"AI will affect every lawyer soon. You can no longer stick your head in the sand and think it doesn't,"says Ben Schorr, a Senior Content Program Manager at Microsoft and AI expert. 

Source : Shashank Bijapur, CEO, SpotDraft via LinkedIn

Even professional law communities are speaking actively about embracing AI. The International Bar Association spoke in favor of adopting AI in legal practice.

"The legal profession needs to embrace AI, understanding and learning how to make use of it, so that legal services may benefit from this amazing evolution. The IBA is committed to providing ongoing support and guidance to ensure that AI technologies are developed and used in a manner that benefits the legal profession and society as a whole."

~Almudena Arpón de Mendívil Aldama, President of the International Bar Association (IBA)

So, how is AI adoption looking at the ground now? We will cover that in this post. 

Keep reading to learn:

• Current trends of AI for legal
• How are legal teams using AI, its pros and cons
• Top AI tools in the market
• What does the future of AI in the legal sector look like? 

AI for legal: The current state

Here are the interesting industry updates that explain the current state of AI in legal: 

GPT-4 passed the bar exam highlighting accuracy

GPT-4, a large language model created by OpenAI, created buzz by passing the bar exam. It created trust in AI’s capability to not just understand the basic text but also advanced legalese. 

“Lawyers need to figure out how to really use AI tools. And those that do, it’ll be a very positive thing for them. We’re sitting on the dawn of a major increase in potential capacity.”

~Daniel Martin Katz, a Professor of Law @ Illinois Tech

AI adoption is on rise

According to recent studies, the use of AI for legal processes has jumped from 39% in 2023 to 82% in 2024. Contract creation is one major use case. 25% of first-draft contracts will be generated entirely using AI by 2026.

Source : Sarah Irwin via LinkedIn

As AI adoption for legal increases, more ready-to-use tools are becoming increasingly available. On a global scale, generative AI in the legal market is growing at a CAGR of 31.06%, and researchers expect it to hit a market size of $781.55 million by 2034.

EU AI Act | Landmark legislation on AI usage

The European Union passed an AI act explaining acceptable usage and transparency expectations. The act highlights the use cases of AI that will be deemed unacceptable and banned. It also covers which use cases are high-risk and would be heavily regulated. The act stresses highly the ethical usage of AI and staying transparent.

Governments around the world are creating regulations to minimize the risks of AI. These regulations will help in smooth implementation as you can underline what is acceptable and what is risky. Before implementing any AI tool, you can simply check if it is keeping up with the required regulations.

Top ways legal teams are using AI

Thomas Reuters recently conducted a study of the usage of AI in professional services. Below are the top five use cases of AI for corporate legal:

1. Contract drafting

AI can act as an assistant during the contract drafting stage. First, AI generates first drafts easily by using predefined templates and some basic user input. It can also suggest relevant/additional clauses for contracts at this stage. Further, AI can also highlight problematic terms and suggest alternatives. You can eliminate potential risks and errors in the drafting stage by using AI.

2. Document summarization

AI can generate short summaries of lengthy legal documents. The legal team can use these summaries to expedite reviews, perform case analysis, complete reporting, and more.

3. Extracting contract data

AI can automatically pull key terms such as entity names, dates, amounts, tenure, etc from documents. This information helps to complete reviews, track key dates, manage renewals, conduct reporting, and more.

4. Document review

AI expedites legal document reviews by:

• Providing short summaries to set context
• Pulling out key terms that need double-checking
• Highlighting risky/incorrect terms and suggesting alternatives.

5. Legal research

AI-powered legal research tools act as a personalized search engine for legal professionals. It can analyze case law, legal journals, court documents, and more to pull out the right information for your case. It helps expedite case law research and legal drafting.

Pros of using AI for legal

Businesses see below the benefits of implementing AI in their legal workflows:

1. Saves time and money

AI expedites routine legal documentation tasks, saving both time and money. A recent report from Thomson Reuters claims that AI could free up around four hours each week for an average US lawyer, equivalent to 266 million hours of increased productivity, which could translate into $100,000 in new, billable time per lawyer each year.

2. Improves efficiency

In a survey by LexisNexis, 71% of legal professionals cited the ability to deliver work faster as the biggest benefit of using AI. Lawyers who can use AI to automate routine tasks are generally more productive, achieving more in their day-to-day task list.

3. Provides data-driven insights 

AI tools provide data-driven insights such as average contract drafting time, the average time taken by the different departments for approvals, etc. These insights help legal departments identify bottlenecks in their current systems and further improve efficiency of their workflows.

Challenges of using AI for legal

Here are the top challenges you can face when implementing AI:

1. Maintaining data privacy and security

Some top risks for legal teams regarding AI are ensuring effective management of data governance, security, intellectual property, privacy, and policy development. AI does bring these risks, making it necessary to thoroughly evaluate any software for privacy and security features before implementing it.

2. Overcoming biases in systems

AI can only make suggestions based on the data it is trained on, bringing biases to the systems. So, while AI is a good supporting tool, it cannot operate independently without human oversight. A quick human review helps to catch any issues or biases. 

