AI Adoption By Legal Professionals Jumps from 19% to 79% In One Year, Clio Study Finds

Utilization of synthetic intelligence by authorized professionals has skyrocketed from 19% in 2023 to 79% this yr, in accordance with the ninth version of the Authorized Developments Report, launched in the present day by Clio throughout its Clio Cloud Convention in Austin.

The report additional finds that as much as 74% of hourly billable duties – similar to info gathering and knowledge evaluation – could possibly be automated with AI, probably disrupting the enterprise facet of regulation corporations.

Because of this, the report says, regulation corporations ought to think about shifting away from hourly billing in favor of extra versatile billing choices similar to flat charges. As AI reduces the time spent on varied duties, regulation corporations that adhere to the billable hour might even see a decline in income, the report says.

Shoppers are more and more supportive of attorneys’ use of AI, the report says, with 70% of shoppers both preferring or impartial towards corporations that use AI. Requested their choice when hiring a regulation agency, 42% stated they would favor a agency that’s utilizing or exploring AI, 28% stated they’d no choice, and 31% most well-liked a agency not utilizing AI.

“The trendy regulation agency is ripe for automation — almost three-quarters of a regulation agency’s hourly billable duties are probably uncovered to automation by AI,” the report says. “To that finish, automation can supply corporations the house to concentrate on the duties that require a human contact — like high-level authorized work, advocacy, and fostering consumer relationships — whereas sustaining a excessive stage of service.”

Common Adoption Nonetheless Low

Whereas the report finds that 79% of corporations have adopted AI, the quantity which have adopted it universally is simply 8%, whereas one other 17% say they’ve adopted it broadly. Thirty-four p.c say they’ve adopted it solely minimally and 21% say they’ve adopted it partially.

Of those that are holding again on adopting AI, the commonest motive, cited by 59%, is that they’re uncertain it would assist them with their work. Different causes given had been:

Don’t belief it, 44%.
Suppose it’s unreliable, 34%.
Suppose it’s not superior sufficient, 30%.

Of these corporations which are adopting AI, the merchandise they’re utilizing mostly are:

Generic non-legal AI instruments similar to ChatGPT).
AI-powered authorized analysis platforms.
Doc drafting instruments.

Different Findings

AI may make regulation corporations extra environment friendly in working with shoppers, which implies they could want to take a position extra in advertising and marketing to extend their consumer pipeline. The flexibility to deal with extra shoppers would require a stronger emphasis on advertising and marketing methods to maintain the workload and develop the enterprise.
The surge within the variety of authorized professionals utilizing AI marks a major shift in how regulation corporations are integrating AI into their day by day operations.
Practically three-quarters of a regulation agency’s hourly billable duties are uncovered to AI automation, with 81% of authorized secretaries’ and administrative assistants’ duties being able to automation, in comparison with 57% of attorneys’ duties.

How A lot of Regulation Can Be Automated?

A 2023 Goldman Sachs research concluded that 44% of labor duties carried out within the authorized trade could possibly be automated by AI and that AI may probably substitute 40% of authorized trade workers.

This yr’s Authorized Developments Report dives into that query, enterprise what it known as a more-refined evaluation that began from the identical knowledge Goldman Sachs analyzed however then in contrast it to aggregated and anonymized billing knowledge from tens of 1000’s of authorized professionals.

It discovered that just about three-quarters of a regulation agency’s hourly billable duties arepotentially uncovered to automation by AI. The duties with the very best potential for automation included:

Documenting and recording info.
Getting info.
Analyzing knowledge or info.

These additionally occur to be the duties that account for 66% of the hourly billable work completed by the typical regulation agency, the report says.

In the meantime, the duties least more likely to be automated embody offering session and recommendation and creating aims and methods.

“If corporations implement extra AI applied sciences to automate the extra menial, information-heavy work associated to doc drafting and evaluate, they could have extra alternative to tackle extra higher-value, strategic work with shoppers,” the report says.

