Posted by Peter Wallqvist, chief strategy officer at Legal Futures Associate iManage RAVN
It’s hard to miss the recent buzz surrounding artificial intelligence (AI), especially in legal tech, with many of the top 200 firms utilising the technology in some manner. But what about the smaller firms? Do they need AI? Can their infrastructure cope with AI?
So, what exactly is AI?
AI emphasises the creation of intelligent machines that work and react like humans. AI is the simulation of human intelligence processes by computer systems. These processes include learning (the acquisition of information and rules for using the information), reasoning (using the rules to reach approximate or definite conclusions) and self-correction.
AI can perform tasks such as identifying patterns in the data more efficiently than humans, enabling firms to gain more insight out of their data.
How can AI help smaller firms?
There are misconceptions that AI is only suitable for larger firms – firms with huge budgets and millions of documents – and therefore unsuitable for smaller firms. But many smaller firms could be missing out on the truly transformative benefits.
Smaller law firms have the same challenges as larger firms – pressure to meet tight deadlines, high volumes of manual review and increasing expectations from clients.
All these challenges can be addressed with the adoption of AI. These law firms might have fewer employees but many still deal with high volumes of data.
AI can create a level playing field between small and larger firms
The use of AI can allow smaller firms to scale up on large projects. In the past, these firms would require adding additional contract resources or simply decline the work. Previously, a firm asked to review a thousand contracts may not have the resources to complete the task.
However, AI could easily help the firm automate the task, such as drag and drop contracts into an AI portal to interpret, categorise, review and extract key data points. This operation can be done far more efficiently than through a manual process.
This also means smaller firms can tackle projects normally done by the big firms and remain competitive, such as contract estate reviews to help strategic clients better understand their rights, obligations and risks attached to those contracts.
By using AI, smaller firms can mitigate risk when reviewing documents. For due diligence exercises, firms aren’t limited to checking just a few samples – they can examine every contract through an AI portal.
Also, the AI portal doesn’t require overtime or sick days. More importantly it’s far more consistent than a manual review.
Small firms can also benefit from AI by training their employees faster on legal work while maintaining staff morale.
Many junior lawyers spend much of their early careers manually reviewing documents. With the use of AI, smaller firms can now re-allocate these staff members to more interesting, billable work instead of manually extracting data. Morale is increased as roles become more rewarding.
But isn’t AI technology too expensive?
The main objection smaller firms have against using AI is cost. There’s a perception that AI is just too expensive.
However, many AI vendors operate with a ‘price-per-document’ model instead of an enterprise licence, so firms only pay for what they use. Smaller firms also should consider the long-term cost savings – they can reduce costs of existing transactions, thereby increasing margins and maintaining competitiveness.
It’s clear there are many benefits to smaller firms by adopting AI in terms of increasing efficiencies, increasing productivity and mitigating risk.
But these firms need to research potential AI providers to ensure they fully understand the challenges, which solution would be right to address these challenges and gain a thorough understanding of the price model most applicable to them.