Challenges for the legal industry with AI

[SINGAPORE] Earlier this month, about 900 lawyers gathered at a Ministry of Justice conference to discuss the future of the law. Mr Edwin Tong, Minister for Justice, radiated genuine enthusiasm from the stage as he spoke about the huge advances in Singapore’s legal industry and how artificial intelligence (AI) is creating exciting opportunities.

The anxiety was palpable on the floor and in questions submitted to the Q&A app. How can you retain clients who have already started relying on AI for legal answers? How can you use AI while maintaining an hourly billing model? Which areas of legal practice are headed for decline?

How AI will transform legal practice

AI is already changing the work of lawyers. Law publications now offer tools that allow you to create legal opinions and research notes in seconds, while other platforms allow you to review contracts and conduct due diligence in a fraction of the time it would take a human.

Up to 44 percent of legal tasks can be automated and performed faster and better with AI. This poses two problems for aspiring lawyers. First, new graduates and young employees will face increased unemployment as the jobs that once supported them are automated.

Second, this basic job was once a classroom for lawyers to learn more complex legal skills. Without that, where would you get experience in critically analyzing legal documents or drafting contracts?

Law firm owners face unique survival challenges. Basic legal documents will soon be created in-house by clients.

Small business owners can use ChatGPT to draft commonly usable non-disclosure agreements or supply agreements. Additionally, institutional customers such as banks can leverage AI to create mundane loan agreements based on standard forms.

Lawyers are not immune to conflict either. AI can review millions of personal injury cases and estimate reasonable possible outcomes, and simple cases can be decided by machines.

Our industry needs to recognize that the landscape of legal practice is changing. AI is expected to augment, not replace, lawyers, but simpler, automatable tasks will disappear. It’s better to pivot your profession than delay the inevitable.

As Tong said, AI cannot build trust with clients. You cannot make moral judgments. You can’t argue with wisdom. This means that the human element in providing legal services creates bespoke commercial solutions, provides strategic advice and engages with clients with empathy and trust.

Machines acquire domain knowledge. Lawyers must apply ethics to their advocacy, build trust with their clients, and exercise the moral courage to tell clients what they don’t want to hear.

My view is as follows. AI is a super associate that can do much of the legal work. The human role is to be a wise, strategic, and effective partner that clients trust. However, clients will only pay lawyers for more complex or bespoke work, so skills will need to improve to become a legal product that cannot be produced by AI or has tangible human value added.

Enough navel gazing. What does this mean for stakeholders? Let’s take a look at the different parts of the production line that make lawyers.

law school

Law curricula that prepare undergraduate students for practical and in-house roles need to change. Universities must continue to teach the principles behind the field of law, but dumping academic data should give way to more analytical judgments about how the law should be applied.

In other words, don’t focus too much on the “what.” We’ll also explain the “why” and “how.” Tong acknowledged that universities must teach the use of AI in their curricula. I don’t think that’s enough. If human skills, critical (and ethical) analysis, and human engagement are important, then the equipment must be part academic ivory tower and part vocational training institution.

Law firm and training

Within law firms and the broader fraternity, there is a need to rethink how young lawyers are trained. If a new graduate needs senior associate skills early in their career, on-the-job training should provide them with that experience.

Mentoring begins by asking new graduates the following questions: “How would you respond to dunning letters, mark up contracts, and advise clients on deal structures? And why?” Rather than “watch and learn,” a Socratic approach rather than the current osmotic approach would be a good start.

Leveling the playing field through small and medium-sized enterprises and AI

For small law firm owners, AI is an undiscovered boon. While sole traders have long lamented their inability to attract legal talent, legal AI solutions can now produce better work product than most newly qualified lawyers.

Agentic AI can reduce labor costs for small businesses by summarizing open legal issues, scheduling meetings, and drafting email responses.

In practice, this means that a solopreneur with the right AI stack can research, draft, and review documents at a speed and depth that once required a team of junior lawyers.

For small businesses and individuals who cannot afford ‘big law’, this could widen access to timely and competent legal advice, rather than closing the door.

Technology here is a major leveler of occupational inequality. To benefit from this, small businesses will need to upskill for more complex jobs and invest in changing professional practices to take full advantage of AI. Government funding is also available through various grants and programs. ​

Business model and value

Since labor costs are the largest expense, this translates into cost savings for all companies.

Clients are already asking for increased productivity to be translated into lower fees. As an industry, we need to create a billing model that is based on value rather than time spent.

A legal opinion that saves a client millions of dollars is certainly worth more than a lawyer’s hourly rate, and valuable claims can also lead to increased lawyer efficiency. While this is more easily interpreted in transactional practice, the inherent lack of predictability in complex litigation is another matter.

The industry will need to consider whether some type of performance-based compensation is appropriate without introducing the moral hazard of pay-for-performance schemes. ​

Take adoption seriously

For this to happen, all of us, not just young lawyers and tech enthusiasts, need to get serious about implementing AI. AI will impact the entire legal practice. Lawyers who don’t accept this today will be obsolete practitioners tomorrow.

There are bigger moral issues at stake than simply making money. Refusing to engage with AI now could affect people’s access to justice. AI can advance the profession’s core values ​​of providing better-informed advice. Faster relief for vulnerable clients. And lawyers have more time to make ethical judgments instead of reaming documents.

However, AI works by searching databases and retrieving historical information. Based on precedent, we tell you what is likely to happen, rather than what should happen. The generated content may have built-in biases that the user is unaware of. This is where legal ethics comes into play.

Lawyers clearly often have an incomplete understanding of ethics and must “take the lead” when providing legal services. In the face of these seismic shifts, our profession has an obligation to leverage new tools to toe the ethical line that only humans can draw.

The author is co-managing partner of TSMP Law Corp.