Lessons from the IBA report on the impact of AI on the legal profession

Last month the International Bar Association's groundbreaking report, "THE FUTURE IS NOW: artificial intelligence and the legal profession" was published. Martijn Lesterhuis, co-founder of Saga and partner at Venturis Consulting Group Amsterdam was - as a representative of the IBA's Law Firm Management Committee - a member of the IBA core working group that performed the research on the impact of AI on law firms.

The Future Is Now: Artificial Intelligence and the Legal Profession, September 2024

Let’s share some important and practical take aways for law firms.

1. Size matters (at least for the moment)

The larger the firm, the more advanced it is in AI. Larger (international) law firms have the scale and resources to invest in research, development, training and adoption programs. Currently, these firms have a competitive advantage. Whether that advantage will remain in the future is however uncertain. Due to the speed of AI development, decreasing cost and growth of available knowledge on AI in the legal market, other firms might catch up soon.

2. Leadership commitment is crucial

For AI initiatives to succeed, buy-in and commitment at board level are essential to get the partnership and employees truly engaged throughout the firm. Firms with strong support from the leadership are making the most significant progress in AI adoption. In addition, these firms established a dedicated AI team and a group of AI enthusiasts to lead the actual AI program.

3. Ensure organizational readiness

Before fully embracing AI, firms need to ensure their IT infrastructure is adequately prepared. Firms leading on AI have cloud-based, future-proof IT systems. They have implemented AI policies at the beginning and address data governance challenges proactively. These firms also strengthen knowledge management practices, which form the foundation for effective AI utilization.

4. Focus on adoption and integration

Unlike previous legal tech tools, AI isn't a simple plug-and-play solution. Successful firms are investing heavily in AI literacy programs to help lawyers understand AI's capabilities and limitations, and in ongoing training and adoption programs to get their lawyers accustomed to working with AI and creating use cases for their practices.

These firms also ensure clear internal communication about AI initiatives and the sharing of best practices. Persistence is key in this process, with successful firms building momentum through incremental achievements.

5. Using a mix of AI solutions

With development of AI going at breakneck speed, leading firms test and work with different AI solutions and platforms at the same time. From a data security and compliance perspective, firms often focus on using an LLM platform in their own secure IT environment to test, learn and use AI in their services to clients.

6. Business model considerations

AI is likely to impact the organizational model of law firms and the traditional billable hour model significantly. Forward-thinking firms are already reviewing their financial approaches, considering both the investment required for AI implementation and its potential to transform revenue streams. It's crucial to reassess how AI might reshape your firm's economic model.

7. Evolution of lawyer development

AI is augmenting rather than replacing lawyers' core responsibilities. At leading firms, the use of AI by lawyers in their work processes improves well-being through assistance in tough challenges. AI is set to change how lawyers work and develop their skills. It will lead to more focus on judging, instead of creation. Core capabilities will include critical thinking, emotional intelligence and legal expertise with a more client centric approach.

8. Client engagement

Leading firms have clients at the top of their mind. They keep their clients informed about AI initiatives and liaise on investment and pricing impact. This transparency fosters a collaborative learning process, enhancing client relationships in the process.

Looking Ahead

AI is no longer a future consideration for law firms – it's a present reality. Firms that embrace AI now will be best positioned to thrive in the evolving legal landscape. At Saga, we specialise in helping lawyers understand and utilise AI through prompt training, legal process management, and AI literacy programs. We also provide a secure AI platform tailored for legal professionals.

We encourage ongoing dialogue about AI experiences in the legal sector. By sharing challenges and successes, we can collectively navigate this exciting new era of AI in law.