Global Law Firms Embrace Generative AI for Efficiency Despite Risks
Law firms globally are increasingly adopting generative AI to enhance efficiency and cut costs, focusing on automating tasks like contract review and drafting. While the technology promises to revolutionize operations, firms are wary of its limitations and potential risks. Australian firms like Gilbert + Tobin and MinterEllison are leading the way, developing AI tools for legal advice and contract negotiation, and setting safeguards to ensure accuracy and data security. Despite challenges, particularly in regions like China due to data privacy concerns, the legal industry views generative AI as a key component of future operations, balancing its vast opportunities against the risks.
Globally, law firms are increasingly embracing generative artificial intelligence (AI) technologies to enhance efficiency and cut costs. These firms are either in the experimental phase or are actively integrating AI solutions to automate mundane tasks such as contract review and drafting, as well as providing initial legal advice. Despite the potential of generative AI to create content that mimics human output, legal practices are proceeding with caution due to the technology’s known limitations.
In Australia, the law firm Gilbert + Tobin has implemented a generative AI feature that answers questions, providing lawyers with expert knowledge in various areas, including contract advice. Last year, the firm incentivized innovation in AI application by offering A$20,000 for the best ideas, receiving over 100 proposals. Caryn Sandler, a partner and the chief knowledge and innovation officer at the firm, highlighted the widespread interest in generative AI for tasks like drafting documents and synthesizing data. Gilbert + Tobin is not only hosting AI-focused workshops for clients but also developing new tools based on the most promising ideas from their internal competition. These tools are being created both in-house and through partnerships with external software providers, according to Sandler.
However, the use of generative AI is not without its risks, including the potential for the AI to generate incorrect or fabricated information. Instances have occurred where lawyers have used erroneous AI-generated content in legal filings. To counteract these risks, Gilbert + Tobin has set up safeguards to protect client data and ensure AI systems only use verified information.
Another Australian firm, MinterEllison, has created a generative AI tool in collaboration with IT firm Arinco, leveraging OpenAI’s technology. This tool can draft initial legal advice in roughly a minute with about 80% accuracy, utilizing past legal advice and other resources. Simon Ball, who leads MinterEllison’s environment and planning team, emphasized the tool’s efficiency in summarizing case law and drafting advice, aiming for an 80% adoption rate within a year. The firm ensures the accuracy of the AI-generated drafts by having them reviewed by senior lawyers before they are sent to clients.
While MinterEllison continues to use a traditional billing model, any future adjustments to pricing will be based on tangible benefits AI brings to client services. Meanwhile, some firms are considering commercializing their AI technologies. A&O Shearman, for instance, is offering its AI-powered contract negotiation tool, ContractMatrix, to clients. This tool, developed with Microsoft and legal AI startup Harvey, can draft contracts from templates, potentially saving up to seven hours per negotiation. David Wakeling, who heads A&O Shearman’s innovation group, highlighted a 20% increase in productivity from using the tool.
In China, the adoption of generative AI by law firms faces distinct challenges, including limitations in the software’s ability to draft legal documents and strict data privacy regulations that hinder the use of foreign AI tools. Despite these obstacles and the risks involved, many law firms view generative AI as essential for their future operations. Sandler from Gilbert + Tobin summed up the sentiment, noting that while generative AI presents “enormous opportunities,” it also comes with “enormous risks.” Law firms must stay abreast of technological advancements to remain competitive.