The Impact of Artificial Intelligence on the Legal Industry in Ontario

Over the last decade, I have been witness to the profound technological transformation taking place in the legal industry. I remember a moment during my Law Society graduation ceremony when one of the speakers addressed the students and families in the audience, emphasizing that the most significant challenge the legal industry will confront during our careers is the influence of technology on the field. While I knew she was right at the time, I had no idea how drastic and swift the technological reform of the legal landscape would be. I remember when we used to draft wills manually using precedents obtained from more experienced colleagues. Today we use software to layout the entire family tree allowing us to get as creative as possible without the experience or budget of a veteran wills and estates lawyer. We used to draft documents for real estate transactions manually, receiving bank documents via fax and inputting data manually into documents. The fax machine would run tirelessly often pouring paper onto the law firm floor. We used to look for hours for a precedent shareholder agreement that included a specific shotgun clause we were looking for. Today, we ask artificial intelligence systems to help draft the clause to our specifications.

All of this leads me to ponder how lawyers organized their practices before the advent of basic computers. Were lawyers manually typing out contracts from start to finish on typewriters? What were their billing rates for client services back then? Were clients able to afford all that labour put into a contract? Did these lawyers possess exceptional speed and genius to draft these documents rapidly from scratch? I have no way of knowing, but I certainly admire their skills and dedication. I am also curious about the perspective of a seasoned lawyer with 30 years of experience. It must be fascinating to have observed the profound technological shift from composing documents on MS-DOS to today’s paperless law firms heavily dependent on software and artificial intelligence for delivering legal services. What a shift in landscape it must be for that veteran lawyer. From all this, one thing is clear and that is the use of AI is gradually reshaping the way lawyers practice, interact with clients, and manage their firms. This article delves into the various ways AI systems are impacting the legal industry in the province of Ontario.

PRODUCTIVITY AND EFFICIENCY

One of the most apparent benefits of AI in the legal profession is the increase in work efficiency. Since implementing various forms of AI technology, our law firm has been able to increase the quality of services provided to clients and reduce the total billable time spent on research, drafting and communication. At our law firm, we do not view artificial intelligence as a threat but as an opportunity. An opportunity to conduct more complex tasks, an opportunity to accomplish tasks more efficiently with reduced human effort, and an opportunity to compete with law firms that have access to extensive precedent banks and financial resources. At our firm, we do not just use AI as a tool for legal research and drafting; we also employ AI for business-related tasks such as book-keeping, marketing, and brainstorming business ideas.

AI now has the ability to quickly and effortlessly summarize lengthy documents and extract important information from them. For example, if you upload a five-page document containing instructions related to a business loan for your client, artificial intelligence has the potential to set out the borrower, the lender, the terms of the loan, and your duties as the lawyer acting on the business loan. AI can assist with other tasks including legal research, document review and analysis, predictive analysis, automated legal drafting, e-discovery, time and billing management, due diligence, and language translation.

It is important to note that while adoption of AI can provide a competitive advantage to those who use it within the legal industry, it does not mean that those who do not use AI are unable to compete. The legal industry is so complex that other factors such as specialization, client relationships, quality of service, and ability to handle complex matters continue to remain relevant in determining competitiveness within the industry. AI is just one of the many tools available to lawyers. Whether artificial intelligence qualifies as an indispensable tool at present is a matter of discussion.

ADDRESSING THE “AI AS A THREAT TO THE LEGAL INDUSTRY” ARGUMENT

I like to draw a comparison between AI technology and calculators. Calculators were never able to replace mathematicians and I believe AI will not replace lawyers. A calculator in the hands of a mathematician will assist the mathematician to solve incredibly complex formulas, but in my hand, a calculator can only be used for simple tasks like calculating the interest rate on a business loan. Similarly, for AI to be useful at a complex level, one must know how to correctly input information and analyze data produced by it. This means that one must be able to understand data outputted by AI and catch errors produced by an AI system, if any. Yes, AI systems in their current form do produce nonsensical and incorrect information at times, especially on complex legal topics. Although AI can automate tasks and improve efficiency, legal practice often involves complex issues that require critical thinking and interpretation of laws and specific situations. Additionally, the human factor, encompassing the assessment of emotions, cultural norms, and ethical standards remain a significant component of legal analysis which cannot be replicated by AI in its current form.

ECONOMIC IMPLICATIONS 

Despite the rise in productivity, AI may pose a challenge to the traditional billing model based on hourly rates. Higher productivity can potentially mean less billable hours. While the economic savings in using AI should rightfully be passed down to clients, I do not personally agree that the use of AI significantly reduces billable hours in all matters. As a corporate and commercial lawyer often working within the confines of limited or “expected budgets” (like most of us), the use of AI has allowed me to increase the quality of work produced for clients within the “expected” or limited budget. So, the argument that the use of AI will reduce the billable hours spent on a matter is not always true because lawyers working with limited budgets may use saved time to increase quality of work produced. In fact, many clients will be happier with this arrangement as they can obtain a higher quality of service from their legal advisors. If there are time savings, I would gladly pass them down to my clients as this would both increase client loyalty and allow me to attend to other matters related to my practice.

DATA PRIVACY AND SECURITY

Handling sensitive legal information with AI systems raises concerns about data privacy and security. As lawyers, we have a duty to protect client information. When choosing an AI system, lawyers must ensure that any AI tools they use comply with privacy regulations to avoid legal and ethical violations. Lawyers should choose an AI system that only collects minimum necessary information. Excessive data collection has the potential to increase privacy breaches. If your firm uses AI systems, you should clearly note this in your retainer agreement with the client and obtain informed consent regarding the risks associated with the use of AI in your practice. In our practice, as a safeguard against privacy breaches, we never input confidential client information such as names, addresses, or dates of birth into an AI system. For obvious reasons, our firm does not trust AI with sensitive client information regardless of the safeguards in place by the AI creator. You must keep in mind that when using AI systems, it is your responsibility as a lawyer to safeguard your client’s confidential information.

CONCLUSION

Artificial intelligence is set to redefine the landscape of the legal field in ways both beneficial and challenging. As law firms continue to integrate AI tools, they must also adapt their methods, billing structures, and ethical considerations to ensure a balanced and effective approach to legal practice. The legal community appears optimistic and ready to adapt, promising a future where AI and lawyers work in synergy rather than competition. There is obvious opportunity in using AI and the only way forward is for lawyers to make a friend out of artificial intelligence and not a foe. Every law firm should dedicate resources to training all staff on how to effectively use AI to carry out daily tasks.

About the Author:

Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here.