Everything wrong with the Legal Industry (and how Technology may be a Solution)

In an earlier article, I argued that AI would not be able to replace lawyers. Since then, I delved deeper into the subject -what does this accelerating technology advancement means for both the legal profession and young lawyers like myself.

First, let's talk about the elephant in the room - what's wrong with the legal industry. (The title is an exaggeration. No article or book could spell a minor fraction of the problems with the legal world.)

Problem 1: Inability to Access Justice

Lawyers are expensive. A mid-level associate in Hong Kong could easily charge HK$5,000 - 7,000 every hour. How could small business and normal people spend HK$5,000 for another person's time (1 hour to be exact)? Honestly, I could not afford to hire myself for my own legal opinion.

While laws influence everything from business transactions to personal rights, only a privileged few have access to quality legal advice poses a significant problem.  

This is not accessible justice.

Problem 2: What Lawyer really does

Netflix portrays lawyers as charismatic courtroom warriors. It seems that they are always solving intelligent legal issues on a daily basis.

The truth is - a significant portion of legal work involves document review and  basic contract drafting. At least that's what I mostly did in the law firm in Hong Kong. Every hour I spent from 9 a.m. to 9 p.m. (or later) reading the date of formation of a company, or writing non-disclosure agreements, shareholders agreements or some standardized listing documents, money went from the client's pocket to my boss's.

While diligently dotting every "i" and crossing every "t" are important, are lawyers really suppose to spend most of the time doing this? Again, they do it at a rate of at least HK$5,000 per hour.

Problem 3: Hourly Billing and Fee Structure  

To compound Problem 2, we have the issue of hourly billing. Ask a ten year old to do something for you, such as paint a wall or write an article, and tell them that they would be paid hourly. Do you expect them to paint as effectively as they could?

It is always dazzling to me why clients would agree to hourly billing, which self-evidently incentivize lawyers to work inefficiently, as their compensation is tied to the amount of time spent rather than the outcome achieved.

Assume that hundreds of hours are really required for document review:

Shall any client (even for big corporations) be required to spend thousands of dollars for junior lawyers to find supporting statement on the prospectus?

And is it really the best way for a law graduate to spend his or her time?

What Technology/AI Could Now Do

AI is now very capable of analyzing huge bodies of legal materials (aka machine learning and big data) and answering questions and solve problems in a language understood by human (aka ChatGPT and Brad).

This critically challenge the way law firms earn money in the last 30 years. It would literally take the right software seconds to analyze thousands of pages of documents which would take hundred of hours, which in turn generate an enormous revenue  (I know law firms which still charge according to the number of pages of documents to be reviewed); or ChatGPT to create a standard contract which might take up a few hours of a junior lawyer time. With the right prompts, generative AI could also prepare a prospectus incalculably faster than a few years before. Now, how much should a law firm charge for writing a prospectus, which still costs millions for some deals.

As such, we could expect AI to replace most billable hours of lawyers in reviewing documents and drafting documents. Only few true legal questions are left to be resolved by bespoke solutions which lawyers are most proud of.

Lawyers who focus on such mundane tasks and refuse to change are, unfortunately, doomed to fail, in my humble opinion.

Key and Goals

As a lawyer of this exciting generation, we should not narrow our mind to get as much billable as we could and blindly climb the corporate ladder. While this would work for someone, the corridor is now so narrow that only a few could possibly succeed.

Businesses are blooming in contract automation and management system. Some courts now go online. There are still lots to do in simplified procedures, user-friendly interfaces, and educational initiatives that empower individuals and small businesses with legal knowledge (just look at the court websites in Hong Kong - should this be so difficult to navigate?).

Ultimately, with the easy access of technology, I hope that, in the not too far away future, we could focus on building a future where the law is more accessible, and hopefully foster a fairer and more just society.

Share with me your views and comment below to talk about one of the followings: -

1) Your bad experience with any legal systems or lawyers;

2) your vision of the legal world; and

3) how that could be achieved.