The Human Side of AI - Legal Disrupters

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Legal. Tech. Business. AI.

The report says take-up of the technology across England and Wales is incredibly high, with around half of lawyers surveyed reporting they are already using AI technology.

People just don't realize there's an entire new world emerging full of clever, new tech that's going to revolutionise the way we do business. The role of the lawyer in particular is changing dramatically.

This is Legal Disrupters, powered by Summize. Digital contracting, done differently

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Graham Smith

Welcome along to Legal Disrupters. Coming up over the next 30 minutes, all of this…

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Coming up on Legal Disrupters.

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Sam Walkley

Great legal tech won't replace a great lawyer, but great legal tech in the hands of a great lawyer is game-changing.

John Armour

We see new business models emerging to harness technology.

Nataly Veremeeva

We're not identified anymore as a cheap location. We identified a location with quality resources that are able to do complex tasks, development of artificial intelligence on blockchain.

Graham Smith

But first, a quick roundup of the latest goings-on in the world of legal and tech.

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Legal. Tech. Business. AI. This is Legal Disrupters News.

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Graham Smith

According to a new survey by the global law firm Baker McKenzie, just 4% of senior executives currently believe the risks associated with using AI technology across their business processes to be significant. Meanwhile, over a quarter of all respondents believe the risks to be minimal.

The report highlights the business benefits to companies ready to start integrating AI technology into their business operations.

A white paper study from the U.S. company Onit has shown that legal contract review software makes users immediately 51.5% more productive and roughly 33% more efficient, making red lines and delivering a contract risk profile all in a matter of minutes.

The report takes a typical mid-sized company with 55 lawyers, who collectively review an average of 9,526 contracts each year. A 51.5% productivity increase allows the same legal team to process 4,906 additional contracts each year. That's the equivalent of adding 28 lawyers to the team.

The report goes on to say that properly managing contracts from start to finish can increase revenues by up to 9.2%.

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Legal Disrupters.

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Graham Smith

In more news today of the robust market for contract management solutions, LinkSquares, a company developing software that helps brands maintain contracts, has announced that it's raised a hundred million dollars in series C financing led by G Squared.

The tranche had participation from new investor, G2 Venture Partners, as well as existing backers. It brings the start-ups total funding to $161.4 million at an $800 million valuation.

And Hence technologies, a Kigali and London based start-up that uses data and AI to match companies with external legal service providers, is set to scale its precision-matching engine after raising $1.8 million in seed funding from various institutions and angel investors. This brings the total amount raised by the start-up so far to $2.6 million.

The start-up, which was founded in 2020, uses data from various sources to match the internal legal teams of its client companies with external legal service providers, which gives it the ability to recommend lawyers based on the nature of the assignment, location and cost considerations.

The start-up's team mainly operates from Kigali in Rwanda, which is one of the best known tech hubs in Africa.

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Graham Smith

This is Legal Disruptors. It's the podcast with the latest developments from the world of legal and tech.

So, when we heard about the University of Oxford report into lawyers using AI in their tech arsenal, I'm not going to lie, we were very excited here, especially when we heard about just how widespread this is.

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Legal Disrupters.

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Paris Monroe

A new study from Oxford University has found the use of AI-assisted legal technology is changing the way law firms operate. The white paper has found the technology is making them more effective and collaborative.

The research team began their work three years ago and has found take-up across England and Wales is high, with around 50% of lawyers surveyed reporting using AI. Here's the Oxford University Faculty of Laws, John Armour.

John Armour

The classic business model for legal services is what we characterize as legal advisory, the delivery of bespoke legal advice based on inputs of billable hours.

We see new business models emerging to harness technology, a business model we call legal technology, which is involving the design of technology solutions and platforms, and a business model we call legal operations, which is about harnessing that technology to deliver process efficiency and project management.

