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Thomson Reuters provided legal industry journalists a sneak peek of AI-Assisted Research on Westlaw Precision and introduced a series of additional initiatives, including the new generative AI assistant connecting all Thomson Reuters generative AI products, Thomson Reuters Generative AI Platform, generative AI capabilities in Practical Law, and CoCounsel Core.

Legal Current shares perspectives from legal industry journalists and influencers on the Thomson Reuters strategy and product highlights. Several journalists noted the strategic approach Thomson Reuters is taking to integrating generative AI, with the recognition of how the technology can transform the legal profession.

Steve Embry of TechLaw Crossroads was impressed that “the Thomson Reuters presenters offered a consistent and clear vision at the briefing as to where Thomson Reuters wants to go with GenAI.” He noted, “What stood out from Thomson Reuters’ new product announcements was the attitude behind them. The sprinted integration with Casetext. The clear vision is to create a ubiquitous virtual assistant. And the recognition that ease of use is so crucial to the users of legal technology products.”

Head of Westlaw Product Management Mike Dahn presenting on AI-Assisted Research on Westlaw Precision.

A highlight was Head of Westlaw Product Management Mike Dahn’s presentation. He called the launch of AI-Assisted Research on Westlaw Precision “the biggest transformational change in legal research since the move from books to online legal research,” as Bob Ambrogi noted in LawSites.

Jean O’Grady agreed in Dewey B Strategic: “It [AI-Assisted Research on Westlaw Precision] offers a foundational move toward a new way of performing research and integrating research into workflow. I need to remind myself that there is a future of legal research I can’t yet imagine.”

Additionally, several journalists called out Dahn’s comments on the importance of accurate results.

In Above the Law, Joe Patrice noted: “Mike Dahn, Head of Westlaw Product Management, explains that solving hallucinations is actually a pretty low bar to clear if you know what you’re doing. Retrieval Augmented Generation (RAG) is a fancy way of saying the large language model draws on trusted data — in this case, the Thomson Reuters library of materials — and can more or less handle the hallucination risks that crop up with unfiltered AI.”

The use of RAG technology was also noted in ABA Journal, where Matt Reynolds noted Dahn’s description of it as “a technique that guards against hallucinations by having the tech draw upon the most up-to-date and reliable information when producing an answer.”

Similarly, Isha Marathe pointed out in Law.com: “‘It can be hallucination-free and still be wrong … hallucination-free is a low bar,’ he [Dahn] explained, stressing the importance of training data. He added that currently, Westlaw Precision is trained on primary sources, but in the coming months it will be trained on secondary ones as well. Additionally, as the underlying technology and the LLMs on the market evolve, Dahn hopes that the processing time will drop from the current ‘90 second to two minute’ mark.”

Beyond AI-Assisted Research on Westlaw Precision, journalists noted how Casetext and CoCounsel will enhance Thomson Reuters offerings.

As Ambrogi explained in LawSites, “ … what TR has going for it over any of its competitors right now is the one-two punch of AI-Assisted Research and CoCounsel, two complementary AI tools that, together, both facilitate legal research and provide an AI ‘legal assistant’ for other common tasks.”

Likewise, Embry observed, “ … there seems to be a symbiotic relationship between the companies and their personnel. This relationship can only help both companies and, more importantly, their users.”

Embry also highlighted the Thomson Reuters emphasis on ease of use for customers: “It seemed important to Thomson Reuters representatives at the briefing that the people using their tools could easily master and understand how to use them. Which, in turn, reflects the attitude that AI tools should be useful to the specialized market of lawyers and legal professionals.”

Thomson Reuters today announced a series of generative AI initiatives designed to transform the legal profession. Headlining these initiatives is AI-Assisted Research on Westlaw Precision.

Available now to customers in the United States, this skill helps legal professionals quickly get to answers for complex research questions. This generative AI skill leverages innovation in Casetext, created by taking a “best of” approach using the Thomson Reuters Generative AI Platform.

With AI-Assisted Research and CoCounsel Core, attorneys are empowered with eight generative AI-powered core skills, including AI-Assisted Research on Westlaw Precision, Prepare for a Deposition, Draft Correspondence, Search a Database, Review Documents, Summarize a Document, Extract Contract Data, and Contract Policy Compliance. The company also laid out high-level product roadmaps to develop numerous additional generative AI skills to address customer-specific needs. Each additional skill will be built on a common software framework within the Thomson Reuters Generative AI Platform.

AI-Assisted Research allows customers to ask complex legal research questions in natural language and quickly receive synthesized answers, with links to supporting authority from Westlaw content and links to further examine that authority. AI-Assisted Research streamlines the initial phase of legal research with sophisticated answers to questions and the authority those answers are based on, saving hours of work. These responses are founded on more than 150 years of Thomson Reuters classification, analysis, and editorial expertise contributed by subject matter experts and attorney editors.

AI-Assisted Research employs Retrieval Augmented Generation (RAG) to prevent the large language models (LLMs) from making up things like case names and citations by focusing the LLMs on the actual language of Westlaw content. Future plans include expanding generative AI throughout the research process in Westlaw and bringing these capabilities to versions of Westlaw outside the United States.

Also, the company announced that it will be building on the AI assistant experience Casetext created with CoCounsel, the world’s first AI legal assistant. Later in 2024, Thomson Reuters will launch an AI assistant that will be the interface across Thomson Reuters products with generative AI capabilities.

