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The legal industry has been slow to embrace artificial intelligence (AI)*. But other industries and professions are not waiting to deliver AI’s enhanced precision and cost efficiencies.

How high do the stakes have to be before law begins to catch up with medicine?

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On April 11, 2018 the U.S. Food and Drug Administration announced that it would, “permit marketing of the first medical device to use artificial intelligence to detect greater than mild level of eye disease retinopathy in adults who have diabetes”.

According to the U.S. FDA, the device: “Provides a screening decision without the need for a physician to also interpret the image or results, which makes it usable by health care providers who may not normally be involved in eye care.”

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With all the references to the attorney-client privilege in recent news, I had been meaning to post an article on this important legal protection.

Today’s Wall Street Journal contains an op-ed by former U.S. Attorney General and former federal judge Michael B. Mukasey that surpasses — in practical wisdom and conceptual clarity — any explanation that I’ve received in law school, read in court opinions, or encountered in day-to-day law practice.

The online version requires a subscription — and if one lacks that it’s worth tracking down a hard copy of the newspaper to read this piece.

To protect itself, a company needs regulatory advice from a lawyer who knows how a government agency would view its activities.

Like a pro football team, regulators who bring an enforcement action against your company are rarely playing the first game of their careers. So there should be little, if anything, in their playbooks that lawyers who’ve tangled with a particular agency haven’t already seen.

Your company needs an attorney(s) with sound grasp of what’s up the sleeves of those bureaucrats who might decide to attack your business.

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A decade ago I gave a speech in Washington, D.C. to a group of regulatory lawyers.

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In this blog I describe how to use effective management and liability prevention to control corporate legal costs. This calls for a certain amount of detail.

But in providing that detail I want to be sure not to lose sight of what this blog and my law practice are all about. Simply this:

When a company’s management is unhappy with the job their lawyers are doing, I help its owners or executives to put something better in place to achieve their business goals.

Half a decade ago Harvard Law School’s Professor David Wilkins announced that the legal industry had entered “the Global Age of More for Less” (see this speech, and this journal article).

The response from all but a few attorneys: Crickets.

Seen in the light of their cost-plus business model, “more for less” just sounded to them like “less” money to pay for “more” time. With a “management” technique that consists of assigning bodies-to-tasks, the legal industry is blind to process efficiencies, competitive pricing, and other skills that anyone who works to a P&L has already mastered.

As a result, law firms and in-house counsel won’t acknowledge that the collision between the legal system’s skyrocketing demands and company budgets (that have more constructive uses than to pay attorneys) is unsustainable. Instead, the legal industry tells business clients that the best they can hope for is to minimize (what they tell us are) the inevitable increases in their legal and regulatory line items.

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Casey Flaherty, an insightful lawyer who advises corporate law departments, describes attorneys’ prevailing mindset:

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Company owners and executives need to take charge of legal and regulatory affairs in order to control legal costs, prevent liability, and otherwise cope with the legal and regulatory system’s increasing demands upon business. 

Because their lawyers won’t do it for them. 

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Consider last week’s diagnosis (here and here) from Ken Grady — one of the legal industry’s leading visionaries: 

“NO SIGNIFICANT CHANGES IN LAW

“Today, we talk about the legal industry going through a transformation. We point to new providers, the use of new tools such as project management, and the miracle of artificial intelligence and what it can and will do.

“But, if we look carefully at the legal industry, we can see that not much has changed from 100 years ago even with these tweaks ….”

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When I left the practice of law to accept a corporate client’s invitation to run a division, what I had to un-learn as a (then former) lawyer was even more important than the new skills I acquired as a general manager.  

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None of this is meant to criticize the legal profession. It’s meant to help business owners and executives to identify who’s good at doing what roles — and then assign duties accordingly.

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Early in my transition from lawyer in corporate practice to general manager I was supervising the closing on a large transaction. A combination of lawyers, my company’s commercial officers, and our customer’s finance people were busily reviewing a borrower’s most recent financials, finalizing lending documents, and arguing about whether or not all conditions precedent to final execution were in place.

Our chief operating officer — my new boss — motioned me out of the conference room.

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LawGeex — an Israel-based tech company whose artificial intelligence (AI)-based document review software automates the process of identifying risky provisions in contracts — has announced the results of a peer-reviewed study that compared artificial intelligence to human lawyers in the review of standard business contracts called non-disclosure agreements (NDAs).  

The LawGeex AI platform achieved 94% accuracy compared to an average of 85% among 20 human lawyers.

And timing? The human lawyers took an average of 92 minutes to review all 5 of the NDAs involved — and the AI platform took 26 seconds.

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Why is this important? Because the review and approval of low-value, high-volume, day-to-day business contracts is a core business task that historically has required manual review by qualified (human) lawyers. The typical Fortune 1000 corporation maintains 20,000 to 40,000 contracts at any given time. And 83% report dissatisfaction with their contract management processes.

As to the kind of contracts reviewed in the study — NDAs — they typically take one week or longer to get approved (an experience I often endured as an executive at GE and Whirlpool).

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[Publication 3/16/2018]