Paris Monroe

The report discovered lawyers are working more effectively, acquiring new skills and working with more diverse groups of people, a division of expertise between lawyers who are involved in the development of AI law tech, and those who use technology as consumers, a rise in jobs requiring law tech skills, particularly for non-lawyer roles, and a significant change in lawyer skills training priorities over the next three years.

The report's authors also looked at the type of organization most likely to benefit from AI legal technology. Oxford's John Armour had these thoughts about it.

John Armour

Ultimately, we conclude that legal operations and legal technology, because technology is at the heart of the delivery of value for these models, rely on multidisciplinary teams to produce AI-enabled legal services and so the organizational structure is important. That is, a corporation is better, has a better fit for the implementation of multidisciplinary teams, than does a traditional legal services partnership.

Paris Monroe

It's clear that AI and legal tech is a bigger and faster growing sector than some people realize and that the legal services and in-house legal sector will never quite be the same again.

Graham Smith

Paris Monroe reporting there. My name is Graham Smith. This is Legal Disrupters.

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You're listening to Legal Disrupters, powered by Summize, with the must-listen-to people at the cutting-edge of legal technology, business, and AI. This is the Trendsetter Talk on Legal Disrupters.

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Graham Smith

Still to come on this week's episode, we hear how the conflict in the Ukraine has been affecting the tech sector, but first, a segment on the show we call Trendsetter Talks, where we catch up and get in conversation with up-and-coming people in the world of legal technology.

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Coming up.

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Sam Walkley

I think that legal tech will be ultimately a massive time-saver for companies, whether that's private practice law firms, in-house businesses. You see tech in every other service. It's so well integrated now across many different industries.

Graham Smith

Where's that line and is there a future where the regulatory aspect catches up as well on the legal side?

Sam Walkley

It's kind of like driverless cars. If a driverless car has an accident on the road, then who's to blame?

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Legal Disrupters.

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Sam Walkley

I qualified as a commercial solicitor, trained and qualified at Shoosmiths in Birmingham, big top 40 national law firm. Prior to that, I did three years as a paralegal. So, originally started in litigation, moved into the commercial team now, which was the team that I ultimately qualified into.

During that time as a paralegal, as a trainee, when I qualified, I was out on secondment in various businesses. So, working in-house legal team at Volkswagen for six months. I did six months at Müller, the milk and yogurt company, which was great, free yogurts every day. And, O2, Jaguar Land Rover. So-

Tom Dunlop

You got free Jaguars every day?

Sam Walkley

Free Jaguars every day. That would've been nice!

Tom Dunlop

I guess at some point you either got a little bit disillusioned with the journey. Obviously we're talking about kind of disrupting the legal industry a little bit and about people who are doing that.

Do you think that the way the legal industry is set up, the way that the services are delivered, was that an element of why you didn't feel a future was there in the legal services? What was that turning point, I guess, for you?

Sam Walkley

Yeah, I think so. I think when I qualified, the pressure was on to make sure that your figures are in the right place, that your billing's in the right place. I am quite an efficient worker. As I say, I'm quite organized, and I found that I was behind every now and again on my figures because of that and that just never really seemed to marry up with the whole purpose of what we're there for, of what lawyers were there for.

We're meant to be a legal service. Service in any other sense of the word, in any other industry, is doing the best job for your client, as quick as you can, and at the best price, and that just seemed at odds with the way that a traditional law firm was set up. The billable hour, the hourly rate, it kind of rewards inefficiency. It doesn't incentivize you to work as quickly as you can and to get the job done as efficiently as you can, particularly when, I think, the whole payment structure of a law firm and the bonus structure, and how valued you are as an employee, in a lot of sense is how much money you make, and how much money you make is determined on the whole by how inefficient you are. It just didn't seem right to me.

Tom Dunlop

In terms of some of your clients that you've dealt with, is there some that haven't accessed legal services before for contract review that have actually maybe even thought they kind of recognized it was important and then after they've maybe approached you for the first time? Because there's a gut feel that there's a whole market, like legal services could get huge compared to what it is today even with this whole untapped market. Have you experienced that first-hand?

