Let lawyers control supply of electronic legal documents, report says

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11 April 2017


New South Wales: call for incubator

Lawyers should control the supply of “so-called standard electronic documents”, such as confidentiality deeds or contracts, a report has suggested.

The report on innovation for the Law Society of New South Wales also highlighted the ethical and regulatory issues raised by artificial intelligence (AI).

“Given the hitherto slow pace of innovation in legal services, especially with respect to the take-up of technology, a degree of consumer frustration, and engagement with cheap and readily available online services, is understandable.

“However, the risks to consumers could be significant. To take commoditised ‘legal documents’ as an example, the specific risk is that a document purchased over the internet proves not to be fit for purpose and the consumer’s rights are adversely affected, potentially with serious consequences.

“The provider may be outside of the jurisdiction and may not have insurance to meet any consequential claim against it – unlike lawyers, they are not obliged to carry professional indemnity insurance.”

As a way of remedying this, the report by the society’s Future of Law and Innovation in the Profession (Flip) commission of inquiry suggested a requirement that providers of electronic documents were “explicitly constrained by statute” to operate only where the technology was designed and delivered “under the supervision of a licensed legal practitioner”.

Alternatively, providers of electronic legal documents but not legal services must supply compulsory notices to the consumer requiring them to acknowledge that the product “did not constitute legal advice, was not produced by a legal practitioner and that legal advice could be sought from a licensed practitioner on the topic at hand”.

The report concluded that the society should “carefully and urgently” study the potential risks of “technology-enabled, mass-produced assistance”, given not only the nature of the risks but the “scale of the potential benefits” to clients.

The report, based on evidence given by over 100 witnesses, as well as written submissions and interviews, called for research into the effectiveness of online legal documents and an analysis of complaints about them.

“Flip heard from many New South Wales lawyers and a number of clients that solicitors are increasingly being approached by clients after online documents have failed to achieve their desired aim.”

The report recommended that the law society also investigate “bringing legal information within the regulatory fold”, whether it was provided by lawyers or non-lawyers.

“Cheap, quick solutions are always fit-for-purpose – until they are not. At present, the legal regulators – the Legal Services Commissioner and Law Society – have no power to hold vendors accountable when things go wrong if the service is deemed not to be a legal service.”

The report highlighted ethical and regulatory issues raised by AI.

“If a lawyer augments part of their service with an artificially intelligent application, for example, to what extent should that lawyer be required to understand the workings of the algorithms and the integrity of the data used to produce the legal work?

“If a lawyer hosts confidential client data on a third-party cloud service, to what extent should that lawyer be required to understand the technologies used by that service to ensure data security?”

However, the report was upbeat about the “enormous efficiencies” AI could deliver, particularly in document review, and “applications in law that perhaps have not yet been imagined.”

It found that although small firms could access “new and emerging technologies in a way that historically would have required impossible capital outlays”, their access to systems using AI was limited.

The report said the introduction of cloud computing had enabled small firms to buy technology in economical ways, like pay-per-use, and some smaller firms “have been able to keep costs down and help shape software products by offering to test or trial them”.

However, the “large datasets” that power AI were costly and as a consequence artificially intelligent systems remained expensive to develop.

“In this case, it appears likely that cost will continue to limit the offerings of smaller firms unless the market radically transforms.”

The commission recommended that the society study the issue in detail “with a view to considering how to encourage the application of artificial intelligence while avoiding a technology divide”.

In other recommendations, the report called for the society to set up an innovation centre to carry out research on the ethical and regulatory implications of innovation and technology, and design continuing education programmes that helped lawyers build up competencies in “existing and emerging” technologies.

The report said the society should also set up an incubator for new legal technology which could “develop innovative solutions for the sector” and “enhance access to justice”.

As part of this, the society was advised to sponsor an annual hackathon, to “harness enthusiasm and expertise” and help providers of legal assistance for the less well-off find solutions to specific problems.

In line with the approach taken in this country by the Solicitors Regulation Authority and Legal Services Board, it called for to the society to continue to help solicitors by reducing “regulatory barriers” to innovation.

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