Posted by Matthew Pascall, senior underwriting manager at Litigation Futures Associate Temple Legal Protection 
If some headlines in the legal and insurance press are to be believed, it may seem that disclosure will be digitised, insurers are over-rated, and the role of actuaries could be archived.
Whilst this may be more likely in aspects of consumer insurance cover, what is the reality for after-the-event (ATE) insurance and funding?
In this introduction to a series of three further articles looking at role of technology in litigation insurance and funding, I take a brief look at the role of AI and then more specifically at potential implications and applications for law firms.
The three articles will give practical guidance to litigators on how to develop a successful relationship with a potential ATE insurance and funding provider.
AI is certainly a hot-topic – but what actually is it? There have been many ‘game-changing’ technology-driven innovations promised to the legal services sector over the years, but few have actually delivered.
AI itself is a sub-set of what is known as machine learning: algorithms and statistical models that computers use to process large amounts of data. The aim is to identify trends in order to make suppositions and predictions.
Another way of looking at it is the ability of computers to try and duplicate the cognitive skills of a human.
There is no doubt that AI, dubbed ‘the fourth industrial revolution’, is changing the way we live and work, and we are already seeing this in action across an increasingly broad cross-section of society.
Data-driven analysis, changes in legislation and online developments have had a huge impact on numerous industries. Just one example is how high-profile football matches can now be quantified into co-ordinates, analysed and conclusions drawn – hence betting on football has been transformed, with huge financial growth for betting companies.
We all crave convenience and have become increasingly reliant on technology in this regard. Google is probably the most visible example of AI many of us regularly interact with. Voice searches, smart speakers, translations and real-time road traffic information are now part of many people’s lives.
Online, we hand over the details of our personal lives to any number of organisations in the interests of knowledge gathering, purchasing goods and making contact with other people.
Given what we now take for granted elsewhere, it is no surprise that legal advice is getting the same treatment. AI’s ability to ‘crunch’ words and numbers is being used for the obvious targets such as reading legal contracts and processing actuarial data for insurance risk assessments.
Larger law firms are early adopters of this, with their greater ability to make the necessary investment.
AI can take away a lot of the routine aspects of legal advice, freeing up lawyers to do the higher-end, more valuable legal work. Estimates are that AI could process around a third of the work that a lawyer does by using reasoning and mass judgements.
Of more specific interest is the recent number of new intermediaries entering the market with support services for litigators, such as AI-backed litigation analytics offering improved decision-making capabilities and specialist risk assessment services as well as platforms offering investments in litigation actions.
Away from the headlines, what is the situation on the ground for litigators, who may have read about these developments? Questions might well include ‘Will there be a trickle-down of technology into higher volume, lower value commercial claims?’ and ‘Will it be suitable for medium-size and smaller firms?’
AI and day-to-day litigation processing
One role of AI in litigation is to ‘sort the wheat from the chaff’ in the early stages of the claim. It might seem an easy comparison to say a similar role is performed by ATE insurance underwriters when initially assessing a case for cover. Beyond that, currently, human involvement is needed where the risk is more marginal.
This is where the value of expertise and experience of your insurance and funding partner is key.
AI’s ability to learn cannot be doubted, but a ‘computer says no’ approach to decisions about a case and its funding can mean there are nuances missed by the technology. Reducing the human inputs of emotion and intuition gained from experience could see a litigation team become both over-reliant and overloaded by computer outputs, thus distanced from the finer points of decision-making.
In short, not all analysis is good analysis. An example of this was a recent report of a leading specialist barrister stating that personal injury lawyers handling a high caseload could be at an increasing risk of a professional negligence claim  – with one of the two main causes being the ‘the economic necessity to rely on technology-based claims handling’.
On the subject of emotional connection and the use of technology – with the football season now well underway, is it a case of be careful what you wish for when it comes to the use of video assistant referees (VAR) in major matches? VAR is there to assist the referee with decision-making whilst the game is taking place.
It may well help those on the field with certain decisions, but at what cost? Will the ebb and flow of a match be lost for the sake of a technicality along with potential advantages for an attacking team?
Contrary to what a teenager might believe, no wi-fi signal is not the end of their world – probably neither is AI for lawyers.
If automation leads to speed and efficiency gains, this is obviously good for client service improvements but over-reliance on it can lead to problems.
There is a balance to be struck – technology is only part of the equation for any successful law firm. We suggest what is required is a willingness to explore technology that could benefit your clients and thus provide a competitive advantage for your firm.
AI may well have uses across your firm and prove invaluable in the routine aspects of litigation, but engagement, reassurance and interaction are vital to humans, and particularly someone seeking to resolve a dispute.
With that in mind, in the next article we will ask the question, ‘Can you have a business relationship with a computer?’