Sam Walkley

Yeah, absolutely. So, the majority of my clients so far have been SMEs that have either never used legal services before, or it has been that one off basis where they've needed a lawyer for a particular thing. One of my clients is a big pyrotechnics in fireworks company. They came to me because they had a massive contract come in. They were doing the pirate techniques globally for the world tour of a well-known pop star and it was their first seven figure contract.

So, they came to me, and it was the director at the time who just said, "I think we need some legalize on this because it's now quite a big deal. There's quite a lot of money involved." And it wasn't a great contract, they were carrying a lot of risk. Wasn't entirely clear what services they were expected to provide. There was things in the service schedule that they wouldn't have been providing or shouldn't have been providing. And then after that, I think the client got the realization after I'd carried out the review for them, marked it up, got the contract into a much better place, mitigated a lot of their risks, I think there was an understanding then of the kind of value of getting legalized on your contracts.

And as much as SMEs might think probably need a lawyer to look at that, a lot of them actually don't take that step to go and get in them. And I'm not entirely clear on why that resistance is there. Maybe it's spend, maybe it's the approachability of the legal industry as a whole. Maybe it's the structure of getting a lawyer that you're not actually sure of the legal world or what you're going to get. So that's where I think certainty comes into it. And as I say with the polytechnics client, they now come to me with their much lower value contracts, because I think they see the value in getting a lawyer to look over that anyway, because obviously your risk isn't always tied to the value of the contract. You could be carrying a lot more risk than what the value of the contract is.

Tom Dunlop

I guess, moving on to the (and obviously we are a tech business always interested in the tech angle and these things as well) … so in terms of disrupting the legal industry, there's the way the service provided the cost of the model, the pricing, about tech, your opinion on, I guess, the relevance of it, there's obviously a lot of hype. We fully are aware of that and have our own views, but where do you think the tech side of it fits in?

Sam Walkley

No, I think that legal tech will be ultimately a massive time saver for companies, whether that's private practice law firms, in-house businesses. You see tech in every other service. It's so well integrated now across many different industries. And again, it does kind of feel like the legal in industry is playing catch upon that again. But I think anything that's going to be introduced as I say, saves time and gives that level of certainty that I think that particularly that untapped SME market is looking for and gives that level of accessibility to legal work. I think it can only be a good thing and it's only going to get better. I think whether it's contract review and contract review AI, or whether it's a platform for your contract life cycle management, I think whatever it is, it's only going to get better.

There's a quote that I saw in LinkedIn, and I've repeated it a few times myself, that great legal tech won't replace a great lawyer, but great legal tech in the hands of a great lawyer is game changing and I think that's a great way to sum it up. But equally, I don't think lawyers can just labour under that as an apprehension. I think lawyers have ultimately got to be quite careful if that's just what they think. I think lawyers have got to, as well as adapting tech, embracing it and looking at ways that they can make that part of their own offering, rather than just thinking of it as a competitor. That's something that might replace them one day. I do think commercial lawyers probably need to be aware that there is potential for AI to ultimately the things that a contract lawyer does day to day.

As I say, it's only going to get better. It's only going to evolve. It's only going to adapt. And I think if lawyers aren't reactive to that. I think if they're not proactive to that, and I think if they're not looking at ways that they can integrate that and offer that as part of their own offering, as well as offering the human side of being a lawyer, such as the relationship building, having conversations, whether that's with the clients or building that relationship with the clients, or building it with the other side of a negotiation, which there's a lot to be said for building a good relationship with the other side of a negotiation.

If lawyers don't focus on that and go about to basics in being that legal service offering and providing that human service, then there's all the potential in the world that legal AI, legal tech can actually do the day job for you. And I think that's where lawyers need to have that recognition. And if there's not going to be a reaction to that, and lawyers are just going to treat legal tech and AI as a competitor, and as something that might replace them one day, then we need to, then we need to really work on the things that maybe legal tech can't offer and that is the human side of being a lawyer and building those relationships.

