The UK legal system is on the brink of disruption as generative artificial intelligence (AI) companies are launching products which have the potential to change the industry’s business model.

According to a report by LawtechUK, increased use of digital technology by legal service providers could result in annual productivity gains worth up to $2.1bn. The report also predicts that annual investment in lawtech start-ups could reach $2.7bn by 2026.

In recognition of the UK’s growing lawtech ecosystem, the government announced £3m funding, in March 2023, for a UK lawtech programme run by start-up incubator CodeBase and legal tech community Legal Geek.

UK common law requires an understanding a massive database of previous rulings. AI is better placed to do this than the human brain. Genie AI is amongst a growing number of start-ups within the UK’s AI ecosystem focused on the legal industry – competitors include Robin AI and Spellbook.

Genie AI CEO, Rafie Faruq, believes the much-hated billable hour model for law has got to change. “It incentivises lawyers to sell their bodies through long hours, not their time, and clients feel like they’re not receiving value for money,” he says.

Though some start-ups have explored upending the lucrative billable hours model, most have opted for developing AI legal assistants. AI legal assistants are able to replace lawyers for routine tasks by reviewing documents and returning revised versions with comments, suggestions and highlights.

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By GlobalData

In addition to generating text, an AI legal assistant will eventually be able to accomplish entire chains of tasks such as highlighting risky clauses, extracting them into a risk report and downloading that to a separate document, and amending the risky clauses in track changes to be more favourable to a client, all in one request.

Faruq says the next twelve months will see more goal-oriented AIs with complex reasoning that can complete chains of actions autonomously. “They will be able to read knowledge bases to augment their reasoning and in 24 months we can expect them to become proactive, not just reactive. That is, they will have a deeply contextual understanding of their client and be able to negotiate with counterparties without them realising it’s an AI behind the comments and red-lines,” adds Faruq.

However, the inability to see and explain the decision-making processes of AI systems is eroding public confidence in this technology, according to GlobalData thematic research. Deploying explainable AI will go some way to helping restore that confidence, according to the analyst.

Faruq believes that AI ethics has never been more important. “On the point of professional negligence and legal advice, the current legal system still suffices – it is fine for any company to give legal advice for “non-reserved” activities in the UK according to the Solicitors Regulation Authority, and whether that’s delivered through a human or AI that reflects the views of millions of humans might not change the legality – but it will be interesting to see which one clients will find more accurate in the long run.”