2309_HYD_LegalMarketOverview_FinancialServices

spotlight: The Rise of AI Thrive

To ensure they can thrive through these changes, many law firms now have specialist in-house teams who are looking into how best they can integrate the use of artificial intelligence into their product offerings. Two of the key uses that firms have been exploring are reasoning and generation. Reasoning is a complex process that involves many different AI techniques. For example, when reasoning about a problem, an AI system might use knowledge representation to store and manipulate data, reasoning algorithms to draw conclusions, and learning algorithms to improve its performance over time. Law firms are trialing extractive AI’s which have been trained to recognise certain pieces of data. These tools are being designed to take away a lot of the heavy lifting for lawyers when it comes to document reviews. It’s important to note that these trials are still in their early stages and, although there is a lot of excitement around them, there are still a number of risks associated with their use. One of the main concerns for law firms has been around the privacy of their clients’ data. Generative AI is perhaps what has caused the biggest stir in the market this year and law firms have also been running trials with

the technology. One of the focuses of the trials has been using AI to summarise legislation and so far, the outcomes have been mixed. It has proven to be a very powerful tool but has struggled when it comes to its judgement. There have also been difficulties in the tool’s interpretation of time, which can have ramifications when analysing legislation that evolves over time. However, perhaps the biggest concern with generative AI is its tendency to ‘hallucinate’. An AI hallucination is when a large language model generates false information - these hallucinations can be deviations from external facts, contextual logic or both. Impact on in-house legal teams: It is not just law firms who are considering implementing AI technology; in-house teams can also benefit from its use. The Law Society discussed how AI can boost teams’ efficiency by creating starting templates to build on as well as using the software to support legal research. Aside from their own use of the technology, perhaps the most pertinent question for in- house lawyers is, when will they start seeing the cost saving passed on by law firms to their fees? First and foremost, it is important to remember that many of these technologies are still only being trialled by

Market Overview London

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2023

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