AI and small law firms: innovation and its impact

Recent surveys have revealed some interesting aspects of the move to AI in the workplace. The recent Microsoft and LinkedIn Work Trend Index, showed that while three quarters of knowledge workers now use AI at work, almost the same proportion said they are bringing AI tools to work themselves. This suggests that it is employees rather than employers who are introducing this technology to the workplace.

Even those not currently using generative AI indicate that they plan to do so imminently.

The challenges of working with AI

Workers see AI as a simple way to make life easier. Although they are intrigued by the possibilities, they may have limited understanding of how the technology works or the associated business risks.

Many perceive free AI tools as just for fact checking, or may only have taken simple steps to try out the technology and understand how it works. As well losing the opportunity to see the real value of AI, they may not be considering the intellectual property rights or copyright issues involved when they use the technology.

There is limited awareness of issues such as ‘hallucinations’ (when an AI model presents false or inaccurate information as real or fact) or ‘drift’ (when an AI system behaves in an unexpected or unintended way). Other considerations to be aware of are basic data governance, the need for integrating human input into AI design processes and, of course, the ethical issues surrounding its use.

Supporting and guiding staff in small firms

Many people may not see the issues with their approach to AI because their firm has provided little or no clear guidance about using the technology. There is some guidance available from professional bodies, but some firms have told staff not to use AI tools at all, while others continue to ignore their existence.

It may be tempting, but law firms can’t just sit back and wait for the hype to die down. Employees need guidance to support them as they inevitably embrace AI.

One concern is that many small firms are lagging behind. According to the Solicitor’s Regulation Authority (SRA), around 75% of the UK’s largest law firms are using AI while just 30% of small law firms are exploring using the tech.

In theory, AI should be able to help small businesses just as much as the biggest companies, as it allows leaders with fewer resources to be more productive, innovate and create new business models. This can also allow law firms to meet their clients’ needs in new ways and support demand for legal advice and services.

As large companies forge ahead in developing expertise, it’s vital that smaller organisations gain an understanding of AI and what it means for them and their clients. Failing to do so could be a lost opportunity to compete with bigger businesses.

Mitigating the risks

At the moment, law firms that have embraced AI are mainly focused on automating existing legal processes to reduce costs.

This might involve activities such as automating anti-money laundering (AML) checks, searching for information to support document discovery, automating generation of letters and contracts, and summarising information from client meetings.

These automated activities, while basic, still need careful consideration. If the business is using Zoom AI or Otter AI to transcribe client meetings, are clients being informed and are the legal implications being considered?

As software increasingly includes AI elements, companies need to assess the implications of adopting the technology. Providing guidance about how, when and where these technologies can be used – and taking steps to address any unmanaged AI activity – will be crucial.

An AI-informed future

Of course, the real potential of AI lies in creating new business models that are truly transformative – models that will not be known until AI understanding and confidence become far more widespread. If firms haven’t got the basics right, the opportunities of broader AI adoption will be missed – and the risks involved in its unbridled use will be far greater.

It is therefore vital for business leaders to get to grips with AI, now and as it evolves. Developing a strategy, building skills and deciding how to change business models to maximise the potential of AI are key elements of this.

That doesn’t necessarily mean you need to adopt AI tools. After gaining an understanding of the technology, along with the opportunities and risks, businesses may decide to make an informed decision to pause its introduction until legal and operational concerns are addressed.

Time to embrace change?

In both work and home life, everyone is now surrounded by AI. From maps plotting the route to work, to AI-enabled toothbrushes sold in supermarkets, the technology is all pervasive.

Because of this, it’s essential for businesses to be proactive, embrace this change and be strategic about their adoption of AI, rather than risking undercover or unmanaged use.

The opportunity to invest in training and upskilling – and for smaller firms to get funding support – is vital. This will help legal service providers build the knowledge and understanding to assess the potential of AI and embrace this transformative innovation when the time is right.