Tom Dunlop

I must say it's a very interesting point, because I think you've, again, touched on a couple points about AI and obviously we get it as a AI review platform. It's quite interesting that people's perceptions of when they see the product is they want it to either... Well, one of two things, either they want complete replacement, a hundred percent replacement...

Sam Walkley

Be the lawyer for us, plug and play...

Tom Dunlop

And then any element between that and a saving of efficiency is almost disregarded. It's like, there's either we will manually review it, otherwise we have a system that replaces that review and that's it. There's a kind of this kind of reluctancy have anything in between, but I think it comes down to it was interesting before when you talked about the, I guess, reluctance to be efficient. So it's either, well, if you can provide it with zero input, then that's a service. They could productize to an extent without any in humans, but if they were going to go to a time basis and even if it was an element of saving that goes against being efficient. So ultimately is against our models. It's quite an interesting dynamic that we come across a lot as well.

I think from an AI side of it as well and obviously the introduction of time saving using tech, there's obviously quite a lot of publicity, certainly for FinTech perspective on the regulatory aspect. How does it understand, how do you train it? How does it get to the decisions? Where do you think the extent of it is? You saw that about taking away time and could it be a rival in terms of a replacement of a contract lawyer? Where's that line and is there a a future where the regulatory aspect catches up as well on the legal side or have you got any thoughts on the future of AI and contracts?

Sam Walkley

Yeah, it's a great question, isn't it? It's like driverless cars. If a driverless car has an accident on the road, then who's to blame? Is it the car manufacturer? Is it the person behind the wheel? And I think that's where even if in the traditional sense, the lawyer's role is going to adapt and your lawyer does use legal tech and does use AI and is the brain behind the AI and it's contributing to the AI, then that's also, I think, where the role of a lawyer can go. It will be the brains that the knowledge bank behind it, if you like. I think from a regulation perspective, I suppose one issue with it is it's never really going to be that full replacement where...

It comes down to a matter of trust, doesn't it? Can you trust the AI to kick out the perfect review to negotiate your contract? I suppose as much as as you can put into the back end of an AI, whether that's your standard contractual provisions, the fallback provisions, if those aren't agreed in the first instance, then perhaps AI will get to a place where it does kick out where you would ultimately get to if you had done it manually with a reviewer markup.

But ultimately, where do you draw the line, as you say?If you then have a contract that you've put through the AI, and then you sign that contract, and then you have issues with that contract, are we really going to get to a position where we go back to the AI company and say, "This did this wrong." Because from my perspective, even, even as a lawyer, even as a business owner, I think an understanding that your AI is never going to be plug and play. There's always got to be some sort of input into that. I think that's where the liability's got to see. And as much as you can regulate, and I know in FinTech, they talk about, what's the kind of process what's the tech behind the decision making?

I think from a legal perspective, I think particularly with AI, where you are imputing your own playbook positions, your own contracting positions, then ultimately, I'm not really sure that you can just put all of the responsibility on getting that contract right onto the AI. I think if lawyers treat and businesses treat AI as a time saver as something that comes in and helps you rather than completely takes your job for you, or gives you the end to end solution that you need, I think I'm not really sure that we're ever going to get to a position where we can really say that AI was at fault for this or AI was at fault for that. I think there's always got to be some sort of responsibility sitting on the user of the AI.

Tom Dunlop

I agree. And I think there's probably quite an interesting dynamic with the view. We've almost come from zero to a hundred in the legal industry, where you've gone from a very inaccessible kind of not very, I guess, from a cost perspective, an unknown, not transparent process in terms of how you might cost the client to now, can I replace those lawyers? There's such a journey in between. I mean, speaking the future, I guess from your perspective and how you see yourself future of your own practice, as well as where you see your service going.