"I'm a strong supporter of AI. Although AI still needs human oversight, one way or another, it brings the great efficiency and productivity that we didn't have back in the day when, for example, we were doing a lot of mundane tasks or processes."

~ Mine Ekim, Managing Director, Legal & Compliance, Golden Gate Global

3. Overcoming skill gaps

AI courses are not yet fully part of the law curriculum, creating a substantial skill gap. Law schools are now catching up, with 55% of law schools reporting to have AI classes. Still, it is best to adopt an easy-to-use AI platform that doesn't have much of a learning curve.

The future of AI in legal

How will AI bring changes to business strategies and processes? We observed below three trends that will reflect the future of AI in legal:

AI will be seen as a productivity tool rather than a human replacement. 

The fear-mongering behind AI is taking a backseat, and the use cases are getting clearer. Businesses will see AI as an investment to boost workforce productivity. 

"AI will eventually be a true gift to legal teams by freeing up more time for lawyers to be creative rather than just doing lower level types of reviews that can be automated."

~ Genevieve Kelly, General Counsel at Goodwin Procter LLP

Recruiters will focus on lawyers with AI skills in resume

Bennett Borden, Partner and Chief Data Scientist, DLA Piper, says, "Lawyers who use AI are going to replace the lawyers who don't." This filtering will start in the recruitment phase itself. Recruiters will now be looking for experience in AI platforms while screening itself. Not having experience with AI platforms in the resume will filter out candidates in the initial screening.

Also read: Will AI Replace In-House Lawyers?

Legal tech investment will grow

Companies will allocate a bigger pie of their budgets to legal technology. 61% of general counsels already plan to spend more on legal tech, particularly focusing on AI-driven tools. Among the planned legal tech spending, the top three areas for investment are virtual legal assistants/AI-powered chatbots (35%), e-billing and spend-management software (31%), and contract management platforms (30%). 

Regulations will increase

As AI usage gets more normalized, governments worldwide will keep regulating it to minimize risks. That makes it necessary to partner with companies with a strong hold of compliance. 

5 Top AI for legal tools 

Given the identified trends, businesses are prioritizing investments in virtual legal assistants, e-billing/spend management software, and contract management platforms. Below are some recommended tools from this space:

1. SpotDraft 

SpotDraft is an AI-powered contract lifecycle management platform that helps companies of all sizes manage end-to-end contracting tasks.

It enables legal document automation at all the contract stages:

• Creation: SpotDraft enables you to automatically create templates from existing documents. You can expedite the creation of documents in the future by using these templates. Further, SpotDraft AI suggests relevant clauses and language as you draft contracts, ensuring consistency and completeness.
• Review: You can generate quick AI-powered summaries and pull key information to conduct due diligence/review faster. SpotDraft also highlights problematic terms and suggests alternatives.
• Termination/Renewal: SpotDraft AI pulls key information such as party names and dates from contracts. You can easily set reminders for termination/renewal of contracts for any follow-up activity.

Key AI features:

• AI-powered templates
• AI-assisted summaries
• AI-powered data extraction

2. DocuSign

DocuSign is a popular contract management solution used by many enterprise companies. It helps in managing the contract lifecycle from creation to execution. Its AI features expedite contract reviews through document summaries, key terms extraction, and risk assessment of documents. 

Key AI features:

• AI-assisted summaries
• AI-powered data extraction

3. Copilot

Microsoft 365 Copilot is an AI-powered legal assistant that equips legal professionals with useful information to draft agreements and prepare for a case. It boosts the productivity of legal professionals by summarizing required content, comparing documents, simplifying analysis, and finding information and valuable insights from various sources. The best part is it can pull information from both external sources (case law, statutes, regulations, and legal journals) and internal documents (existing legal agreements) to give holistic information.

Key AI features:

• AI-powered search/Generative AI
• Document generation
• Document summarization

4. CoCounsel

CoCounsel is an AI legal assistant helping legal professionals with document drafting, research, and analysis. It can conduct legal research by understanding complex internal documents and pulling out required details. It can also scour the right information from the internet to assist with analysis.

Key AI features:

• AI-powered search
• Intelligent document analysis

5. SimpleLegal

SimpleLegal is an operations management platform that helps legal departments manage their spending. The platform helps legal departments to track and review bills by external law firms/vendors.

Its AI-powered review features can:

• Highlight any discrepancies in invoices to fasten reviews.
• Predict legal spending on any new case based on historical data
• Analyze vendor performance to identify top-performing firms and areas for improvement.

Key AI features:

• AI-powered invoice reviews
• AI-assisted financial forecasts
• AI-based vendor analytics

Optimize contract management with SpotDraft

SpotDraft is an easy-to-use platform to manage all your contract workflows. Our AI features help you to:

• Create instant templates from any document and expedite the contract creation process
• Conduct faster contract reviews
• Extract key terms quicker from contracts for any reviews/reporting

With our strong commitment to privacy and security, you can stay assured that you are meeting all industry regulations.

Book a quick demo to stay on top of AI in legal trends and improve your contracting workflows. 

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