How Artificial Intelligence is Revolutionizing the Legal Industry

In the sprawling landscape of technology and innovation, where artificial intelligence (AI) is starting to carve its niche in virtually every sector, there exists a quiet revolution that is reshaping the legal world. 

Every case can mean the difference between justice served and injustice perpetuated, and litigators stand as the modern-day knights, fighting for the rights of individuals, businesses, and society at large. They are the unsung heroes of our legal system, laboring tirelessly to ensure that justice prevails.

Yet, even the most noble of warriors use advanced tools in their quest for justice. This is where AI steps onto the scene, offering these litigators an innovative approach to the way they do their business. The AI industry, with its enormous potential, is increasingly becoming a trusted ally for those who tirelessly champion the cause of justice.

Artificial intelligence and large language models 

These are terms that are thrown around a lot at the moment, especially following the highly successful launch of ChatGPT in early 2023, which propelled AI into the mainstream. However, for concepts that are as complex as these, it feels unjust to assume everyone understands what they are and how to use them. 

In a recent podcast interview, Darrow co-founder and CTO, Gila Hayat,  put it in the following terms: “Artificial Intelligence, in a nutshell, is a system that has ingested huge amounts of human intelligence that has been curated for a long period of time. It might look like magic, or even dark magic for some people. But at the core of things, AI is a machine that has been exposed to a huge amount of data, that due to the sheer volume,  couldn’t be comprehended by a single human being. Thanks  to the exposure, the machine then has the ability to derive or predict the answer to any kind of question. So the more data you put into it, the better results you will get.” 

Large language models (LLMs) is another term that gets tossed around a lot  These are AI models trained on vast amounts of text in order to understand existing content and generate original content. Gila continues to explain that “they say things that sound coherent, but they are only as good as the data they were trained on.  And from what we’ve seen with general AI models, like ChatGPT for example, they talk about legal matters in a way that a civilian would, but they don’t really get to any depths. For example the intuition  of what a story is really about, or what kind of narrative can  make it a more understandable story.”

Specialized, legal focused LLMs, are what are going to really revolutionize the legal landscape and the way lawyers work. And this is precisely what Darrow is developing. 

The three waves of Legal Tech

Many legal professionals have started using AI-driven technologies and are already seeing the benefits. In a recent blogpost, NFX, the venture capital firm famously known for investing in disruptors (and one of Darrow’s early investors), explains that the introduction of AI in the legal profession actually represents the third wave of the ongoing Legal Tech revolution. This underscores the profound impact of artificial intelligence on the legal industry, marking a significant evolution in the way technology is transforming legal practices.

First Wave:  2000-2011 

The landscape of the first wave was predominantly dominated by traditional Software-as-a-Service (SaaS) companies, such as DocuSign and LegalZoom. While these companies have achieved considerable success in providing valuable products to attorneys (i.e. by automating or digitizing processes and enabling remote work), they primarily operated without significant integration of artificial intelligence (AI). 

During the first wave, a notable shift towards AI in the Legal Tech sector was observed with the emergence of e-discovery solutions. AI technologies, like machine learning, began to be applied for tasks like data search, ranking, and categorization, ultimately reducing the manual effort required for document analysis. According to NFX this was a relatively slow period for Legal Tech, with fewer than ten startups founded annually between 2000 and 2010.

Second Wave: 2012 – 2020

During the second wave companies started shifting towards becoming comprehensive platforms with a number of capabilities to service attorneys, rather than single-purpose tools. For instance, Smith.ai, developed a customer engagement platform, while other firms focused on contracts – offering services for drafting contracts, contract storage, and contract analysis. During this period, Legal Tech companies started to introduce the use of LLMs, though they were not yet fully practical for lawyers. Some of the pioneering companies during this wave began utilizing Natural Language Processing (NLP) to enhance efficiency, work quality, and overall customer experience in the legal field, marking a significant step towards a more integrated and effective legal AI ecosystem.

