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A version of this article first appeared in issue # 5 of Legal Business World on August 20, 2024.
A recent article published on June 6, 2024, by Law.comtitled “This Is Your Time’: AI Gives In-House Counsel Unprecedented Leverage,” highlights the transformative impact of AI on legal services. The keynote panel at the Legal Innovators’ conference revealed that in-house counsel is now leveraging AI for various tasks such as research, contract review, and building chatbots to handle FAQs. This shift allows lawyers and paralegals to focus on more critical tasks, maximizing their efficiency and effectiveness.
The discussion also brought to light a critical evaluation of how outside law firms are incorporating AI in compliance with new State Bar Opinions.
These opinions emphasize the ethical duty of attorneys to understand and utilize technology, including generative AI, to perform client work securely, efficiently, and confidentially. Panelists suggested a potential reduction in work being sent to outside counsel, driven by the capabilities of in-house AI and the firms’ use of such tools. When asked if her team is sending less work to outside firms, one associate general counsel replied, “Not yet…But I will.”
The trend of keeping more legal work inhouse is gaining momentum, as evidenced by the June 6 article in Corporate Counsel featuring insights from leading legal operations thought leaders. Companies are reassessing the value offered by law firms, scrutinizing whether they are effectively utilizing AI and how it impacts billing and quality control. Cofounder of AI-powered contract review company eBrevia, Adam Nguyen, told the conference, “Corporate clients have a lot of concerns about whether outside counsel are using AI, and are they just charging them the same rates that they would charge them without AI.”
This evolving terrain presents a crucial opportunity for law firms to embrace AI and demonstrate their value in this new era. By adopting AI tools and ensuring high-quality supervision of AI-generated work, law firms can not only retain their existing business, but also enhance their credibility and competitiveness.
Global Legal Ethics Guidance and Opinions on the Use of AI
The integration of artificial intelligence (AI) into legal practice is not merely a technological advancement but also a matter of ethical consideration throughout the world. Jurisdictions across the globe have assigned boards and task forces to develop recommendations and issue ethics opinions to guide legal practitioners in the responsible use of AI. While no uniform rule exists, the trend is to maintain a balance between innovation and regulation of risks.
The European Union has been at the forefront of regulating artificial intelligence (AI) within the legal services sector, reflecting a proactive approach to emerging technologies. The Artificial Intelligence Act, which aims to ensure that AI systems are safe and respect fundamental rights, takes effect on August 1, 2024. This legislation categorizes AI applications by risk level, with stringent requirements for high-risk systems, including those used in legal contexts. The Act emphasizes transparency, accountability, and the need for human oversight to mitigate the risks associated with AI in legal decision-making.
In the United Kingdom, the regulatory landscape is similarly evolving to address the ethical and legal implications of AI. The UK government has released a National AI Strategy, which includes a focus on creating comprehensive regulatory frameworks to govern the use of AI in various sectors, including legal services. The strategy highlights the need for standards that ensure AI systems are transparent, fair, and reliable. The UK Information Commissioner’s Office (ICO) has also published guidelines on AI and data protection, highlighting the importance of compliance with existing data protection laws when using AI in legal services.
In the United States various state bar associations and the American Bar Association (ABA) have issued guidelines and ethical opinions on the use of AI by legal professionals. These guidelines stress the importance of competence, confidentiality, and the need to understand the technology being used. The ABA’s Model Rules of Professional Conduct are being interpreted to require lawyers to stay informed about the benefits and risks associated with AI tools, ensuring they can advise clients appropriately. The opinions emphasize the importance of informing clients about the role AI plays in the firm’s representation.
The efforts of Asian governments to regulate and guide the ethical use of AI align with global standards and reflect a commitment to fostering innovation while ensuring that AI technologies are used responsibly and ethically. In Singapore, Hong Kong, South Korea, and Japan, government authorities have issued a variety of frameworks generally prioritizing accountability, risk management, transparency, data privacy, and respect for human rights in the governance of AI use throughout the corporate economy, including the practice of law.
Overall, legal professionals are expected to balance the innovative potential of AI with their duty to uphold justice and protect client interests.
This balance requires ongoing education and adaptation to new regulatory requirements as they emerge.
US-Based Ethical Directives on the Use of AI in Legal Services
The California Bar Association’s Committee on Professional Responsibility published practical guidance for members to follow in their use of AI. Confidentiality obligations require that any client data by anonymized before being input into any generative AI platform and to consult with IT experts to ensure the system “adheres to stringent security, confidentiality, and data retention protocols.” Lawyers must reasonably understand the technology they use and be vigilant to monitor the results for bias while reviewing and validating both the input and output of generative AI technology.
Colorado enacted a first-in-the-nation state law addressing the use of AI in several industries, including employment, financial and lending services, insurance, and legal services, among others. The law focuses on reporting any instance of bias or discrimination identified during the application of AI algorithms. While not effective until 2026, the new law illustrates legislators’ concerns about AI’s influence in consequential decisions affecting the lives of constituents.
The Florida Bar Association issued Proposed Advisory Opinion 24-1 recommending its members maintain full compliance with their ethical obligations when employing third-party AI in their practice. Chief among the FBA’s concerns was client confidentiality. The advisory opinion recommends getting the client’s informed consent before disclosing any confidential information in a generative AI prompt. Lawyers are also reminded to refrain from double-billing or inflating fees for AI-assisted work. The duty of competence and candor to the tribunal also requires lawyers to understand the technology’s capacities and limitations, and to verify all research, case citations, and other information produced by AI.
New York’s Bar Association’s guidance for attorneys’ use of AI follows a path similar to those discussed above. The NYBA recommends first evaluating whether using AI will benefit the client’s interests before engaging with it. Other recommendations include maintaining a responsible understanding of the technology being used and obtaining the client’s consent in advance of exposing confidential data to an AI system.
The global trend towards increased regulation and ethical oversight of AI in legal services highlights the common concerns among these jurisdictions.
While the specifics of the regulations may vary, they share the underlying principles of transparency, accountability, and ethical responsibility.
These efforts intend to foster confidence in AI systems while also ensuring it is used to enhance, rather than undermine, the integrity of the legal profession. As AI continues to evolve, so will the regulatory frameworks, ensuring that legal services remain both, innovative and ethically sound.
