AI-Enabled Business Models in Legal Services: From Traditional Law Firms to Next-Generation Law Companies?

What will happen to law firms and the legal profession when the use of artificial intelligence (AI) becomes prevalent in legal services? This paper addresses this question by considering specific AI use cases in legal services, and by identifying four AI-enabled business models (AIBM) which are relatively new to legal services (if not new to the world). These AIBMs are different from the traditional professional service firm (PSF) business model at law firms, and require complementary investments in human resources, intra-firm governance and inter-firm governance. Law firms are experimenting with combinations of business models. We identify three patterns in law firm experimentation: first, combining the traditional PSF business model with the legal process and/or consulting business models; second, vertically integrating the software vendor business models; and third, accessing AIBMs from third-party vendors to take advantage of contracting for innovation. While predicting the future is not possible, we conclude that how today’s law firms transform themselves into tomorrow’s next generation law companies depends on their willingness and ability to invest in necessary complements.

Citation

Armour, John and Sako, Mari, AI-Enabled Business Models in Legal Services: From Traditional Law Firms to Next-Generation Law Companies? (July 12, 2019). Available at SSRN.

LSB report: ABS have had a positive impact on legal services market

The Legal Services Board’s (LSB) annual report asserts that alternative business structures (ABS) continue to have a “direct and positive impact” on the legal market.  They have provided an effective structure for firms who wish to take a different approach to meeting legal need.  There are now more than 1000 ABS in England and Wales.  Research conducted by the LSB in 2018 shows that ABS are significantly more likely to use new technology and are more innovative than other types of law firm.

Read the full report here

 

Event: Challenges of Global Digitalisation for Governance and Justice

16-17 September 2019, Luxembourg
European Institute of Public Administration (EIPA)

About this course

Digitalisation is rapidly transforming our world and affects governance, businesses and justice. In light of this, there is an urgent need to adopt solutions to the global digital changes in automatisation, artificial intelligence, blockchain technology, digitalisation of legal practices and services, as well as electronic evidence.

The seminar will address the main issues at play in terms of overcoming the challenges of the rapid scientific and technological changes faced by governments, economies and markets, as well as justice. Centred around global cooperation and technological convergences, the seminar will explore following solutions in governance innovation and technological distribution, taxation of the digital market economy, digital justice, protection of people’s fundamental rights and the generation of new digital ones.

Who is this course for

Public administration officials, legal officers and technical staff of national public administration and ministries, justice professionals, legal counsellors, practicing lawyers, EU staff.

Read more and book…

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SRA launches legal access challenge

Legal Access Challenge launched to encourage innovation

  • Six in 10 don’t think the legal system in England and Wales is set up for ordinary people
  • Many who experience a legal problem don’t take professional advice, citing cost and trust as key barriers
  • Eight in 10 say it needs to be easier for people to access legal guidance and advice
  • We are partnering with Nesta Challenges to launch a prize to make legal support more accessible and affordable through new technology

New research from Nesta Challenges reveals six in ten (58%) people in England and Wales think the legal system is not set up for ordinary people, with the vast majority wanting it to be easier for people to access legal support.

The research was conducted to mark the launch of the Legal Access Challenge – a new prize we are running in partnership with Nesta Challenges – which aims to help more people access legal services through new technology.

The survey also found one in seven (15%) people in England and Wales have experienced a legal issue in the last 10 years; although with only half (51%) of all respondents confident they can identify whether a problem is a legal matter, this is likely to be far higher. We know from existing data that very few people seek professional advice from a solicitor or barrister when they have a problem1, and the research showed people are instead turning to friends and family (20%) or Google (16%) for legal advice.

When asked about barriers to accessing legal advice, seven in ten (68%) say the high cost, followed by the uncertainty of the cost (56%) and knowing who to trust (37%). The vast majority (79%) believe it needs to be easier for people to access legal guidance and advice for themselves.

There is a widespread belief that technology could be the solution to this, with six in 10 (59%) saying they think technology could lead to better services to help people resolve their legal problems. People believe that the biggest benefits to using a digital service for legal advice would be having a fixed price upfront for legal fees (38%), being able to understand their rights (26%) and having access to cheaper legal advice and information (23%).

