The Next Revolution in Legal Services: How AI is Reshaping Law Firm Value

joanfan9
Jun 18
7 min read

Technology has long permeated various aspects of daily life, and the professional field of law is no exception. As early as the 1960s, the concept of "legal technology" began to emerge in the United States, aiming to enhance the efficiency of legal services through technology and software solutions. These tools support law firms in areas such as document automation and management, billing, accounting, and electronic discovery. In recent years, the rapid advancement of AI technology has further expanded the scope of legal tech applications, extending its reach to more front-end legal services.

From document and knowledge management to enhancing employee productivity, and further to data security and privacy protection, AI tools are increasingly capable of playing a supportive and effective role in the work of lawyers.

From Paper to Digital: The Digital Transformation of Document Management

In the realm of document and knowledge management, Formosa Transnational, one of Taiwan’s top three law firms, launched its digital transformation on the occasion of its 60th anniversary. The firm has been actively adopting AI technologies to enhance operational efficiency. Leading attorney Lin stated, “In response to the evolving trends of digital technology and AI, the firm began a phased rollout of Microsoft 365 and the AI-powered tool Copilot starting in 2024.”

hese new tools are primarily applied to daily management and workflow tasks, including individual lawyers’ scheduling, task tracking, and document drafting. The introduction of AI tools has significantly improved the efficiency of document handling. “Everyone can see each other’s edits, which helps reduce confusion and minimize errors. It has definitely boosted efficiency,” said Partner Attorney Wang. He noted that contract revisions, which previously might have required a dozen back-and-forth exchanges, are now much simpler thanks to collaborative editing features. Common issues such as version conflicts and redundant communication are effectively addressed, streamlining the contract revision process and greatly enhancing the overall effectiveness of legal services.

Regarding data management, perceptions and approaches differ between North America and Asia. Steven Wang, founder and CEO of MATTEROOM LLC, a company specializing in software development and SaaS services for law firms, has long observed trends in the European and American markets. He noted that law firms in Asia generally view knowledge as a collection of templates and documents. In contrast, North American firms believe that knowledge should encompass more comprehensive “contextual information,” such as call records, emails with clients, chat content from work groups, timesheets, and other work logs and recommendations. These reconstructible practical experiences are the true assets that can be accumulated and transformed, so knowledge management should not be limited to simple template structures. He suggests that “an effective knowledge management system requires an information architecture mindset, imagining each case as managing a data center.” This approach facilitates future data retrieval and ensures that when team members change, all work output remains within the firm, preventing the loss of knowledge assets.

Precision Management and Productivity Enhancement with AI Assistance

A systematic approach supplemented by AI tools has made document and knowledge management more convenient for law firms. The same method can be applied to managing employee productivity and time management. Attorney Lin stated that after the firm’s full implementation of the Microsoft 365 system, internal management has become more precise and systematic. Using integrated data analytics tools, the firm has moved beyond the previously fragmented, individual-based scheduling model, enabling a more comprehensive understanding of lawyers’ work output and resource utilization.

Steven Wang shared that AI time-tracking tools like MIRA can automatically capture lawyers’ activities across various applications, such as calendars, Outlook, Word document editing, and call logs, generating accurate timesheets. This solves the problem of lawyers being too busy to record their hours promptly. Additionally, AI tools provide real-time, visualized data that allows partners to clearly understand the team’s actual contributions and operational efficiency, enabling precise management decisions. In response, Attorney Lin candidly mentioned, “The firm is currently evaluating the next phase, planning to apply AI to billing systems and financial data analysis for management purposes, aiming to monitor each lawyer’s productivity and utilization rates to optimize resource allocation and operational efficiency.”

Additionally, AI tools can help law firms speed up the efficiency of conflict-of-interest checks. Steven Wang shared that there are “answer engines” designed specifically for law firms to assist with conflict searches when taking on new cases. “In the highly competitive legal markets of Europe and North America, the speed at which conflict checks are completed often determines whether a firm can successfully secure a case. AI tools can help lawyers drastically reduce the time-consuming traditional manual review process, ensuring the firm can respond quickly to client needs.” Digitizing data is the first step toward professionalism and efficiency. Through systematic management and AI assistance, firms can swiftly execute AI-powered conflict-of-interest checks, maintaining their competitive edge.

Balancing Data Security and Flexibility in AI Tool Usage

While AI brings convenience, information security remains a key consideration for law firms when adopting AI tools. “Our firm places great importance on client data security and privacy protection. Lawyers have a duty of confidentiality to their clients, which goes beyond personal data protection laws—it is a fundamental professional ethical standard,” emphasized Attorney Lin. She noted that the firm already has clear guidelines governing the use of AI; even for simple tasks like contracts, document translation, or presentation preparation, raw data that has not been de-identified cannot be uploaded to any AI tool. However, she also acknowledged that in practice, “de-identification” technology still faces challenges and cannot guarantee absolute irreversibility. Attorney Lin further pointed out that the government may eventually introduce regulations or guidelines for institutions with confidentiality obligations when using AI to handle sensitive data. Nonetheless, law firms must maintain a strong sense of self-discipline and implement rigorous internal controls when using AI tools to process clients’ confidential information.