The AI assistant, called CoCounsel, will be fully integrated with multiple Thomson Reuters legal products, including Westlaw Precision, Practical Law Dynamic Tool Set, Document Intelligence, and HighQ, and will continue to be available on the CoCounsel application as a destination site.

In addition, Thomson Reuters will introduce generative AI within Practical Law Dynamic Tool Set in January 2024. Customers will benefit from generative AI within Practical Law through a new interface with an AI legal assistant, which will quickly provide answers using conversational language – all validated by trusted Practical Law content created and maintained by a team of more than 650 legal experts.

Read the press release for more on AI-Assisted Research on Westlaw Precision, the new generative AI assistant connecting all Thomson Reuters generative AI products, Thomson Reuters Generative AI Platform, generative AI capabilities in Practical Law, and CoCounsel Core. For more on how Thomson Reuters is ensuring that its AI products and skills are built responsibly, check out the company’s Data and AI Ethics Principles.

Practical Law The Journal is the award-winning magazine companion to Practical Law, covering a wide range of transactional, regulatory, and litigation topics. It publishes monthly in a digital-only format hosted on Reuters.com. Legal Current reached out to the Practical Law The Journal team to discuss what readers can look forward to in the November issue.

What emerging issues and developments can readers learn about in the new issue? 

Our feature article explores a tectonic shift on the horizon of the digital advertising landscape that will impact most businesses. Increased global privacy regulations have prompted advertisers and tech companies to move away from using third-party cookies – small digital files that websites download to a user’s device – to track consumer behavior across online platforms. Fernando Bohorquez, Jr.; Gerald Ferguson; and Priyanka Surapaneni of BakerHostetler offer best practices to help businesses prepare for the impending transition from a consumer-tracking framework to a consumer-centric, privacy-forward one.

This issue also delves into the current, uncertain state of the commercial real estate leasing market. Bradley Kaufman of Pryor Cashman and Peter Livaditis of CBRE examine commercial leasing trends in the office, retail, and industrial sectors, and discuss strategies that commercial landlords and tenants are employing in response to market challenges.

Additionally, practitioners in the health care space should be sure to review our new piece on the legal issues surrounding gender-affirming health care services. While the federal government and some states have taken steps to protect access to health care for LGBTQ+ people and prohibit discrimination based on gender identity, several other states have enacted bans on gender-affirming care services. This article addresses the various challenges for health care providers as they try to navigate this dynamic environment.

What other legal topics are explored in this issue? 

As end of year nears, many companies are turning their attention to performance reviews. Employee counseling and discipline are important tools for employers when an employee performs poorly at work or engages in misconduct. When delivered timely and clearly, counseling may improve the employee’s performance or conduct and strengthen the employer’s defense if litigation arises. In this issue, we provide a model performance improvement plan, with explanatory notes and drafting tips, that employers can use to manage and coach a struggling employee and address certain recurring behavioral issues.

In addition to addressing employee performance issues, companies must understand the factors that drive engagement within their organization to create an effective talent management strategy. Aalap Shah and Lianne Richardson (Chew) of Pearl Meyer provide insights on how companies can unlock employee potential and gain a competitive advantage in the talent market by cultivating a positive culture that connects people to purpose.

The Journal also profiles leaders across the legal industry. Whom did you interview this month?

Among others, we checked in with Practical Law Advisory Board member Shouvik Biswas of Kubota & Basol. He discusses the biggest challenges facing IP&T attorneys and how his previous career as an engineer informs his current work as a patent attorney.

How can readers access The Journal?

Readers can enjoy free access to The Journal on reuters.com/plj. To view the content, they simply sign in to their Reuters account or, if they don’t have an account, they can register here.

The latest AALL Spectrum issue features an interview with Emily Colbert, senior vice president of product management at Thomson Reuters, on the company’s plans to incorporate generative AI capabilities, what process improvements the technology can provide, and how customers feel about its arrival.

AALL Spectrum noted that AI has long played a notable role in legal research and that legal industry is open to adopting the next iteration of AI technology, generative AI. Colbert talked with AALL Spectrum about the company’s plans to feature the technology in several of its solutions.

Colbert noted in the interview that in addition to integrating generative AI into Practical Law, Westlaw Precision, and other products, Thomson Reuters is also working with Microsoft to develop a generative AI-fueled contract drafting Solution that will pair the Microsoft 365 Copilot tool with Thomson Reuters legal content.

Emily Colbert, Senior Vice President, Product Management, Thomson Reuters

Colbert’s interview touched on a range of topics, including what makes the legal industry well suited for a disruptive technology like generative AI and how the company’s past experience helped it prepare for the era of generative AI. Also, she emphasized the importance of the human element in developing generative AI and explained how the Thomson Reuters build, buy, and partner strategy has supported its approach to product development.

To read all of Colbert’s insights, check out her full interview in the November-December 2023 issue of AALL Spectrum, the bimonthly member magazine of the American Association of Law Libraries (AALL).

The ABA’s Business Law Section M&A Committee’s flagship Private Target M&A Deal Points Study is considered the industry’s gold standard reference for deal points in private acquisition agreements. Through Practical Law’s new partnership with the ABA, select Practical Law forms now contain integrated slides from the study as well as continuously updated Practical Law What’s Market Analytics charts and What’s Market’s trends information.