Part of our wider programme to drive innovation in the sector, the Legal Access Challenge will offer £250,000 in grants to help innovators develop new technology solutions to help make legal advice more affordable and accessible for the majority.

Chris Gorst, Head of Better Markets, Nesta Challenges, said: “For too many people, legal support and advice seems out of reach and reserved for those with the time and money to navigate a complex legal system.

“Technology is not a panacea, but in many areas of our lives it has transformed the choice, convenience and quality available to us and this could be true in legal services too. The UK is a world leader in both technology and legal services, and there is a huge economic and social opportunity in bringing these together.

“We are launching the Legal Access Challenge to help demonstrate what technology can do and to bring these new solutions to market. We want to see digital solutions that directly support individuals and small businesses to access legal services conveniently and affordably, and which can help close the ‘legal gap’ we currently face.”

Nesta Challenges is part of Nesta, the innovation charity, and offers financial prizes to stimulate innovative solutions to some of the biggest challenges society faces. The team works with regulators, policymakers and others to help make markets more competitive and open, advising on how regulatory reforms and targeted public investment programmes can work together to achieve greater impact.

Anna Bradley, Chair of the SRA Board, said: “Whether they are dealing with a personal legal matter , or running a business, people need to be able to get legal support when it really matters.

“Having access to professional advice is important at those life changing moments. And for small businesses, it can make the difference between success and failure.

“There are real barriers for people looking for help and the innovative use of technology is one way of tackling those barriers.

“We want our regulation to support new ideas. The Legal Access Challenge can help to drive the development of new approaches which will deliver tangible benefits to the public, opening up access to legal services for as many people as possible.”

The Legal Access Challenge is open to entrants until 11 August 2019. More information can be found at www.legalaccesschallenge.org

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The implications of AI on legal regulators and how they can use it

At last year’s ICLR Annual Conference in The Hague, ICLR member came together to present on the implications of AI on legal regulators and how they might harness this technology to their advantage. Panelists drew from input from ICLR members and how their own institutions were engaging with Artificial Intelligence, as shown in the infographic below:

The presentation cover various aspects, including:

  • What is Artificial Intelligence? … And what it isn’t: Steve Wilson, Standpoint Decision Support
  • What are the Potential Risks to be Managed: Bridget Gramme, Center for Public Interest Law at the University of San Diego School of Law
  • How Legal Regulators can use AI: Crispin Passmore, Solicitors Regulation Authority
  • Getting into Artificial Intelligence: Alison Hook, Hook Tangaza

You can access the full presentation here:  ICLR Artificial Intelligence Presentation


Interested in the impact of new technologies on regulation? Get involved at this year’s annual conference. Contact Jim McKay (jamesmckay@lawscot.org.uk) to become involved as a speaker or session moderator. 

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California Bar Exploring Opportunities To Deploy AI

The agency is examining how artificial intelligence could help it review misconduct complaints and administer the bar exam.


The State Bar of California has started wading into the artificial intelligence waters.

The agency is exploring ways AI could help bolster the efficiency of its attorney discipline system and assist with administering the bar exam.

The bar recently entered into a contract with the MITRE Corporation to help it develop and evaluate algorithmic processes for identifying whether aattorney misconduct complaint could be closed without investigation.

State Bar Executive Director Leah T. Wilson said if an AI tool can be crafted to help the bar more speedily review whether to close or investigate complaints, it would reduce the administrative burden on staff. That in turn would allow the bar to shift its “human resources to other parts of the case processing continuum,” Wilson said.

Freeing up staff to assist with serious allegations of lawyer misconduct could be beneficial in light of the state auditor’s recent recommendation that the State Bar not hire as many new employees for its discipline unit as desired.

Wilson said an AI tool could also assist in ensuring a level of consistency and standardization in the bar’s review of the roughly 16,000 attorney misconduct complaints it receives annuallyThe technology could be especially helpful amid a nearly 60 percent increase in complaints made to the bar in recent months, a bump that has come amid the agency starting to accept online complaints.  

It was the transition last fall to permitting online complaints that allowed the bar to even contemplate an AI tool for reviewing such filings, according to Wilson.