Third Wave: 2021 – present 

LLMs have evolved significantly, now being trained on extensive datasets of legal language. When developed and trained correctly, these LLMs have the potential to achieve language proficiency on par with that of a highly trained lawyer. Their ability to comprehend, interpret, and generate legal text makes them valuable tools in various legal applications, including document review, contract analysis, and legal research. This advancement in LLMs represents a transformative leap in the legal industry, as it becomes a human-like assistant for legal professionals, allowing legal professionals to succeed more than ever before. The way LLMs are already enhancing the overall efficiency and accuracy of legal processes is ultimately reshaping the way legal work is conducted.

The benefits of embracing legal AI 

Since AI became more “mainstream” and rapidly integrated into nearly every industry and profession, a common fear has emerged that AI will replace humans. But this is a misconception that is simply so far from the reality: AI will enable adopters to reach new heights, if leveraged effectively. NFX outlines the three core benefits of AI for legal professionals.

1. More cases won

NFX explains that attorneys who leverage AI technology are capable of achieving significant advantages in their legal practice. These legal professionals are not only able to attract and take on a higher volume of cases but also demonstrate an enhanced ability to choose those cases that will secure victorious outcomes. 

Beyond that, because so many legal violations are simply undetected (arguably, undetectable by a human), AI allows for the possibility that many more violations can now be discovered. Once discovered by the AI, litigation teams can do what they do best: fight for justice. They can bring cases to court and represent victims who were not even aware they had been harmed in the first place.  

In addition, the integration of AI systems allows attorneys to streamline and expedite the claims processing procedure, ultimately improving operational efficiency and productivity of their firms. This transformative impact of AI on legal professionals highlights its potential to optimize legal processes, bolster attorneys’ success rates, and allow them to better serve clients – which not only helps their firm’s bottom line, but allows them to advocate for more victims and hold wrongdoers accountable. 

2. Heightened job satisfaction

In legal practice, a substantial portion of an attorney’s responsibilities often comprises repetitive and mundane tasks, the kind that one tends to procrastinate. However with the advent of AI, attorneys now have a powerful ally to handle these time-consuming duties. This technology allows legal professionals to offload those burdensome or rote tasks to AI systems, freeing up their valuable time and mental energy to concentrate on the aspects of their work that demand a uniquely human touch. By delegating these routine tasks to AI, attorneys can redirect their focus towards the more intricate and specialized facets of their profession, allowing them to focus on the parts of the job that they love, and offer clients a higher level of expertise and personalized service.

3. Drive business forward 10X

Conventional legal technology has undeniably played a pivotal role in propelling law firms forward, typically achieving a substantial 1.5-fold increase in their operational efficiency. However, the use of AI as opposed to non AI driven technologies has ushered in a transformative era where the potential for growth is exponential, potentially reaching a remarkable 10-fold boost in productivity, profitability, and effectiveness. This extraordinary leap, as pointed out by NFX, highlights the incredible potential AI offers not only to the legal sector but across various industries. Legal professionals have emerged as frontrunners in adopting AI technologies, embracing their power to enhance operations and redefine the practice of law.

Attorneys are ready, but this is just the beginning

It’s been well documented that it typically takes five years for new technology to break through to this group of professionals. You can see this trend over the past few decades, from the adoption of computers in the late 1980s/early 1990s, to the use of online legal research services in the late 1990s, all the way to the types of AI applications we are seeing today. Attorneys follow this trend. According to NFX, 51% of lawyers have already used generative AI. They are ready, and so is the technology. 

The AI LegalTech landscape is continuing to gain momentum and reshape legal practice. AI is a powerful tool in the legal arsenal, and one which can enable litigators to bring even more justice to the world. 

The Legal Tech industry has already generated a staggering $30 billion from sales worldwide  and is poised for explosive growth. The integration of AI into the legal profession is just the beginning of a broader technological reinvention. As we continue to witness the synergistic partnership between human intelligence and artificial intelligence, there is no doubt that the world of law is on the precipice of transformative change. Together, these heroes of the courtroom and the cutting-edge capabilities of AI are paving the way for a brighter and more just future for all. In this era of innovation and collaboration, we can look forward to a legal system that is not only more efficient but also more equitable, ensuring that justice truly prevails.

You can read NFX’s full article here and discover why they invested in Darrow.

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