- Charts the rise of alternative legal service providers from outsourcing to the current AI-powered generation.
- Predicts the way lawyers work will change as a result of AI.
Addressing an audience at Lincoln’s Inn in April, Sir Geoffrey Vos, Master of the Rolls, repeated his views that artificial intelligence (AI) and ChatGPT are likely to exceed human lawyers in ability at some point, and possibly in the longer term make judicial decisions.
Regardless of AI cynics within the legal profession, the technology advances apace. Earlier this year, GPT-4 scored in the top 10% of the Uniform Bar Exam (the professional exam taken by aspiring lawyers in the majority of US states). Only a few months prior, ChatGPT-3.5 had scored in the bottom 10%, failing most sections.
As AI continues its advance through increasingly sophisticated legal tasks reliably and at a fraction of the time and cost of its human counterparts, businesses will respond in favour of machines. The provision of legal services will need to be rethought.
Alternative service providers
Alternative legal service providers (ALSPs) have been part of the legal scene for 20 years and now take centre stage. Many of the most established names in law have highly developed ALSP elements to their business—Allen & Overy’s Peerpoint, Clifford Chance’s Applied Solutions business, and Pinsent Masons’ Vario. In fact, Pinsent Masons no longer calls itself a law firm—it is a ‘professional services firm with law at its core’.
The evolution to date of ALSPs may provide clues as to direction of travel for AI.
People, process & technology
The classic business mantra for improved organisational management is ‘people, process, and technology’. Successive generations of ALSP have taken each of these in turn, but the latest generation today involves all three, with a particular focus on data and insights.
People
The first-generation ALSPs emerged in the mid-2000s offering ‘legal process outsourcing’ models, reorganising the ‘people’ element of a legal team by sending work to low-cost-country locations such as India and the Philippines. This was followed by ‘on-shoring’ or ‘near-shoring’; for example, Freshfields’ decision to open a low-cost hub in Manchester in 2015. In parallel, other ALSPs emerged (Axiom, Lawyers On Demand, Pinsent Masons’ Vario) applying a flexible resourcing model to legal staffing. This was ground-breaking at the time, but the business model innovation concentrated purely on the ‘people’ component of managing a legal department.
Technology
Circa 2015, second-generation ALSPs brought in a technology offering. However, most were limited to automating, often poorly defined, legal processes to make them more efficient, making legal support available to other departments in a business on a self-service basis without the need for intervention by the in-house legal team, or gathering data about the operation of the legal department and presenting it in a more easily consumable format.
Process
ALSPs have matured over time, and today offer advanced technologies and knowledge on a variety of disciplines. This includes AI-powered solutions for litigation and contract analysis, compliance services, automation capabilities and more.
Third-generation ALSPs are now emerging, and they combine all three components of people, process and technology. The different strata of legal work in a business or firm are separated out and assessed to identify how they are best resourced, using management consultancy principles and a deep knowledge of the business concerned. Which are best handled by technology (whether AI, generative AI or other big tech)? Which are best handled by technology and lawyers? Which purely by human lawyers? And if the latter, are they best delivered by in-house lawyers? Or an external resource, either a private practice firm or outsourced legal service provider, potentially leveraging new process configurations and modern technology?
Interestingly, these third-generation ALSPs take a holistic approach. First, all legal data is accessible and actionable so general counsel (GC), and the firms that advise them, can see where they need to direct or optimise legal work and resources. What are the real issues in a business that create legal and litigation risk? They may not be at all what the human lawyers assume. One classic example is the entrenched habit of human lawyers of spending hours arguing over liability caps in contracts, delaying the onboarding of new contracts and slowing up ‘speed to revenue’ for the business, when data analysis will generally suggest these clauses are rarely an issue. Statistics consistently show that what is far more likely to land a company in litigation or regulatory challenges is a mismatch between the promises their sales force makes and what the company actually delivers.
Perhaps, therefore, the lawyers should be asked to spend more time outside the legal department and in the business, joining the dots between the sales and production teams? An example from a GC I spoke with recently was that after spending time in the company’s factories, she realised that the facilities with the highest rates of litigation (workplace accidents and product issues) had the highest rates of absenteeism. By getting the right data and setting up dashboards and flags, her team were able to identify spikes in absenteeism and work with human resources on solving the causes before they became systemic and introduced risk to the business. It was a simple example of how fundamentally a holistic and strategic approach to legal can change the contribution that lawyers make. This is why third-generation ALSPs and taking a holistic approach can be such a game-changer.
As Sir Geoffrey Vos says, there’s no need for lawyers to fear AI, the rise of online dispute resolution—or even the prospect of robot judges. The opportunity is for the human lawyers to move into a more strategic space. Far from diminishing their role, AI can elevate it.
Ziad Mantoura is a UK-qualified solicitor & senior vice president at Epiq, a third-generation alternative legal service provider and the world’s largest ALSP (www.epiqglobal.com).
