Eric Staal, vice president of global markets at Lex Mundi, emphasised the urgent need for the legal sector to adapt to the rapid advancements in artificial intelligence, particularly generative AI (GenAI), amidst slower regulatory updates, in an interview with Delano. He stressed the importance of forward-looking strategies for managing cross-border risks, innovating billing models and understanding their impact on mergers and acquisitions (M&A) and environmental, social and governance (ESG) compliance.
Representing a network of over 150 independent law firms worldwide, including Arendt & Medernach in Luxembourg, Lex Mundi plays a crucial role in offering comprehensive legal services across more than 125 countries.
Kangkan Halder: Considering the rapid evolution of GenAI and the slower pace of regulatory updates, what challenges does this create for the legal sector?
Eric Staal: With innovation and competitive business dynamics moving quickly, legal teams need to be in a position to give forward guidance about the potential future liability arising from how GenAI is being put into use today. Far from squaring the circle to do more with less, legal teams and advisors are having to spend additional resources to take advice and anticipate issues.
You recently released a report called “Opening Pandora’s Box: Early implications of Generative AI for corporate legal management”. What strategies does Lex Mundi recommend for addressing the complexities of cross-border legal risks in the context of GenAI?
Our includes key aspects for incorporating AI into risk management frameworks including AI audits and mitigation measures. Additionally, many question marks can be addressed through proper qualitative horizon scanning to leverage expertise on the ground in the markets where companies are doing business.
Different technologies and models [are] still evolving with the promise for efficiencies and cost benefits still over the horizon.
How do you perceive the impact and reach of GenAI in reshaping legal services throughout 2024?
Judging from ongoing conversations with corporate general counsel and management teams in private practice, we are in the early trough of an ‘S curve’, wherein leaders are testing capabilities and considering implementation measures including (re)allocation of team members and tasks. Right now, the market for different technologies and models is still evolving with the promise for efficiencies and cost benefits still over the horizon.
Does Lex Mundi have any specific initiatives or teams dedicated to ensuring its member firms remain ahead in the GenAI-driven legal market?
We have a Tech and Innovation team at Lex Mundi that is working with GenAI and AI-focused legal technologists, member firms and clients not only to evaluate implementations but to understand the ramifications for structuring practices and legal advisory services.
ESG could be the next frontier for AI compliance.
In the GenAI era, how do you foresee the evolution of billing practices for legal services?
Longer term, the impact of GenAI portends a shift toward more value-based billing for strategic guidance as less time is needed for researching and drafting.
After the Lex Mundi summit in February 2024, M&A and ESG compliance were highlighted as major areas influenced by GenAI. Can you expand on these impacts?
M&A diligence will increasingly need to assess target companies for potential new areas of successor liability related to intellectual property, data privacy, antitrust and other areas.
Regarding ESG, many multinationals are challenged to audit deep into their value chains for human rights misconduct, among other compliance issues. With new laws about product traceability and operational transparency entering into force, AI can help to build the visibility and predictability to comply more effectively. Already AI tools are fairly well established in financial services compliance and, more recently, with respect to sanctions compliance. ESG could be the next frontier for AI compliance.