Artificial Intelligence in Legal Departments and Law Firms - The Benefits of Legal Tech

Innovative technologies from cloud services to artificial intelligence (AI) have become an integral part of the German corporate landscape. Only legal departments seem to be less open to innovations and progress and are lagging behind in the area of digitalisation. This is because lawyers are professionally risk-averse and may perceive the advancing developments as a threat to their existence. At the same time, the work of qualified lawyers will by no means become superfluous through the use of legal operations. Legal experts will still be needed in the future to accurately assess the collected and bundled data and to correctly apply the templates created. Artificial intelligence does not replace human intelligence, but works in cooperation with it. Standardised work processes in legal departments and law firms can thus become many times more efficient, while lawyers can devote themselves to more demanding tasks. Even if every new technology carries a certain residual risk and requires some time to get used to – the advantages clearly outweigh the disadvantages.


Today’s demands on legal departments

In the past, in-house lawyers could move almost unchallenged in their own realm, because their work was understood only by other lawyers, but hardly anyone from the other departments. The only thing expected of them was that they ensured the legality of contracts and business  procedures.

In the meantime, company managements are also demanding transparency and efficiency from legal advisors and syndicates. The legal department is no longer only responsible for drafting legally secure contracts,

Today, lawyers are also expected to make a contribution to the profitability of the company. Thus, legal departments are increasingly under pressure to justify their existence and corporate value. In addition, there is a flood of legislative changes and new case law at national and international level. Some serious changes are sweeping through the entire legal landscape. For example, the General Data Protection Regulation and Brexit have made it necessary to revise various treaties in numerous areas. In addition, advancing globalisation requires a lawyer to keep an eye not only on the legal situation in their own country, but also in almost 150 other countries. To meet these new challenges, lawyers must now familiarise themselves with up-to-date technological solutions.


Forecasts by Gartner Inc.

According to a 2020 survey by research firm Gartner, 81% of all legal departments are unprepared to keep up with the demands of the digital age. As early as 2023, Gartner predicts that 25% of all internal legal queries in large companies will be handled by virtual legal assistants or AI-based chatbots. In these companies, the in-house lawyers could then use the quarter of their capacities that have been freed up for complicated legal questions or operational processes. 33 % of companies will even employ their own specialist for the technologies used in the legal department as early as 2023, according to the Gartner forecast. It is high time for legal departments of medium-sized companies and established lawyers to catch up.


What can artificial intelligence do for contract drafting?

When entering data by hand, errors creep in again and again, which is why the reworking of draft contracts is costly and time-consuming. In a digital legal department, once data records have been stored, they can be called up immediately, duplicated and then individually supplemented or modified. The use of legal tech solutions offers particular advantages in companies with several departments, each of which creates and stores contracts. If all these contracts are bundled and fed into one system, changes for a group of documents can also be made centrally with a few mouse clicks. For example, if the Federal Supreme Court has just ruled that a certain clause in residential leases is inadmissible, the affected contracts of the entire company can be found immediately and adapted to the new requirements. Intelligent software can even act as an early warning system, because it can be trained to detect similar, possibly also risky formulations in contracts. Since the AI is capable of learning, it will automatically refrain from using inadmissible clauses in the next draft of the contract. Instead of an outdated text module, the lawyer does not even have to type in a new section, but prefers to let the AI make suggestions, which he can then refine at will. If all contract documents are stored digitally, time-consuming searches and exchanges with other departments are no longer necessary if a contract needs to be reviewed. The experts in the legal department have a complete overview and immediate access to all important documents.


The advantages of digital data rooms for lawyers and clients

Not only within the firm, but also in the correspondence between lawyer and client, legal tech solutions can help to speed up communication and avoid mistakes. Lawyers must pay particular attention to data security and their professional guidelines when using clouds. However, there are already some providers who offer secure, encrypted data rooms specifically for professionals who are bound by confidentiality. The lawyer decides which data should be visible only to him, which to the client and which also to the opposing lawyer. All parties involved can make entries from different end devices and thus quickly upload a document or transmit information even while on the road. For example, if the lawyer has drafted a brief, the client can note comments, additions or requests for changes directly in the document, to which the lawyer has immediate access. In a data room supported by AI, risky passages can be immediately detected and legally secure suggestions can be saved for future documents.


AI in the legal workspace provides an invaluable time advantage. Contract drafters can draft a large number of similar contracts in less time and review existing contracts more quickly. Contract execution speeds up while the risk of errors decreases. Intelligent software does not replace the legal mind, but frees it up. Because those who no longer have to spend hours and hours drafting and reviewing contracts can turn their attention to more meaningful tasks. Therefore, lawyers who get involved with legal tech solutions will not only work more efficiently, but also more relaxed and satisfied in the long run.

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