#LSA10 and the future of Legal Services: Artificial Intelligence, cyber-courts, global markets and block chain

30 October 2017

The Legal Services Act 2007 (‘the Act’) marked a profound upheaval of the regulation of the legal services market that, for centuries, had existed practically in stasis. While the provision of legal services had traditionally been the preserve of practitioners operating within conventional partnerships or barristers’ chambers, the Act enabled other types of organisation to offer a competitive alternative.

Ten years later, this transformation seems likely to be dwarfed by the impact of such cutting-edge developments as artificial intelligence (AI) lawyers, algorithms that can determine disputes, the processing of big data, an increasingly globalised market, or even flexible working.

What is this brave new world? what can we expect from it? and what do we have to fear?

Contrary to popular opinion, not all lawyers are luddites blankly refusing to engage with the digital age. The pervasive nature of legal services has meant that most practitioners are required to have some understanding of technology, whether that be by serving documents via email, using online data sharing platforms, or providing detailed advice in relation to cyber-offences.

Recently there has been a drive to equip lawyers with particular IT skills, with one firm even piloting a scheme to teach its employees how to code. The idea is that lawyers would not only be able to use technology such as block-chain to assist clients, but develop computational logic to complement existing legal skills. However, with the recent creation of the world’s first lawyer-bot software, ‘ROSS’, one has to wonder whether such upskilling is really necessary. ROSS can already read and understand language, hypothesise, research the most up to date law and, perhaps most unnervingly, learn from its own experience. It has already been adopted by a handful of pioneering law firms across the world last year.

The implementation of technology has been comparatively slow in the courts. The use of live-links has only recently become available for some, whereas the reliance on and preference for physical documents (rather than the use of tablets or screens to review evidence) seems unshakable. Frustrating as such resistance may be, the transition to online working has not been without its own pitfalls. In Raconteur’s Legal Innovation Report 2017, it was revealed that 73% of law firms suffered a cyber-security incident last year, 41% of which were cause by the act of an employee. Moreover, in the last two years alone, cyber-related incidents increased by 28%, which suggests that we are very much still learning about the implications for becoming entirely digital.

As for the legacy of the Act, the provision of legal services via alternative businesses has been a triumph for some. Deloitte’s tax and legal profits increased by 10% in 2015/16, whereas PwC’s legal arm grew from £48.5m to £59.9m. For more information on ABSs, see Sian Jones’ blog #LSA10: the impact of Alternative Business Structures.

Perhaps the most positive news to take from the evolution of legal services in recent years is that, according to Stonewall, law firms make up half of the top 10 most LGBTQ friendly employers in the UK. Moreover, flexible working is becoming more and more prevalent, with 70% of law firms delivering or embarking upon remote and mobile working (see PwC’s Law Firm’s Survey Report 2017). This should allow organisations to retain members of their work-force who would otherwise be leaving to devote more time to family or other personal commitments. The internet has also meant that global markets are immediately accessible, and business is not entirely shut down just because important team members are on business trips or conferences in different time zones.   

In terms of things to come, the Law Society’s The Future of Legal Services report (January 2016) anticipates that the key drivers of change in the next few years can be categorised into five different groups:

  1. global and national economic business environments and the move towards other markets, such as China, as the UK leaves the EU;
  2. how clients buy legal services (including in-house lawyer buyers as well as SMEs/public); 
  3. technological and process innovation, reducing administrative costs, replacing many transactional roles but generating work around cyber security, data protection and technology laws;
  4. new entrants and types of competition such as direct access barristers, DIY clients; and the ‘Big 4’ accountancy firms; and
  5. wider political agendas around funding, regulation and the principles of access to justice.

The biggest shockwaves to the market will no doubt be in respect of technological advances which, as per the Law Society’s Capturing Technological Innovation in Legal Services report 2017, are “an unexplored landscape for the majority of the profession”.

According to PWC’s Law Firms Survey 2017, AI will be able to predict growth, ascertain which cases are worth pursuing, and identify intelligent pricing models based on the market.

Perhaps more concerning is the anticipated role AI will take in transactional areas of law. Indeed, a 2016 study by Deloitte suggested that there would be an estimated reduction of 39% in legal sector jobs over next two decades as a result of automation, particularly where technology such as block-chain can eliminate the need for solicitors to act as intermediaries in some transactions.

Cyber-courts are another phenomenon. The Prisons and Courts Bill 2017 currently being considered by Parliament includes proposals to create online plea services, and even to facilitate holding a trial over the internet. Such a move has been met with considerable resistance from the legal profession and campaign groups such as Transform Justice, who argue that the existing proposals were unsupported by research or the necessary consultation (see Transform Justice Briefing on the Prisons and Courts Bill 2017). Other developments include the use of algorithms to determine disputes to ensure more objective judgements and avoid inherent bias towards minority groups. However, as Harry Surden at the University of Colorado observes, the use of computers in this way could give us a false sense of accuracy, and recommends caution against “overly (endowing) things that look technological and mathematical as objective” (see New Scientist article, Law by algorithm: Are computers fairer than humans?). Moreover, a judgement reached on the basis of a secret algorithm does not sit well with the principle of open justice.

Given these concerns, the regulatory framework surrounding the provision of legal services will need to be alive to the ethical implications of introducing and, in some cases, replacing certain aspects of the system with technological innovations. Indeed, such adaptability to new developments is better enabled under the more flexible regulatory framework of the Act than it would have been under the previous regime (see Iain Miller’s blog - #LSA10: Reflecting on 10 years of the Legal Services Act - An Introduction).

Like it or not, change is coming from every direction. We can expect the work we do to alter dramatically as practitioners attempt to find niche specialisms or services that cannot be overtaken by technology. The next generation of lawyers entering the market will likely have very different demands and expectations regarding the working environment. Therefore, we can anticipate a shift towards agile working to retain the best people, hopefully in a way that is more inclusive.

Mary Shelley observed that “(n)othing is so painful to the human mind as a great and sudden change” (Frankenstein, 1818). While great changes in the legal services market are an inevitability, if we can learn to understand and embrace these changes, their impact may not be so sudden, and we will not be left with the feeling that we have created a monster. 

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