How can financial organisations harness the undeniable benefits of generative AI tools without risking compliance breaches, customer trust issues, or even litigation?
Rachel Scanlon, Managing Director of D2 Legal Technology (D2LT), outlines five reasons why in-house lawyers should be looking to master AI – and why having understanding of AI technologies and strategy is key to managing risk and unlocking these benefits.
- Being a Lawyer Suddenly Just Got a Lot More Interesting
With the rapid advancement of AI, the role of in-house lawyers is becoming increasingly dynamic and complex. Lawyers now have the opportunity to engage with cutting-edge technology, addressing novel legal challenges that arise from AI implementation within legal departments and law firms. This includes navigating intellectual property concerns where the source of the data is a large language model, ensuring data privacy when trying out the benefits of AI on internal or client information, and managing compliance risks associated with new regulations which are fast being rolled out globally, such as the EU AI Act.
Embracing AI not only enhances lawyers’ legal acumen but also positions them as crucial advisors on strategic use of technology within their organisations.
- Harnessing the Power: Standing on the Shoulders of LLM Giants
Generative AI tools underpinned by large language models offer immense potential to streamline legal processes and enhance decision-making. With access to trillions of pieces of data available inside AI platforms, in-house lawyers can leverage these powerful tools to automate routine tasks, such as contract review, content creation, and legal research, freeing up time for more strategic activities. By understanding and harnessing the capabilities of AI, lawyers can improve the efficiency and accuracy of their work, providing greater value to their organisations and clients, and improving their own professional experience.
- Time Saving and Productivity
AI has the potential to significantly boost productivity within legal departments. Automating repetitive and time-consuming tasks, such as document analysis and due diligence, allows lawyers to focus on higher-value work. This increases overall efficiency and reduces the likelihood of human error, provided there is a “lawyer in the loop” to sanity check any results being created by AI. By integrating these latest tools into their workflows, in-house legal teams can achieve faster turnaround times, better manage their workload, and ultimately deliver more timely and effective legal services.
- Opportunity for Learning About Legal Data, Privacy, AI Analysis, and Technology
The adoption of AI presents a vast opportunity for in-house lawyers to deepen their understanding of legal data, privacy issues, and AI technology. As they engage with AI tools, lawyers can gain insights into how these technologies analyse and interpret data, enhancing their ability to address privacy and other legal concerns, and to improve regulatory compliance. Additionally, this hands-on experience with AI fosters a culture of continuous learning and technological proficiency within the legal department, ensuring lawyers remain at the forefront of innovation.
- Ability to Expand Client Relationships
AI offers numerous potential benefits to enhance key stakeholder relationships across the banking and finance world, and between law firms and clients.
One important area for lawyers is the ability to demonstrate the value of the legal function to their clients. They can do this through leveraging AI-driven insights to identify potential legal risks and opportunities earlier than they would have otherwise, and offering strategic guidance that aligns with business objectives. They can use more advanced metrics than have been available in the past to put together detailed management information about how lawyers are using their time and gaining efficiencies. They are also able to unlock significant business value through better document management and contract database frameworks. On top of all this, many lawyers can now get the benefits of being able to ask an AI bot how to have difficult conversations, how to write a business case or put together internal communications quickly and creatively.
Features like these not only strengthen client relationships but also position the legal department as a key partner in driving commercial success. Furthermore, transparent communication about AI’s role in legal processes builds trust and confidence among clients, enhancing the overall client experience. Many clients will now expect lawyers to be using AI where they can, to bring down legal costs and speed up the work.
Appropriate AI Usage
In order to truly unlock these benefits from AI adoption however, in-house legal teams need a firm understanding of appropriate AI usage, and of the risks associated with unbridled adoption of the technology. Like internal courses on workplace health and safety, or code of conduct matters, training on AI usage is likely – indeed needs – to become commonplace.
Lawyers should also be asking themselves the right questions: Where has the data they are using come from? Can they safely put confidential documents or firm information into the system they are using? Is there an internal register where they and their clients should be logging AI use? How can more senior lawyers who are not digital natives change the way they work so as not to be left behind?
Conclusion
As laws evolve and try to keep up with the way people are using AI in 2024 and beyond, companies urgently need to understand the regulatory compliance and intellectual property ownership implications of AI strategies. From choosing between commercial and in-house tools to managing internal data and customer transparency, legal teams must undertake rigorous training to help financial institutions navigate the risks and rewards of AI investment. Embracing AI not only transforms the legal profession but also enhances the strategic impact of legal departments within their organisations.