SRA Risk Outlook Report Focuses On The Pros and Cons Of AI In Law Firms – Part 1

Perhaps one of the biggest themes of 2023 was the widescale adoption and proliferation of Artificial Intelligence (AI) in all areas of life. The rather unnerving (or exciting, depending on your standpoint) reality is that we are only just at the very start of the AI revolution, and the legal profession is likely to be altered beyond all recognition in the coming years as a result. 2024 will see an exponential wave of AI development, leaving many trying to catch up with its implications. This is why, in November 2023, the SRA published its Risk Outlook report on the implications of AI for the UK’s legal market. In this, the first of two articles, we will discuss what the SRA has to say about the adoption, use and opportunities for law firms in the UK.

How Many UK Law Firms Are Now Using AI?

According to the SRA’s research, the use of AI in law firms is increasing rapidly. They found that:

• Around 75% of the UK’s largest law firms are using AI, nearly double the amount from 2020
• More than 60% of large law firms and around 30% of small law firms in the UK are actively exploring the potential of the new “generative systems”
• Approximately 72% of financial services firms are already using AI in some form, and
• The use of AI in small and medium-sized law firms in the UK is rising.

How Is AI Being Used In Law Firms?

LawtechUK, an initiative backed by the Ministry of Justice (MoJ) tasked with driving digital transformation within the legal sector and delivered by CodeBase and Legal Geek, has defined a number of categories of use cases of AI within law, as follows:

Risk identification and prediction – the SRA’s report explains that this is the most common use of legal AI and will automate day-to-day compliance tasks such as those supporting anti-money-laundering (AML) checks. It can also be used to analyse cases to predict the chance of success. According to one provider, their software can predict case outcomes with 90% accuracy.

Administration – there are many potential uses of AI within legal administration, including legal chatbots, triaging cases, and gathering and sorting information.

Profiling – AI is being used to identify consumers’ understanding, prioritising cases and classifying documents. The report provides an example of a commercially available system which “profiles legal documents for clarity, suggesting how firms could modify them to better communicate with their intended audience, thereby achieving more efficient outcomes and offering a better customer experience to clients”.

Search – AI will carry out a wide range of search functions, including case preparation, document discovery, identifying precedents for litigation, and automating the review and management of contracts.

Text generation – AI will be used to draft contracts and client letters, take minutes from video meetings, summarise large amounts of information, and proof content.

What Does The SRA See As The Main Opportunities Of AI?

The SRA expects AI to drive “radical innovation” in all sectors, with the legal industry likely to be one of the most affected sectors. The report highlights several key opportunities for the legal sector, as follows:

Speed and capacity – AI will allow law firms to complete lower-level tasks faster (e.g. KYC checks and discovery), allowing them to focus their valuable resources on more challenging, labour intensive and potentially complicated tasks. This will be particularly beneficial for small law firms with minimal administrative resources.

Cost savings – AI-driven automation will save money and will help law firms place their efforts where they have the best chance of achieving a successful outcome.

Transparency – AI will help to make legal reasoning more logical and clear. This will facilitate auditing and provide greater reassurance to legal consumers.

Skills development – As legal professionals start to grapple with AI technology, they will be exposed to new skills and become part of a multi-disciplinary team that includes IT specialists. As the report explains, “This exposure gives solicitors the opportunity to develop their skills and experience, working directly with a wider range of professional experts. This will help to increase individuals’ confidence in using advanced technologies, and might help with career satisfaction and professional development.

New business models – AI will create new ways for law firms to operate and make money. The SRA provides the example of AI chatbots that will be used to provide new cost-effective and profitable services to consumers that were not previously possible.

Final Words

While the SRA’s report highlights some important opportunities, the truth is that the potential of AI to transform the UK’s legal sector is almost limitless. Many of the uses and opportunities of AI will become clear over time as the technology develops and emergent developments come to fruition. In part two, we will take a closer look at the risks and challenges of AI identified by the SRA’s report and how firms can manage these risks in the future.

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