AI Executive Order and What It Means for the Legal AI Profession.png

Impact of AI Executive Order on the Legal AI Profession

Last week President Trump issued an Executive Order on maintaining US leadership in AI. It is significant for the legal  AI profession for many reasons. The order lays out five steps to ensure continued leadership from a federal perspective, and these are:

  1. To prioritize AI investments in R&D projects over others
  2. To make AI models and data more available across government
  3. To develop governance standards for AI
  4. To invest in and develop the right skill sets for AI
  5. To foster international co-operation but also protect the US “AI program” from foreign interference and potential threats

A commentary in Corporate Counsel last week sought to outline what this might mean for the legal AI profession.  The American AI Initiative (the coordinated Federal Government Strategy for AI) is primarily focused around Federal as that is what is in scope for the Executive Order – it isn’t per se enforceable to the private sector, but of course, there will be significant osmosis and bleed from one to the other. This differs from China, the other pretender country to the AI throne which is dominated by state-supported AI research.

The strength of the US technology companies is an asset for the country and these companies are a key factor in ensuring that the US stays in the vanguard of AI. The companies focused on advances in Machine Learning and Deep Neural Networks are at the forefront and are seeing rapid growth.

How will this affect the legal services sector then? Well, as Corporate Counsel points out, advances in AI governance standards and potential regulatory oversight will give law firms the confidence to invest. They should also lead to more collaboration between the private and public sectors enabling better outcomes. As Brian Kuhn from IBM has pointed out, there is more investment in legal AI technology in-house than in the law firms, despite a lot of noise from the latter declaring that they are investing in it. He reasons that more and more legal services are being in-sourced and in-house counsels and legal ops professionals have a greater appetite to implement a machine learning platform to reduce costs and accelerate processes. The Altman Weil Flash Survey, “2018 Law Firms in Transition” confirmed a decade long trend that shows a reducing demand for outsourced legal services and “commoditization, new technology tools, and non-traditional’ competitors are all permanent changes to a post-recession market.” Clearly, in-house lawyers and legal ops staff are embracing new legal AI technology tools in a way that the law firms are not, and they are scaling quickly to see significant gains and avoid expensive outsourced legal services.

That supports the finding of the recent survey by Ari Kaplan Advisors who reported that over a third of in-house counsels surveyed were using contract analytics (heavy on machine learning) right now and half of them expected to increase spending in 2019. It is being implemented mostly in risk, regulatory compliance and sourcing/contract management functions, but crucially it is the law department in these corporates that are driving the selection, adoption and user acceptance of contract discovery technology.

It may have gone unheralded on the bigger stage, but many Fortune 100 behemoths are already using advanced contract analytics to cut their costs on outside legal services and rapidly speed up their ability to respond to external events such as regulatory changes and mergers and acquisitions. Governments need only to look to the largest banks, telecom companies, defense contractors and energy companies to see how advanced some of the mainstream use of legal AI has become.

The newest US Executive Order #13859 (at time of writing) may well prove to be one of the most important that POTUS has signed. As the order proclaims, “The United States must foster public trust and confidence in AI technologies and protect civil liberties, privacy, and American values in their application.” And so, if indeed artificial intelligence is to change how we live and work over the next century, leadership in the technology will be paramount for the US. It may also prove to be the most potent “arms race” of all time.

To learn more about how to leverage legal AI for contract analysis and contract review, visit our machine learning platform page.