AI Is Upending Law. Is That A Sign For The Rest Of Us? — With Melia Russell

Channel: Alex Kantrowitz

Published at: 2025-12-10

YouTube video id: USgXmFxe1EY

Source: https://www.youtube.com/watch?v=USgXmFxe1EY

AI and law has come a long way since a
lawyer was caught using fake chat GPT
generated cases and was sanctioned. The
technology is upending the field and it
may be a sign of what's [music] to come
for the rest of us. That's coming up
right after this. Welcome to Big
Technology Podcast, a show for
coolheaded and nuance conversation of
the tech world and beyond. Today we are
going to talk about a fascinating story
about how AI is upending the legal
field. a hidden story, one that I've
been hearing about privately, but I'm
excited to speak with you about
publicly, and we have the perfect guest
to do [music] it with us today. Malia
Russell is here. She's a senior
correspondent at Business Insider, and
she covers how AI is changing [music]
the legal field. Malia, welcome.
>> Thanks for having me, Alex.
>> So, let me take you back to June 2023.
There's a Reuters headline. It says,
"New York lawyer sanctioned for using
chatbt cases in a legal brief."
Basically the lawyer uh put this
argument out to a judge and said uh
these cases are support my argument but
those argument those cases were
completely fabricated by chachi got
sanctioned and the whole world said if
you uh you know if lawyers use
generative AI they're going to include
hallucinated facts and you can't trust
them. Uh but two years later uh the
field has come very far since then. So
talk us through like the last couple
years and and how AI tech has been uh
become a very useful tool for lawyers.
>> That case struck fear in the hearts of
lawyers across America and became the
nightmare scenario that I think colored
a lot of public perception of what
happens when lawyers use AI.
The reality is lawyers are using it
every day without ending up in Reuters
headlines or Business Insider headlines.
Um although it does still happen. I
think the latest count I read was like
over 600 identified pleadings where
lawyers had um included content caught
by a judge that was contained a
hallucination from a general purpose
chatpot or other tool. Um what has
shifted since 2023 is we have this
Cambrian explosion of applications that
are legally tuned for the for the legal
professional. These are tools that
understand the work they do. They have
structure so that they know the right
documents to pull at the right time.
What are the models to turn on for the
best outcome here? How do we um uh
protect confidentiality rules within the
firm? There is chatbt for lawyers or
claude or Gemini, but there's also a
completely new wave of point solutions
that is delivering real results and real
outcomes for lawyers.
>> Yeah. And we talk often about where the
ROI from AI is going to come from. And
there have been a couple of areas that
people have talked about. Coding is
obviously the the top one. Customer
service is another. Uh but one of the
issues has been what happens when you
get into a highly regulated field like
law uh that that can't afford mistakes
that can't afford [clears throat] fake
cases that can't afford hallucinations.
And I was this episode came about
because I was with a friend who's a
lawyer at a football game and he started
telling me about all the different ways
that his firm is using artificial
intelligence. Uh and it it really um
stunned me because it was a clear case
of how this can have a return on
investment and how this can change the
field. And I think, you know, I sort of
teased this in the beginning, but it is
a way that if you look at what's
happening in law, you're going to see
what's going to happen everywhere else.
Let me give you uh one example, and I'd
be curious to hear if you if you hear
more. So, obviously, a big part of a
lawyer's job is search, searching
through documents, trying to find other
cases that may or may not be applicable
uh for a defense or a prosecution or uh
whatever it might be. The way that
they've done it before generative AI has
been using different terms and
connectors. So you search for different
terms that may be applicable for your
case. Then you read some and you see
okay is this something I can site or
not. Um what this person told me was
instead of like basically doing this
like keyword search painstaking time
timeintensive what they are able to do
now is drop full sophisticated
paragraphs into
uh generative AI tools like Weslaw and
it will return
connected uh relevant and uh and
important research basically back doing
the the research job for them
effectively and and fully minimizing the
amount of time that they spend on this
work.
>> And the change here is that whereas
before you had lawyers going into
conference rooms, digging through filing
boxes of papers, looking for the firing
gun, if you will. Now they're turning to
tools where you upload all of your
relevant documents and depositions and
interviews on a case and you're able not
to just search for keywords, but you're
able to search for, you know, find all
of the supporting evidence that X
happened and it's going to turn up what
is related and saves them potentially
weeks, months of work,
>> right? That is that's expensive work, by
the way. I mean, it what what this what
I think this is doing is it's
compressing I mean, you talked about it
weeks. You could take weeks of work and
and basically condense it into a prompt.
Like, what are the economic implications
of that right away?
>> Sure. And I'm going to give you a little
bit of backstory. So, I've been covering
legal tech for about seven months now.