This podcast discusses this new partnership, including a sneak peek at the timing of and several new data points to be covered in the soon to be released 2023 version of the study, among Barbara J. Oikle, the Senior Managing Editor of National Corporate and M&A Content at Practical Law and the two Co-Chairs of the study:

• Jessica C. Pearlman, a Partner at K&L Gates, LLP, and Vice Chair of the ABA’s Business Law Section’s M&A Committee and former Chair of the ABA’s Business Law Section’s M&A Committee’s Market Trends Subcommittee, and
• Tatjana Paterno, a Member at Bass, Berry, & Sims PLC, and Vice Chair of the ABA’s Business Law Section‘s M&A Committee‘s Market Trends Subcommittee.

To view a toolkit with links to Practical Law forms that have been updated with this integrated information, see Private M&A Forms with Integrated Market Trends Information Toolkit.

To listen to the podcast, click on the built-in player below. To download and listen later, click here

Law firms have slowed their fall hiring of new lawyers to curb expenses as demand for legal services continues to recover. That’s among the findings of the Q3 2023 Thomson Reuters Law Firm Financial Index (LFFI), powered by Financial Insights. 

Legal Current shares key takeaways from the report, which shows firms may be setting themselves up for a year-end push for profit growth. 

1. Firms are significantly reducing their annual fall hiring of new associates to rein in expenses. In particular, Am Law 200 firms have brought in their smallest fall associate classes since 2020. Firms are seeking to reduce direct expense growth, which while slowing, remains stubbornly high, rising 6.4% in the third quarter as measured on a rolling 12-month basis. Meanwhile, overhead expenses were up 7.0%. With demand and rates growing, firms are looking to further trim expenses to support profit growth.    
2. Demand for law firm services is up, driven by counter-cyclical practices. Demand was up 0.1% in the third quarter – the third consecutive quarter of growth; it would have been even higher but the quarter had one fewer working day than the third quarter of 2022. Counter-cyclical practices, which tend to perform better during periods of economic weakness, continued to be among the strongest practices, as they have been for much of 2023. These include bankruptcy, litigation, and labor & employment, which were up 6.0%, 2.0%, and 1.1%, respectively.
3. Rate growth continues to accelerate. Rates rose 6.3% to a post-Great Financial Crisis high for quarterly growth. This is somewhat counter to historical norms; typically, firms tend to set rates in the first quarter and essentially lock in growth rates for the rest of the year. So far, rate growth has accelerated since the first quarter this year. Firms also saw realization improve in the third quarter when compared to Q2, ending six consecutive quarters of decline and resuming the usual seasonal pattern of improving as the year goes on. However, billing and collection realization were still lower than in previous third quarters in 2021 and 2022.

The LFFI is a composite index of law firm market performance using real-time Financial Insights data drawn from major law firms in the United States and key international markets.

Download the Q3 2023 LFFI report for more insights. 

Thomson Reuters was among the companies recognized with the 2023 Corporate Pro Bono Partner Award from the Pro Bono Institute (PBI) at its annual awards dinner on Oct. 16 in New York City. The award honored the Thomson Reuters partnership with Baker McKenzie for the Justice in Action project.

The Justice in Action project focuses on building community across industries, geographies, and cultures through pro bono. It addresses compelling social justice challenges around the globe through impactful research projects on behalf of nongovernmental organizations that serve vulnerable populations.

Helen Respass, senior managing editor, Practical Law, and co-chair of Thomson Reuters Global Pro Bono Program, was among the Thomson Reuters colleagues who attended the awards dinner. She talked with Legal Current about how she and her colleagues contributed to the Justice in Action project.

Legal Current: How has Thomson Reuters supported the Justice in Action project?

Respass: Thomson Reuters has collaborated with Baker McKenzie on quite a few Justice in Action Pro Bono sprints during the past two years. Over 100 of our volunteers across the Americas, APAC, and EMEA regions have tackled compelling social justice challenges related to racism, mental health, justice crossing borders, and child welfare. Our research projects have ranged from creating local guides for youth to understand their rights when interacting with police, to legal maps for LGBTQ+ youth on topics such as ability to contract, emancipation, public accommodations, and anti-discrimination laws.

Legal Current: What impact have the Thomson Reuters efforts made?

Respass: Our efforts help create capacity-building tools for vulnerable populations and others who need to understand the law. For example, during Asian American and Pacific Islander Heritage Month, we worked with Baker McKenzie to create Justice in Action sprints to support the Asian American Legal Defense and Education Fund’s (AALDEF) #StopAsianHate Project. Our volunteers researched U.S. and Canadian state, provincial, and local laws to help create Anti-Hate Crime Fact Sheets for community groups and victims of anti-Asian violence and harassment. I’m grateful to be part of an organization that recognizes the value of pro bono work and enables us to inform the way forward by giving back and creating positive change.

Legal Current: Why is it meaningful to you, personally, to be involved in pro bono work?

Respass: Over the years, I’ve had the opportunity to participate in different pro bono work, from research projects like these Justice in Action sprints, to matters helping non-profits set up and operate, to cases where I’ve represented asylum seekers and unaccompanied minors. No matter the type of project, it’s incredibly rewarding to be able to use my legal skills to be part of life-changing work that helps the most vulnerable in society find safety, economic security, and hope for the future. Pro bono work enables clients to succeed and restores dignity, hope, and control over their lives. And it allows me to step outside the routine tasks of my day job and reconnect with why I became a lawyer – to advocate for justice and equality and defend the rights of the poor and needy.

Legal Current: What’s the one thing you want everyone to know about the Justice in Action project?

Respass: We all have busy lives, so it can be hard to carve out time for pro bono. Justice in Action sprints are only four hours and include training! There is no pre-work or prior experience required. They are fun, accessible, bite-sized pro bono opportunities that really make a difference. These sprints also remind us that working together, we can be a force for positive change in the world.