At present, adopting on-premises AI systems may temporarily mitigate the risk of data leaks. (“On-premises” refers to AI solutions deployed on a company’s own servers and infrastructure.) Formosa Transnational has chosen to use “MediaTek DaVinci,” a generative AI platform independently developed by Taiwanese tech company MediaTek. Attorney Lin explained, “The advantage of DaVinci is that data is fully processed on on-premises servers, avoiding upload to third-party cloud platforms and thereby reducing potential data leakage risks. Additionally, most AI tools currently operate primarily in English, resulting in lower accuracy when handling Traditional Chinese. Using a Traditional Chinese language model produces more accurate documents.” Although AI tools can alleviate some of the workload for lawyers, Attorney Lin continuously reminds that users must remain vigilant against “garbage in, garbage out” errors or misinformation when using AI tools. Ultimately, manual verification is still necessary to ensure information quality and accuracy.

For larger-scale data management needs, Steven Wang proposed a “hybrid cloud” architecture as a balanced solution. This collaborative model between cloud and on-premises systems allows law firms to keep highly sensitive or confidential data on local servers while outsourcing non-sensitive data processing to the cloud, thereby balancing data security and collaborative efficiency. Steven acknowledged that although the initial implementation cost is relatively high, in the long run, it not only strengthens information control but also enhances cross-departmental operational flexibility, gradually achieving the dual goals of data governance and business growth. Additionally, he believes that in response to increasingly stringent privacy regulations such as GDPR, this hybrid approach may become the mainstream trend for digital transformation in the legal industry.

Differences in AI Tools Between the European/American and Asian Markets

According to the American Bar Association (ABA) survey results for 2024, the proportion of law firms using AI tools has significantly increased—from just 11% in 2023 to 30% in 2024. Among larger firms with over 100 lawyers, the adoption rate also rose, from 16% to 46%. Steven Wang observed that large North American law firms operate with a highly corporatized approach, using digital systems to enable “cross-selling opportunities.” Based on clients’ historical records and potential needs, these systems automatically suggest internal collaborators, expanding the range of services the firm can offer. This practice has become the norm among leading North American firms. In contrast, many Asian law firms still rely on manual coordination by individuals or departments and lack technological tools to support such internal referrals. Additionally, Asian firms have started to introduce new management roles such as Chief Information Officer (CIO), Chief Technology Officer (CTO), Chief Security Officer (CSO), and even Chief Knowledge Officer (CKO). These specialists oversee technology strategy and knowledge management, making firm operations more efficient and professional.

Looking back at the relatively low acceptance of digitalization and AI tools among Asian law firms, this is primarily due to heightened concerns over data security and privacy. Steven pointed out that the conservative mindset of many senior partners has slowed the pace of digital transformation. In Asian firms, AI tools are mostly used for basic document management and translation, while complex contracts still rely on manual processing. However, as generations shift, younger partners are gradually becoming the key decision-makers and are more willing to adopt new digital tools, creating opportunities for transformation within Asian law firms.

AI as a Lawyer’s Tool and a Turning Point for Law Firm Competitiveness

The application of AI in the legal industry is rapidly expanding. It has become a powerful tool for law firms to boost efficiency and is widely used in daily operations, even evolving into a requirement from clients. Attorney Lin Hsiang-Chun shared that European clients once commissioned a UK law firm to handle large-scale debt contract cleanup, explicitly requiring AI to summarize the contract clauses. What used to take multiple lawyers hundreds of work hours can now be completed by AI in just minutes, with senior lawyers quickly reviewing the draft. This significantly shortens processing time and enhances overall efficiency but also challenges the traditional billing models of lawyers.

Law firms have long relied on the “billable hour” model, but as AI tools significantly reduce the time required, this traditional billing method is becoming outdated. Attorney Lin candidly admitted that many law firms in Europe and North America are actively discussing how to reasonably incorporate AI costs into their fee structures—such as through subscription fees or shifting to a “charge by value” model. “Lawyers are no longer just selling time; they are providing insightful results and decision-making value. This trend is already underway in Western markets and will soon happen in Taiwan as well.”

Amid the AI trend, Steven emphasizes that AI is not just a tool but an essential “weapon” for lawyers. To truly harness AI’s benefits, law firms must first accomplish two key tasks: “preserve” all data properly, and then take “action” by using AI to extract knowledge and insights. By adopting a data-driven approach, firms will gain a critical competitive advantage when facing challenges such as cross-border litigation and stringent regulations. AI will continue to transform how lawyers work and drive the legal services industry toward a new era of digitalization and value-driven practice—ushering in a new age for the law.

Grateful to TBAX for the kind invitation to share，Original Report：https://dissent.tba.org.tw/special/4848/