Sam Walkley

For now, I'm going to just carry on trying to take things back to basics, try and just promote what legal service should always have been, which is a service that's client driven, genuinely, not just talking to talk genuinely putting the clients front and centre of everything that you are trying to do, doing that on time, doing that on cost, doing that on accessibility and availability. I think going back to basics, hitting all of those service levels, I think that's the way that lawyers will continue to exist even in the evolving world of AI and legal tech.

Tom Dunlop

Perfect. Yeah, totally agree. It sounds very exciting. The best of luck.

Sam Walkley

Thanks Tom.

Tom Dunlop

Thanks so much for your time.

Sam Walkley

You too. Thank you. Thanks for having me on.

Legal Disrupters, powered by Summize. Digital contracting done differently with intelligent automation, making your workflow smarter for more visit summize.com.

Graham Smith

Sam Walkley, the founder and boss of XVO Legal in conversation with the CEO of Summize, Tom Dunlop about the human face of AI in our first Trendsetter Talk on Legal Disrupters. I'm Graham Smith. I'm here across six episodes with all the latest news, ideas, analysis and conversations in the world of legal business and technology.

Finally, this week. The conflict in the Ukraine has caused reverberations around the world and conversations at the recent ABA TECHSHOW in Chicago and LegalWeek in New York were both dominated by this subject and it's not on effects in the entire tech sector. So we decided to take a closer look.

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Legal Disrupters.

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Paris Monroe

The Russian invasion of Ukraine has already had an impact on the energy and commodities markets. And there's another major industry that will take a hit, tech. So far, most of the focus has been on cyber security and semiconductor chips. Russia is a world leader in cyber warfare, sewing misinformation, and weaponizing digital platforms. But the impact on the tech industry will not stop there. That's because pre-invasion, Ukraine was also a valuable growing hub for tech talent. Tech accounts for over percent of the Ukraine's GDP and growing fast. The Ukraine IT development sector exported 6.8 billion in IT services in 2021 and increased by 36% between 2020 and 2021.

One in five fortune 500 companies use Ukraine IT services, among them Microsoft, Google, Samsung, Oracle, Snap, and Ring drawn in by the country's minimal bureaucratic hurdles. Ukraine has become a preferred destination for many companies to both hire full-time employees and especially to contract from. Here's Nataly Veremeeva, director of Kyiv based TechUkraine.

Nataly Veremeeva

We're not identified anymore as a cheap location. We're identified like a location with quality resources that are able to do complex tasks, development of artificial intelligence on blockchain, of internet of things. But in fact, the war is going on for eight years. We have entered into the hot phase of the war right now. I believe that our companies are quite able to work in a volatile environment and still deliver.

Paris Monroe

In total, 126 tech start-ups have raised venture capital funding in Ukraine since the start of last year according to PitchBook. The country's first decacorn, the cloud-based AI typing assistant Grammarly, achieved a 13 billion valuation on the back of a 200 million investment round in April, 2021. Now all of the country's dynamic tech clusters in Kyiv, Kharkiv and Dnipro have been compromised. To limit the of damage, several companies are trying to move their employers and contractors out of Ukraine, such as Israeli software company, Wix who have evacuated employees to Poland and Turkey, but many workers who are military aged men are blocked from leaving the country. Like this former IT contractor in Southern Ukraine.

Ukrainian IT Contractor

They gave me refuge and I say, "Oh right, train me to how to deal with it."

Paris Monroe

Companies like PayPal and Affirm have all been founded or co-founded by Ukrainian software engineers. The war in the country could have wider implications for the sector and the global economy than previously thoughts.

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Next time on Legal Disrupters.

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Electra Japonas

I think lawyers, old school lawyers particularly think that everything that they do is really, really special, and so therefore needs to be bespoke and needs to be done manually in a very artisanal way. Some of the stuff that I say can be a bit confronting, I suppose, and potentially controversial because I'm talking about change and disruption in an industry that’s quite archaic.

Graham Smith

We'll see you in two weeks.

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