Navigating the Legal Landscape of AI: Opportunities and Challenges in Commercial Law

Faith Evans, 17 February 2025.

Artificial Intelligence

Artificial intelligence (AI) is a fast-growing industry that allows computers to learn and solve problems at high-speed. Although an era-defining technological revolution, many critics fear that AI could cause more harm than good to society. Fears have grown through the rapid development of AI, some suggesting that AI research should be frozen until we can understand and mitigate any of its potential threats. Sceptics have even predicted that AI could lead to the extinction of humanity. With polarising views, proponents of AI have ridiculed this prediction and have encouraged the utilisation of AI to benefit society.

Artificial Intelligence in Commercial Law

No longer a fantastical conception, law firms worldwide and in the UK have recognised the upside of adopting AI into daily practices. However, with the UK legal sector's embracement of AI technology, many have asserted that it is transforming legal practice in ways that go beyond simply improving efficiency. With the profession embedded in human intellect and practice, this is now evolving through technological innovation with many firms allocating a budget dedicated to generative AI tools.

Benefits of Artificial Intelligence in Commercial Law

The introduction of AI into law firms has led to the optimisation of typically rote and time-consuming fee-earning tasks. A prime example is AI-powered legal research. Conventionally, legal research is a time-consuming process that requires lawyers to examine a widespread of information on statutes, precedents and case law. The implementation of generative AI tools can make legal research more efficient by examining large amounts of data in a matter of minutes and then providing summaries containing the crucial information lawyers seek.

AI has reduced lawyers’ workloads through enhanced client engagement through AI chat. Allowing lawyers to concentrate on complex legal frameworks. AI chat boxes can be accessed 24/7 and provide adequate answers for basic legal enquiries.

Due diligence and risk assessments are an essential task in any law profession. However, due diligence and risk assessments are a time-consuming process and can be labour-demanding. Law firms have now implemented AI in this necessary procedure to process vast amounts of documents and contracts, identifying potential compliance, conflict and risks with accuracy. Improving AI in this sector of law can allow firms to take on more clients without compromising any quality of work.

Risks of Artificial Intelligence in Commercial Law

The use of AI in law firms provides efficiency and allows law firms to capitalise on the AI revolution. However, a report by Goldman Sachs suggested that the equivalent of 300 million full-time jobs across the globe will be replaced by AI, including jobs in the legal profession, creating a vast job displacement.

Confidentiality, commercial sensitivity and intellectual property rights also pose risk to law firms. With the inherent confidential nature of the legal sector, AI should be assessed whether it is the best alternative regarding client-sensitive documents. Often AI applications can share inputs with third parties. To avoid this, legal professionals must check the terms and conditions to avoid any breach of confidentiality.

Bias and discrimination can also impose a major risk that law firms must know about, as AI is trained to contain biases. This then has the potential to lead to discriminatory outputs through manipulation of the technology, which can create biased outcomes, and flawed responses which can influence critical aspects of the litigation processes if lawyers solely rely on artificial intelligence.

Conclusion

Artificial intelligence is a technological revolution in the modern world. AI has the potential to aid the legal sector in accessibility, efficiency, and finances. However, law firms must proceed along the road to AI with caution and understand the potential risks through the implementation of AI.

References:

BBC (2024), ‘What is AI, how does it work and what can it be used for?’, BBC News

Bloomberg Law (2024), ‘What are the Risks of AI in Law Firms’, How AI is changing the law firm business model

The Law Society (2024), ‘How AI is reshaping the future of legal practice’, The Law Society