And
it came about because my editor-inchief
at Business Insider, long before she was
a journalist, was a Yale law school
graduate and a law clerk. And she ran in
social circles with a lot of lawyers.
And what she kept hearing was this um
fear and paranoia around the death of
the billable hour. Um lawyers get paid
by the hour. There are definitely
exceptions to that um where the
[clears throat] work is more flat
feebased, but if you're working with
enterprise clients, you you typically
charge by the hour. And software that
promises to save them time. Um that math
doesn't math for them uh when the risk
is that it cuts into their uh revenue at
the end of the year. What I found
talking to lawyers is that
there's still paranoia that this changes
the business model for them. It will
nudge them to look at alternative
business models like switching to flat
fee. Another one I hear a lot is that um
they're still going to charge by the
hour, but the kinds of work they charge
a billable hour for changes.
you a you know top partner at Quinn
Emanuel might be billing $10,000 an hour
because there's a lot of wte repetitive
work that your class of associates used
to do that you're you're doing with a
generative AI tool now so they can um
push aside some of the work they used to
bill for and instead put the real
premium on the human judgment that comes
in after that kind of first pass work
that happens with with generative AI
tools. You know,
to take a step back,
lawyers are notorious lites and there's
a few reasons for that.
First, they work largely in documents
and for a very long time, software
wasn't especially good at extracting
meaning from text. You also had lawyers
storing files on physical servers on
premises for increased security and and
control over that data. Confidentiality
is like the
>> pretty important in that field.
>> Pretty important in that field. Um, what
changed is that
Chat GPT
offered law firms
the greatest demo in the history of
software for what it could do for the
white collar professional. I think a lot
of lawyers looked up from their screens
after that moment and said, "Oh, this is
going to transform us." What we saw was
that the clients are now coming to the
law firms and saying um we're seeing how
AI is improving our efficiency
internally. What's your strategy? Well,
that that's important because like you
said earlier that lawyers have resisted
this or they are, you know, they they
are they bill by the hour and that's
another thing that I've also heard is
that the clients have said not only
what's your strategy uh but they're
demanding it. They want to see the
breakdown of the tools that they used
because again if you're paying this fee
per hour and your your um service
provider is being intentionally
inefficient uh you're going to be
pissed. And so, okay, maybe the fee per
hour changes uh but but the clients are
now coming to the lawyers and saying do
this. So, the law field might not even
have a choice here. It may just
immediately go this way.
>> Yeah. I think lawyers are realizing if
they don't adopt it, their clients will
find other firms that do.
>> Can we can we pause for a moment just to
appreciate the technology story here?
Now look, there's there's definitely
lots of problems with with the
technology, but um the fact that AI
today is good enough that uh we're
having this discussion for real, like a
for real discussion that it can condense
the work down from weeks to, you know, a
couple minutes or an hour. Uh it it's
pretty remarkable the I mean, think
about again this the story that
everybody heard.
>> Yeah. 2023 lawyers like using a
hallucinated case and sending it to a
judge and getting sanctioned to now the
technology is good enough that it is uh
something clients are demanding their
lawyers use.
>> Yeah, I think they're seeing that I mean
one thing that's changing is that
the basic the the general purpose tools
are becoming good enough for a lot of
legal work. Um
the bread and butter of legal work is
searching and writing text and uh AI
that that is the perfect surface area to
apply AI. So it's kind of a no-brainer
on the part of the client and they're
seeing their legal bills balloon year
after year. It's it's one of the bigger
line items on on their budget every
year. And so they're saying, "We want to
know." I was actually at a legal
conference recently and on stage was the
general counsel of a MAG7 company. And
interestingly, he was being interviewed
by his own outside council.
>> It was Meta, right?
>> I can't say it was off the record. Okay.
>> Or it was a Chattam House rules. But um
the someone in the audience asked, "Do
you
expect you'll be saving money next year
on your legal bills?" And he said, "I
absolutely hope so." And like here the
chair of his outside council is sitting
right next to him. I t I did talk to
after his panel another MAG7 uh GC who
said you know we brought in all of our
outside councils for a summit about a
month ago and I stood in front of them
and I said I want to know what tools
you're using how you're tracking it and
what kind of cost savings I can expect.
What do you think um has helped on the
technology standpoint to get the you
know technology from the point where it
was hallucinating a couple years ago to
now it's it's so good. Is it just that
OpenAI's GPT models have gotten better
and hallucinate less or is it the fact
that companies like uh Westlake or sorry
West Law uh have decided to implement it
and they're that's getting good. What do
you think is happening on the technology
front? So in legal tech you have two
companies that are the dinosaurs of this
industry. Lexus Nexus and Thompson
Reuters which makes Weslaw. And the
pitch they make to law firms and general
counsels is that you should buy our
software because when you're generating
case citations, you can link those
citations in a source of truth, which is
our own vast repositories of case law.
