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The law, money, and everything else: AI and an imaginable future

Let the Courts be Furnished with Mechanical Magistrates.
“Let the courts be furnished with mechanical magistrates.” (Oppet caption 1900) Photo: Bettmann/Getty Images

Charles Kerrigan | CMS

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Legal and compliance professionals should update their frames of reference in order to utilize new technologies.

The latest AI systems are a set of technologies capable of profoundly changing the world in which lawyers and compliance operate. By 2027, 94% of law firms will have adopted generative AI. 

To avoid underestimating the nature of the change that is hurtling towards us, we need to update our frames of reference for how these technologies will be operating. 

Capabilities

We should start by setting out some capabilities of the latest technologies.

First, the computers can read and write. This is an existential change. Lawyers describe their jobs in many ways, but we’ve all made a living from reading and writing.

Second, the computers can do things for themselves. Agentic AI systems operate independently, making decisions and taking actions without direct human intervention. They are proactive in working toward goals, they learn from their environment and experiences, and improve their performance quickly. Already they show human-like reasoning capable of managing multi-step processes.  

Third, the computers can be dispute avoiders. Google’s “Habermas machine” is an AI model designed to minimize and resolve disagreements, to help groups find common ground on divisive issues. AI generates consensus by averaging individual positions which avoids direct interpersonal and emotional conflict. 

Fourth, the computers are multi-modal. They can read and write, but they can also work with voice and images and raw data.

The finance industry is being transformed by embedded finance, and embedded finance is transforming other industries. Embedded finance is the term used for the placing of financial products within non-financial (online) environments. If I buy a pair of trousers, I can pay for them using credit in the merchant’s store – without talking to my bank. I can insure my new trousers against the risk of losing or damaging them, again in the merchant store – without talking to my insurance company or opening its app. 

In the context of e-commerce, this is an improvement in customer service. But really, it says to customers that products and services will come to them, not the other way round. 

To help us consider what this looks like in the context of legal services, we can ask some questions of the more traditional type.

Why do people call lawyers? 

  • Legal advice: to know that they will not inadvertently breach a law or regulation.
  • Market practice: to know that their contracts, policies, or approaches to regulation are not different from their peers.
  • Judgment: to obtain the best answer when there is no right answer.
  • Trust: a sense that their issues are being handled within a positive relationship, doing what you say you will do, and showing expertise and good judgment.

Reflecting these criteria through the lens of how improved AI systems will change over the next 10 years, this is the likely result:

  • Legal advice: since AI systems can review and understand text, they are excellent candidates to identify and analyze laws and regulations.
  • Market practice: this is an information problem. Market practice is shorthand for the sum of data making up the terms of transactions in a market. No human can compete with a machine on an information problem.
  • Judgment: judgment informed by data will be viewed as more valuable as AI systems become transparent and verifiable.
  • Trust: we don’t trust AI responses now, but 10 years is a long time, the AI we have now is the worst AI we will ever deal with, and the rate of improvement between Chat GPT 3.5 and Chat GPT 4.0 (2 years) suggests we can be optimistic.

The last point is the most interesting. Lawyers assume they will be dealing with clients who are people. But a lot of automation this way comes..

Search

Search is an example of the potential scale of disruption coming from AI. Search engines must engage with AI because it is a fundamental disruptor for them. 

But the future of search is:

  • Conversational: don’t type keywords, ask questions and get coherent, context-aware answers.
  • Personal: results that reflect individual preferences, behavior, and past interactions.
  • Deep: systems that understand complex queries, weigh different perspectives, and provide contextual responses.
  • Integrated: replete with voice assistants and augmented reality – for example a seamless experience of information delivered through different interfaces and devices.
  • Trusted: AI systems will ultimately be judged on their accuracy and trustworthiness.
  • Proactive: anticipating user needs based on the user’s current context and activities.

The last two points are the most important. Push and pull. Law firms currently rely on clients contacting them for advice. Clients pull the advice from firms. The better alternative for clients is for advice to be pushed to them from a trusted source.

The future of law looks like the future of search. If search is the future, who can build it? Big law or big tech?

Charles Kerrigan is a partner at CMS in London. He is the author of The Financing of Intangible Assets, TMT Finance and Emerging Technologies (2019) and author and editor of Artificial Intelligence Law and Regulation (2022).

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