Generative AI: catalysing transformation at the crossroads of legal tech

The legal tech landscape has evolved swiftly, driven by the hype and capabilities of generative AI. But is generative AI merely a fleeting trend or has it arrived at the opportune moment to act as a catalyst, synthesising years of fragmented progress and convergent initiatives into an industry-wide transformation?

We firmly believe it is the latter. Both innovative law firms and corporate clients, along with their in-house legal departments, were primed for this transformation due to several key developments.

Shaping the future of legal workflows

For forward-thinking law firms, workflows supported by AI were not entirely new. Prior generations of AI solutions, primarily powered by machine learning, had already made inroads in document analysis and review tasks as early as 2016. While these tools offered significant potential, their success was contingent upon access to the right data, substantial investment in training and a willingness to modify established review workflows. This led to a gap between high expectations and actual capabilities, resulting in limited widespread adoption.

In recent years, the legal tech market has matured substantially. Solutions have evolved in both capability and ease of implementation. The shift towards cloud-only development has significantly enhanced functionality and integration capabilities, making it simpler for firms to test and adopt new technologies. The surge in AI capabilities within these solutions suggests that cloud-based platforms will pave the way forward.

At a crossroads

We are at a pivotal juncture where the path we choose will shape the future of the legal industry. The fast pace of AI development and its initial proven capabilities, even considering challenges around hallucinations and content validation, are proverbial genies out of the bottle. In legal tech, we've never seen such a level of excitement.

For many legal professionals, this excitement is fuelled by direct interactions with generally available AI and initiatives that have introduced domain-specific legal AI solutions like Harvey, Leya or CoCounsel. These platforms have showcased AI's potential to revolutionise legal workflows and service delivery. For others, the interest stems from apprehension. Discussions cover a broad range of topics, from whether traditional law firm billing models are becoming obsolete, to the potential for more value and project-based billing, or even the impact of AI and automation on staffing levels.

Nevertheless, interest and hype are clearly at an all-time high, and there has never been a better time to drive innovation and push legal tech initiatives. We have experienced the first wave of technological development in AI models, swiftly followed by legal tech solution providers leveraging, building upon and integrating these capabilities. Law firms and legal departments are just scratching the surface of meaningful workflows and use cases in collaboration with these providers.

Accelerated advancement or strategic consolidation?

Returning to the crossroads analogy, the legal industry now faces two potential paths. The first is one of accelerated advancement. In early 2025, we may see another significant leap in AI model capabilities, which would prompt solution providers to adapt swiftly to these innovations. The continuous evolution of AI could unlock unprecedented efficiencies for law firms, paving the way for innovative services that were previously unattainable.

Alternatively, there could be a slowdown in technological development, affording the industry time to consolidate and fully integrate existing capabilities. This pause would allow for AI applications to be refined, potentially addressing challenges like hallucinations, and establishing robust validation mechanisms for AI-generated content. Firms could focus on embedding AI more deeply into their workflows, training personnel and maximising the value of current technologies.

Frankly, both scenarios are equally exciting. Whether we are on the cusp of another surge in AI innovation or approaching a period of strategic consolidation, the opportunities for transformation and advancement in the legal industry are unprecedented. Data will also play a pivotal role in this next phase. Both legal database content and firm-specific data will increasingly be integrated into legal AI solutions and workflows, adding new dimensions of capability and complexity to specific processes.

Navigating the legal tech revolution

As we stand at this pivotal crossroads in the legal tech landscape, it is essential to keep our eyes on the horizon while navigating the immediate path ahead.

At Schoenherr, we are committed to this dual focus. While we keep a vigilant eye on complex AI developments, such as advancements in reasoning capabilities, agentic workflows and leveraging more data, we never lose sight of the essential steps ahead. Our priority is to bring meaningful legal technology and AI solutions into the hands of our lawyers today. We are dedicated to preparing our teams for a new working style that embraces greater synergy with technology, emphasises upskilling and fosters a mindset ready for future challenges.

author: Andrei Salajan