So their argument is that use us because
we're going to limit hallucinations
um because we own the data. Um that has
left, you know, a long trail of legal
tech challengers to um make the case
that we can partner with the data
providers to get around your
hallucination concerns. Um, they're
increasingly working on features.
Imagine like a spell check for, okay,
I've completed this brief. I want the AI
to scan it that these cases match real
cases. Does what my associate wrote here
in this brief match
more than 85% what you think the intent
of the original um, case file says. So
it's not just checking that it exists,
but it's can even check does it match
what the case law actually says. So the
techn is moving really quickly.
Law firms are I think
completely puzzled what is going to be
the vendor of choice here and they are
trying everything.
They're Lexus Nexus and Thompson Reuters
are like non-negotiators. They pretty
much if you're a big law firm, you have
to have one or both of those software
subscriptions because it's just like
mission critical for the work that they
do that legal research. um but they are
buying licenses to so many other AI
platforms and point solutions testing
all of them um and that has this effect
of you know
inflating those startups revenues and
driving up their valuations and we can
get into that in a bit but
>> right so basically what you're saying is
the key here is grounding uh the
technology in the data right so Thompson
Reuters has the data Lexus Nexus
has the data and if you're able to
connect that with the models, you'll
have less hallucinations and make it
useful.
>> Yeah. And one of the BFDs in legal tech
this year was Harvey announced a
strategic partnership with Lexus Nexus.
So Harvey is um the Goliath of the legal
tech space. They make software that
helps, you know, that aims to help
lawyers deliver legal services faster,
more affordably, and at a higher
quality.
>> And they're all they're AI uh native
funded by OpenAI.
>> They were one of the first checks out of
OpenAI's startup fund back in 2023 and
had early access to GPT4's
GPT4. Um they announced this year a
strategic partnership with Lexus Nexus.
So if a customer has a Lexus Nexus
subscription and a Harvey subscription,
they can now um access Lexus Nexus
within the Harvey app. So getting it
made a very strong case that um you can
trust our results. I will say that
lawyers are still hitting home to their
junior lawyers, you need to check the
work. [laughter]
Um, I think what's so interesting about
some of the sanction cases we've seen is
that the lawyers are taking personal
accountability for not checking the AI's
work. And that kind of feels
maybe an obvious thing to do. Um, but
you know, there's a firm this year, um,
one of the top 10 law firms in the
United States, Leam and Watkins. And
earlier this year, they were repping
Anthropic in a uh copyright lawsuit. And
one of the associates um said that they
had used Claude to help generate
citations within a um an expert
testimony that they submitted for part
of this copyright case. Um, and Claude
had
hallucinated the authors and title of a
paper in one of the citations. So, it's
very meta and that you have a law firm
representing Anthropic that used
Anthropic's product and produced a
hallucinated case. I mean, it was it was
hugely embarrassing for all parties
involved. Um and that is uh the terror
striking big law right now.
>> I think firms are really rethinking the
way they train lawyers around this. Um
and it starts at the onboarding. It's
it's I know Laam and Watkins rolled out
an AI academy recently for their entire
first year associate class where they
brought 400 lawyers into a conference um
hall in Washington DC and for two days
they sat through product demos and they
heard from um general counsels at their
clients and they did listening sessions
on how partners at the firm were using
AI and the through line in this talk was
that um
we have exceptional standards here at
LaMman Watkins and the final product is
still your responsibility and you've got
to keep your hands on the wheel.
>> Yeah. No, it's a it's an interesting
point and sort of brings up another
thing that my friend told me about the
the tools that he's been using um that
they get things wrong. Uh but they al
they all
>> they also will get him or can get a
lawyer uh a certain portion of the way
there.
>> Uh and you know again like it's doing
all this research is pulling the
relevant cases and coming to the wrong
conclusion. Uh but if you're a lawyer
who has some seasoning and double-checks
the work um that actually that becomes
the time save. So you don't necessarily
trust it for the output but you do rely
on it for a lot of the work that it
does. One of the interesting questions
that I hear around legal AI is who gets
the most use out of it. Is it the early
career lawyer or a more senior partner?
And to take a step back, the work that
an early career lawyer is most similar
to what the Genai tools are very good
at. It's writing those um citations and
checking them. It's taking first passes
at writing memos. it's sifting through
digital filing uh boxes trying to find
that firing gun. So there's yes, they
can use AI to speed up that work. But
what's really interesting is that I hear
the more seasoned attorneys are actually
getting huge value out of using these
tools because they can recognize
more quickly looking at it um what not
up to snuff. like they have a BS radar
that might allow them to say, "Okay, I
just want to do a first pass with the
Gen AI, but I can recognize more quickly
um what's real and what's not and allows
them to just um get to a better result
faster."
