Artificial Intelligence, Lawyers and the Courts

Asset financiers grappling with the threats and opportunities posed by AI may be interested to learn of the impact AI, and in particular the recent developments in generative AI, are likely to have on their interactions with their lawyers and with the court system.

It always takes time to accurately assess the impact of new technologies, but it does seem that AI is likely to be a game changer in all forms of the provision of services whether that be the provision of asset finance to customers or the provision of legal services by lawyers to asset financiers.

UK Finance Report

UK Finance is the umbrella group for the major providers of most commercial finance apart from asset finance in the UK. In November 2023 UK Finance published a Report on the impact of AI in financial services, setting out the findings of a survey conducted among UK Finance members. The survey covered the state of AI adoption, its emerging applications and the risks it poses to financial services.

The key findings highlighted in the report include:

• UK financial institutions see a substantial opportunity in AI. 90% of survey respondents are currently leveraging predictive AI in back-office functions and reporting tangible benefits. More than 60% of respondents believe generative AI has the potential to deliver significant cost savings and improvements to operational effectiveness.
• Harnessing the potential of AI technology will necessitate a re-evaluation of business processes, employee skills and staffing considerations. Getting a return on investment will be reliant on data quality and seamless integration into existing systems, a process that could take three to five years.
• There is a steep learning curve and numerous questions remain unanswered at present. The advent of generative AI has identified additional risks and underlined the challenge of needing to procure models from external providers. Most financial institutions consider they are well equipped to identify, monitor and mitigate the risks, with 60% already leveraging existing risk management capabilities and adjusting their frameworks to include generative AI.
• Respondents support the UK’s flexible approach to AI regulation, based on principles and outcomes, rather than prescriptive rules on the application of the technology. However, 65% of respondents regard uncertainty with the direction of regulation as a top concern for the adoption of AI in the UK.

Legal sector comes to the party

There is probably now a reluctant acceptance amongst lawyers that the time gap between developments in technology impacting clients and the way they do business on the one hand, and the need for lawyers to alter the way they have operated for many years on the other, has gradually disappeared to the point where law firms now have to be seen to be ahead of their clients in reacting to new technology.

It was in this context that Manchester Law Society recently ran a conference specifically dealing with the impact of AI on commercial lawyers, and the keynote speaker was none other than Sir Geoffrey Vos, the senior judge from London who is Head of Civil justice.

It is well worth highlighting some aspects of the keynote speech:

“…it is, in my view, incredibly important that lawyers and judges get to grips with new technologies in general and AI in particular…

One may ask rhetorically whether lawyers and others in a range of professional services will be able to show that they have used reasonable skill care and diligence to protect their clients’ interests if they fail to use available AI programmes that would be better, quicker and cheaper.

…the principle [is] that we all owe a duty to those we serve – namely citizens and businesses here in England and Wales – to make constructive use of whatever technology is available if it helps to provide a better, quicker and more cost effective service to clients…

there are many things that AI in general, and generative AI in particular, can do for lawyers that is likely to save time and money and to be of great value…

[AI] can also, of course, also predict case outcomes. I would have thought that any litigation client would want to know, if they could, what an AI thought as to their prospects of success. That opinion could be compared with the opinion of their human lawyers. Since the AI has access to more and different data than the humans, its opinion would at least be worth taking into consideration…

Using AI is unlikely to be optional. First, clients will not want to pay for what they can get more cheaply elsewhere. If generative AI can draft a perfectly serviceable contract that can be quickly amended, checked and used, clients will not want to pay a lawyer to draft one instead…

…we will all need to rethink the way we do things, and the law may need to rethink how we allocate liability for things that go wrong in a world of capable AI tools…

In my view, the task of understanding how the private law and regulatory backdrop needs to be adjusted to cater for the mainstream adoption of AI, cannot be started soon enough.”

Comment

The impact of AI will clearly be profound in the provision of legal services and the conduct of litigation when disputes arise, and there is a degree of comfort in the extent to which the legal community seems to be aware of these issues, though doubtless the practical impact of developments will involve some surprises.

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