Editor’s Note: This article was first published by Legaltech News.
A new study by research analyst firm International Data Corporation (IDC) predicts continued growth in the use of generative AI by legal professionals, with 69 percent of study respondents reporting they expect their use to increase over the next two years. In a webinar analyzing the results, lawyers agreed on the transformative impact of generative AI, but differed on what it might mean for the billable hour.
The study, Generative AI in Legal 2024, was conducted by IDC and commissioned by Relativity. It surveyed legal professionals, including attorneys, paralegals, legal IT, and legal operations professionals from nations around the world, including Australia, Canada, Ireland, New Zealand, the United Kingdom, and the United States.
Generative AI Today and Tomorrow
Not surprisingly, the study found that half of legal professionals increased their use of AI generally over the past two years, with only 3 percent reporting their use had declined. Significantly, 48 percent of respondents report their day-to-day AI use involves generative AI.
Legal research and contract analysis are the current top legal uses for generative AI according to the study, but it appears things may change in the near future.
Document review may be the biggest growth area for generative AI over the next few years. In the study, 64 percent of legal professionals reported they’ll be using generative AI for document review within a year, with 93 percent predicting they’ll be using it for doc review within five years—making document review the leading predicted use for generative AI within the year and over the next five years.
Likewise, document review was the legal task where respondents had the most trust in generative AI, with 89 percent reporting they were very comfortable or somewhat comfortable using generative AI for document review.
Generative AI use is significant across legal job roles and organization types, according to the study.
Paralegals and legal ops professionals lead the way in current use, with over half of them reporting they currently use generative AI, followed by lawyers at 47 percent and legal IT professionals at 41 percent.
Law firms lead the way in current generative AI use, with over half (51 percent) of law firm respondents reporting they use generative AI, followed by corporate at 41 percent and government at 39 percent—but many government and corporate respondents not currently using generative AI predict they will be using it within a year.
Generative AI Around the World
No matter where they were in the world, study respondents reported automation of basic tasks as their top reason for using generative AI, followed by cost savings.
APAC respondents had a substantially higher interest in using generative AI to enhance or automate their data privacy compliance activities than did their European or North American colleagues.
European participants in the study had a significantly greater concern about data bias, and they also had greater concern for a lack of explainability of generative AI results—but North American respondents had a greater concern about the creation of harmful content.
In a Relativity legal education webinar analyzing the results, speakers Fiona Campbell, London-based director of dispute resolution and head of electronic disclosure at Fieldfisher; myself, David Horrigan, discovery counsel and legal education director at Relativity; Ryan O’Leary, research director, privacy and legal technology at IDC; and Celia Perez, general counsel and corporate secretary at FreightCar America, analyzed the study data and agreed on the transformative impact of generative AI. However, our agreement on the data was not universal.
Interestingly, no matter where they were in the world, the risk of hallucinations or false responses was the least of study respondents’ concerns about generative AI, despite highly publicized cases of hallucinations in legal research, such as Mata v. Avianca Inc.
FreightCar America general counsel Celia Perez thinks overconfidence may be a reason.
“I think there’s an underestimation of hallucinations. Some lawyers can be a bit overly confident. They think they can identify and correctly spot hallucinations,” Celia said. “There’s almost a reactive instead of proactive approach. If they haven’t seen any issues yet, they think they’re fine. It’s somewhat of a concern. It can be dealt with, but it is a little concerning.”
Generative AI and the Billable Hour
In the study, 59 percent of law firm respondents currently use generative AI in firms where the billable hour is the primary client billing method, compared to 42 percent in law firms using primarily task-based billing.
The webinar panelists differed in their takes on how generative AI may affect the billable hour.
Fieldfisher’s Fiona Campbell wasn’t surprised that significantly more billable-hour legal teams use generative AI than do their task-based billing colleagues.
“Anyone operating on a billable hour model would use generative AI. It’s a no-brainer to ensure that they’re increasing efficiency and productivity,” she said.
IDC’s Ryan O’Leary wasn’t so sure.
“I would tend to take the opposite viewpoint. Billable hours tend to, in my experience, induce inefficiency to a degree. I’m wondering if these folks are using generative AI for this billable hour task and then sitting back and watching YouTube for 45 minutes or something,” Ryan said.
“It seems as though with task-based billing, you’d be more incentivized to knock out as many tasks as quickly as possible with generative AI. It seems to me you would expect less generative AI use from the billable hour law firms,” Ryan added.
Fiona disagreed, saying that generative AI “frees up time for lawyers to strategize and focus on the higher work,” arguing that law firms with billable hour models were “working effectively by using generative AI rather than trying to prolong the hours.”
The Future Impact of Generative AI
The webinar participants agreed on the transformative effect of generative AI.
“I think generative AI has the potential to fundamentally transform the provision of legal services as we know it,” said FreightCar America’s Celia Perez. “But I don’t think genAI is going displace lawyers or legal service professionals. It’s simply going to change the nature of how we’re trained and how we work and hopefully impact businesses and the world for the better.”