>> Yeah, it's very interesting in terms of
the way that AI is used because, you
know, there's been this question. Think
about engineering, right? Does it make
every coder a 10x coder or does it make
a 10x coder a 100x coder, right? Does it
make the superstars sort of unreachable
because it puts this powerful tool at
their hands and they really know how to
use that? And there's been this debate
like for writing for instance like you
know AI seems to just produce average
writing which is great because it brings
up a lot of writers to average which is
a massive improvement for many writers.
Um the other side of it is uh you know
what can it really help the experts but
in law in particular it seems like those
that are those that that yeah have have
experience or seasoned are going to get
a lot from this and really be able to
like maximize their productivity in a
way they couldn't previously.
>> I think that's right and this came into
question recently. There was kind of a
a super viral moment in legal tech a
couple of months ago. There was an
anonymous post on this
uh subreddit uh for legal tech
afficionados that asked, "Is anyone
really using these tools?" Um, and this
person claimed to be a former
employee of Harvey. Um, which who knows
if that's really the case, but uh they
were suggesting that only junior lawyers
wanted to use Harvey because you figure,
you know, the tropes that the younger
lawyers are going to be more techsavvy
and more they're using these tools
personally, so it comes more naturally
to them. Um but Harvey has certainly
pushed back that they are seeing high
adoption and engagement kind of across
generations of lawyers and that they're
actually seeing huge gains in um usage
weekly active usage uh year-over-year.
>> So let's end this section just talking
again about the ROI question. M
>> um it's interesting with law because you
can't really like back it into a
traditional ROI uh calculation because
you could be paying like $20 a month for
Chad CPT but that that probably you're
not if you're using you know Weslaw but
um you could be paying let's say a
subscription but that brings your work
down by such a dramatic amount that you
get to bill less. like you actually have
a negative ROI even as it's making you
more productive. But I think that um I
actually would be curious to hear your
perspective on how these companies are
going to do the ROI calculation uh and
and whether we're just going to see this
type of pattern repeat itself where the
technology works uh in in very
impressive ways. But for industries and
enterprises in particular, it changes
the way that they've done business for
so long that there will be, you know, uh
just these these speed bumps to try to
get it get it working and rolled out.
>> Well, something I hear from time to time
is that it's harder to measure
the work you could now do that wasn't
possible before Gen AI. So yes, you're
maybe maybe you do see a reduction in
billable hours, but lawyers are telling
me that they're able to dig deeper on
cases because AI helps them be more
efficient. And this is happening even at
the, you know, really small and midsize
law firm level. I talked to a solo
practitioner. He's a a civil rights
lawyer in San Diego. Um he repped a
family where the children had been
unlawfully detained at the US Mexico
border. And he spoke to me about how
using tools he was able to save time on
generating citations or summarizing
depositions. and he could use that time
um to think through his um his strategy
better for the courtroom to spend more
time crossing the border to go meet with
a family and glean more from them. this
idea that um there's so much more work
to be done when you aren't just sifting
through boxes um I think will be part of
that ROI calculus for firms. I do think
we're going to see what's happening in
legal happen in accounting happen in
consulting. It seems to be happening in
legal very quickly because
I guess I'm not sure why exactly.
>> I mean I have a guess. It's just that
it's it's words, right? It's words.
Accounting is numbers. It's harder for
these models to do, but it's words,
semantic search. Like it's sort of
>> it's the lowhanging fruit for generative
AI where the others will. I think
consulting, you know, probably requires
like some tool use. you know, you go in,
you do calculations with code, same with
accounting, but these things are just
getting better and better at all these
professional services tasks. And if what
we're seeing now in legal is any sign
that this is a conversation I think many
industries will be having over the next
couple years, if not having now. H and
also a more optimistic spin on this is
that sure maybe firms sllo off the
billable hour model and they switch to
flat fee billing for more services. Um
but they're
also potentially going to save on labor
costs if they start to displace lawyers
because they can do more with the better
software tooling. we might be looking at
more profitable law firms in the future
that run on leaner teams. Um, you know,
this is like I feel like we see this
conversation playing out in in tech, the
idea of the um, you know, oneperson
unicorn company and um, I think we're
going to see that model echo in law as
well.
>> All right. Uh I want to take a break
because uh well because we have to but
also uh when we come back I do want to
talk about the employment question. I
want to talk a little bit more about how
individual lawyers are empowered uh and
then also um how the clients using this
stuff uh might change things in in law.
So uh that's coming up right after this.
And we're back here on Big Technology
Podcast with Malia Russell, senior
correspondent at Business Insider
talking about how AI is changing law.
Let me ask you this. So, um, uh, I'm a
fan of of WebMD. It's not the best
website, uh, but it does definitely
allow me to go to the doctor's office
when I'm feeling bad and say, I I think
that this might be the problem with me.
