Judge Chips Away at Legal Profession’s Business Model: Criticizes A Lawyer’s Failure to Use Artificial Intelligence

The case of Cass v. 1410088 Ontario Inc. contains this one sentence written by an Ontario Superior Court judge in the course of disallowing from an attorney’s fee request the amount designated for “legal research”:

“If artificial intelligence sources were employed, no doubt counsel’s preparation time would have been significantly reduced.”

Padding on the hours billed for researching case law is a favorite method for bulking up legal fees related to court cases — for lawyers in the United States — as well as for those in Canada:

1. Thomson Reuters’ Canadian arm noted this:

“Judge says AI could have been used”, and “Courts mindful of technology”.

2. A Toronto-based intellectual property lawyer offered this observation:

“Really, that judge was saying, ‘If you can do this faster, why are you not doing it faster? Why are you charging your client for something that could be done more efficiently?”

3. And the CEO of legal AI pioneer Ross Intelligence Andrew Arruda tweeted:

“If artificial intelligence sources were employed, no doubt counsel’s preparation time would have been significantly reduced.

“… IT’S HAPPENING FOLKS.”

… 

For business people watching this, I think there are two take-aways.

The first, your lawyers have these faster, more accurate — and cheaper — means available to them in their work on your behalf.

Example:

Miami bankruptcy lawyer Luis Salazar who left a law firm with 1800 lawyers to found a 5-lawyer boutique firm

Staffing strategy: He’s substituted use of AI for the manual research done by junior associates at a law firm like his previous one.

From the New York Times:

“In Miami, Luis Salazar, a partner in a five-lawyer firm, began using software from the start-up Ross Intelligence in November in his bankruptcy practice. Ask for the case most similar to the one you have and the Ross program, which taps some of IBM’s Watson artificial intelligence technology, reads through thousands of cases and delivers a ranked list of the most relevant ones, Mr. Salazar said.

“Skeptical at first, he tested Ross against himself. After 10 hours of searching online legal databases, he found a case whose facts nearly mirrored the one he was working on. Ross found that case almost instantly.

“Mr. Salazar has been particularly impressed by a legal memo service that Ross is developing. Type in a legal question and Ross replies a day later with a few paragraphs summarizing the answer and a two-page explanatory memo.

“The results, he said, are indistinguishable from a memo written by a lawyer. ‘That blew me away,’ Mr. Salazar said. ‘It’s kind of scary. If it gets better, a lot of people could lose their jobs.'”

The second take-away: The legal profession does not — yet — use these AI tools all that much.

In a post one year ago I made this point — citing data in the U.S. legal profession and the U.K. legal profession:

But business lawyers are staying away in droves from this sort of labor-saving technology.

According to Altman Weil, a well-regarded consultancy serving law firms and in-house departments, only 7.5% of reporting U.S. law firms are even beginning to use technology tools that incorporate machine learning and other forms of artificial intelligence. And most of the rest report that they avoid such tools altogether: 26% are “not aware of what is going on in this area”; and 38% “are aware of what other firms are doing but are not pursuing it ourselves”.

PwC, the Big-4 accounting firm, reports similar responses from UK law firms: Just 3% report actual use of artificial intelligence; 4% robotic process automations; and 11% use of big data and predictive analytics.”

Why the low adoption rate — if AI is becoming available now?

However economical these tools may be from the standpoint of reducing costs to clients (while increasing accuracy and speed at the same time) — AI tools reduce hours billed in a profession whose business model depends on time-based compensation.  

AI’s benefits — speed, accuracy and lower research costs — are available commercially to the U.S. legal profession and to its business clients.

But the U.S. legal profession isn’t (yet) adopting AI on any scale.

Businesses that wish to tap into AI’s benefits will need to:

1. Seek out law firms like Mr. Salazar’s described above — a minority aggressively making use of these tools, or

2. Hope that more conventional law firms change course and adopt these new tools — however much they will reduce hours billed.