AI is coming to the legal world, but Foley & Lardner, a top 50 US law firm, isn’t waiting.
Foley & Lardner used ThoughtRiver’s online contract review service as the foundation for Foley Equipped. The Legal AI SaaS product includes law firm advice on handling 40 common issues in software and non-technical contracts.
Foley does not charge clients for its services.
Chanley T. Howell, a partner at Foley & Lardner, said it was “good to build momentum for a deal.” “That doesn’t give us all the answers. Human intelligence has to be involved.”
Foley & Lardner expects Equipped to reduce contract review costs by 20% to 25%. That said, it’s a necessary sacrifice now that research shows that AI will handle many routine tasks in the legal profession.
“If we don’t do it, other companies will,” Howell said. “You have to do things like this to stay competitive.”
In fact, research from Princeton University, New York University, and the University of Pennsylvania shows that AI will eventually perform many of the tasks that paralegals and legal assistants do today.
A Goldman Sachs study found that AI can perform the tasks of 44% of legal professionals in the US and Europe.
Contract review automation
Foley Equipped is the first step towards automating routine legal tasks. For example, in the technology industry, software makers, SaaS providers, and IT consultants use similar agreements in their respective markets.
Foley & Lardner’s clients upload vendor contracts to Equipped. This flags the clause for review. The software will also suggest changes.
Unless the customer is a Fortune 100 company, Howell said the most prominent technology vendors such as Microsoft, Salesforce and Oracle are unlikely to change the terms of their contracts. Medium and small tech companies are flexible.
But whether a contract is negotiable or not, clients need to know the risks associated with clauses covering data protection, security and intellectual property.Foley & Lardner Partner Christopher J. McKenna said this knowledge could allow companies to change their business operations or add technology to reduce risk.
“A lot of companies don’t think about it. [risk] It’s a gap,” McKenna said.
Foley & Lardner separates from ThoughtRiver’s contract advice within Equipped.
“Clients will use us instead of going straight to Thought River for internal guidance,” says Howell. “This is our playbook commentary and advice.
“I feel like our contract language is really good.”
Clients can use the advice of law firms to skip final review by Foley & Lardner attorneys. However, that’s not what usually happens.
“They want a partnership with us, so they’re not going to take all of our IP and run it on their own,” Howell said.
Reducing litigation costs with AI
Foley & Lardner predict that AI will eventually be able to do most of the legal drudgery. This may encourage clients to seek project-based pricing for more work, rather than lawyers charging by the hour.
It’s no secret in the legal community that clients hate billable time. Lawyers despise hourly billing because it ruins the weekend and leads to more time in the office.
“Clients and law firms say they hate billable hours,” Howell said.
More project-based pricing should work if the client is happy with the price.
Whatever the form of claim, AI software has the potential to reduce the overall cost of legal affairs. For example, lawyers would no longer charge long hours to review hundreds of documents in litigation if AI software could accurately summarize information and find key data.
“It reduces the amount of work being done at lower levels such as associates,” says Howell.
But CEOs and CIOs looking at 6-, 7-, or 8-figure deals always want to seek advice and discuss strategy with experienced attorneys.
“Computers that can do that effectively are a long way off, a long way off,” Howell said.
Antone Gonsalves is the Networking News Director for TechTarget Editorial. Since the mid-1990s, he has used his UBM Information week, tech web and computer reseller newsHe also contributes to Ziff Davis’. computer weekIDG’s CSO Online and IBTMedia’s Cruxial CIOHe began his journalism career at United Press International, working as a reporter and editor in California, Texas, Kansas, and Florida. Got a news tip? Send him an email.