Now, I did one search uh about uh
scratchy throat and it suggested that I
had Ebola [laughter] uh which was
inaccurate uh just for the record. Um so
it can yeah that's good news. Um but but
uh it's even become uh with with
generative AI that exercise has become
um even more intense for me. I
definitely will speak with like Dr. chat
GPT before I go into the doctor. Uh, and
then I'll recite like sort of what I
think is going on and the doctor says,
"You're the most annoying patient in the
world, but you might be on to
something." Um, and so I'm curious to
hear your perspective about how Generai
might change the uh lawyer client
relationship where uh maybe the client
will come in and um have have written
the brief or have like you know can do
some of their own research with these
generations and you know present similar
cases or ideas to lawyers and whether it
becomes more of a a consultative type of
approach when you go to a lawyer versus
what typically happens now where the
lawyer you know says all right you know
$15 a minute and [clears throat] why
don't you sit down and listen?
>> Yeah, I do think we're going to see the
WebMD thing play out. We already are.
This is happening more at the um I guess
civil law layer. Um where you're not
going to probably have Fortune 500
companies coming into an Amlaw 10 firm
saying like I did my homework on this
and this is what I think we should do.
Um but I hear stories that you know p
people bringing personal injury suits
for example or um employment suits are
coming in with their own chap GPT
approved ideas on how they think this
should go.
>> Um
>> it's amazing
>> and you know I think
>> and then you like vet it with a real
lawyer right and then they can sort of
say yes or no versus just like throw it
into the legal system.
>> Yeah. And I think there's a question
like, okay, did this just create more
work for the lawyer having to like
untangle that person's preconceived
notions about how things should go?
>> I think what we're going to what's going
to be a more interesting shift is the
arrival of more selfservice legal
services. So the first wave of legal
tech companies were developing software
to sell to law firms and general
counsels to help them deliver legal
services faster and more affordably. The
newer wave is companies doing the legal
work itself. They are either um
attorneys spinning off from big law to
open their own solo shops. they might be
Silicon Valley entrepreneurs saying like
I think I have a you know a better
alternative to um a legal shop that
specializes in master service agreements
or NDAs. Um so we're seeing this surge
of companies provide legal service
directly to consumers and companies and
they're not doing the billable hour at
all. I mean that would be kind of
against their ethos, their like almost
like we're a you know a consumerfriendly
brand. Um I think we will see th that
model start to like eat away at
traditional law as people say I don't
have to go to a law office. I can, you
know, zoom my lawyer who's AI assisted
and get it done faster.
Can I share a quick tangent on this?
[clears throat] Um,
>> have you done this yourself? Is that
what you're going to tell us?
>> No. [laughter]
No. But a really funny thing that's
happening is this is this is happening
in prenups. I just wrote a story about
this in prenuptual agreements. Um,
earlier this year, I'd wanted to do a
story on uh there's a couple of tech
companies that sell uh sorry, there's a
couple of tech companies that offer
online prenups and you go to a website
and you fill out a questionnaire and
it's not unlike using a Turbo Tax to
file your taxes. you're like filling out
the questionnaire with all your assets
and then, you know, poof, bada bing, it
returns in a number of hours or days a
prenup that's maybe been lawyer reviewed
if you pay for the add-on. Um and
prenups are rising in this country and
something like 10% of the prenups
generated annually are now coming
through these tech companies like Hello
Prenup or First or Neptune um that serve
couples kind of like a a DTOC prenup.
Um, so that's just like one niche
example, but I feel like that's already
changing how clients use legal services.
>> So if it's if it's that easy to just
like, you know, press play and generate
a legal document, uh, write a prompt and
generate a lawsuit or prenup or, you
know, there's been this question about
what this is going to do for employment
of lawyers. And I really like the
argument that it's just going to
necessitate more because it's so easy
now to there's like no barrier to uh
initiate legal uh action that you're
just going to need more people that are
trained to handle this stuff. I like the
argument. I don't like the fact that
we're going to have more lawsuits, but I
think that's a pretty good argument in
terms of anticipating what's going to
happen from here.
>> It's a it's like a sticky conversation
because
>> Well, let's have it because I have some
other stuff that I want to talk about on
legal, but let's let's hear this. I
don't want to get I don't want to get in
trouble, but I feel like a lot of
companies right now are selling a pitch
around we're democratizing access to
legal services. And yeah, I think the
criticism of it is that it's going to
result in many more frivolous cases
jamming up our justice system,
>> which works so well as it is.
>> Exactly. Um, I don't have an answer yet
on
>> whether that really happens. Um, but I
think it's a a real risk of this kind of
democratization of legal advice.
