Disruption – Innovation – Revolution
LegalTech is often referred to as “the largest and most important legal technology event of the year” and it certainly is an enormous event, with over 10,000 delegates, a wide variety of seminars on legal tech developments and an exhibitor floor the size of a soccer field. For us, it is a good way to keep track of the trends and legal tech developments that will play an increasing role in the practice of law moving forward.
This year’s key words summarizing the event were Disruption – Innovation – Revolution. These three words were used to describe the state of the industry by Daniella Isaacson and Nicholas Bruch, ALM Intelligence, in the opening session and then repeated throughout the week. The number one buzz word was otherwise, not surprisingly, Artificial Intelligence (AI).
In his visionary key note, Andrew McAfee, Director of the MIT Initiative on the Digital Economy, explained how the pace and scope of the tech progress the past year has surprised even the most initiated experts. For example, technology has now found ways to conquer barriers like Polanyi's Paradox and has proved in study after study to be better than human experts in making decisions and finding the right solutions.
Polanyi's Paradox refers to the problem of tacit knowledge; that we know more than we can tell. Up until very recently, it has been a barrier to AI solutions to encode human knowledge when the knowledge cannot be articulated. For example, the world's top players of the 4,000-year-old strategy game 'Go' has not been able to explain their moves by strategic choices but merely by relying on instinct based on long experience. Attempts to program a computer good enough to beat a human Go player has therefore failed for a long time. Until March 2016 when Google's AlphaGo proved it possible to break the barriers of Polanyi's Paradox and, in a paradigm shift, won four out of five Go games against the world's best human player.
Even though AI clearly is the number one buzz word in legal at the moment, there is still a great uncertainty about what it actually is and what it can do. A general misconception seems to be that Artificial Intelligence is a single "thing". It is not. It can be clause identification, anomaly detection, general due diligence review tools, cognitive systems, machine learning etc.
One of the AI-seminars at LegalTech focused on the use of machine-learning technology in due diligence reviews, where the tools help lawyers review large sets of material, looking for risks and pitfalls. The reason to use tools like Luminance, Kira, eBrevia and others is mainly to cut costs and increase efficiency, but inter alia Svein Gerhard Simonnaes, BA-HR, and Steven ter Horst, Hothoff Buruma, pointed out other positive effects too. For example, it can be seen as more neutral to the transaction parties when the review is based on machine analysis rather than by one of the parties' attorney. They both also stressed that, even though a tool is used to access the material in a different way, the end products to the clients has not really changed.
However, they have experienced questions regarding validation of the algorithms and how to ensure that the outcome is correct, when it is produced "within a black box". As a wise person in the audience pointed out, what is more of a black box than the human brain? How can you control the exact decisioning and reasoning behind a human decision? If two lawyers look at the exact same problem, they will most likely reach different results without being able to explain the exact facts that accumulated to the decision. I.e. the alternative to the use of an AI tool is not perfection. If anything, AI makes reasoning more transparent. As quoted by Mark Twain, "Facts are stubborn, but statistics are more pliable."
In another very interesting and inspiring panel discussion with inter alia Andrew Arruda, ROSS Intelligence, Zev Eigen, Littler Mendelson, and Brian Kuhn, Watson IBM Global Business Services, it was stressed that AI is in a very early state and that it is important to learn how it works and how it can be best used in its context. They made a comparison to the technical shift from horses to cars - cars have several benefits compared to horses but cannot be used in front of a plough. The challenge is to form the right partnership between man and machine, to combine the skills that humans excel at with the abilities of a cognitive system. When finding the right combination, several common truths and beliefs will be challenged. It was proposed that we for example should use AI to find and retain talent, as studies show that HR solutions based on algorithms are better than humans at hiring the best employees. When an algorithm picked the candidate, they both stayed longer and did a better job. Zev Eigen meant that resumes are not at all predictive ("Going to Harvard is predictive of nothing."). Instead of relying on academic degrees, he uses data and data analysis to find the right talent. Read more here: “Artificial Intelligence at LegalTech 2017”
In study after study covering several areas of expertise, algorithms have been just as good or significantly better than humans. Humans have only managed to outperform an AI solution in 6 % of the cases, whereas algorithms have outperformed humans in 46 % of the cases! Still, we humans have a tendency to trust one's gut over a machine. In most corporations we rely on, what Andrew McAfee calls the HiPPOs - the “Highest Paid Person's Opinion” - instead of taking evidence-driven decisions.
In the study about employee hiring, the phenomenon was dubbed as the "algorithm aversion". Despite the fact that hiring algorithms reduce hiring and turnover costs, find employees who fit better within companies and set aside the bias risk, most hirings are still done by humans. Some hiring HiPPO managers gravitate to people like themselves; others are just overconfident in their abilities to predict success. Read more about the importance of using evidence-driven decisions instead of relying on the HiPPOs here: “Polanyi’s Paradox and Hippos at LegalTech 2017”
An AI system will handle several tasks much better than a human, such as going through loads of documents in just a second. If you as a lawyer can partner with such systems and focus on what you as a human can excel at, you seems to have found the right strategy for becoming the lawyer of the future. The questions is, if you are prepared to this cultural shift in your organisation to support disruptive thinking and innovation or if you will continue to base your strategic decisions on HiPPOs?
Läs vidare på VQ:s Legal Innovation Blog.
Ann Björk och Helena Hallgarn, VQ
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