How Should Companies Choose a Law Firm Strong in Generative AI?

Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.

For companies advancing the use of generative AI, "whether the firm is well versed in AI-related legal matters" and "whether it can handle contract review using AI" are major points of focus when choosing an outside law firm.

That said, it is not easy to pin down what makes a firm strong in AI. A grasp of legal knowledge such as copyright and personal information protection is of course a prerequisite, but in many situations that alone cannot fully support the practical judgments that arise in day-to-day corporate legal work. The premise of where AI functions in an attorney's work is touched on in What Is an AI Lawyer? How to Divide Roles Between Attorneys and AI in Corporate Legal Work in the Age of Generative AI.

What does the firm leave to AI in contract review, and what do its attorneys check? Will it review your terms of use after asking how your service actually works? When consulting a firm, these are the ways of working I think you should confirm.

Connecting Legal Knowledge to Judgments on the Ground

In legal matters relating to generative AI, the main themes include copyright, the Act on the Protection of Personal Information (APPI) and AI governance frameworks. Expertise in these areas is, of course, indispensable.

However, what is needed on the ground is not merely to present abstract issues but to make actual business decisions. Companies may be unsure about individual judgments such as whether this tool may be used internally, which data may be entered without problems, how to evaluate the terms of use, and whether it is acceptable to present deliverables created by AI to customers.

When consulting a firm, confirm whether, in addition to explanations of statutes and guidelines, you can ask it to carry out analysis that takes your company's business procedures into account. Which assumptions the firm asks you to confirm when you explain your business is also a useful indicator.

Understanding the Relationship Between Contract Review and AI

The practice of contract review is being transformed significantly by the emergence of generative AI. With AI, there are situations in which summarizing contracts, extracting specific clauses and drafting proposed revisions can be done more quickly.

However, the essence of contract review is not limited to correcting errors in the text. It is a comprehensive judgment that takes into account how much risk your company can accept, the business relationship and bargaining power with the counterparty, and how to build internal consensus.

When consulting a law firm, ask how it understands the limits of AI-based contract review and how it checks the output. Whether the firm can grasp the company's business background and policies and then judge which comments should be conveyed is a major dividing line.

The Ability to Read a Service's Terms of Use Together with the Business

Whether you develop an AI service in-house or introduce one for use in your work, you need to review the terms of use and contractual conditions. The issues to check are wide-ranging, including secondary use of input data, ownership of generated outputs, and disclaimers and limitations on damages.

Here, in addition to knowledge of general cloud services, an understanding of the data processing and risk structures specific to generative AI is required. In particular, when providing an AI service yourself, it is necessary to check not only the text of the terms but also whether there are discrepancies with the actual functional specifications and explanations to customers. Whether a firm can interpret terms of use and privacy policies not in isolation but together with the business model is a yardstick for judgment.

When Reading Descriptions Such as "AI Lawyer"

The term "AI lawyer" is sometimes used in public. However, I think the reality in corporate legal practice is closer to attorneys and in-house legal staff using AI to renew how they work, rather than AI replacing attorneys themselves.

When choosing a law firm as well, it is essential not to evaluate it based only on the advertising phrase "we have introduced AI," but to confirm what kind of legal services it provides on the premise of AI. Check the actual support provided, such as whether it leads to faster reviews, whether knowledge accumulates within your company, and whether the firm can continue to support you as your business grows. If the appeal is merely superficial and the reality is no different from conventional handling, it will be difficult to obtain the expected effects.

Capability in Day-to-Day Corporate Legal Work

In choosing a law firm strong in generative AI, the ultimate deciding factor is its reliability in corporate legal work as a whole. Proficiency in basic corporate legal practice, such as startup legal matters, fundraising and day-to-day contract checks, is the foundation.

On the premise that the firm is proficient in such day-to-day legal work, confirm how it uses AI to improve the quality and speed of its work, how it approaches governance and service terms, and whether it can continue to support you after your business expands.

At LegalAgent, we aim to be an organization that does not limit AI to a tool for work efficiency but builds our work procedures and the value we provide to clients themselves on the premise of AI. We value not only explaining legal issues on paper but also working together with companies to build their legal functions. The fees and scope of service for outsourcing day-to-day contract review on a fixed-fee basis are summarized on Legal Outsourcing.

Frequently asked questions

How can you tell which law firms are strong in generative AI?

The deciding factor is not only knowledge of AI-related law but whether the firm can explain concretely in which steps of which work it uses AI and who checks the output. Whether it can return contract reviews as tracked changes in Word, and whether it can separate comments for internal use from comments for the counterparty, are also useful criteria.

Will quality drop if we engage a law firm that uses AI?

With appropriate operation, AI handles the first-pass review and drafts while attorneys make the judgments and final checks, so the structure increases speed while maintaining quality. Before engaging a firm, it is effective to ask for an explanation of how output is checked.

How should we check the handling of confidential information?

It is advisable to check whether the AI services used are configured so that input information is not used for training, and how data storage locations and access permissions are managed.