>> Oh, yeah. I mean, I think that's where
it's going unfortunately. Uh, because we
have enough frivolous lawsuits, but
yeah, you just prompt a lawsuit. uh when
you can do that and just fill in the
blanks, it becomes it becomes an issue
for an already overtaxed system. The
other side of it is is that, you know,
maybe that will create more work for
some firms, but um you've already
foreshadowed where we're going with the
junior law associate. Uh people have
been talking a lot about how entry-
level jobs are hard to come by and today
people are coming out of law school and
they're typically prepared to do the job
that that Westlaw uh application does
now. Sifting through documents,
stitching together different things. Um
there's there's a a small crisis
unfolding now where entry- level workers
aren't able to find work today. Uh but
it seems like it's going to be an acute
problem in law. So what have you heard
on that front and where do you think
it's going?
>> I think it's still very early days. As
far as I know, employment of lawyers is
still at record highs in the last
decade. And there's also record high
applications for law schools right now.
like this is a very attractive field for
>> I thought that that so I saw that stat
that law school applications have gone
up and um there there's been some so we
can pause on this for a minute because
it's very interesting there's been some
speculation that that's just because the
economy isn't strong right now or maybe
it is the undergrad workers who like try
to get entry- level jobs can't and they
are doing what most unemployed
undergrads do which is sit on the couch
and then say, "I'm going to get that
advanced degree."
>> Yeah. Well, for the ones that are
graduating,
as of last spring, they seem to, for the
most part, still be finding employment.
Law firms have never been more
profitable. So, they are still growing.
Um, I think they're anticipating
that they might see an increase in
demand for their services so they can
continue to hire um larger associate
classes. But I think where we're really
going to see the crunch is at the long
tail of small to midsize law firms where
um they are it's going to be easier than
ever for them to stay lean. Um they
don't need to
necessarily even take on more work to
remain more profitable because they can
operate more lean. It's almost like
being an AI assisted lawyer can be a
lifestyle business, you know, for some
of these people. So,
>> I mean to make a lot of money and don't
work that hard, [laughter]
>> right? That's a good that's a good
living if you could do it.
>> Yeah. I I wouldn't know anything about
that. [laughter]
>> Same here.
>> Um, you know, people talk about the law
firm is shaped like a pyramid. At the
tippy top you have the high-powered
wealthy partners. In the middle you have
mid-career lawyers and at the bottom you
have a battalion of first through fourth
year associates that are doing that
grunt work. And you know, that's where
we could see um I've heard it um the
pyramid morphs into a diamond where you
get like a bulge at the mid-career level
because of what we talked about earlier
with like they can leverage these tools,
but they still have the years of um
human work and hardearned judgment to be
able to like evaluate the results
they're getting from from AI. And then
you just see like a pinching happen at
the very bottom.
>> Yeah, that's like it it you know I saw
that you kind of laughed as you said
that the pyramid turning into a diamond
and it does feel like this kind of
cliche thing that you would see at a
conference where like the PowerPoint
animates from the triangle to the
diamond [laughter] and everyone's like
whoa. But that being said, it it
actually feels right. Right. I think a
lot of fields could end up in that
situation where the pyramid because a
lot of fields work with the same pyramid
and that pyramid could can morph into
the diamond. I've also heard a
rectangle. I've heard a rectangle, an
hourglass. Like people have fun with the
nomenclature.
>> Hourglass. So an hourglass is like no
nobody in the middle.
>> Um I think that idea
>> it can't be all these shapes. It just
can't. [laughter]
[gasps]
>> Well, I'll tell you what might be a
silver lining of this. Um,
>> what I hear partners say is that if the
very junior lawyers
don't have to do as much of the grunt
work, what's going to be more important
for them is to sit closer to the partner
and understand better the human judgment
that they're applying to the output.
>> Yeah. But the partner is never going to
let them sit there. Why would the
partner have a entry-level worker
>> basically babysit them? They are going
to want to be unencumbered by having to
teach. I mean, I would say there might
be some altruists out there that want to
help the next generation, but these are
lawyers. Come on.
>> You know what's actually like really
gross sounding is I hear that more of
them are exploring ways to do um
simulations for their associate classes.
So imagine like going into a virtual
training and working on a leveraged
buyout or preparing for a deposition.
And so like because if you're a first
year associate, you're not going to put
them on a major M&A transaction, but you
can let them do a pretend one in this
simulated environment. And I I think
there might be a legal tech provider
that's talking to law firms about
offering that solution.
>> You can use generative AI to do that.
That's true, too. Yeah. Uh, you could
use a general purpose AI probably to do
that, too. Um, it I think I said kind of
gross because it just feels like,
>> oh, did I go to law school to then
pretend to be a lawyer? But if they're
just not getting the repetitions on real
matters, um, it's a way to kind of
supplant that.