For more information on the Justice in Action project and the 2023 Corporate Pro Bono Partner Award, visit PBI’s website.

Photo caption: Thomson Reuters colleagues at the PBI dinner (L-R): Jennifer Adler, Matthew Hayes, Bevan Phillips, Emma Hunt, Samantha Biggio, Helen Respass.

Practical Law The Journal is the award-winning magazine companion to Practical Law, covering a wide range of transactional, regulatory, and litigation topics. It publishes monthly in a digital-only format hosted on Reuters.com. Legal Current reached out to the Practical Law The Journal team to discuss what readers can look forward to in the October issue.

Does the new issue have a particular theme or focus?

In support of legal professionals across the industry and in recognition of World Mental Health Day on Oct. 10, our new issue delves into the critical topic of attorney well-being. The cataclysmic events of recent years have raised unprecedented challenges to businesses and individuals around the globe. Attorneys are suffering from depression, anxiety, and other mental health issues at startlingly high rates, and at rates that are higher than professionals in other industries. 

In our feature article, Michael Kasdan, founder and chief enthusiasm officer of Lawyering While Human, reviews factors contributing to the current poor state of attorney well-being, sets out the business case for why law firms and other organizations should support and invest in attorney well-being, and recommends solutions that legal employers can adopt to effectuate real change in the industry. 

What else can readers learn about in the October issue?

This issue covers some key topics for public companies and their counsel, including an analysis of the first proxy season following the effectiveness of the SEC’s universal proxy rules. Frank Aquila of Sullivan & Cromwell highlights several important themes and takeaways, including concrete steps that boards should take to prepare for the 2024 proxy season.

Additionally, we provide up-to-date guidance for in-house counsel on a range of core matters, such as conducting layoffs and other reductions in force, monitoring remote employees, challenging a competitor’s false or misleading advertising claims, and responding to a nonparty subpoena or prelitigation demand to preserve electronically stored information.

We are also delighted to feature a piece from Practical Law’s  new Real Estate Litigation topic. The new topic area is the latest expansion of Practical Law’s Commercial Litigation content set, adding over 70 new resources on land ownership and use, injury to real property, the landlord-tenant relationship, and more. In this issue of The Journal, counsel can learn about litigating a real property inverse condemnation (or takings) claim against a governmental entity, including pre-litigation matters, elements the plaintiff must plead and prove, defenses, and available remedies.

The Journal also profiles leaders across the legal industry. Whom did you interview this month?

Among others, we spoke with Stephen Mar, chief legal and administrative officer of tech startup Odeko. Mar shares the unique ways that Odeko’s mission advances ESG priorities, discusses the legal department’s top goals, and offers career advice to prospective general counsel.

How can readers access The Journal?

Readers can enjoy free access to The Journal on reuters.com/plj. To view the content, they simply sign in to their Reuters account or, if they don’t have an account, they can register here. To be notified when new monthly issues of The Journal are published and get highlights delivered straight to their inbox, readers can also opt into our newsletter here.

Just in time for fourth quarter – when many law firms are exploring rate setting with clients for the coming year – is a new Thomson Reuters report, Law firm rates in 2023: What’s working, what isn’t, and how to move forward in 2024. It examines the current and historical performance of law firm rates and provides insight on factors that affect law firm revenue and profitability.

With 2023 seeing record-setting growth in attorney rates, the report considers what’s in store for 2024. “Lawyerly rate hikes could continue,” Joe Patrice noted in coverage of the report on Above the Law, and the increases may not be due to inflation. As firm leaders make decisions about what to charge for legal work performed, Legal Current shares key takeaways from the report.

1. Historical context is helpful for understanding the significance of the current growth in law firms’ worked rates. Following the global financial crisis of 2008-09, firms’ worked rate growth dropped. But rate growth soon stabilized – until the start of 2020. Of course, the pandemic marked a turning point, with the second quarter of 2020 seeing an average law firm post worked rate growth in excess of 5% for the first time since the global financial crisis. Then rate growth cooled again in 2021 but accelerated dramatically into 2022 on through today.
2. It’s been a remarkable year for rate growth. The pace of worked rate growth for large law firms this year has far exceeded the growth of 2022. Of note, Am Law 100 firms set a new high-water mark for rate growth in the first half of 2023, with worked rates up by 7.3%.

3. Multiple factors affect rates, and in turn, firm profitability. Among the factors shaping rates are inflation, firm productivity, expenses, and demand mobility – the shifting of work from one law firm to another seeking lower costs, greater value, or both. Firms will be considering all of these factors as they engage in year-end rate-setting exercises.

4. While rate growth has been a driver of revenue growth for many firms, it doesn’t tell the whole story. Billing realization and collected realization are two additional metrics that are key to getting a complete picture of a firm’s profitability; looking at collected realization against worked rates rounds out a law firm’s revenue picture. And with all large law firm segments experiencing declines in realization for several consecutive quarters, this insight into profit margins clouds an otherwise strong picture for firm profits.

For more on the performance of law firm rates and how firms are engaging in rate setting for 2024, download the report.

A highlight of today’s Legal Geek conference included a Thomson Reuters session about a new HighQ partnership with Dealcloser, a transaction management platform. Elena Folkes, director of Market Development, Thomson Reuters; Geetha Mashetty, product lead, Transaction Management, Thomson Reuters; and Jag Dhariwal, CEO, Dealcloser, shared what the partnership means for legal professionals in the Legal Geek session, “The new frontier of Transaction Management: a game-changing solution from Thomson Reuters.”  

