sdecoret - stock.adobe.com
AI is coming for the legal profession, and Foley & Lardner LLP, a top 50 U.S. law firm, isn't waiting.
Foley & Lardner tapped ThoughtRiver's online contract review service as the foundation for Foley Equipped. The legal AI SaaS product includes the law firm's advice on handling 40 issues common in software agreements and non-tech pacts.
Foley isn't charging clients for the service, which gives them a head start on addressing problematic clauses.
"It's good for a jump-start on an agreement," said Chanley T. Howell, a partner at Foley & Lardner. "It doesn't give you all the answers. You still need some human intellect involved."
Foley & Lardner expects Equipped to reduce the cost of a contract review by 20% to 25%. Nevertheless, it's a necessary sacrifice at a time when studies show that AI will handle many routine tasks within the legal profession.
"If we don't do it, other firms will," Howell said. "We've got to do things like this to remain competitive."
Indeed, a study by authors from Princeton University, New York University and the University of Pennsylvania found that AI will eventually perform many tasks done by paralegals and legal assistants today. A Goldman Sachs study found that AI could perform 44% of tasks within the U.S. and European legal professions.
Automating contract reviews
Foley Equipped is a first step toward automating routine legal work. For example, in the tech industry, software makers, SaaS providers and IT consultants use similar contracts within their respective markets.
Foley & Lardner clients upload vendor agreements to Equipped, which flags clauses for review. The software also suggests modifications.
Unless the customer is a Fortune 100 company, the most prominent tech vendors -- such as Microsoft, Salesforce or Oracle -- are unlikely to change the terms of their agreements, Howell said. Midsize and small tech companies are flexible.
But whether the contract is negotiable or not, clients still need to know the risks associated with clauses that cover data protection, security and intellectual property. That knowledge allows companies to change business operations or add technology to lower the risks, said Christopher J. McKenna, a partner at Foley & Lardner.
"A lot of companies do not think about that [risk] gap," McKenna said.
Foley & Lardner separates its contract advice from ThoughtRiver's within Equipped.
"The client would use us instead of going straight to ThoughtRiver because of the internal guidance," Howell said. "This is our playbook commentary, our advice. We feel our contract language is really good."
Clients can grab the law firm's advice and skip a final review by a Foley & Lardner attorney. However, that isn't what typically happens.
"They want us for our partnership, so they're not just going to take all of our [intellectual property] and run with it on their own," Howell said.
AI to lower legal costs
Foley & Lardner expects AI to perform most legal grunt work eventually. That will likely lead clients to ask for project-based pricing for more jobs, instead of lawyers billing for their time by the hour.
It's no secret in the legal profession that clients dislike billable hours because they think it encourages padding and busy work. Lawyers despise billing hourly because it ruins weekends and leads to more hours at the office.
"Both clients and law firms say they hate billable hours," Howell said.
More project-based pricing should work if clients are comfortable with the price. "If it's competitive in the marketplace, everyone should be happy," he said.
Whatever the form of billing, AI software will likely reduce the overall cost of legal work. Lawyers, for example, will no longer charge for long hours of reviewing hundreds of documents in a legal case if AI software can accurately summarize the information and locate the critical data.
"It will cut down on the amount of work that's being done at the lower level, like associates," Howell said.
But CEOs or CIOs looking at a six-, seven- or eight-figure deal will always want to seek advice and discuss strategy with experienced lawyers.
"A computer being able to do that effectively is a long way off -- a very long way off," Howell said.
Antone Gonsalves is networking news director for TechTarget Editorial. Since the mid-1990s, he has worked for UBM's InformationWeek, TechWeb and Computer Reseller News. He has also written for Ziff Davis' PC Week, IDG's CSOonline and IBTMedia's CruxialCIO, and rounded all of that out by covering startups for Bloomberg News. He started his journalism career at United Press International, working as a reporter and editor in California, Texas, Kansas and Florida. Have a news tip? Please drop him an email.