The Impact of AI on Legal Services: Revolutionizing Efficiency, Protecting Privacy, and Expanding Access to Justice

As generative artificial intelligence (AI) enters its second year of widespread use, its impact on industries has become more tangible, particularly in the legal profession. Initially met with excitement and high expectations, AI is now moving beyond the "hype cycle" toward practical applications. Law firms, in-house legal teams, and pro bono services are adopting AI tools to drive efficiency, reduce costs, and improve access to justice. Yet, this evolution is accompanied by challenges, including concerns about data protection, job security, and long-term implications for legal training.

Transforming Legal Services: Efficiency and Time Savings

Law firms and corporate legal departments are increasingly recognizing the potential of AI to streamline routine tasks, such as drafting contracts, summarizing documents, and automating compliance processes. For instance, Cooley’s use of AI technology to summarize long email chains and produce first drafts of contracts exemplifies the immediate time savings AI can deliver. Similarly, Hogan Lovells developed a custom AI tool, Craig, which employs auto-pseudonymization and zero data retention to safeguard sensitive information while assisting with legal drafting and regulatory compliance.

In-house legal teams, too, are reaping the benefits of AI. Unilever’s legal delivery centers in Barcelona, Mexico City, and Bengaluru are using AI to handle complex legal contracts more efficiently. Tools like Microsoft’s Copilot and CoCounsel have enabled Unilever’s lawyers to automate tasks, saving an average of 30 minutes per day and reducing reliance on external counsel. This shift toward in-house legal work has the potential to disrupt the economics of the legal industry, as large corporations opt to handle more tasks internally, only outsourcing the most complex issues to law firms.

In a similar vein, ASML’s legal team has integrated ContractMatrix to review third-party contracts and summarize regulatory changes. The tool enables quicker responses to legal queries, eliminating the need for costly consultations with external law firms. ASML’s decision to renegotiate contracts with its preferred law firms to reflect AI-driven cost savings highlights how AI could lead to a restructuring of fee arrangements between law firms and their clients.

Data Protection and Privacy Challenges

Despite the advantages of AI, concerns around data protection remain a significant hurdle for the legal sector, particularly given its reliance on client confidentiality and privacy. Law firms must navigate complex cross-border data regulations that vary by jurisdiction. For example, Allen & Overy (now A&O Shearman) has encountered difficulties using AI for cross-border document processing, as the legal requirements for cloud processing in different regions create challenges. In response, law firms are developing bespoke AI systems that allow for more localized processing while protecting client data.

At the forefront of this effort is Hogan Lovells, whose AI system Craig incorporates advanced encryption and pseudonymization techniques to comply with local regulations. Similarly, A&O Shearman has built ContractMatrix to prevent AI "hallucinations" — instances where the AI generates incorrect or misleading information — by incorporating hyperlinks to original, validated documents. This approach ensures that lawyers can quickly verify the accuracy of AI-generated content, reinforcing the need for human oversight in AI-driven processes.

Protecting Jobs and Ensuring Training in the AI Era

The potential for AI to disrupt employment in the legal profession has been a major concern, with reports predicting large-scale job losses. Yet, the reality so far suggests that AI is augmenting legal work rather than replacing lawyers. At A&O Shearman, for example, the introduction of ContractMatrix has resulted in significant productivity gains, with some lawyers reporting a 20-30% reduction in time spent on tasks such as contract review. Rather than leading to layoffs, AI is allowing overburdened associates to manage increasing workloads more effectively.

However, some experts worry that AI could hinder the development of essential legal skills. Cooley’s Peter Werner expressed concern that junior associates might rely too heavily on AI for first drafts of legal documents, potentially missing out on the critical thinking and problem-solving skills required to become proficient lawyers. This raises an important question: how can law firms strike a balance between leveraging AI to improve efficiency and ensuring that junior lawyers receive the necessary training and experience to develop their expertise?

Expanding Access to Justice through Pro Bono Work

While AI's impact on commercial legal work is profound, its potential to expand access to justice through pro bono work is equally significant. AI tools are enabling law firms to take on more extensive and complex pro bono projects, such as Norton Rose Fulbright's involvement in the UK government’s Covid-19 inquiry. By using AI-assisted e-discovery platforms, the firm was able to sift through thousands of documents to identify relevant material for review, a task that would have been impossible to complete manually.

Similarly, Linklaters has leveraged its in-house AI chatbot, Laila, to accelerate the drafting of case summaries for a human trafficking project in Tanzania. This technology allows the firm’s lawyers to focus on higher-level legal analysis and collaboration with stakeholders, thereby enhancing the impact of their pro bono work.

AI is also driving innovation in immigration law. Hogan Lovells, in partnership with legal tech company LawFairy, is developing a platform to help immigration caseworkers navigate complex UK nationality criteria. The AI-powered tool simplifies the application process by breaking down legal information into digestible questions, empowering caseworkers to make better-informed decisions.

A Legal Profession in Transition

The integration of AI into legal services is fundamentally reshaping how legal work is conducted, offering unprecedented efficiencies, cost savings, and opportunities to expand access to justice. However, this transformation is not without its challenges. Law firms and in-house legal teams must navigate complex data protection regulations, adapt to evolving business models, and ensure that AI-driven efficiencies do not come at the cost of essential legal training.

As the legal profession continues to embrace AI, its role will likely evolve from a mere tool for automation to an integral part of legal strategy. Those firms that can strike the right balance between leveraging AI for routine tasks and maintaining human oversight will be best positioned to thrive in this new era of legal services. Ultimately, the future of AI in law will depend on how well the profession can adapt to these emerging technologies while safeguarding the core values of justice, privacy, and professional development.

References

Miller, J. (2024) 'AI moves along ‘hype cycle’ to make its mark on legal profession', Financial Times, https://www.ft.com/content/8dbeecee-c242-4b22-987b-96b492f27d1e

Lambert, Y. (2024) 'In-house legal teams start to see AI gains', Financial Times, https://www.ft.com/content/285f1c78-6deb-47ac-b5d3-1b59b78e15c1

Hodge, K. (2024) 'Lawyers turn to AI to expand pro bono work', Financial Times, https://www.ft.com/content/6d9a68a9-94db-44b8-9906-b08a461a7c12