Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
A&O Shearman has created an artificial intelligence tool to speed up work performed by more senior lawyers, as the “magic circle” firm attempts to generate revenues from the disruption of the legal industry.
The tool, created in collaboration with AI start-up Harvey, is focused on time-intensive, low-billing tasks including in areas such as antitrust and fund formation that require senior associate or partner input and oversight.
The antitrust element of the model, which A&O Shearman will use itself and sell to other firms for a fee, uses a company’s financial information to assess which of the more than 130 jurisdictions a client might need to make a regulatory filing in for a merger. It then identifies what data is missing and drafts the information requests for each party.
Such exercises often take hours of associate time and input from more senior lawyers because of the high stakes involved when considering a transaction. However, law firms are often expected to do such exercises at low cost, with many using good rates as a competitive advantage to win deals. A&O Shearman said the new tool would allow it to boost margins on such work.
The tool is the second product A&O Shearman has brought to the market as it attempts to make money from the long-term impact of AI on the legal sector. In 2023, the firm rolled out ContractMatrix, a contract negotiation tool the firm uses itself and sells to other law firms and clients.
“This technology is targeting a more sophisticated type of legal work that requires the time and attention of senior lawyers,” David Wakeling, global head of AI advisory and the markets innovation group at A&O Shearman, told the Financial Times. He added that the technology would not lead to job losses, as senior lawyers with freed-up time would be redeployed elsewhere.
“We believe that AI will ultimately be transformative for our firm and we can actually create revenues from being part of that change,” Wakeling said.
Most top law firms are using generative AI in some format to simplify processes or make junior tasks more efficient, but have not been able to use it for more complex tasks. This is because AI language models are good at predicting the next likely word in a sentence but, until recently, were not useful in the kind of complex, nuanced analysis that senior lawyers can do.
Winston Weinberg, chief executive and co-founder of Harvey, said the company had used the latest generation of OpenAI’s reasoning models, which are able to answer questions by analysing information and breaking it down step by step.
The AI model was trained by senior lawyers at A&O Shearman to solve problems in the way they do. The engineers then instructed the model to copy these processes and asked the lawyers to assess whether the AI model’s answers were acceptable or not.
“The training is teaching [the AI model] how to think and how to reason” like a partner, Weinberg said.
The rate of AI progress has been fairly slow in the legal industry because of issues such as data privacy and client confidentiality. UK firm Shoosmiths announced this month that it was linking a firm-wide bonus to AI use in an effort to encourage uptake. The firm has said a shared £1mn payout will be given to staff if it hits a target of reaching 1mn Microsoft Copilot prompts.
When A&O Shearman launched ContractMatrix, it set out to have hundreds of companies subscribed to the tool by the end of 2024.
The firm said it currently had more than 40 large organisations signed up, including companies such as investment group Prosus, which owns JustEat, Japanese energy group Jera and Dutch wind turbine company Sif-group.
The firm declined to comment on the price of the new product or revenues made from ContractMatrix.
The new tool, which is still in development and is expected to be available for sale later this year, is focused on four areas: antitrust, cybersecurity, loan review and fund formation.
A&O Shearman was the first law firm to work with Harvey when the company was founded three years ago. The start-up has become the go-to legal tech provider in the industry, working with about 250 law firms globally.