>> But I think that underscores the problem
with so many uh, entry- level jobs in
the future, right? if this technology
goes the way you know that it that I
anticipate it will
>> and the question haunting I think firm
leadership is if we hire fewer early
career lawyers where do the mid-career
lawyers come from you know like
>> what's the answer to that
>> they don't know
>> I don't think they know I don't think
they know it really what I
>> maybe companies will have to just have
these training programs right where
you're you're typically used to uh
bringing in a young person, having them
cut their teeth on really difficult
stuff. Um and they provide some value to
the company without a doubt, but not an
exceptional amount.
>> Uh and and yeah, then you promote them
and maybe because generative AI can do
their work. Uh you just sort of like you
said, you like have like a simulation
hunger games or something like that,
right?
>> Whoever rises to the top gets a
mid-level position.
>> Yeah,
>> it's fascinating. I will say that
I think there's an exodus brewing where
lawyers are early career lawyers are
reading the writing on the wall and kind
of getting out while they can. There
have never been more opportunities for
them to go work at a tech company
because suddenly there's there's going
to be three over three billion dollars
of venture capital poured into legal
tech companies this year. Um, so they
can
step aside from that partner track and
join a tech company
helping to build the future of their
profession and what a you know
compelling pitch compared to like oh how
do you feel about like managing a robot?
But isn't it interesting because a lot
of the specialists uh in professional
services are being contracted to like
effectively feed their knowledge to AI
bots and that will allow AI bots to
replicate the work they do. Like there's
you hear every every you know couple of
months about like a financial services
uh job listing at at an AI company where
like your job is to upload financial
models for $150 an hour and you might be
happy doing that work for a little bit
uh if you can't get if you can't get a
mainstream job in finance. But
>> this is actually becoming a side hustle
for lawyers right now. I hear that they
get, you know, cold inbounds every week
from some of these like data labeling
data uh sorry, data model labeling or or
training companies.
>> Do you think it's wise for them to to do
that to do that work?
>> I asked I had a call with one yesterday.
It's called Micro One and they are
building a marketplace of experts that
train um models for the big AI labs. And
I asked him, um, do the lawyers that you
contract with not tell their employers
they're doing this? [laughter] Because I
would think that that would be like, um,
time away from their real job. And also,
lawyers aren't known for having a lot of
free time anyway. And he said like, no,
they gather on our Slack. They're using
their pictures and their real names. I
think it's
um I think they wear it as like a badge
of honor that they're part of the change
in their industry.
>> But that's the question, right? Like are
they automating the you know the their
profession, the future of their
profession? It's really tough for like
>> it is that what you mean?
>> Yeah. I mean it's tough for one person
to be like well you know if I don't go
ahead and label this this data it's not
like I'm stopping this change from
happening. But what they are effectively
doing is helping these AI companies
automate the work of of many. I I guess
there's really no no turning back the
tide on that front.
>> I don't think there's a downside to
developing these skills though. I think
that the lawyers of the future need to
be techsavvy
um because it's what the clients expect.
And I hear that, you know, if you're a
secondyear associate and you are super
savvy with Lora or Hebia, you know, a
tool that allows you to do um corporate
due diligence. um maybe the other
partners like seek you out for
troubleshooting, you know, [laughter]
like like it it could put a spotlight on
you as um
>> someone who can help lead the firm into
that
blackbox future.
>> Before we leave, I want to talk about um
these legal startups which you've
reported on extensively. Uh Harvey, the
one that we've talked about here a
bunch, I've reported on for big
technology a bit. Uh their valuation is
$8 billion. So just talk a little bit
about like the valuations for these
companies and how they'll justify them.
>> Yeah. Um Harvey's a Goliath of this
space. They came out very early. The
founders um Winston Weinberg is a you
know recovering lawyer and uh Gabe
Pereira was a Google DeepMind
researcher. They were roommates
together. They started this company
because they thought legal deserved a
better solution. Um,
Harvey.
People seem to have like a lovehate
thing with Harvey, probably because it's
the 8 billion dollar gorilla in the
room. But it operated very stealthily
for a long time. It had an approach
where if we can convince the most
powerful law firms to get on our
platform, the others will fall in line.
So they did, you know, they were very
heads down. They did these um uh pilots,
yearslong pilots. I mean, one of the
things that people, I think, don't
appreciate about legal tech is their
about law firms is that their
procurement process can be like 12 to 18
months. They're just so um
>> I would hate to sell anything to them.
>> Oh yeah. And I think those timelines are
shortening, but um but anyway, Harvey
succeeded. I mean it partnered really
closely with those law firms. They were
co-development partners when it got
their buy in. Other firms followed suit.
