What If Legal AI Isn’t The Issue at Al, But the Fact That It Doesn’t Know Your Matter Well Enough?

0:00Okay, so welcome everybody to today's Legally Speaking podcast sponsored by Clio Live. I'm delighted to be joined once again by a returning guest to the show, the wonderful Joshua Lenon, who is the lawyer in residence at Clio, an attorney admitted to the New York bar. And for over a decade, Joshua has bought legal scholarship to the forefront of Clio with the conversations happening both within Clio and their dear customers. And Joshua has worked extensively to educate lawyers on technology's capabilities and enhance their practice whilst teaching tech companies about the unique needs of the legal system.

0:38His insights lead the evolution at Clio, and I've seen that first time through many of our interviews over the years, driving advancements for the benefits to law firms, their clients, and the entire legal ecosystem. So a very big warm welcome back to the show, Joshua.

0:54Joshua Lenon:Thank you so much, Rob. I am very excited to be having a conversation with you again. Oh, and likewise, it's always a blast and you're always a fountain of knowledge and you always have so many great insights to share. So let's get into it. Let's set the scene to start with. We're talking very specifically around the UK and Ireland legal insights reports today. And that showed that 89 % of legal professionals are now using AI in some capacity, which is great. But only 27 % have actually embedded it widely across their firm. So what does this gap tell you about where the legal profession actually is in its AI journey right now?

1:31Joshua Lenon:Yeah, I think it's interesting that we have this gap, as you described, between we know about AI, we've taken a look at it, we may even have a tool available. And then we're not widely using it. And I think there are three areas where this really comes to the forefront. The first of which is the size of the law firm. The larger the law firm, the more likely they are to describe AI as being universally and widely used. And so we see the magic circle firms are throwing money at different AI tools and then looking to get them widely adopted. And then when we look at your high street firms, they are very much interested in AI, but their available solutions oftentimes are either very specific to a particular task, right?

2:23Joshua Lenon:It does one thing and one thing well, or it's a commercial generative AI tool like ChatGPT or Google's Gemini that is not legal specific. And in fact, we see just around a third of solicitors telling us that they're using this kind of consumer generative AI. And so we have firm size. We have, is it legal specific? Right. And then even if it is legal specific, does it only do one thing? And maybe that's not the one thing that I do. So lots of interest in AI, but depending upon what your firm size is, the maturity level of both your ability to adopt, your willingness to adopt, and the appropriate tool being available has been something that I think has stymied UK and Irish legal professionals.

3:15Joshua Lenon:Unfortunately, that's all changing with Clio's Clio work and Vincent offering. I don't want to be too salesy, but we're really excited about it. Oh, and we're really excited about it as well. And I think it's really cool that now obviously Clio with last year with that huge acquisition of Vincent and, you know, with Sharedo moving into the Clio operate because historically, obviously, huge focus and success in the SME market. But now you can see it from both sides, like you say, from the high street and at the big law end. And one of the things you touched on there is sort of rethinking. And our latest guests actually on the Legal Speaking podcast are the founders of the UK version of YPOG.

3:50And they really believe in this from an AI perspective in terms of redesigning that rethinking. And your report frames workflow integration as the real differentiator for high-performing teams. Why do you think, though, so many firms still treat technology as just a general add-on to its existing processes rather than perhaps the deeper work that needs doing, the reason to redesign them entirely?

4:15Joshua Lenon:Well, there's always the traditional, it's not really traditional, but the long running reasons that technology adoption has been poor in the legal industry. And the first of which is just having time, right? Our Insights Report talks about how close to half of legal professionals are telling us they're working outside of business hours just to catch up, right? And so some of these tools do need time to do due diligence, to figure out their full capabilities, like where they're strong and where they're weak. And because so many legal professionals are just like trying to keep up, that's something that's been very tough for them to do.

4:54Joshua Lenon:The second reason is the applicability of technology outside of their law firm. There are so many places, unfortunately, throughout the government where technology still isn't embedded and accessible as it should be. We see this in instances like conveyancing, where we're still struggling to utilize the online capabilities of conveyancing to really speed up the process. And until the government catches up, you can throw lots of technology at your own firm, but there's still that barrier of how far it can go. So between those two, right, legal industry has always been slow to adopt technology. But I think we're starting to see a change.

5:36Joshua Lenon:We see the government is investing in new technologies, new offerings, and interoperability with lots of other tools out there, which is very exciting for us as a vendor, right? Because we can take your work farther. And the second thing is we're starting to see these tools increase in maturity and user experience such that it doesn't take as much time to get on board with these tools now, especially if they work with technology you already have. Right. So rather than having to throw yet another separate technology silo onto your workflow, instead, what we're seeing is legal AI tools are actually embedding themselves in your workflow and helping to move them forward faster.

