attributed to “the uncertainty surrounding the outcomes of adopting new technologies,” or “altering established practices, impeding the willingness to embrace innovation”, the report stated.
Looking forward, there appeared to be only one way to go about it, as AI is set to be a force to reckon with. “The best way to get ready for the future is to deploy trusted and ethical technology, and actively advance AI use cases across industries,” concluded the report.
