Modernizing Law Firms for the AI Era
ILTACON 2023 highlighted generative AI's impact on law, increasing calls for regulation and a rift between law firms and clients over AI use, while examining law firms' modernizing compensation and ongoing JetBlue lawsuit.
Welcome to your Law Tech briefing for Aug 28, 2023, covering what happened in legal tech recently.
TLDR; Listen instead:
Have less than a 1 min? Three takeaways from yesterday
- AI Integration and Legal Implications: The role of artificial intelligence in the legal industry continues to be an evolving matter requiring careful appraisal. Following a court ruling denying copyright protection for AI-generated artwork, it's clear that current copyright laws require human authorship. This implies that industries exploring AI applications would benefit from comprehensive guidelines, such as those provided by ArentFox Schiff, in maneuvering through the potential challenges imposed by AI.
- Adopting Modern Compensation Structures: The need for law firms to modernize their compensation structures is increasingly important as market trends evolve and the younger generation of lawyers emerges. Adopting a transparent compensation strategy that allows for flexibility and speedier transitions for associates into partners may provide a competitive advantage. Increased emphasis should also be placed on incorporating technology into legal processes rather than solely relying on human effort.
- Client Transparency in AI Deployment: The LexisNexis survey revealed a significant demand from clients for transparency in the use of AI within legal processes. Law firms would, therefore, benefit from establishing strategies that promote transparency and involve clients in discussions concerning AI deployment. This open approach could help mitigate disagreements and foster trust between law firms and their clients.
Briefing
Here's what happened in legal tech recently...
Observations were drawn from ILTACON 2023's successful conference that hosted over 3,400 people and featured 158 exhibitors. Particular attention was awarded to the potential impact of generative AI on the legal sector. Discussions on AI's role in legal creativity were intensified after a court ruling denied copyright protection for AI-generated artwork. Furthermore, law firm ArentFox Schiff released a guide for industries maneuvering with AI as The White House urged increased AI regulations to address issues of human bias and data privacy. Meanwhile, a LexisNexis survey revealed divergent views among in-house lawyers and law firms on client involvement in AI implementation.
Trends
Key trends in the legal tech space centered around the need for law firms to modernize their compensation structures to accommodate evolving market trends and the younger generation of lawyers. The evolution of AI continues to disrupt the legal industry, with a strong demand for AI integration in legal processes reflected in the LexisNexis survey. However, areas of disagreement regarding client transparency and decision-making rights in AI deployment were highlighted. Meanwhile, the hire of lateral partners as a potential threat to the traditional law firm model came into focus. Lastly, JetBlue's ongoing antitrust lawsuit and a civil case concerning its proposed acquisition of Spirit Airlines is being watched closely.
Analysis
The dismissal of Stephen Thaler's lawsuit against the Copyright Office and Register of Copyrights underscores that current copyright laws require human authorship, thereby excluding AI-generated works. This raises complex questions about AI's integration into creative aspects of law. Recognizing this emerging complexity, ArentFox Schiff's guide could offer valuable insight for industries exploring AI applications. In the ever-changing legal market, firms adopting modernized compensation schemes, valuing transparent remuneration communication, and establishing a flexible compensation strategy could gain a competitive edge. This shifting landscape advocates for a faster transition of associates into partners and increased emphasis on technology and system use rather than relying solely on human effort. Firms should note the significant desire of clients for transparency regarding AI use, as brought forward in the LexisNexis survey. JetBlue's ongoing legal battle could set precedents around competition law and mergers in the aviation industry. The coming months will likely see a series of intriguing legal developments as the dynamics between AI, legal adjustments, and operational strategies continue to unfold.
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Key stories
Leverage technology, not lawyers (Jordan Furlong)
The role of the traditional associate in law firms is changing drastically due to shifts in hiring strategies and the incorporation of Generative AI into law firm operations. This has implications for the old labor model within the legal sector, which relied heavily on leveraging the hours billed by associates. As fewer hours are available for associates to bill, law firms are increasingly looking to bring in more experienced lateral partners. However, this could be seen as a short-term solution, potentially leading to a long-term profit decline. The solution may lie in reshaping the associate's role and speeding up professional development. Instead of focusing on billable hours, law firms could invest in an intensive skills development program that transforms associates into more proficient legal professionals, thereby making them more valuable for clients and the firms themselves. This change may bring an end to the traditional structure of law firms, introducing a new, more circular framework. It is a shift from leveraging people to leveraging technology and systems.
All stories
A Vibrant ILTACON 2023 Reaffirmed Its Place As One of the Leading Legal Tech Conferences (LawSites)
ILTACON 2023, the International Legal Technology Association's annual conference, was hailed a success with over 3,400 attendees and 158 exhibitors. The event, held in Orlando, offered a platform for legal tech firms to display their products and for attendees to gain insights from industry experts. Significant discussions were held around the potential impact of generative AI on the legal sector.
5 Ways Your Law Firm Compensation Plan Is Failing You (Attorney at Work)
The article emphasizes the necessity for contemporary law firms to modernize their compensation schemes in line with current market trends. It underscores the significance of pay transparency, recognizing intrinsic rewards, consistent performance and remuneration communication, equitable salary discussions, and a flexible written compensation strategy. These modifications can aid in attracting and retaining new-generation lawyers, providing firms an advantage over those adhering to obsolete methods.
A D.C. federal judge ruled that AI-generated artwork cannot be copyrighted, intensifying discussions on AI's place in legal creativity. Law firm ArentFox Schiff has published a guide for industries dealing with AI. The White House Office of Science and Technology Policy emphasized the need for more AI regulation due to concerns over human bias and data privacy. While there are challenges, many lawyers see AI as a tool for enhancing productivity and profitability, despite the ongoing issue of industry regulation.
Stephen Thaler's lawsuit against the Copyright Office and Register of Copyrights, Shira Perlmutter, has been dismissed. Thaler sought copyright protection for AI-generated works, but Judge Beryl Howell ruled that the Copyright Act requires human authorship, thus AI-created works are not eligible. The judge also dismissed Thaler's claim to assign the copyright to himself, stating no valid copyright existed. This is another setback for Thaler in his pursuit to copyright AI-created content.
The 2023 Start/Stop Survey – Please Share What’s Hot and What’s Not Today (Dewey B Strategic)
The Dewey B Strategic blog and Harbor have launched a Start/Stop survey to collect feedback on legal industry products, including generative AI. The survey will conclude on August 29, 2023, and results will be presented at Harbor's annual Legal Information + Knowledge Services Conference in September. Proceeds from the conference will cover technology expenses and contribute to the AALL George A. Strait Minority Scholarship & Fellowship fund.
60% of in-house counsel expect law firms to use generative AI (Legal Dive - Latest News)
A LexisNexis Legal & Professional survey reveals 78% of in-house lawyers across various countries want to be informed about their law firms' use of AI tools. However, there's a disparity in opinions about client choice regarding AI use: 65% of in-house lawyers expect to have a say, but only 45% of law firm respondents agree. The survey indicates a strong demand for AI in the legal industry, but disagreements exist on client involvement in its implementation.
JetBlue says price hike in botched redaction not what it seems (Legal Dive - Latest News)
JetBlue is contending with a Department of Justice (DOJ) antitrust lawsuit and a civil case from consumers regarding its proposed $3.8 billion acquisition of Spirit Airlines. The critics argue that the merger would increase fares and limit accessibility for passengers dependent on low-cost carriers. However, JetBlue counters that the merger would boost competition and service quality. The airline is seeking to dismiss the consumer lawsuit, claiming no injury has occurred to the plaintiffs. The DOJ case trial is slated for October.
