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How AI is impacting the local legal sector

Hardly a day goes by without the harbingers of doom proclaiming that artificial intelligence – specifically Generative AI and Large Language Models (LLMs) –will upend the world as we know it, feeding into a narrative of confusion and fear that has spilled over into the legal industry.

This is encapsulated by a March 2023 report by Goldman Sachs, claiming that “one-fourth of current work tasks could be automated by AI in the US with particularly high exposures in administrative (46%) and legal (44%) professions…”. However, a thorough reading of the report leaves more questions than answers. What tasks or activities? Will it happen in the next five years or some day in the distant future? Bringing clarity into this fuzziness, 5 CIOs and IT Heads at Cypriot law firms unravel their expert perspectives.

Automation Rules

Within the confines of the traditional and cautious legal sector, the current technological tableau remains firmly anchored to rule-based automation tools, such as e-discovery, contract management and legal research software. “Although AI and other buzzwords like blockchain have invaded the legal sector, cloud computing is currently the highlight of what had previously appeared as a one-way option,” explains Chris Phinicarides, IT Director at Chrysostomides Advocates and Legal Consultants. While these tools have enabled firms to streamline parts of their operations, reduce human error and save resources, they still require human oversight – indeed, they are practically useless without lawyers. As Dimitris Dimitriadis, Chief Innovation Officer at Christiana Aristidou LLC explains, the final interpretation and decision-making resides with human lawyers. “This is because the law is not merely a system of rules but a complex field that involves interpretation, negotiation, persuasion and ethical judgment – aspects that are still beyond the capabilities of current tools,” he adds.

True AI

The term ‘true AI’ is associated with a set of distinctive characteristics referring to the computerisation of reasoning, learning, decision-making and even creativity. Tempering expectations, in their current iteration, these machines are limited in scope and capabilities – a symbiotic relationship between humans and machines is paramount, as they are heavily reliant on human guidance, feedback and corrections to realise their full potential. Nonetheless, true AI has multifarious applications in the legal sector. According to Constantinos Antoniades, Head of the IT Department at Michael Kyprianou & Co LLC, it can improve legal research by analysing vast troves of information at speeds far beyond human capacity, identifying relevant precedents, and even generating sound legal arguments.

Intriguingly, when combining their creative inclinations and rhetoric capabilities with talking machines (chatbots powered by Generative AI), law firms can find themselves in a position to service clients 24/7. The implications here are manifold, as the convergence of computational prowess and empathy, once considered a solely human trait, paints a picture in which lawyers reside within our phones. The vast horizon of this promise stretches to predictive analytics, where past legal cases can be meticulously dissected, examining factors like the nature of the case, the jurisdiction, the presiding judge, and the laws involved. “Based on this analysis, it can predict the potential outcome of a similar new case,” says Charis Pavlou, IT Manager at Chrysses Demetriades & Co. LLC. Law firms, then, stand poised to formulate strategies tailored to individual clients or cases; looking into the crystal ball has escaped the pages of fiction to enter reality. For his part, Chris Phinicarides suggests that the widespread adoption of true AI tools will affect the charging/billing methodology of firms, moving away from time-based to flat fees and introducing an additional “technology fee” for the use of AI. In a world where the ever-cautious legal profession will be driven by artificial intelligence, the working environment also stands to be reshaped. The feared spectre of rigid deadlines will recede into obscurity, allowing legal professionals to channel their energy into strategic thinking and client advisory. “They will give lawyers more time to focus on matters that require human judgment and expertise, which no AI tool or automation can replace,” notes Michael Ioannou, Chief Information Officer at Elias Neocleous & Co LLC. This impending transformation will also allow lawyers to find a better balance between professional and personal life, as the ever-loathed administrative drudgery that leads to 80-hour working weeks will be taken over by AI’s computational power.

Hello, ChatGPT

Large language models (LLMs) like ChatGPT are a type of machine learning, trained on massive amounts of text data generated by humans, and they learn to mimic the patterns and structures of natural language. They are statistical machines with a single-minded focus to perform a task, like predicting the next word or completing a given prompt. They can generate coherent and diverse texts, compose poems, generate code, and even draft legal arguments. Recently, a federal judge in the US fined a firm and two lawyers for presenting fictitious legal research created using ChatGPT – obviously the wrong way to use the technology! “This highlights the importance of engaging with the technology to better understand it and see how it fits in with a business. This was the case with the advent of all great technologies and the legal industry is not insulated or protected from change, whether lawyers like it or not,” says Michael Ioannou. For Charis Pavlou, the potential for misuse underscores the necessity to establish regulations and ethical rules, from developing methods to identify AI-generated content to ensuring that AI providers adhere to strict ethical guidelines. There are also instances where LLMs seem to express some form of intelligence and understanding that transcends the data that they have been trained on, which raises a provocative question: will they supplant lawyers or do they stand to enhance productivity and efficiency?

“As AI evolves, it may develop a form of internal judgment based on its algorithms and training. However, this shouldn’t be confused with human judgment, which is based on a lifetime of experiences, intuition, ethics, and the ability to understand and respond to nuances and context. AI’s internal judgment should always be under the supervision and control of the human expert,” Dimitris Dimitriadis asserts. However, Chris Phinicarides opines that as clients seek answers and solutions to their problems, they might not necessarily care whether they originate from humans or machines. “Could AI eventually replace professionals, as software replaces so much manual work nowadays?” he ponders.

Fear and Loathing in AI

Amid the uncharted waters of artificial intelligence, fear and, at times, aversion ripple through the legal sector – and the world at large, for that matter – thereby impeding their adoption. Currently, these machines also come at costs that can challenge small law firms and solo practitioners – paradoxically the same professionals who stand to gain the most from their use. “AI tools also require substantial data for effective training and collecting such data can be costly, especially in the legal field,” Constantinos Antoniades points out. Additionally, the heavily regulated nature of the legal profession will naturally make it difficult to adopt these new technologies while a scarcity of skills and knowledge regarding AI presents a significant hurdle. The lack of regulation and transparency is a legitimate concern for most firms. On this, Michael Ioannou says, “There needs to be more discussion showcasing how beneficial this technology can be in helping lawyers do their jobs better and quicker, positively affecting their wellbeing. The mentality needs to shift from a zero- to a positive-sum game.”

Missing the AI train

The view shared by all the interviewees is that the advance of artificial intelligence is imminent and unavoidable. Dimitris Dimitriadis likens it to the shift from typewriters to word processors, a transition that initially appeared daunting, requiring new skills and workflows before becoming the standard tool in every law office. So, law firms that fail to consider adopting AI into their business models face several risks. Firstly, they will be at a competitive disadvantage compared to firms utilising these machines to streamline their processes, enhance efficiency and innovate. “Client expectations for efficient and cost-effective legal services could be compromised, resulting in lower client satisfaction and a potential loss of clients to more technologically advanced competitors. The legal industry is at a crossroads,” says Constantinos Antoniades, adding that the choice is clear: adopt AI or risk being left behind. What is more, Charis Pavlou stresses that firms refraining from jumping on the AI train might struggle to recruit the new generation of legal professionals, who are likely to lean toward more tech-savvy competitors. On top of that, they will find themselves excluded from shaping the regulations and tenets that will govern the new legal landscape – a position that will render them relics of a bygone era. “A study of history quickly shows us that new technologies have always been pivotal during inflection points and times of change, so companies need to hedge their bets accordingly. AI, especially Large Language Models, is already showing huge signs of progress. In today’s data-driven world, why not explore these possibilities?” asks Michael Ioannou.

This feature first appeared in the August edition of GOLD magazine. Click here to view it.

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