Orrick sees an AI advantage in public finance law
DALLAS – With its recent expansion into Texas public finance, Orrick Herrington & Sutcliffe is expected to extend its lead as the nation’s top bond and disclosure counsel this year.
As it expands geographically, the law firm is also offering clients a growing array of tools that incorporate artificial intelligence and related technology.
“I would say we’ve made a fundamental commitment to using technology and also improved work processes to make ourselves more competitive,” said Justin Cooper, co-chair for public finance at San Francisco-based Orrick. “Clients are demanding more efficiency, and they don’t want to pay $500 to have someone pore over a document if we can bring the cost of service down using technology. Our general feeling is that what clients want to pay us for is thinking, good ideas, market knowledge, and good judgment.”
While AI conjures images of the obsolescence of human labor, Cooper sees the technology as liberating clerks and junior associates from the ordeal of searching through documents in windowless rooms. Cooper said he has “zero fear” of AI making lawyers obsolete.
“Those young lawyers will have more opportunity to have more responsibility and more client interaction and more substantive engagement early on in their careers,” Cooper said.
In a recent study, the AI developer LawGeex pitted its program against a team of 20 attorneys tasked with reviewing five non-disclosure agreements. After two months of testing, the AI finished the test with an average accuracy rating of 94%, while the lawyers averaged 85%. The AI’s highest accuracy rating on an individual test was 100%, while the highest rating a human lawyer achieved on a single contract was 97%.
The lawyers took an average of 92 minutes to finish reviewing the contracts. LawGeex’s AI needed only 26 seconds.
Because public finance is generally a fixed-fee environment, the benefits of AI might not be as apparent as in other practices.
“If you’re the city of Sacramento and you’re going to pay Orrick or someone else 75 grand to do your deal, you don’t really care whether we do it efficiently or inefficiently,” Cooper said. “But we need to reduce the resources we use to earn that $75,000 fee.”
Because AI improves dramatically with practice, “the more stuff you put in there and the smarter the machine gets, the more it can recognize,” Cooper said.
“The analytic folks have done a couple of test cases on a per-contract basis,” he said. “Instead of something costing $100, it might cost $10.”
Orrick’s suite of technology products was developed at Orrick Analytics in Wheeling, W.Va., where the firm's in-house tech operation was founded and now has more than 300 employees.
“AI is a term that means a lot of different things to different people,” said Wendy Butler Curtis, chair of Orrick’s eDiscovery and Information Governance group and Orrick Analytics. “We use data analytics in every practice.”
Curtis traces legal AI’s roots to electronic discovery or eDiscovery, which evolved through a series of court rulings and hit the American Bar Association’s conference radar in 2004. The advent of eDiscovery spawned “technology assisted review” built on a variety of software platforms.
“There are other firms that are using AI, but we are more sophisticated,” said Curtis. “We have on staff a statistician. We have attorneys who are technology and data specialists. We build our own dashboard and our own automation. We’re auditing all of this process. That differentiates us and makes us a leader, because we’ve been doing this for more than 10 years. We’ve done all the testing.”
While Orrick emphasizes cost savings to its clients, the AI systems also outperform in accuracy, Curtis said.
Deadline-driven cases, such as when bond lawyers last year were scrambling to get ahead of Congressional tax reform, can also benefit from the technology, she said. In a crunch, the firm can increase the number of attorneys working on a case at short notice, she said.
“We can go from 40 contract attorneys to 400 if we need to,” she said. “We can be nimble and respond to the market.”
While AI can streamline the process, top-notch legal talent is needed to devise strategies and apply the data in the most effective way, said Curtis, who is a practicing attorney.
In Texas, Orrick’s talent search led to last month’s hiring of 20 veteran attorneys in public finance to join the five who opened the office in 2016. Orrick also hired Texas attorneys for its other practice areas.
“Our new Texas colleagues will integrate really well with our public finance team,” Cooper said.
McCall, Parkhurst & Horton, the perennially leading bond counsel firm in Texas and the Southwest, is not expected to give up its top spot this year.
“Technology will affect our practice in years to come,” said Stefano Taverna, a tax specialist and partner at McCall Parkhurst. “How immediate that is, it’s hard to tell. We’re certainly keen on keeping an eye on technology.”
Taverna attended the National Association of Bond Lawyer’s Tax and Securities Law Institute in February in Phoenix, where one of the speakers, Andrew Arruda, chief executive of Ross Intelligence, offered guidance on how AI will affect their practices.
“On the one hand, it could speed up a lot of research,” Taverna said. “On the other hand, I think it could require a lot of training of AI to get to the point where they are highlighting particular cases.”
Sherry Askin, president of Omni Software Systems, says that lawyers are still required at the beginning of research as well as at the end.
“What often happens is you do a human review and a machine review at the same time to teach the machine,” Askin said. “Humans still have to orchestrate all of that into a successful transaction with a client.”
While firms such as Orrick invest in in-house AI, Omni Software and other developers are designing programs that can be used by the smaller law firms.
“We believe very firmly in having the platform that’s mass customized for broad use,” Askin said. “I would say that law has been rather stunted in this field. But AI is starting to leapfrog quite a bit.”
Regardless of how lawyers feel about their traditions, AI represents a revolution that cannot be ignored, experts say.
“Imagine someone trying to consume all of the content of the Westlaw Library,” Askin said. “A machine would be able to consume that library in minutes instead of years.”