A Rise in Flat Price Billing

 This yr’s report finds that flat payment billing is more and more well-liked, with regulation corporations utilizing it for 34% extra of their circumstances than in 2016. As AI reduces the time required for a lot of regulation workplace duties, flat charges allow regulation corporations to seize the worth of their companies with out the constraints of time-based billing.

Even so, hourly billing stays predominant in regulation corporations, though the report finds that 71% of shoppers want to pay a flat payment for a complete case and 51% favor flat charges for particular person actions.

Additional, the report says, regulation corporations utilizing flat charges profit from faster billing cycles and quicker fee assortment, as they’re 5 occasions extra more likely to ship payments, and almost twice as more likely to obtain funds, as quickly as they full their work for shoppers.

Growing Funding in Advertising and Tech

Regulation corporations are steadily rising their investments in advertising and marketing and know-how, the report finds.

For software program, spending has grown by a median of 20% yearly since 2013. This enhance has outpaced income development, which has elevated steadily at 9% every year.

The disproportionate development in know-how spending exhibits that corporations more and more see know-how as integral to their future enterprise, the report says.

Additional, funding in know-how seems to repay. Corporations with above-average productiveness — these billing greater than the trade common of 33% of their workday, or roughly three hours of billable time per day — are making even bigger investments in know-how and advertising and marketing.

These corporations spend 12% extra on software program and 41% extra on advertising and marketing, resulting in a 21% enhance in profitability.

The information demonstrates a transparent hyperlink between tech adoption, larger advertising and marketing efforts, and general monetary success, the report finds.

Solo attorneys spend the least on software program as a proportion of their general bills (0.58%), however the report finds that they’re quickly accelerating their know-how investments. Solo practitioners’ know-how spending is rising at a price of 56% yearly, greater than twice the trade common.

By comparability, small corporations with 2 to 4 attorneys spend 1.77% of their bills on software program, whereas corporations with 5 to 19 workers spend 1.37%, and corporations with 20 or extra workers spend 1.6%.

This fast adoption by solo practitioners displays their recognition of know-how’s vital function in remaining aggressive in an more and more digital authorized panorama, the report concludes.

‘Secret Shopper’ Examine Exhibits Consumption Points

This yr’s report contains the outcomes of a “secret shopper” research wherein emails purporting to hunt authorized assist had been despatched to 500 regulation corporations.

If the corporations contacted, solely 33% responded, a drop from 40% in 2019, when Clio performed an analogous research.

Cellphone inquiries additionally confirmed a decline, with solely 40% of corporations answering calls, in comparison with 56% in 2019. In complete, 48% of regulation corporations had been primarily unreachable by cellphone.

Of the corporations that responded to the emails, most did so promptly, with 84% responding inside eight hours. Nevertheless, simply 18% offered clear subsequent steps or price info, and solely 2% referenced related authorized circumstances as requested by consumers.

Those that reached corporations by cellphone fared no higher, as solely 41% of corporations provided price info, 12% offered price estimates, and 36% defined the authorized course of or outlined subsequent steps.

These gaps in communication left secret consumers annoyed, the report stated, with 73% unlikely to advocate the corporations they contacted. The patrons who reached corporations by cellphone had been extra optimistic, with 39% prepared to advocate corporations they spoke with immediately.

The report discovered that regulation agency web sites additionally supply an opportunity for enchancment, as simply 30% present clear steering on the hiring course of, and simply 14% show pricing info.

By bettering their consumer onboarding expertise, similar to by including on-line consumer consumption instruments, corporations have 50% extra incoming potential shoppers and earn 50% extra income on common, the report says.

“Shoppers in the present day anticipate well timed responses and clear communication from their regulation corporations, and people corporations that prioritize this are seeing outsized features in each new shoppers and income,” stated Joshua Lenon, lawyer-in-residence at Clio.

“By incorporating a web based consumption course of and utilizing know-how thoughtfully, regulation corporations can deal with these challenges head on, making a extra seamless  expertise from the very first consumer interplay.”