GPT in general and the legal industry in particular: Report from an interesting roundtable.

Yesterday at noon (local time), a roundtable on "Beyond ChatGPT: What Generative AI Actually Means for Law Firms, In-House, Legal Tech and More" was held in the US. Legaltech News Editor-in-Chief Stephanie Wilkins welcomed an illustrious crowd of guests.

Without a doubt, the surprise hit came from Pablo Arredondo, Co-Founder and CIO of Casetext. Not only did he announce the simultaneous live launch of GPT-4, but also of "CoCounsel", an application from Casetext that already relies on OpenAI's brand new language model. He raved about the new GPT version, predicting that it would be simply impossible for law firms not to use the new technology because it was so much better than humans (!) To be fair, he added that he had analyzed his own litigation files with CoCounsel, which alerted him to highly personal errors and gaps in reasoning.

Casey Flaherty, Co-Founder and Chief Strategy Officer of LexFusion, initially tried to put things into perspective: GPT is ultimately just one of many available language models that has the hype on its side. However, he also emphasized that the threshold to market maturity had been overcome; if ChatGPT was the trailer, the movies would now follow. His advice: "This is happening now; it will be done by you or to you." 

It was also exciting to hear that Flaherty, unlike the other panelists, very much expects technology to partially replace lawyers.

Darth Vaughn, Litigation Counsel and Legal Innovation and Technology Operations Manager at Ford Motor Company, took a different view: he, too, is excited about new technology, but stressed that at all times domain knowledge must remain available in the organization to control the new tools.

A large indirect impact on advocacy was seen by Jae Um, Founder and Executive Director at Six Parsecs. She, too, sees LargeLanguageModels as indispensable in law firm practice. However, she emphasizes that the use of ultra-fast high technology means the end of traditional billing based on time and material. The law firms are urgently required to try out alternative remuneration models, whereby it will probably come down to trial&error.

In summary, a common ground can be found in the fact that from the point of view of US commercial law firms and providers, the use of state-of-the-art technology is indispensable. Which language models will ultimately prevail cannot yet be judged. I have not heard of any reservations about training models of foreign providers with own law firm content (=client data). And whether this constraint is transferable 1:1 to the continental European market with its completely different legal system could not be addressed in this intra-American format.

USA: COVID-19 does not increase cloud usage among lawyers

An interesting article on law.com recently addressed the question of whether the pandemic has led to increased use of cloud technology among lawers. A survey by the American Bar Association of several hundred members from law firms of all sizes paints rather the opposite picture. A fairly stable 40% of American lawyers continued to reject cloud technology.

The reasons given are not new. On the one hand, there is the cost risk involved in a transition from on-premise to cloud during the changeover phase.  More important, however, are security concerns. These can be roughly divided into two categories. One set of concerns is factually based. The fear that cloud providers could install spy software under pressure from public authorities and thus gain access to confidential information is usually cited. These reservations probably cannot be definitively dispelled for the USA.

It is more difficult to deal with dogma, such as the following. "Data storage in the cloud carries a higher security risk than on premise." Once you internalize this, it will be hard to convince you otherwise. So ultimately, it will be the clients who motivate their advocates to use contemporary technology. Or everything will remain as it is.

Parallels to current discussions are coincidental, but not necessarily wrong.

Germany: BGH backs debt collection companies against the legal profession

A decision by the German Federal Court of Justice is causing considerable unease in the German legal profession. What was at issue?

A debt collection company had low-threshold claims from consumers assigned to it in order to bundle them into a class action and then bring them before the court in its own name. A professional association had filed a complaint against this, claiming that this procedure exceeded the scope of the so-called "collection privilege" of the German Legal Services Act. The Court of Appeal also agreed with this view and denied the debt collection agency the right to sue. The Federal Court of Justice, however, does not consider this view to be supportable.

As reported by lto.de, the court refers almost exclusively to the question of whether the consumers who have assigned their claims have a special interest in protection that speaks against the collection agency asserting their claims. In short: this is not the case, since the collection agency must also be represented by a lawyer in court. The BGH also considers the business model, according to which the collection agency assumes the sole litigation risk in order to retain 35% of the awarded claim amount in the event of success, to be appropriate. On the other hand, there is no question of a protective interest on the part of the legal profession, nor are they unduly disadvantaged by the fact that the lawyers themselves are barred from success fees to this extent.

German lawyers must accept, according to the article in lto.de, that they will face even more structural competition from debt collection companies.

 This case law is not directly applicable to the Austrian market, as the "debt collection privilege" of the German Legal Services Act has no direct equivalent in the Austrian legal system. 

Show factor

In his column "Lost in innovation," the highly respected Markus Hartung expresses doubts about the innovative power of both law firms and their clients, the legal departments. There is no other way to explain the fact that both staff numbers and per capita turnover at law firms continue to rise, but so does the number of employees in legal departments, Hartung says. Innovation would require a permanent, joint process analysis between law firms and their clients, and there is no sign of this.

So far, so undisputed. But is this relationship really only a professional one? I claim, no. The value of consulting services (both of lawyers and of tax and business consultants) is, after all, also determined to a considerable extent on an emotional level. The particularly aggressive lawyer's letter to the opposing party, theatrical meetings, and even heavy documents - they all serve to convince clients of the extraordinary qualifications of "their" lawyer and of his overwhelming commitment to the cause.

The question remains why clients play along here. The answer is probably differentiated: some because they want to - the behavior described above gives them self-justification that they have made the right choice. And the others? - they are probably to be found in the rapidly growing group of clients willing to change, as described in the current Future Ready study by WoltersKluwer. 

Everything will stay the same until it will change.