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It seems few industries have greater potential for disruption from artificial intelligence than the law. Like games like Go, which DeepMind used to reveal the facility of neural networks, legal systems even have rules and precedents. Give an AI model enough data and it might probably pass its bar exam.
Therefore, the law has turn into the goal of many AI start-ups, comparable to Harvey, a US company that raised $100 million in July at a valuation of $1.5 billion from investors comparable to Google Ventures and OpenAI has collected. At the identical time, there was a boom within the UK: three legal AI start-ups – Genie AI, Luminance and Robin AI – collectively raised greater than $100 million in funding last 12 months.
The UK's growth is a product of the overlap between two successful industries, one old and one latest: business law and the concentration of AI start-ups, particularly in London and Cambridge. “We have a wealthy heritage and a few incredible talent. “That’s an enormous competitive advantage,” says Eleanor Lightbody, managing director of Luminance, which was founded in Cambridge in 2015.
Slaughter and May was amongst Luminance's works early investorstogether with the late Mike Lynch's Invoke Capital, and it initially focused on reforming the way in which corporate law firms operate. They provide costly due diligence for transactions comparable to mergers and acquisitions that require young lawyers to sift through 1000’s of documents. That feels like a super goal for disruption.
But it hasn't quite worked out yet. Much of the recent expansion of legal AI has come not from the combination of the technology into law firms, but from corporations automating contract drafting: Genie AI users include many smaller manufacturing and construction corporations. Not only is it changing the legal industry, it is usually allowing corporations to do more legal work themselves.
Although many law firms have experimented with AI, the tradition of hourly billing implies that the usage of AI often equates to a discount in revenue. “My suggestion to large law firms is just not to get too involved in generative AI. They receives a commission for his or her human expertise, not their speed,” says Rafie Faruq, co-founder and CEO of Genie AI.
The marketplace for contract creation in other corporations can be much larger. Legal departments are sometimes inundated with internal demands to shut contracts with customers and suppliers. “There are people on every floor of each office on the planet taking contacts, reviewing them and making decisions,” says Lightbody, who got here to Luminance from Darktrace, one other Lynch-backed AI company.
Companies can upload 1000’s of existing contracts into AI models that analyze the clauses and conditions they commonly use. Technology can use this information to create latest designs and highlight where changes are needed. Luminance's platform highlights clauses that require human attention in red and yellow and might suggest revisions to make sure they meet requirements.
It's like having an experienced lawyer at your side when preparing a contract: They can easily and inexpensively access a big knowledge database. The ability to efficiently search past contracts has other advantages. For example, corporations can easily discover which clients they should inform a few cyber attack as a substitute of hiring a law firm to do the review.
Much of the work is routine, and in-house lawyers are blissful to be relieved of this, says Faruq: “They don't want to write down boring contracts. They need to work on higher value deals.” But corporations also depend on their lawyers for institutional knowledge. An AI model that reads every contract is a possible rival.
The legal AI industry faces its own uncertainties. A number of capital has flowed into startups that use standard AI models customized with their very own technology. (Robin AI relies on Anthropic, while Genie AI uses Anthropic and OpenAI). If the underlying technology is analogous and the training data of legal standards and precedents are equivalent, the barriers to entry may prove low.
Founded by machine learning experts, Luminance has its own AI model trained on 150 million legal documents. Genie puts more emphasis on its library of 1,000 templates, which an AI agent draws on to write down legal contracts from scratch. “It is not possible to beat the large players in AI,” says Faruq.
The harsh reality that not everyone will survive will hit the legal AI industry in the long run. Currently, the flow of capital shows not only the potential of this technology outside the law, but additionally the competitive strength of the UK.