Folkes and Dhariwal noted that the average time to close merger-and-acquisition deals has risen more than 30% in the last decade, with 22% of delays stemming from inadequate technology supporting the due diligence process. Folkes and Dhariwal explained that the HighQ-Dealcloser partnership lays the groundwork for addressing these pain points for customers.  

The partnership aims to fulfill a vision of an end-to-end transaction management solution integrating HighQ, Document Intelligence, and Dealcloser. The integrated solution will enable users to address each stage of the transaction lifecycle: preliminary processes and documents, due diligence, transaction documents, regulatory filings and approvals, closing, and post-closing.  

“The vision for the HighQ and Dealcloser partnership is to enable customers to close deals faster and better leverage technologies to control costs and improve productivity,” said Sebastiaan Bos, senior director, Legal Practice and Productivity, Thomson Reuters. “This collaboration is a proof point for the Thomson Reuters build, buy, partner approach to provide customers with the best and trusted solutions at speed, and our continual efforts to apply cutting-edge innovations to support our customers’ evolving needs.” 

“Our end goal is to provide customers with access to a single source of truth across the entire deal lifecycle​, and this partnership is a critical first step in making this a reality,” said Dhariwal. “We are excited about this partnership and how it ultimately will enable our customers to provide a superior client experience, reduce costs, and mitigate risk throughout the deal lifecycle.” 

Legal departments are prioritizing workflow efficiency, cost controls, and technology use. These are among the findings of the 2023 Legal Department Operations Index, which noted legal departments are facing growing workloads, shrinking budgets, and a need to increase their use of technology.

Legal Current shares top takeaways from the report.

1. Legal departments are under pressure to do more with less. The report found 70% of legal departments are seeing higher matter volumes, yet 66% say that their budgets are flat or declining. While new technologies, including AI, could help improve efficiencies, legal departments face what the report terms a “technology conundrum.”

2. Increasing use of technology is a high priority. A majority of general counsel (57%) say that leveraging technology automation is one of their top cost-control strategies. As a result, using technology to improve workflow efficiency is their second-highest priority, ranking behind controlling outside counsel costs. However, only 32% of legal departments’ budgets for legal technology are increasing.
3. Legal departments rate e-billing and spend/matter management software as the most valuable technologies. These are followed by e-signature, litigation hold, and legal research. In addition, the Future of Professionals Report found that 60% of legal professionals believe AI will result in corporate legal departments moving more work in-house over the next five years, owing to improved efficiency and reduced costs. However, legal professionals also have concerns about AI, including the accuracy of outputs and the need for regulation to govern the ethics of AI.
4. Legal departments are conflicted about return-to-office policies. While legal departments seek to balance the benefits of face-to-face interaction with the autonomy and flexibility of remote working, the decision may be largely out of their hands. The report found 54% of legal departments say their policies are set by the broader organization.

For more insights, download the 2023 Legal Department Operations Index.

Australian law firms finished the second half of fiscal year (FY) 2023 strong, rebounding in the face of softening demand and rising expenses in the first half of the year. That’s among the takeaways from the 2023 Australia: State of the Legal Market Report, which examines Thomson Reuters Financial Insights data from 20 law firms in Australia alongside metrics from more than 230 firms in the United States and the UK.

Legal Current highlights the report’s key findings and shares reactions from Australian legal media.

In Lawyers Weekly, editor Jerome Doraisamy summed up the report: “New research shows that Australian law firms are weathering softening demand and rising expenses well, but declining productivity – together with headcount increases outpacing demand growth – are causes for concern.”

The report found that Australian firms offset the first-half decline in demand with a 6% surge in the second half of FY 2023 and solid growth in worked rates, which jumped 5.3% year-on-year. Australian firms’ second-half comeback was driven, in part, by the rise of counter-cyclical practices.

Counter-cyclical practices, including dispute resolution, insurance coverage, insurance defense, workplace relations, and insolvency & restructuring, accounted for one-third of all hours logged. These practice areas delivered most of the demand growth, achieving 8.5% growth in the second half of FY 2023.

The Australian legal market’s transactional practices declined by 0.6% on a year-over-year basis yet outperformed other global markets in the second half of FY 2023. Australian firms saw transactional demand grow by 4.9%, compared to a 2.6% decline in transactional demand decline for U.S. firms.

Long-term challenges include continued double-digit expense growth, with both direct and indirect expenses affecting firm profitability. Australian firms’ direct expenses rose an average of 11.4% in FY 2023, likely due to headcount increases and talent becoming more expensive. Rising indirect expenses are also impacting revenue growth, with inflation-driven cost increases hitting marketing & business development and knowledge management the hardest.

Against this backdrop, Australian firms saw profits per equity partner drop for the first time since FY 2016, as firms experienced profit margins declining by an average of 3.3%.

Talent is also cause for concern, with the report noting, “Australian lawyers appear uniquely dissatisfied with key aspects of their firms compared to their global peers.” A troubling finding was that high-performing Australian lawyers said they’re less likely to stay at their current firm than their global peers.

“Worryingly for firms, pay was not the main source of their discontent,” reporter Maxim Shanahan noted in Australian Financial Review’s coverage of the report.

Finally, the report detailed uncertainties over the impact of generative AI, which aligns with findings of the Future of Professionals Report that showed legal professionals’ concerns around AI include accuracy, data security, and ethics.

