AI and document automation for law firms

With the recent excitement about ChatGPT (Generative Pre-trained Transformer) it is clear that AI is happening a lot sooner than we assumed. Of course, ChatGPT is not the first AI system out there.  But it is the first time that so many people have experienced it.  

So how will AI change document automation for law firms? Will AI replace document automation software? And will AI make lawyers obsolete?

About 25 years ago, Marshall Morisse (who founded HotDocs) said to me that “every year I tell myself that this will be the year that document automation software goes mainstream.  And every year I am disappointed.  But this is the year!”

Document automation software has gone mainstream, and there are now over 400 vendors selling some form of document generation software.  And despite the fact that document automation is arguably the best way for law firms to increase efficiency and reduce costs, for the most part document automation is still seen as the unsexiest software technology on the market! But maybe this is the year that DA will finally become sexy!

In the past couple of years there has been a lot of fear mongering – with claims that AI will completely wipe out the legal profession. We’ve got the media to thank for that!

To be fair, the media didn’t say when this was going to happen, but they led us to believe it was imminent! And it’s not the first time that people have feared that machines would displace human workers. 

In 1776 James Watt reinvented the steam engine.  What was interesting was that everyone believed it was going to replace so many jobs, but what happened was that it automated many aspects of the older jobs, some becoming redundant, but ended up creating many new jobs.

Back to today…

And in the past few weeks when we saw ChatGPT, many of us thought “Wow! This is it! Game over for us humans! But now that we are getting over the shock, we are starting to realize that isn’t the case. Although AI will indeed impact certain aspects of legal practice, it is likely to benefit lawyers, rather than replace them in the foreseeable future.

And if we look back on history, automation has never cost jobs – although it has changed them.  

Why AI and ChatGPT won’t soon replace document automation systems?

While AI can certainly do some impressive things, lawyers aren’t going to trust an agreement generated by AI for some time still. So that means a lawyer will still need to proofread an agreement that is generated by AI – and that is a huge waste of a lawyer’s time.

Document Automation Software can be relied upon to give the same output every time a document is assembled, whereas AI learns and adapts all the time. Again, that means proofreading.

There is also the issue of confidentiality – especially with all of the legislation around the protection of personal information.  Will AI remember any personal information you give it? 

And where is the information stored?  And what about your content and IP?  Is your IP now in the public domain too?

Resistance to Change
You probably remember the quote that “Lawyers are 100% for progress but 1000% against change”.  After 40 years, lawyers are finally starting to adopt document automation software.  And now we want them to embrace AI?  

Also every lawyer believes that their agreements are the best in the world.  They don’t even trust an agreement from another senior partner in the same firm.  So there is going to be an inherent distrust of AI generated contracts.

Document automation software does a lot more than simply generate documents. Today it is used for:

  • online intake questionnaires
  • public questionnaires to attract new business
  • client solutions for retention
  • email templates for more consistent and quicker correspondence with clients
  • digital signatures
  • saving completed documents and data into DMS systems like iManage, NetDocuments, and Sharepoint
  • for collaboration on agreements
  • and even for legal decision trees.

Already the AI proponents are claiming that AI can produce an agreement quicker and better than a human lawyer could.  Except that someone – probably a lawyer, will have to validate the contract’s integrity, and they will be reluctant to do that without checking it thoroughly first.

This is especially true if one considers some of the blatant errors being reported, and the fact that ChatGPT “hallucinates” from time to time…

AI vs IA

I regularly get asked if document automation is in fact AI.  Of course, the answer to that is “no” because AI uses machine learning and big data to predict outcomes. Document automation is more IA, which is the acronym for Augmented intelligence – where computers enhance the capabilities of humans rather than replacing them. So the easy way to know the difference between the two is to ask “does it replace humans or does it help them?”

But in the early stages, Artificial Intelligence might be more like Augmented Intelligence – where it enhances how humans (and lawyers!) function. And perhaps for now the distinction between AI and IA is not that important, since both will enhance efficiency for law firms for the foreseeable future.

