Why Legal Outsourcing 2.0 uses Artificial Intelligence and Natural Language Processing Technology

Legal Outsourcing 2.0 uses artificial intelligence-enabled solutions in everything we do. We help create artificial intelligence solutions and create solutions employing artificial intelligence daily. There are some areas of law where artificial intelligence enabled solutions are common place, such as document review. There are other areas where it is not, such as contract extraction. But the fundamental question is, why does it make sense to use artificial intelligence-enabled solutions?

Artificial intelligence-enabled solutions are better, faster and less expensive than traditional approaches. When you think through the nature of the work they are replacing, the first two factors are obvious.

Contract extraction and document review is tedious and the person who performs those services at times can feel like a zombie. When people feel like zombies they are more likely to make mistakes. A computer solution does not have feelings, so it never feels like a zombie. The computer does not need a lunch break. It continues on and on and on, like the Energizer Bunny. The lawyer using the tool spends more of their time doing tasks that they were trained for and is happier doing so. The result is fewer errors, faster speed and happier reviewers. Happier reviewers make less errors. They also tend to stay around longer so you have a higher quality workforce with retained knowledge and training.

The third factor for using an artificial intelligence- enabled solution is cost. Legal Outsourcing 2.0 passes on the decreased labor costs associated with the artificial intelligence solutions we employ to our customers by way of lower pricing. Legal Outsourcing 2.0 can extract data from contracts using our artificial intelligence factory approach at about 2-3 times the rate than others do using a traditional approach. After we account for the cost of the artificial intelligence piece our pricing is about 40% to 50% less expensive than those using the traditional approach.

So, why does Legal Outsourcing 2.0 use Artificial Intelligence and Natural Language Processing Technology? For three reasons. Our customers are happy because they get better, faster and less expensive services. Our employees are happy because their work is less boring and they spend more time doing what they are trained to do. Management is happy because the first two reasons provide the means to successfully grow the business.

Be (a)ware of the Model

No, I am not referring to the attractive creatures that show up at Fashion Week in New York City in February and September each year. I am referring to business models. Legal business models! That is what we find interesting at Legal Outsourcing 2.0.

The dominant legal business model has been built around the hourly bill. The more hours you bill at the highest labor rate you can charge, the more successful the lawyer and law firm. The incentives created by that model are to increase the hours billed, not decrease them by inducing efficiencies. The hourly business model adds to the existing legal bias against change and creates an almost insurmountable challenge at large law firms to do what is obvious and intuitive in any other business setting.

The legal outsourcing business model has traditionally tracked the hourly bill of law firms, albeit at lower labor rates. If the billable rate is $30 per hour and not $500 per hour, more hours is still better than less hours. As a consequence, the traditional legal outsourcing firms using a billable hour model have been almost as insanely slow to adopt technology as their higher billing brethren. The advantage to the client is what we refer to as labor arbitrage. The cost is lower, but the process is still inefficient.

Increasingly, particularly after the recent financial meltdown, there has been much discussion and some action towards law firms billing on a per piece basis. Sometimes the change is merely cosmetic, less often it is substantive. If the change is cosmetic it is merely pricing the same task by translating the billable hours it usually takes to perform the task to a per piece basis. The disincentive to lessen the number of hours it takes to perform a task is eliminated, but that does not necessarily mean that the task is being performed more efficiently with the increased efficiency being passed on to its price.

Ultimately, after you arrive at work being done using an appropriate pricing model, to determine if a task is being done efficiently, you still need to drill down and understand how the task is being performed and what, if any, use is being made of emerging technology solutions. For example, in the contract review and extraction area, if the technology being used is a manual review of the contract and typing fields into an excel spreadsheet, even if the work is being charged on a per unit basis, you will be overcharged. Not because the service provider is doing anything different for you than he has done for his other customers for the last 15 years, but precisely because he is not.