AI and The Business of Law: Where we are and what’s next?

1.0 Background

The introduction of AI in the legal space sparked debates on whether or not AI can replace lawyers. In the first half of 2023, the conversation took an unprecedented turn when two New York attorneys used an AI tool to prepare a court filing riddled with citations to cases that do not exist. The lawyers faced legal sanctions, and serious questions were raised on the ethicality and reliability of AI tools in legal practice.

Despite such setbacks, artificial intelligence is undeniably transforming the business of law. As the legal industry adapts to this technological shift, AI proficiency is becoming less of a choice and more of a necessity. According to a 2025 survey conducted by Thomson Reuters across law firms in 50 countries, 72 percent of legal practitioners believe AI is a positive force in legal practice. Yet only 10 percent of law firms have developed policies to guide their usage of generative AI. Notwithstanding the apparent shortfalls of AI tools, it has been instrumental in the development of legal tech as a facet of the legal profession. This article will discuss the immense potential of AI in the business of law as law practice embraces AI usage and how to navigate challenges associated with usage to shape the future.

1.1 The AI Advantage in Modern Law Practice

Law firms and practitioners worldwide have strategically integrated AI tools, balancing their benefits with the associated challenge of accuracy, ethics and regulatory concerns. Conversely, the adaptation of AI tools into Nigerian law practice is in its infancy. Considering artificial intelligence’s growing influence in the legal profession, Nigerian law firms must embrace these technologies to enhance efficiency, improve service delivery, and remain competitive in the global legal industry.

Here are commonly utilised AI tools in the business of law:

• AI in Hiring and Recruitment: Hiring and recruitment processes have been remarkably improved by AI tools. Globally, law firms have experienced a shift from traditional recruitment to the use of AI tools in conducting tests, and screening resumes for requisite experiences to determine the suitability of candidates, assess skills and predict job performance. This recruitment method streamlines hiring processes, reduces unconscious bias and improves candidate selection.
• AI and Legal Research: AI tools are becoming increasingly prominent in conducting legal research. These AI tools can sieve through lengthy materials to highlight relevant information at the snap of a finger. Using natural language processing, AI tools conduct extensive searches based on queries and retrieve relevant authorities. It can also be engaged to provide analytical predictions of case outcomes based on resources and jurisdiction-specific precedents.
• AI in Legal Drafting and Due Diligence: Generative AI tools can draft contractual agreements using predefined templates. To ensure regulatory compliance and consistency, AI tools can review contracts, identify risky terms, and suggest revisions. Their ability to analyse voluminous information aids the review of complex agreements.
• AI Chatbots and Smart Assistants: These tools are often found on websites for effective client interaction and immediate legal assistance. They can be leveraged to generate automated non-disclosure agreements and FAQs for enquiries.
• AI and Judicial Processes: The Nigerian judiciary has warmly embraced the introduction of online court filings.

1.2 Moving Ahead: What’s Next?

The occurrence of AI hallucinations, as evidenced in the earlier scenario, strongly discourages the use of AI tools. The AI black box problem, which is the inability to access the reasoning process of AI tools, makes it difficult to track the logic behind outcomes, reducing transparency and user trust. Client confidentiality is an important feature of legal practice. Therefore, the interaction between AI tools and confidential information poses confidentiality and privacy concerns. These collective issues, alongside underlying bias in AI tools, challenge the usage of AI tools in furtherance of the business of Law. However, these issues can be addressed accordingly:

• Full Disclosure and Transparency: Law firms and legal practitioners providing legal services should notify their clients of this and obtain consent. In doing so, they can satisfy the requirement of transparent representation of clients.
• AI Proficiency: Legal practitioners should acquire training on relevant AI tools and how to effectively leverage them for a successful competitive edge.
• Internal AI Policies and Best Practices: Law firms steadily adapting AI tools for law practice should develop internal AI policies to balance innovation with risk management. Such guidelines should include compulsory human oversight to correct errors, biases, and ethical breaches. They should also include cybersecurity and data protection measures to protect confidential information.

1.3 Conclusion

AI is improving the business of law by reducing cost, and improving efficiency and client service while maintaining professionalism. To stay ahead of the curve, law firms and legal practitioners can acquire the required skills as a proactive step forward.