For more Australian law firm insights, download the 2023 Australia: State of the Legal Market Report.

Practical Law The Journal is the award-winning magazine companion to Practical Law, covering a wide range of transactional, regulatory, and litigation topics. It publishes monthly in a digital-only format hosted on Reuters.com. Legal Current reached out to the Practical Law The Journal team to discuss what readers can look forward to in the September issue.

Does the new issue have a particular theme or focus?

There seems to be no hotter topic today than AI. From intellectual property implications to cybersecurity, AI questions touch on a vast collection of legal issues. Many employers see the value of AI in their practices and protocols, but given the newness of the technology and the speed with which it is developing, they have less visibility into the risks.

In our feature article, Barbara Harris of Practical Law explores the major labor and employment issues implicated by an employer’s use of AI in the workplace, including the potential for discrimination in screening, hiring, and other employment decisions. And in our companion Q&A, Richard Warren of Miller Canfield breaks down the latest guidance from the EEOC on employer use of AI.

What other emerging issues can readers learn about in the September issue?

This issue is packed with expert insights on a range of compliance-related developments, including the federal securities laws and FINRA rules that broker-dealers must consider when transacting in cryptocurrency; key takeaways from the SEC’s new cybersecurity disclosure rules; what to include in a privacy policy under the California Consumer Privacy Act, as amended by the California Privacy Rights Act; and best practices for email marketing under the CAN-SPAM Act.

We also highlight recent legislation that targets ESG practices and presents significant uncertainty for an increasing number of businesses. These state anti-ESG laws continue to expand in scope and reach, creating a bind for companies seeking to comply with investor demands and a growing patchwork of statutes that aim to limit the use of ESG factors.

Additionally, direct listings are back in the spotlight following a recent U.S. Supreme Court decision involving Slack. This issue features guidance on direct listings as an alternative to traditional IPOs from a panel of attorneys at Latham & Watkins who pioneered the direct listing approach in Spotify’s groundbreaking transaction in 2018.

The Journal also profiles leaders across the legal industry. Whom did you interview this month?

Among others, we spoke with Judith Browne Dianis, executive director at Advancement Project, a nonprofit aimed at combating structural racism in education, voting, policing, criminal justice, and immigration. Browne Dianis shared practical steps that attorneys, law firms, and organizations can take to help eradicate racism in the legal system and the legal industry.

How can readers access The Journal?

Readers can enjoy free access to The Journal on reuters.com/plj. To view the content, they simply sign in to their Reuters account or, if they don’t have an account, they can register here. To be notified when new monthly issues of The Journal are published and get highlights delivered straight to their inbox, readers can also opt into our newsletter here.

Our Future of Professionals Report reflects our history of partnering with legal professionals and our commitment to applying innovative technology that helps our customers better serve their clients.

The report surveyed more than 1,200 professionals in legal, tax and accounting, global trade, and risk and compliance industries. Legal professionals’ perspectives in the report are what I anticipated based on what I’ve learned talking with our customers about their expectations for – and concerns with – AI and generative AI.

As we work to integrate generative AI into our legal solutions, we’re collaborating closely with customers to make sure we’re solving their biggest pain points and enabling them to focus their time where it matters most. Our customer-driven approach to developing generative AI tools follows how we created groundbreaking innovations like Westlaw Precision, Quick Check, and Practical Law Dynamic Tool Set, among others.

The report findings reinforced what we’re hearing from our customers: Legal professionals are generally optimistic about the potential for AI.

It’s encouraging that 55% of legal professionals expect using AI to lower costs for firms and drive greater firm profitability. Law firms anticipate using AI-powered tools to drive growth through increased productivity, reduced costs, and improved client service.

Law firms also believe AI will create new revenue streams; 81% of legal professionals expect AI to lead to new advisory services within the next five years. AI could help firms expand into new markets as well as drive efficiencies with tools that streamline client intake and automate contract drafting, for example.

And in-house counsel are looking to AI to achieve greater efficiency; 48% ranked efficiency as a top priority, while 39% said reducing external spend was a priority. I continually hear from in-house counsel about the importance of controlling their legal spend. They’re eager to see how AI can help them increase internal capacity and reduce outside spend without adding staff.

Yet legal professionals’ optimism is tempered by concerns.

While 66% of professionals believe AI will create new career paths, they also worry that AI could lead to job cuts. It’s a valid concern. But I see opportunities ahead – particularly for individuals willing to learn new skills.

For those who expand their skillsets into areas including software coding and AI prompt engineering, AI will likely open up more career paths. Lawyers and legal professionals who adapt to embrace AI are going to be best positioned to use it to their advantage – improving their personal productivity as well as enhancing their career growth.

Another issue, cited by 30% of legal professionals in the report, is accuracy of AI outputs. It’s a concern we share at Thomson Reuters.

It’s why we’re using our proprietary data to develop our AI-powered solutions. We will deliver verified citations to support all of the outputs, and our process is guided by human subject matter experts who understand the nuances and the context to train and finetune results. My colleague Joel Hron, vice president of Technology, has shared how Thomson Reuters is ensuring that our generative AI solutions will deliver trustworthy and accurate results.

Overall, my takeaway from the report is that legal professionals are looking past the hype around AI and generative AI. They’re aware that the legal industry has to put in the work to develop trustworthy AI solutions that will help strengthen productivity and increase firm profitability. And they’re excited – as am I – about the progress made as well as for what’s to come. I look forward to continuing to partner with and learn from our customers as we redefine legal work with the power of generative AI.