She stressed that the MITRE project is in the early stages, and the bar will closely examine the effectiveness of the tool developed.

“If it’s not reliable to a very high degree of statistical significance, we couldn’t implement it,” Wilson said.

The bar’s $90,000 contract with MITRE, which was signed last month, calls for the company to complete its work on the project by mid-October.

Meanwhile, the State Bar is planning to use AI to help it administer the First-Year Law Students’ Examination, known as the “Baby Bar.” Law students completing their first year of law study at an unaccredited law school or through the Law Office Study Program are among those who must take the test.

At two of the sites where the Baby Bar will be given next month, the bar will be piloting the use of AI proctors for the essay portion of the exam that is taken on computers, Wilson said.

Live proctors will be there as well to ensure things go smoothly and to respond if the AI software alerts them to any patterns of eye movement or gestures out of the norm for test takers.

“If all goes well, it is our intention to deploy AI proctoring for the July bar exam,” Wilson said.

The bar began exploring AI proctoring because it struggled last year to attract enough proctors to administer the exams it gives to prospective lawyers.

Wilson said there will still need to be some human proctors present at future exams for security purposes and to help with any issues that arise, according to Wilson. But she said a successful pilot of AI proctoring would reduce the overall need for human proctors moving forward. 

On both the bar exam and attorney discipline fronts, Wilson said the bar is seeking to strike the right balance between being forward-leaning while protecting against the risks that arise with the deployment of new technologies.

I think it is the responsibility of good government everywhere to figure out how we can take advantage of technology to improve the services that we provide to the public,” she said.

Separate from the initiatives mentioned above, a bar task force is actively working to identify regulatory changes that would provide members of the public with greater access to legal services through technology, such as AI. The next meeting of the Task Force on Access Through Innovation of Legal Services is Monday, May 13.


*This article first appeared on Evolve the Law. 

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Four steps legal regulators can take to embrace their data

Data has always been a foundational part of the practice of law. However, the convenience, accessibility, and speed of digital mediums is transforming the discipline from within. Law firms are stepping up the plate leveraging their internal data, as well as industry data to make their practice and delivery of services more efficient and effective. E-Discovery, case predictive technologies and even fledgling artificial intelligence programmes are proliferating across top firms globally. Small and large firms alike are engaging with varying degrees of software to manage information and leverage its value.

It is time legal regulators attempt to match pace. This month ICLR.net is focusing on how legal regulators can start to think about data’s role in improving their regulatory responsibilities. We have identified four preliminary steps to help your institution to start thinking about leveraging data.

1. Start small and close to home: Identify your data sources

Identify consistent incoming sources of data. This may be lawyer registrations, renewals and fees. This “low hanging fruit” often serves as the fundamental data base, which can yield insights such as lawyer demographics and disciplinary patterns.

2. Clean and organise your data

Unwieldy spreadsheets no longer make the grade. Setting your organisation up for success means treating your data properly and preparing it for utilisation. Categorising and cleaning your data in a consistent manner will make things easier down the road. Data should be stored in a clear and structured format, which is both secure and shareable with appropriate access permissions.

3. Collaborate with those who know data

Some institutions may want to call the professionals in from day one. Smaller organisations may be able to tackle the first two steps on their own, but to begin to leverage analytics really requires a professional touch for the best results. You should be looking for a company specialises in data structures and analytics. The legal tech sector is rich with software providers offering data management products, but working with a professional in selecting the best fit for your organisation’s data or building a unique system is what will ensure success. It is key to work with someone with the skills as well as background knowledge and insights into the legal profession and industry.

4. Fostering a data-driven culture

Legal information and data powerhouse Thomson Reuters puts it best:

“Building a data-driven legal practice is not something you assign to a task force, department, or an individual. It requires a buy-in from everyone from the top leadership down.”

In addition, it is worth saying that employees at all levels should be involved in the data system development process, to ensure compatibility and realistic adoption and utilisation of the system. The human resource is what will bring an organisation the strongest return on any data investment.

Is data analytics for your organisation?

