What Are the Risks of AI in Law Firms?
In June 2023, two New York attorneys filed a brief written by ChatGPT, which included citations to six nonexistent cases and erroneous quotes. This was one among several high-profile incidents that highlight some of the risks of using artificial intelligence for legal professionals without strong oversight or scrutiny.
Even as generative AI continues to become more sophisticated and have fewer instances of “hallucinations,” there are still issues of inaccuracy, bias, discrimination, and confidentiality that loom especially large in the legal industry. Despite these challenges, AI will continue to transform the legal industry in fundamental ways, including how law firms are structured.
How will generative AI change the law firm model?
One of the benefits of AI in law is the ability to simplify rote tasks with the click of a button. Lawyers no longer need to dedicate countless hours to researching case law, drafting and managing contracts, or generating documents. Instead, they can leverage AI-enabled tools to do the work for them and redirect their attention to higher-value work, such as strategic legal planning and negotiations.
But in an industry that’s built on billable hours, a reduction in hours poses a risk to operations and headcount. Traditionally, clients have been billed by the hour, with the bulk of time-intensive work executed by junior associates and paralegals. But if that work can be executed in seconds with the help of AI, clients might demand an alternative billing structure, which could lead to a consolidation in the number of junior staffers.
Though aspects of traditional law firms may change with the adoption of AI, human intelligence and oversight will remain critical. AI can’t develop client relationships, offer discretionary judgment, or provide nuanced understanding of complex or unprecedented cases. Firms will need to contend with current business structuring and operations and make a choice on how to best adapt to the changes AI brings, striking a balance between leveraging technology and the value humans add.
What are the legal ethics issues with AI?
As AI in law and legal practice shape-shifts, junior and senior lawyers alike will need to adapt to market changes while also keeping ethical considerations top of mind.
The American Bar Association’s (ABA) Model Rules of Professional Conduct codifies best practices and ethical guidance on how to use AI in legal work, including:
Competent representation
Lawyers need to provide competent representation to clients, including the benefits and risks associated with relevant technology. More than 40 states have adopted this language; Florida took it one step further and mandated that if lawyers don’t understand a particular technology, they need to seek outside counsel from someone with that expertise.
Confidentiality
Lawyers must take reasonable steps to protect client information from unintended recipients. Because several AI applications such as ChatGPT retain queries and share inputs with third parties, legal professionals should check the terms and conditions to prevent exposing clients to risk.
Supervising nonlawyer assistants
Lawyers must supervise any nonlawyers who assist them to ensure that they adhere to rules of professional conduct. Traditionally, nonlawyers have encompassed paralegals or vendors; however, AI straddles a hazy line as to whether the technology can be considered a nonlawyer assistant. Regardless, attorneys are accountable for any ethical violations committed by nonlawyers under their supervision.
What are the litigation issues with AI?
If using generative AI during legal proceedings, litigators should consider the risks and limitations of the technology to ensure fairness and justness.
Bias and discrimination
If a generative AI platform is trained on data containing biases, then this will likely lead to discriminatory outputs, which poses risks for litigators leveraging the technology. When AI systems spit out biased outcomes, these flawed responses could influence critical aspects of the litigation process, if attorneys aren’t careful.
Data privacy and security
Many AI developers rely on the information users input to train and improve their models. Litigators must uphold the client-attorney privilege by not sharing confidential or sensitive information and ensuring the platform has adequate data privacy and security safeguards in place. If not, any sensitive information could be retained within the system and accessed or sold to third parties.
Compliance and regulation
As AI tools rapidly evolve, existing legislation may fall behind, leaving lawyers in a precarious position when integrating new technologies into their legal practices. Failure to comply with AI-related regulations could result in legal consequences, impacting the credibility and reputation of the lawyer and firm.
Bloomberg Law is an intelligent approach to legal AI
While large language models can increase efficiency, AI for legal professionals can also introduce significant risks. Lawyers must balance the benefits of utilizing AI with ethical, legal, and professional considerations.
Whether you’re considering using generative AI in your legal practice or advising clients on their risk, Bloomberg Law can help you navigate the legal and ethical risks of AI with confidence. Get the full picture of AI-related legal issues and professional best practices with our extensive Practical Guidance, news, and in-depth analysis of AI-related legal issues.
Watch our on-demand webinar on Generative AI and Legal Ethics for an overview of legal ethical concerns associated with using AI in the practice of law, including takeaways to balance the risks and benefits.
The nuances and challenges of AI aren’t new to us. For more than a decade, we’ve been perfecting the power of AI to help lawyers speed up and simplify legal tasks, and we understand that these advancements require an extraordinary level of testing and discernment. Request a demo to see how Bloomberg Law’s AI-powered tools and comprehensive coverage can transform your legal practice.