This is a guest post from Paul Fischer, president of the Thomson Reuters Legal business.

Rawia Ashraf, vice president of Product Management, was among the presenters at the webinar Thomson Reuters hosted with sneak peeks of the generative AI capabilities in Westlaw, Practical Law, Legal Drafting tools, and the plugin with Microsoft 365 Copilot. More than 150 attendees submitted questions during the webinar.

Today, Ashraf provides the third in a multi-part series of Thomson Reuters subject matter experts answering attendees’ questions. She shares how intelligent Drafting tools will use generative AI to bring together content and intelligence from across Westlaw, Practical Law, and Document Intelligence to surface key insights, legal knowledge, and answers to complex questions.

Is the drafting tool going to exist as a Word plugin or through the Westlaw website?
Ashraf: “Our Drafting tools will use generative AI to help users draft and modify clauses from within Microsoft Word. To clarify, Thomson Reuters is developing its own intelligent Legal Drafting solution as well as working with Microsoft to develop a drafting solution, powered by our legal products and content, and Copilot for Word. Generative AI capabilities will enable Legal Drafting tool users to draft and modify contracts and clauses within Microsoft Word. We’ll enhance large language models (LLMs) by leveraging trusted data – such as Practical Law standard clauses, precedent, and drafting notes – to provide context to the AI so that the results we deliver are more accurate and verifiable than LLMs alone. Also, users will be able to pull Practical Law clauses and content as well as their own proprietary content directly into their drafting process, using a dialogue-based search to identify the right language for their contract. Users can also summarize and compare clauses and drafts within Word using Thomson Reuters Document Intelligence. These capabilities will allow users to quickly address issues, make decisions, and move on to the next issue in their contract negotiation.”

Does the Word tool read/match defined terms in your existing document?
Ashraf: “We’re excited to provide users with a solution that takes some of the most burdensome challenges out of drafting. Our solution enables legal professionals to use their expertise to edit, validate, and build the final document with integrated access to Thomson Reuters knowledge, content, and AI technology. The tool will detect defined terms – either in the definition section or the entire file, whichever the user decides – and then the user can see all defined terms that were detected. It will also flag a variety of defined term errors.”

Does the Word integration work with Mac?
Ashraf: “Yes, the solution works with Macs and PCs.”

For the drafting tool, does it allow you to see alternative versions? Also, can you ask it to provide “pro-landlord” or “pro-tenant,” etc.?
Ashraf: “Yes, our drafting solution allows users to search and filter to get specific language across many different facets, including whether it is favorable to one party or another. We also allow users to upload their own playbooks for guidance and preferred language right at the point of drafting.”

Will you need Office365 to take advantage of the drafting component?
Ashraf: Microsoft Office 365 will not be necessary to leverage our Drafting solution.

For more insights from Ashraf and other Thomson Reuters leaders on shaping the future of work in the legal profession with generative AI, register here to access recordings of the June webinar. Also, sign up on TR.com/AI for updates on how Thomson Reuters is integrating generative AI across its legal solutions.

Dear friends,

We are saddened and concerned as we watch Hurricane Idalia make landfall in Florida and Georgia. Please know that at Thomson Reuters, we are deeply concerned about everyone in the path of this dangerous storm. We hope that you remain safe and can quickly recover from the effects of the hurricane.

For customers displaced by the storm, we have set up a disaster recovery hotline. We kindly ask that you call us at 1-833-TRCARES (1-833-872-2737) to let us know how we can help – or just to let us know that you’re safe.

We stand with you and offer our full support.

Best wishes,

Loida Malonzo
Vice President, Customer Service
Thomson Reuters

ILTACON seemed back this year,” said Zach Warren, manager, Enterprise Content for Technology and Innovation, Thomson Reuters Institute. “While attendance may not have been exactly at pre-COVID levels, it was darn close, and the energy felt the same.”

With more than 3,400 registrants, as Steve Embry noted on TechLaw Crossroads, it was the second most-attended show in the conference’s history.

Several Thomson Reuters employees were among the crowd. Legal Current caught up with them for their takeaways from the conference.

What was missing stood out to Kathleen Miner, vice president, Product Marketing.

“Usually there are more product announcements at ILTACON; this year there were very few,” she said. “Comments were that companies were waiting until they have a generative AI product to offer.”

Pablo Arredondo, Casetext CIO and cofounder, agreed that generative AI was front and center.

“Any topics and trends had to do with specific facets of the phenomenon: how to vet solutions, how best to use the tools available, how to talk about its use with clients, how to roll it out among members of a firm, how to train staff … everything began and ended with generative AI,” Arredondo said.

Warren also noticed firms and legal departments are ready to transition from talk to action.

“Even in non-AI related sessions and conversations, I noted that a few consistent jokes about ‘We need to make a generative AI reference in here somewhere’ always got a laugh,” Warren said. “But what that tells me is not only is generative AI pervasive, but the industry is ready for it to be more than just talk. The hypotheticals of generative AI have been near discussed to death at this point, and I think everybody is ready for actual implementation and use cases. That anticipation will make the introduction of new generative AI tools hit even harder when they arrive for legal.”

Rachel Beithon, senior product manager, echoed Warren’s perspective.

“While, overall, customers are excited about generative AI and the conversational AI piece, they are more excited about what other applications we plan to use LLMs for,” she said. “It is a highly knowledgeable – about AI and technology – group of legal professionals at ILTA, and they understand that LLMs are going to be very powerful and can really help us leap forward in terms of content and capabilities in our products.”