Now 50 of the 100 highest grossing law
firms in the United States are are on
their platform. Harvey arguably, you
know, fired the the starting pistol on
this legal tech arms race and then it
invited a tsunami of competition. And so
now it kind of has to defend the turf
that it helped create. Lora is one of
the top companies in this space. It's
founded by Max Junstrand um who was
actually a professional video gamer and
and spent a couple of years in law. Um,
and it was a Swedish legal tech company
and they came to the US this year and
started this year as kind of like, you
know, Europe's answer to Harvey. And now
they're making a lot of ground um with
Fortune 500s and um and large law firms
internationally.
uh
there's just a a litany of competitors
in their wake that are tackling either
the AI platform or a point solution
around it. Part of the challenge is that
with this surge of competition is also a
surge of sameness. These companies are
building on slightly different
combinations of the same foundation
models. They are all building at the
application layer. But there is no real
technical moat. So they need to,
you know, win over the law firms with
their white glove service and their, you
know, shipping speed. Um, the way that
they, uh, help train lawyers because a
shiny tool doesn't stick unless you
really get the client to engage with it,
the customer to engage with it. There is
no technical mode and so these firms
have to compete on brand. They have to
compete on their ability to kind of mold
to the client and deliver product that
feels almost um white labeled for them
and all of these things take capital. Um
Harvey has the most of that. Um it was
really quick to establish brand. Um, I
think next year we're going to see a lot
more activity in the uh legal tech
companies that are providing services
directly. That's going to be a more
popular model next year directly to
customers or to consumers. Um, and I
think we're going to see consolidation
as well.
>> Okay. So, let me ask you one last
question here. Um when it comes to this
tech uh there could be an argument uh
made that like they are just rappers on
chat pt and um why wouldn't a law firm
you know eventually just like buy a
private uh version of or a closed off
version of chatpt eventually chatpt will
get access you know maybe we'll pay for
it we'll get access to all these legal
cases and we'll get better at serving
the enterprise um and So I wonder if you
think the rapper question that has been
applied to so many startups will also
apply to legal startups as well.
>> I think the law firm is such a
discerning client that they're willing
to pay the premium for the packaging.
>> Um and it and it goes beyond packaging
because it's not just a white labelled
chatbt. It's it's in the permissions
settings that they give them. It's in
the partnerships with those digital law
libraries like Lexus Nexus and West Law.
Um they are selling, you know, a bespoke
product with lawyers in mind, lawyers
paranoia and and their real um security
and compliance risks top of mind.
Winston Weinberg, the CEO of Harvey, has
actually said OpenAI is indirectly our
biggest competitor, which is right
shocking because
>> they're platformed on Open AI and
OpenAI's on their cap table. Um, but he
says that every law firm we talk to is
going to compare our product against the
latest model ship from from Chat2PT. So,
uh, ship from OpenAI. So, I think that
they will
have an uphill battle, but I think that
the law firms ultimately will continue
to buy something that feels
best-in-class and built for them.
>> All right. I said last question, I
actually have one one last one big
picture. Uh just look forward in the
next couple years. How do you think the
legal field is going to change as this
stuff uh picks up more? Again, we we're
at three years of chat GPT, right? So
this is really just beginning and it
seems to have already made a very big
impact uh within the legal field. Where
is it going to go?
>> I think we will see the billable hour
increase as opposed to completely
disappear. Okay.
>> I think lawyers are going to charge
higher and higher premiums for their
eyeballs on work and their
mind share. Um and they're going to
switch other services to flat fee
billing. I think we're going to see
more lawyers splinter off from big law
and start their own solo shops or join
tech companies as there's never been
more opportunities for them to do so.
I don't know how to answer the question
on what happens with, you know, a
increase in more frivolous lawsuits and
I'd encourage companies that think they
have an answer to that to come find me.
Um, but
ultimately I think legal is a precursor
to AI swallowing professional services
as an industry and it's a bumpy road,
but um, you know,
lawyers do their homework and I think
that
they'll net out looking pretty smart for
doing so. Yeah, I've I've had my eyes
opened to how impactful uh generative AI
will be uh in the legal field, already
is uh in the legal field. And to me,
that's the reason why I wanted to do
this show, someone who's impartial to
talk through all the, you know, the the
pluses and minuses of this because uh I
I think that if what we imagine will
happen in the legal field does happen,
and we've said it before on the episode,
it will cascade uh and we'll see it in
many other professional services. uh uh
uh disciplines. And so uh I think this
is, you know, kind of canary in the
coalmine territory and and I'm so glad
we spoke about it. Uh so Malia, can you
tell people where they could find your
work?
>> Oh, sure. Uh businessinsider.com and I'm
on LinkedIn. Uh I don't have quite your
following, but I'm working on
>> No, you you have a good following. I
[laughter]
All right. Well, Malia, thank you so
much for coming on.
>> Thanks, Alex.
>> All right, everybody. Thank you for
listening and watching. We'll see you
next time on Big Technology Podcast.