Law firms embrace innovation with AI and data science

Although historically slow technology adopters, legal firms are increasingly embracing innovations in artificial intelligence, natural language processing and data analytics.

At its heart, legal work depends on information processing. Law firms need to sift through thousands of pages of contracts, legal judgments and case law as part of their day-to-day activities. While outsourcing repetitive work has long been a way to lighten the load, new artificial intelligence (AI) and data analytics applications promise to transform how law firms process and analyze information.

Automated contract management

Take contract management as an example. A vital part of this work is tagging and classifying data. To do this, law firms must go through hundreds of pages of contracts to extract key information, such as terms and contract milestones, as part of the onboarding process.

This labor-intensive activity is a perfect match for AI and natural language processing (NLP). Essentially NLP can deconstruct legal language into its fundamental components, simplifying the analysis of complex legal documents.

An automated contract management system using NLP can review digitized contracts and extract all pertinent information. It can then provide automated reminders for contract managers so that they can carry out their obligations over the course of the contract. The automation then frees up lawyers from routine activities to carry out more high-value strategic and legal work.

Using this technology can also improve contract performance. By regularly reviewing contract status at key milestones, it can greatly reduce the risk of not meeting contract terms. And at the end of the contract, law firms can correlate the outcome to the contract terms to measure performance and provide learnings for future contracts.

More sophisticated systems can make suggestions and identify any potential inconsistencies or problems at the contract review stage. They could even draft contract terms and clauses to minimize risks based on the information analyzed. This is crucial because, according to KPMG, inefficient contracting can cause companies to lose as much as 40% of the value of any given deal. In addition, machine learning means that the more contracts the system reviews, the better it will become at doing this.

And it’s not only law firms where automated contract management can drive efficiencies and improvements. According to the International Association for Contract & Commercial Management (IACCM), the average Global 1000 corporation maintains over 40,000 contracts, with their numbers and complexity both increasing.

Using data analytics to predict outcomes

Data analytics also promises much for law firms. By analyzing legal documents, law firms can gain insights, such as revealing hidden connections between entities, and uncover links to citing cases.

Decision tree analysis helps law firms assess likely outcomes in a case. For example, they can look for patterns in previous similar litigation in different jurisdictions to estimate the time the case took to come to judgment and what the outcome was. This can guide the litigation strategy for the client, such as when and where to go to court.

The key to this decision is budgeting. Legal analytics can estimate the level of resources a case will require over the length of litigation. This allows the law firm to estimate the pricing of their services for their client compared to the potential outcome. Contingency-fee lawyers, for example, will be able to estimate how much work is involved in taking on a case and what the rewards for the stakeholders would be.

Crucially, legal analytics allows law firms to shift from effort-oriented to outcome-oriented metrics, while managing client expectations of cost and outcome. This can be done throughout the litigation as it progresses, as predictions are refined. Ultimately, this can also prove a market differentiator for law firms as they can demonstrate their track record and the likely outcome of any case and its cost.

Seizing the opportunity

However, before law firms can take advantage of the benefits of these innovations, they will have to digitize what is often a huge volume of paperwork. There will be governance challenges to overcome from managing this newly digitized information along with existing digital content, such as email, SharePoint and phone records.

The key to success will be the meta data and a comprehensive document map. Gaps in data may cause a real problem, particularly if there are difficulties in identifying the location of all data, and whether it is all accessible. Data privacy issues could also be significant regarding data about individuals.

Beyond data issues, skills and culture change will also be important. There will need to be re-education of legal staff, which must include elements of data science, data management, data governance and visualization. Legal staff will need to be on board to accept the organizational changes and trust the insights.

New horizons

Although there are barriers to overcome, the payoff is significant. In addition to improving the client experience, these innovations also have the potential to open new market opportunities for law firms in selling these services to other companies – both inside and outside the legal sector. Deregulation in the law market has created a whole new range of providers of quasi-legal services.

By productizing some aspects of the legal process with technology, law firms can drive new revenue streams with subscription-based services, such as self-service portals for clients.

Forward-looking law firms are already moving away from the traditional role as the gatekeeper to law and offer additional non-legal services for a richer client experience.

Orange data and AI experts can help law firms take advantage of these new data-based technologies, from identifying use cases and establishing data governance to building data science capability and validating results. In addition, the Orange co-innovation team can help you productize any new services and market them to the wider world. Find out how we can help shape the future of your business.

Mathew Smith
Mathew Smith

Mathew is responsible for Business Development at Orange Business Services and is based in London, UK. With over 15 years experience in ICT sales, Mathew has worked with some of the leading UK and global law firms. In his spare time, Mathew is a keen golfer and current Four-Ball Champion of Dulwich and Sydenham Golf Club.