1. Unlocking the Potential of Artificial Intelligence in English Law
Professor Mari Sako
Saïd Business School, University of Oxford
Glenlegal Conference, 4 March

2. Research Programme
Funded by the Industrial Strategy Challenge Fund's (ISCF) Next Generation Services Research Programme and UK Research and Innovation (UKRI)
Researchers from Law, Economics, Computer Science, Education, and the Business School
Five work packages
WP1: New business models in legal services (we focus on corporate legal services (B2B))
WP2: Mapping digital justice
WP3: Frontiers of AI in legal reasoning
WP4: Coordinating skill investment and technology transfer
WP5: Legal and technology education
Further details:
(c) Mari Sako, University of Oxford 2019

3. AI in law: what is at stake?
International competitiveness of UK jurisdiction
Growth in lawyers in England & Wales
Source: Law Society and approved regulators
(c) Mari Sako, University of Oxford 2019

4. Numerous AI applications in law…
Source: The Law Society (2019) Legaltech Adoption Research
(c) Mari Sako, University of Oxford 2019

5. Question 1: Benefits of AI
What are the top three benefits sought from adopting AI in your firm?
Enhance the quality of service delivered to your clients
Retain clients against competition from other providers
Increase internal efficiency by optimizing business processes
Provide new services through data analysis and insight
Provide alternative career paths for associates
Improve recruitment and retention of employees
Other (SPECIFY)
Don’t know
(c) Mari Sako, University of Oxford 2019

6. Question 2: Barriers to adopting AI
What are the top three barriers to adopting AI within your organization?
Lack of client demand
Client concern about giving access to, or storage of, data
Lack of buy-in from key decision-makers inside the firm
Nervousness inside the firm about negative impact on skills and roles
Insufficient employee skills to use AI effectively
Difficult to decide which AI platform to commit to
High costs of initial proof of concepts, licensing and platform fees
Costs of training/customising AI products for application by the firm
Absence of financial metrics to justify investment in AI
AI technologies for legal applications are not yet robust
Other (SPECIFY)
Don’t know
(c) Mari Sako, University of Oxford 2019

7. How is AI affecting law firms?
We focus initially on automation using supervised machine learning (ML)
Functions of AI
Inference
Prediction
Analytics
Learning
Planning
Organizational effects of AI
Minimum viable size due to data
Value migration from lawyers to non-lawyers
Greater reliance on external resources (tech, finance)
Our research questions
How is AI technology impacting professional knowledge and legal careers?
How does AI adoption affect law firms’ governance choices?
(c) Mari Sako, University of Oxford 2019

8. Two key questions in our research
How is AI technology impacting professional knowledge and legal careers?
How does AI adoption affect law firms’ governance choices as they shift their business models?
(c) Mari Sako, University of Oxford 2019

9. Question 3: Talent
How many non-fee earning professionals does your firm employ relative to fee-earning lawyers?
Fee-earning lawyers > non-fee earning professionals
Fee-earning lawyers = non-fee earning professionals
Fee-earning lawyers < non-fee earning professionals
Don’t know
NOTE: Professionals who are not fee earning include business development managers, project managers, knowledge management professionals, data scientists and technology experts.
What proportion of your client-facing fee earning professionals are non-lawyers?
None
Less than 1%
1% - 5%
6% - 20%
21% - 50%
More than 50%
(c) Mari Sako, University of Oxford 2019

10. Two key questions in our research
How is AI technology impacting professional knowledge and legal careers?
How does AI adoption affect law firms’ governance choices as they shift their business models?
Business model: the way a firm creates and captures value
Governance
Intra-firm governance (partnerships and alternatives)
Inter-firm contractual governance
(c) Mari Sako, University of Oxford 2019

11. Question 4: Data and technology
From where do AI models that your firm train come from? Tick all that apply.
Own model
Vendor model
Client model
Other
On which data does your firm train models? Tick all that apply.
Own data
Client data
Data from providers (e.g. LexisNexis, PLC, Westlaw)
Public data (e.g. SEC filings, court decisions)
How is AI investment funded at your firm? Tick all that apply.
Retained earnings
Client disbursement
Loans
Equity stake in technology and data providers (e.g. legal tech startups)
(c) Mari Sako, University of Oxford 2019

12. Question 5: Build or Buy?
What is your firm’s preferred strategy for legal technology, including AI? Tick all that apply.
Create an in-house legal technology team in the firm
Create a separate legal technology subsidiary
Take an equity stake in tech firms, including via incubator
Buy from vendor
Collaborate with a vendor
Collaborate with a client
Collaborate with other party (e.g. academic institution)
Not yet decided
Don’t know
(c) Mari Sako, University of Oxford 2019

13. Our (interim) answers
How is AI technology impacting professional knowledge and legal careers?
Value migration from humans to computers  Sell products as well as services
Value migration from lawyers to non-lawyers  variety of career progression routes; hierarchical control, not peer control, inside law firms
How does AI adoption affect law firms’ governance choices as they shift their business models ?
External funders  preference for ownership form with access to external investors
Technology and data providers  contractual governance is becoming more important
(c) Mari Sako, University of Oxford 2019

14. Value migration in the legal ecosystem
Global market size
Global legal: $850 billion (2017)
ALSP: $10.7 billion*
ALSPs
Corporate legal departments
Law firms
Investors
Data vendors
Professional associations
Alternative legal service providers (ALSPs) include:
LPO providers
Big Four
Managed legal service providers
Value migration drivers
Insourcing by general counsel
Demand for greater efficiency and transparency
Shift from input-based to output-based pricing
* Alternative Legal Service Providers 2019
We will study value migration within organizations (from lawyers to non-lawyers), and between organizations.
(c) Mari Sako, University of Oxford 2019

15. Business model and governance options for law firms
AI impact
Law firms
Pure play
Mixed models
Legal tech division
Legal tech subsidiary
Equity stake in vendor
Partner with vendor. client. etc.
New entrants
Big Four
Process focus
Managed legal service
Contract lawyers
Products focus
Which (mix of) models will emerge as dominant in the market?
(c) Mari Sako, University of Oxford 2019

16. Thank you for your attention! Mari.sako@sbs.ox.ac.uk