Arredondo noted the legal profession is ready to implement AI.

“During both one-to-one discussions with participants and listening to speaking sessions, it was quickly clear that most legal professionals do not fear the use of generative AI, and in fact are genuinely eager about the progress the technology has made,” he said. “The excitement was palpable, and most conversations revolved around how to educate lawyers about the power of AI tools and how to start incorporating them into daily workflow.”

“Customers are excited about the possibility of generative AI to do better work faster,” added Zena Applebaum, vice president, Product Marketing. “I heard from procurement professionals in firms, as well as lawyers in firms and practice managers that they are excited about the power of the technology for contract review and analysis, contract life cycle management, and drafting capabilities as well as legal research. Customers are also really excited by the integration with Microsoft 365 Copilot.”

Throughout the conference, Thomson Reuters attendees talked about redefining legal work with the power of generative AI, ahead of launches of generative AI capabilities in Westlaw and Practical Law, among others.

A memorable moment for many was the Casetext toast, pictured above.

“My favorite moments were those spent with our new colleagues from Casetext – getting to know them, the product they’ve built and support, and really getting a view of the great talent and colleagues we have added to our Thomson Reuters team,” said Erica Kitaev, senior director, Product Management.

“It was an incredible moment for me to see my team at Casetext and our new team members at Thomson Reuters come together for a toast to the future,” Arredondo added. “I couldn’t be more thrilled about joining the Thomson Reuters family, and ILTACON was the perfect place to celebrate and acknowledge the work it took to get to this moment.”

Improving productivity, driving law firm profitability, and providing high-quality advice to clients are among the top motivators for legal professionals to embrace AI, including generative AI. These are among the findings of the Future of Professionals Report, which surveyed more than 1,200 professionals in legal, tax and accounting, global trade, and risk and compliance industries. 

Legal Current shares top takeaways from the report for legal professionals, including opportunities generative AI presents as well as concerns with the emerging technology.    

1. Legal professionals expect AI to improve productivity. Productivity is a top priority for legal professionals, and improved productivity was ranked as the biggest positive effect of AI. This finding follows the Q2 2023 Thomson Reuters Law Firm Financial Index, which noted the legal industry faces ongoing productivity challenges; firm productivity dropped in Q2, though it was less severe than in previous quarters. The Future of Professionals Report showed 38% of professionals anticipate AI giving them more time and mental bandwidth for higher-level tasks. It’s a key benefit considering that 67% of professionals rated “producing high-quality advice” as a strong motivator in their work.
2. Law firms see AI as an opportunity for increased revenue. More than half (55%) of legal professionals predict that using AI will lower costs for firms and drive greater firm profitability. AI also may lead to greater use of alternative pricing models as it challenges law firms’ traditional billable-hours model. With AI automating some legal tasks, legal professionals will have more time to devote to higher-value work, such as strengthening client relationships and business development – which could, in turn, increase firm profitability.
3. AI may be a threat to law firms that don’t embrace it. The report found 82% of professionals expect AI to lead to new services in the next five years, and 66% believe AI will create new career paths. While AI could lead to some job cuts in the legal industry, it will also present opportunities for individuals to learn new skills – from coding to math – that can help firm drive efficiencies. Law firms that embrace new technologies – and legal professionals who learn new skills to adapt – will be best positioned to use AI to drive and sustain growth.
4. Law firms may need to increase investment in technology and training. Law firms have a reputation as slow to change, yet clients and law departments alike increasingly expect their firms to use technology – specifically to reduce costs. Clients are increasingly willing to move work to high-quality but more cost-effective outside counsel, according to the 2023 Report on the State of the Legal Market. Client demand may encourage firms to overcome any fears of AI’s learning curve and demonstrate their leadership in implementing technologies to drive efficiencies – internally and for their clients.
5. Risk and regulation continue to be areas of concern. Professionals’ biggest fears around AI outputs include accuracy (25% overall; 30% for legal professionals), data security (15%), and ethics (15%). To help address these concerns, 93% of professionals believe that regulations to govern professional ethics of AI are necessary. The Future of Professionals report noted both the need for humans to be involved with AI and as well as the creation and implementation of AI guardrails – backed by a globally aligned, cross-industry regulatory framework.

For more insights, download the report. 

Thomson Reuters announced today that it has closed on its previously announced acquisition of Casetext, Inc., a provider of technology for legal professionals, for a purchase price of $650 million in cash.

Founded in 2013, Casetext uses advanced AI and machine learning to build technology for legal professionals, creating solutions that help them work more efficiently and provide higher-quality representation to more clients. Casetext’s customers include more than 10,000 law firms and corporate legal departments. Its key products include CoCounsel, an AI legal assistant powered by GPT-4 that delivers document review, legal research memos, deposition preparation, and contract analysis in minutes.

The acquisition supports Thomson Reuters “build, partner and buy” strategy to bring generative AI solutions to its customers and the company’s efforts to redefine the future of professionals through applications of generative AI. Other recent developments include Thomson Reuters commitment to invest $100 million-plus annually to integrate AI into its flagship content and technology solutions, as well as its work with Microsoft for a new plugin with Microsoft 365 Copilot, with the two companies collaborating on a legal drafting solution that leverages Westlaw, Practical Law and Document Intelligence. In July, Thomson Reuters also launched a beta program to pilot new generative AI capabilities in Westlaw with select customers.

For more details, read the press release.