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Digital disruption in law and related legal issues

The legal industry and lawyers are very traditional in their ways of working. However, changes are afoot and with the arrival of the "fourth industrial revolution", it is time to ask whether the legal profession is ready for the technological innovation that is upon us?

IT driven change has been transforming the delivery of legal services for many years, from the introduction of emails, electronic document management systems and e-billing to skype and videoconferencing capabilities. A recent study by Deloitte suggested that technology has already contributed to a reduction of about 31,000 jobs in the legal sector, in particular to roles such as legal secretaries. A further 39 per cent of jobs are at a "high risk" of becoming obsolete by machines in the next two decades. Computer science's rapid evolution in Artificial Intelligence (AI) enabled products and services have made their scope broader and their commercial application more widespread.

The current focus of legal transformation is the use of AI to automate document processes which have been slow and inefficient and firms are racing to be amongst the first to offer the latest efficient AI driven technology solutions either directly to clients or to pass on the benefit through enhanced service delivery and lower fees. This smart technology is credited with improving the quality and consistency of output by removing discrepancy between tasks and the risk of human error.

Following a change in the legal climate over the past decade, there is less of a willingness to pay for junior, low-level work and clients are looking for greater value for money. With the availability of data extraction and analytics tools, data processing and document heavy tasks can be simplified and automated in order to free up lawyers for tasks which require more judgement and cognition at a higher level.

The potential for AI is profound however it is only now gathering some momentum in the legal work place with services like Ross Intelligence using the notable IBM Watson platform to undertake comprehensive research tasks which would traditionally take up a large part of a trainee's work day. Intelligent systems are beginning to be able to outperform junior lawyers and paralegals in reviewing large sets of documents and with a higher degree of accuracy, however the cognitive function and machine learning functions still require further development and testing before they are ready for mainstream deployment.

The technology is evolving faster than policy and regulation and new issues arise which necessitate the introduction of new laws. Professor Richard Susskind, IT Adviser to the Lord Chief Justice, believes that the legal profession has 5 years to reinvent itself from being traditional legal advisers to being "legal technologists".

The trends and upcoming developments in this area leave much to consider and can be grouped into three main areas: big data and the cloud, artificial intelligence, regulation and data law.

Big Data and the Cloud

The fourth industrial revolution could not have been mounted without the capability to interrogate large amounts of digital data which has been facilitated by the pervasiveness of the cloud and the exponential increase in computing power. A computer's processes no longer take place on large servers but instead are migrated to data centres through virtualisation. This in turn has permitted AI and Machine learning capabilities to reach new levels.

Growth in the demand and use of mobile, internet and data services has fuelled the amount of digital data volumes which are growing by ten times every 5 years.

Big data is now able to be processed using text analytics and machine learning which works by running predictive coding allowing lawyers to sample data and identify the relevant documents. This technology can be used to sort, cut, interrogate and predict data for legal analysis and decision making. The implications of this are that document review can be performed in a matter of seconds providing the output in a structured user friendly format. Much better than a simple key word search, which typically produces a large quantity of unstructured data.

It is the ever growing presence of the cloud and the increase in data which fuels the evolution of AI.

Artificial Intelligence

With the advent of big data AI has been able to evolve at a much more rapid pace and machine learning and machine control technologies, which were once the subject of science fiction, have become a reality with AI personal assistants, autonomous vehicles and smart implantable or wearable devices being some examples of what's currently available.

So far the most ubiquitous use of AI technology by law firms are e-discovery platforms which have automated a long and costly process making it more efficient. The analysis of large data sets with predictive algorithms has heralded the age of the simplification of legal advice by the standardisation of contracts to reflect evolving market trends.

Block chain and smart contracts continue to be a hot topic. It is believed that these innovations will enable new operating models and that, in some cases, will remove the need for lawyers.

Regulation and Data Law

The increasing expansion of AI applications will necessitate the need for changes in Intellectual Property law, contract, regulation and tort.

Data input and data output as well as operating data, data mining and extraction all require a focus on the licensing practices and the biggest implication will be on data security and privacy. What used to be a few paragraphs in a contract now takes up pages as information security will become ever more important with a focus on updating policies and an increase in requirements around the use of AI, data, its use and retention, encryption and archiving.

A global issue with the use of AI services and other smart devices is vulnerability to hacking and interception of unencrypted data. The increase in connected devices gives hackers and cyber criminals more entry points and could be used to spy or eavesdrop on individuals in order to obtain personal information such as bank details.

Changes are already being made in the processing of data and the way data is collected, particularly personal data. Individuals may unwittingly fall victim to an unwanted public profile based on the data collected. For example, an insurance company might gather information about a person's driving habits through a connected car when calculating an insurance rate.

How to address the legal issues through regulation will be a key trend in 2017. IT vendors will have more customer policy requirements to comply with alongside regulatory requirements. A significant new regulatory requirement is the obligation of 'privacy by design'. This calls for the inclusion of data protection compliance from the onset of the designing of systems, rather than as an afterthought. This obligation is contained within the new data privacy law, the EU General Data Protection Regulation (GDPR), which enters into effect on 25 May 2018.

The big question on both the supply and customer side is where the liability lies in the event that the technology, executing its function according to its coding, causes harm or damage or when the AI simply fails to work properly, for example errors in a smart contract system. This issue will no doubt be the subject of heavy negotiation in contractual arrangements.

Current intellectual property law will also require reform to keep pace with the technological innovation taking place. Machine learning systems are built to continue learning with each new bit of data or new task they undertake. This gives rise to questions as to who will be the owner of the improvements and the changes in the systems. UK copyright law has evolved to cover the ownership of computer generated works; s9(3) of the UK Copyright Designs and Patents Act 1988 (CDPA) states that:

"In the case of a literary, dramatic, musical or artistic work which is computer-generated, the author shall be taken to be the person by whom the arrangements necessary for the creation of the work are undertaken"

However, arguably there is still uncertainty over the ownership of AI generated works and in the absence of meaningful judicial guidance in this area, users of AI systems should include express contractual provisions dealing with the ownership, assignment and licensing of such works.

Where AI systems generate new inventions, can these be subject to patent protection? Unfortunately, the UK Patents Act 1977 does not allow inventions from a computer system to be capable of patent protection. Case law dictates that the creator of the invention must be a 'person', which again necessitates addressing the ownership, assignment and licensing of AI generated inventions and patent rights in contractual arrangements.

The rapid change to the profession and the role of lawyers themselves will necessitate equally rapid evolution in the law. Lord Neuberger believes that as well as having employment implications resulting from these changes in the profession, there are also ethical implications of AI which requires not only the engagement of firms but a change in the focus of the legal education system so that the innovation in the sector is a positive opportunity for legal technologists rather than a doomsday threat for the traditional lawyer.