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As a forward-thinking in-house counsel, technology officer, data privacy officer, compliance officer or legal innovator, you’ll likely have exposure to legal technology conferences, presentations by legal technology vendors and CPD events. Phrases such as “innovation”, “artificial intelligence”, “smart contracts”, “blockchain”, “analytics”, “automation”, “natural language processing” and “augmented intelligence” mean something to you.

This article acknowledges that you already understand the significance of adopting legal technology and explores the importance  of speaking the same language as that technology and understanding its risks in order to realise its promise.

Speaking the Same Language

As lofty as our dreams may be, we will never achieve them if we are not speaking the same language.  For example, when software vendors use terms such as “artificial intelligence” and “smart contracts”, they often do not reflect our everyday use and understanding of those terms. Artificial intelligence as currently implemented in legal technology is not particularly intelligent. And smart contracts are not particularly smart (and are often not even contracts; they’re written in code, and therefore better described as self-executing transactions).  

Rather, artificial intelligence in legal technology is more akin to pattern recognition than human intelligence. It has a high tolerance for error. An example is in the use of predictive coding for disclosure. The accuracy of predictive coding can range from 60 to 90%, although the accuracy for manual review is lower or similar. However, in many legal processes, such a large range of accuracy is unacceptable.

The good news? What legal technology can do now is actually very simple to understand once you cut through the (legal and technological) jargon. While the law is written in one language, with a body of case law as precedence, technology exists in many programming languages. It doesn’t have a singular body of precedence governing or guiding those languages.

The lesson? Don’t be afraid to ask the ‘dumb’ questions like “What does this actually do?” and “How does it do that?”. These are often the most intelligent and important questions to ask a vendor when deciding on, and implementing, new technology.

Dealing With Outliers

Legal issues are complex and risky. Accordingly, legal outliers are damaging. We draft long term supply contracts to deal with once in a lifetime events or try to capture non-compliance with a carefully crafted process. Our nightmare is the black swan event, the worst case scenario, the outlier. And we have all had, or heard of, at least one.

We can, therefore, resist onboarding any legal technology that cannot anticipate and deal with those ultra rare scenarios. And even when we grapple with the outliers we know can occur, as Donald Rumsfeld famously stated:  

… there are also unknown unknowns – the ones we don’t know we don’t know.

Current legal technology is rarely developed with a focus on outliers. Instead, it is often focused on dealing efficiently and effectively with the majority situation. Further, the internal logic of legal technology is often obfuscated. Usually, this is deliberate and for legitimate commercial reasons, to protect the tech product. This means that legal technology can sometimes blindside us.

For example, an alleged software error occurred in the Commonwealth Bank’s smart ATMs. This error meant the bank failed to limit transactions to $10,000 and report transactions of $10,000 or more (53,506 of them). The error had existed since 2012 and the Commonwealth Bank was fined $700 million.

Importantly, the point is not that legal technology holds an inherent risk and should be avoided. Instead, the lesson is that legal technology is fallible and that, like an outlier, predicting the event is futile. Instead, we should aim to understand the risks associated with the use of a particular piece of legal technology and how to manage those risks.

Key Takeaways

The reality set out above is understandably daunting. It can be difficult to explain to your board, partners, shareholders, managers and other stakeholders. And it can be equally difficult to convince them to adopt legal technology despite those risks. However, the benefits are worthwhile despite these difficulties and, when you manage the risk of technology and understand how to approach outlier scenarios, your in-house team becomes closer to realising the dream legal technology promises.


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