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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The Rise of AI in the Law
Few industries appear to have more potential for disruption by artificial intelligence than the law. Like games such as Go, which DeepMind took on to demonstrate the power of neural networks, legal systems have sets of rules and precedents. Give an AI model enough data and it can pass its bar examination.
A Rush of Activity in the UK
The law has become the target of many AI start-ups, such as Harvey, a US venture that in July raised $100mn at a $1.5bn valuation from investors including Google Ventures and OpenAI. There has been a parallel rush of activity in the UK, with three legal AI start-ups — Genie AI, Luminance and Robin AI — raising more than $100mn in combined funding last year.
A Product of the UK’s Competitive Advantage
The UK’s growth is a product of the overlay of two successful industries, one old and one new: the commercial law and the cluster of AI start-ups, particularly in London and Cambridge. "We have a rich heritage and some incredible talent. It is a great competitive advantage," says Eleanor Lightbody, chief executive of Luminance, which was founded in 2015 in Cambridge.
From Reforming Law Firms to Automating Contracts
Slaughter and May was among Luminance’s early investors, along with the late Mike Lynch’s Invoke Capital, and it initially focused on reforming how corporate law firms operate. They provide expensive due diligence for transactions such as mergers and acquisitions that involve junior lawyers sifting through thousands of documents. That sounds like a plum target for disruption.
The Harsh Reality of the Legal AI Industry
But things have not quite worked out like that, so far. Much of the recent expansion in legal AI has come not from integrating the technology into law firms but automating the drafting of contracts by companies: Genie AI’s users include many smaller manufacturing and building companies. More than changing the legal industry, it is allowing corporations to do more legal work themselves.
Conclusion
The legal AI industry faces its own uncertainties. A lot of capital has flowed into start-ups that employ standard AI models, customised with their own technology. If the underlying technology is similar and the training data of legal statutes and precedents is identical, the barriers to entry may prove low. For now, the flow of capital indicates not only the potential of this technology outside the law, but the UK’s competitive strength.
FAQs
Q: What is the potential for disruption in the law by artificial intelligence?
A: The law has a rich heritage and the potential for disruption by AI is significant.
Q: What are the key players in the legal AI industry?
A: Harvey, Genie AI, Luminance, and Robin AI are some of the key players in the legal AI industry.
Q: How is the legal AI industry evolving?
A: The industry is evolving to focus on automating the drafting of contracts by companies, rather than integrating the technology into law firms.
Q: What are the challenges facing the legal AI industry?
A: The industry faces challenges such as the potential for low barriers to entry and the need to adapt to changing market demands.
