The Future Lawyer Weekly Briefing – W/C 17th June 2024

AI and its uncertain position in the legal sector

Artificial intelligence (AI) has seen a dramatic increase in investment since 2022, following the successful launch of ChatGPT. Across all industries in 2023, worldwide spending on AI systems was estimated to be over $150 billion, showcasing the current demand for AI growth and implementation.

However, concerns have been raised regarding the compatibility of AI implementation within the legal sector. In an industry where accuracy is of the utmost importance, current data suggests that AI systems are struggling to find their way in the legal world.

What does the current data tell us?

Whilst AI implementation in the legal sector is still in its infancy, the data so far paint a concerning picture. Stanford University found that Westlaw’s AI-Assisted Research aid gave accurate legal answers just 42% of the time. Meanwhile, LexisNexis’ equivalent tool gave accurate answers 65% of the time, underlining the struggle to implement trustworthy, accurate AI tools in the legal industry.

In an industry where accuracy is of the essence, AI tools which give accurate answers less than half of the time clearly represent a risk. Thomson Reuters found that inaccurate answers played the most pivotal role in lawyers not utilising AI, with 74% of lawyers finding the high probability of inaccuracy a major concern.

Has AI been used correctly in the legal profession?

There have been high-profile examples of poor AI implementation leading to legal action against solicitors. Steven Schwartz, a New York lawyer, admitted to using ChatGPT as a way of finding precedents for his case. However, ChatGPT made up six of the seven cases, with Schwartz declaring that he was unaware that the AI software was able to create fictional cases.

As the Solicitor Regulation Authority (SRA) 2023 ‘Risk Outlook Report’ referenced, the impact of this can be significantly detrimental to law firms, who could be seen as misleading the Courts.

This example underlines the uncertainty regarding AI in the legal profession. Whilst AI is continuously developing and attracting investment, it is perhaps in the legal industry’s best interests to keep AI implementation on the backburner; however, a significant number of firms have been keen to utilise AI, despite the risks.

The broader societal implications

Firstly, AI in the legal industry leaves room for decreased confidence in lawyers from the public. Take the case of Steven Schwartz. It is very difficult for the public to maintain confidence in lawyers when there are instances of AI being implemented by lawyers, without a deep understanding of the potential consequences. As AI training for lawyers develops, best practices regarding AI use should follow, which will hopefully increase public confidence in law firms using AI.

As well as decreased confidence, client satisfaction could be harmed. AI cannot replicate the value of human interaction between a client and lawyer, which many clients seek. Whilst many current AI tools are used for contract review and administrative tasks, it is likely that the next steps will see AI tools evolve to give legal advice. The question is whether these tools will be an adequate substitute for real human interaction.

How are law firms involved?

AI implementation impacts law firms in three distinct ways:

New training methods:

As the case of Steven Schwartz underlined, to ensure successful AI implementation across law firms, there will need to be in-depth training measures established.

AI tools are in their infancy. Therefore, training needs to be supplied by law firms to ensure that lawyers are familiar with: potential drawbacks of the tool, what the tool should be used for, and how to ensure the tool is complying with the relevant regulations.

New roles for trainee solicitors?

Another impact on law firms is the potential for the role of trainee solicitors to change. With current AI systems often being used for document and contract reviews, these tools are being used for roles that trainee solicitors would often take.

As a result, the role of trainee solicitors within law firms could start to alter. What this change looks like will depend on the size of the firm. However, with AI tools occupying many typical trainee solicitor jobs, the role of a trainee will surely undergo a change over the coming years.

Ensuring compliance with legal frameworks:

Perhaps the most pertinent issue for law firms regarding AI, is to ensure their AI tool complies with the relevant legal frameworks. Currently, AI tools are not being used to give legal advice; however, if and when this starts to develop, law firms will need to ensure that the advice is compliant with the legal framework expectations.

As well as this, law firms must ensure ethical compliance. The SRA’s 2023 ‘Risk Outlook Report’ on AI implementation referenced several potential ethical issues. For example, law firms will need to ensure that the relevant AI tool is processing personal data in appropriate ways. Moreover, AI outputs need to be monitored to ensure no biases or inaccurate outcomes are being put forward.

Article by Rajan Hothi

Where to Park Your Ship?

Legal Implications of the Red Sea Crisis on International Carriage Arrangements: Chapter 2

International commerce heavily relies on maritime transport, which handles 80% of global trade. The Red Sea crisis, a key bottleneck, affects 30% of the world’s container trade and 15% of all maritime trade, disrupting shipping routes, ports, merchants, shipowners, financial institutions, and consumers.

The crisis raises significant humanitarian, environmental, and security concerns, but this article concentrates on the commercial and legal challenges it presents. These include increased costs, contractual complexities, and liability issues.

Legal issues

Legally, the crisis prompts the potential invocation of force majeure clauses or contract frustration if carriers terminate agreements linked to the region, possibly excusing them from delay liabilities. Shipowners might seek indemnities for higher costs due to longer alternative routes.

Additionally, the crisis could spike insurance premiums for vessels and cargo, leading to disputes over cost distribution between carriers and merchants. This crisis compels shipowners to weigh safety against contractual duties within the crisis-afflicted Red Sea region.

The following questions are of legal importance:

1. Can shipowners deviate from the canal against contractual terms or refuse charterers orders to sail through the Suez Canal?
2. Can shipowners refuse to call at a nominated port located along the crisis impacted region?
3. Can Shipowners suspend, cancel or terminate contracts on the basis of the crisis?
4. Who assumes liability for damage to cargo or delay in delivery?

The article addresses the second question.

Where to Park Your Ship?

Vessels must call at the nominated port, unless the contract allows otherwise. Correspondingly, a charterer has a duty to nominate a safe port. Per Sellers L.J in The Eastern City, a port is safe if the specific ship can reach, use, and return from it without encountering danger beyond “good navigation and seamanship.”

If incorporated into the contract, CONWARTIME 2013 and VOYWAR 2013 clauses grant shipowners discretion to refuse ports in war risk areas, after an objective assessment of the danger to the specific vessel. Similar provisions exist under The Hague or Hague-Visby Rules, Article IV(2)&(4) and Article 5(6) of the Hamburg Rules, where the port poses a war risk or danger to the vessel, crew or cargo.

The question then is if the situation in the red sea constitutes a war risk. The general nature of the crisis cannot be used to determine if the situation is dangerous to particular vessels. The analysis must be vessel specific. A documented risk assessment on each vessel must be done before deciding to refuse an unsafe port.

Lack of express provisions

But what if there is no express provision? While express inclusion is ideal, courts may sometimes imply a safe port warranty based on the nature of a charter. The reasoning is that inherent in the contract is the expectation of a safe port for the specific ship.

This reasoning draws heavily on the definition of a safe port established in The Eastern City. It is believed that a consideration of established industry practices in similar contracts will be influential when deciding whether to imply a warranty.

It has been held that the degree of control the charterer has over nominating ports will be influential in implying a safe port warranty. Greater control strengthens the case for implying a warranty. Conversely, the more specific the charter about the port, the less likely the owner can claim it’s unsafe on the reasoning that it must have satisfied itself of the safety and willing to take the risk.

Also, if the contract specifies a range of ports instead of a single named port, implying a safe port warranty becomes less likely. Regardless, unsafe port claims are complex, expensive, and slow. To minimise risk, shipowners should assess port safety proactively.

Article by Ebenezer Ajayi