To give you an idea of the power of AI…

In a comparison between AI and human lawyers to annotate five nondisclosure agreements lawyers achieved an average accuracy of 85%, while the AI system was 94% accurate. But that isn’t the main point of this example. It was the speed which was remarkable. On average the lawyers finished annotating the NDAs in 92 minutes, whereas the AI tool took only 26 seconds. That is 200x more efficient.  

And that is a far more imminent threat (or opportunity depending on how you see it) for the profession – this massive increase in efficiency and productivity from AI which might dramatically reduce the numbers of support staff.

Another question I am asked is when AI will become mainstream for law firms.  It’s not like it is going to be the flip of a light switch.  AI will incrementally find its way into many aspects of the profession.

Microsoft and AI

Microsoft has confirmed that they will be investing $10Bn in OpenAI, the engine behind the new AI-powered ChatGPT tool.   It’s not like there aren’t already AI companies that are doing some really exciting things with AI – but it must be really concerning for them that Microsoft has decided to play in their sandbox.

Microsoft has also announced that it will shortly be adding ChatGPT functionality to its Office 365 suite. That means that AI (or at least the beginnings of it) will be instantly available to 260 million active Office 365 users. 

Of course, based on history, the fact that this functionality will be available in Office doesn’t mean that everyone will use it!

That said, MS is going to inject AI into every one of the O365 applications. And because this is where users spend their day, it is likely they will start using the new functionality. And they won’t even need to learn the new functionality because MS will prompt you.

Let’s look at how Microsoft Word will benefit from AI…

For example, AI could advise you on any clauses you missed which other similar agreements included. Today that functionality is already available for a price, but it might soon be available to everyone cheaply or for free. 

So you would be working on an agreement in Word, and there’d be a popup on the right hand side letting you know that other agreements included a clause that you seem to have forgotten, and asking you if you would like Word to insert it for you. Or the system might recommend different wording, or offer you a suggested Clause – all provided by ChatGPT.

It might also offer guidance notes, automatically selected by MS Word based on your agreement.  As we dig deeper we will find a number of other exciting new AI features which will make users more productive.

Document automation and how AI will help…

There is one more really neat way that AI will benefit document automation software.

One of the main reasons why document automation software has battled to become mainstream is that it is a tool, and not an out-of-the-box solution.  So for it to be useful, someone still needs to author or develop the templates – which requires an understanding of how the coding works. It also needs a substantial amount of time to create or code templates.

That’s why so many document automation systems failed over the years.

So to get around the complexity of document automation coding, some document automation systems have introduced low code versions, where it is easier to create templates.  But even these systems require some learning, and it still takes hours – if not days to design a moderately complex template.

But AI and ChatGPT can learn how to markup Word documents into document templates using Named Entity Recognition to replace variable information with questions.  

“Named-entity recognition (NER) locates and classifies named entities mentioned in unstructured text into pre-defined categories such as person names, organizations, locations, medical codes, time expressions, quantities, monetary values, percentages, etc.”

Using this technology, makes it possible to automatically convert Word documents such as agreements into templates, in seconds! While it might sound like this is years in the future, we’re already working on this functionality, and we hope to release a first version before year end.

Even if the initial markup is not perfect initially, it will still save a lot of time in coding templates, and for lawyers who don’t have the time or the inclination to learn how to code, this could be a complete game changer for both the lawyers and the document automation vendors.

Lawyers vs AI…

Then on whether AI will replace lawyers, I think AI is going to change the profession in many ways – and more quickly than we realize!  And it certainly will take over some aspects of practice.

But lawyers, mostly, are smart.  They will adapt.  They might re-tool for a different career, or they might add other services to their firm. And besides, AI will help lawyers for the foreseeable future, not replace them.

The introduction of AI is going to be a wild and exciting ride, full of opportunity for the smart, tech aware lawyers. 

Taken from Chris Pearson’s presentation at ABA TechShow 2023 in Chicago.
Chris Pearson
Business Head at XpressDox


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