Some regulators may believe they are too small or the resource required to harness data is too great. However, these four steps can be completed at various levels, just as law firms of all sizes are engaging in data tools. Ultimately, it will be a matter of survival for regulators to keep pace with those they regulate. Information has a strong multiplier effect, and data analytics has the power to transform regulation and industry’s productivity as a whole.


We are interested in hearing about how your institution is using data to assist in regulation. Let us know! Interested in the power of data in regulation – get involved at this year’s annual conference. Contact Jim McKay (jamesmckay@lawscot.org.uk) to become involved as a speaker or session moderator. 

Colorado Lawyer Self-Assessment Program yields analytical insights

Colorado Supreme Court Office of Attorney Regulation Counsel started developing its lawyer self-assessment program more than two years ago, immediately after a seminal workshop on proactive, risk-based regulation at the 41st ABA National Conference of Professional Responsibility in May 2015. The new resource is a leading facet of a larger shift toward proactive management-based regulation, which aims to help lawyers practice ethically and soundly in the first place, rather than just reactively imposing discipline after lawyers make mistakes.

The new system provides the regulatory team with real time stats on lawyer engagement and self-assessed professional performance. It highlights the professional objectives scoring the highest and lowest across all respondents, providing the team with evidence to support further educational program development. The platform also has the ability to create customized lists of continuing legal education (CLE) resources based on each respondent’s own personal benchmarks and areas of need. These lists make yearly CLE planning fast and easy for lawyers, and keeps them focused on the most effective resources for their needs.

Jon White, staff attorney at the regulator, writes “The practice of law will always be challenging. The “ounce of prevention is worth a pound of cure” approach of the proactive practice program seeks to reduce some of that stress. The self-assessments give lawyers the blueprint to build an ethical infrastructure. Lawyers, in turn, benefit from enhanced peace of mind. Clients benefit from exceptional service. It is a win-win for all.” The insights generated by the program’s data is informing the regulator where practitioners need more assistance, and where there may be weaker points in the sector as a whole. Staying ahead of this issues protects the public and strengthens the jurisdiction as a whole.

Read more about Colorado’s Lawyer Self-Assessment Program Here

 

Platform Economy in Legal Profession: An Empirical Study on Online Legal Service Providers in China

Platform economy breaks into the legal profession by pooling lawyers with different specializations into a simple user-friendly platform, consolidating the lower-tier supply side of the legal market and generating economy of scale. This paper is the very first empirical piece looking into China’s online legal service portals. It is found that, the intermediary functions of the portals as the “matchmaker” between the supply and the demand side are often commingled with certain substantive legal services, which cannot be easily unbundled from each other. Given the grand information asymmetry in legal service provision and the potential importance the users may attach to the portals’ recommendation, the quality of such intermediation and matchmaking still leaves to be desired. This being said, because the portals help to improve the access to justice in China by virtue of offering an EXTRA channel for acquiring and comparing potentially useful information, which is made available at a much lower cost than visiting a physical law firm, the regulator should strive to improve the quality, rather than block up the source of the information. To that end, this paper proposes, based on the inspiration of the ABS regime, an alternative license for these online legal service providers, which imposes minimum regulatory and leaves room for new innovative business structures to evolve.

Full Paper Available Here

Jing Li, Tilburg University – Department of Business Law

Regulation Tomorrow: What Happens When Technology is Faster than the Law?

In an age of constant, complex and disruptive technological innovation, knowing what, when, and how to structure regulatory interventions has become more difficult. Regulators find themselves in a situation where they believe they must opt for either reckless action (regulation without sufficient facts) or paralysis (doing nothing). Inevitably in such a case, caution tends to trump risk. But such caution merely functions to reinforce the status quo and makes it harder for new technologies to reach the market in a timely or efficient manner. The solution: lawmaking and regulatory design needs to become more proactive, dynamic, and responsive. So how can regulators actually achieve these goals? What can regulators do to promote innovation and offer better opportunities to people wanting to build a new business around a disruptive technology or simply enjoy the benefits of a disruptive new technology as a consumer?

Full Paper Available Here

Mark Fenwick, Kyushu University – Graduate School of Law; Wulf A. Kaal, University of St. Thomas, Minnesota – School of Law; Erik P. M. Vermeulen, Tilburg University – Department of Business Law