6:25Joshua Lenon:And it's that integration of it's where I'm already working. It understands what I'm doing. It actually helps move me not just to the next step, but maybe the next two or three steps. That is, I think, driving the benefits of artificial intelligence tools within the legal space. I love that. And ultimately, you're looking for fusion, aren't you? Rather than sort of confusion with all of these things and to reduce that friction and have a lot more. I'm going to steal that phrase. That's so well framed. Okay, sorry. Please continue. No, absolutely. And one of the other things I was going to welcome is that anyone watching this and convincing in the UK would welcome the change, the amount of stress and hassle it takes.

7:10I've been through the process many times myself here. This is where tech for good can really benefit everyone. So we welcome that. But I want to talk about context because I've been at ClioCon. I thought Jack's keynote last year in Boston was incredible. and he talked a lot around the context as sort of the core problem. And you've written that legal AI without full matter context is essentially working blind. So can you walk us through then a concrete scenario where that context gap produces a generally bad outcome and one that a lawyer might not even catch?

7:43Joshua Lenon:Yeah, absolutely. And so lawyers are, solicitors and barristers, are being hired for their professional judgment, right? And being able to look at a scenario and weigh the facts, the law, and alternative strategies to work their way through. But as we're seeing, everything's becoming more and more complex. We're seeing more data sources, right? If you ask a lawyer that was helping with divorce like a decade ago, right? They would never have considered social media as part of necessary evidentiary discovery, right? for your own client much less the other side but now we've piled all this stuff on top of the different types of information and sources of information that we need to have our professional judgment really understand the situation and so what we've seen with legal ai is because it has this vast processing power that you can throw more and more on top of it without leading to to burnout, cognitive load, right?

8:54Joshua Lenon:And the time pressures that we often experience as legal professionals just trying to get context, right? I need to read through all these documents. I need to go back over my notes. I need to remember what we said in that phone call three months ago, right? And AI is actually able to look at all of these things and provide information contextual awareness that you either don't have at the front of your mind or that you're forcing yourself to carry all the time just so you don't forget it. Instead, the AI can carry that load for you and provide the context when you need it. When I mentioned divorce, for example, when onboarding a new client, right, they're probably talking about divorce, but based on their specific factual situation, right?

9:47Joshua Lenon:They might be a better candidate for a separation agreement or a judicial separation, right? Maybe they haven't been within the jurisdiction long enough to be eligible for a divorce proceeding, right? And instead of you having to parse this all out, right, and then start to craft a legal strategy, the AI can help look at their intake, their phone calls, the emails that they've sent you, look at the law that's surrounding it, and actually lift up the right approach for them, right? This family, unfortunately, hasn't been in England long enough to qualify for a divorce, but if they're interested, here's a judicial separation and the requirements that they meet, right?

10:33Joshua Lenon:Here's where their goals might not align with this, right? They're looking for a clean break financially. And so unfortunately, judicial separation doesn't allow for that, right? You're still kind of pulled together. It doesn't allow for rulings against pensions, for example, right? And so it can raise all of these issues and help you determine from a vast source of information, both from your own files and from the legal information stored within Clio work, for example, what is the best, most appropriate approach for this client before you? And it's without you having to like, just bury yourself in that every time you talk to that client.

11:21Yeah, I love that. And we're going to talk more now about Clio work, because what areas of the day-to-day work where lead professional feels context actually lost most acutely? And how does ultimately Clio work address that problem? Give us some more specifics.

11:38Joshua Lenon:Well, it does two things really well. First is it has the ability to just go through lots of information. And the information it can access is both that which is stored within your own client files in Clio Manage, Clio Grow, Clio Draft, but also this vast legal library that we acquired when we purchased Vilex. Over a billion documents, not all of them are UK specific, but a vast library of UK law, UK case law, lots of journals and professional trade writing about the practice of law and different types of workflows, all of which are included. And so it's able to go through those at the same time, thereby raising certain items that you might not either be aware about, hey, I found this email that actually changes the analysis, or there's been a slight change in what's required as a part of financial disclosures.

12:42Joshua Lenon:And bring that to the fore so that you can start to then apply judgment rather than labor. And then the second thing it does well is it turns all of that gathered context and knowledge into work product. And this is a somewhat US specific term. But this is the notes, the drafts, the writings of a legal professional. And in the US, where product is protected under evidentiary law as being something that's owned by the lawyer, as given professional secrecy and not disclosed as evidence. But the important thing is it's where all of this investigation and research and conduct actually becomes a product, a work product.

13:36Joshua Lenon:And so Clio Work not only does this contextual gathering, this research, this awareness of all this information, but it actually then turns it into something you can use. Right. It's drafting documents. it's creating templates for you it's organizing things into tables and spreadsheets that you can use elsewhere and so it combines both this research and awareness with actually getting something done at the same time and so it's very exciting to see just how fast it moves things along love it love it yeah and who doesn't love you know that that speed you know success loves speed as so many say one thing you can't get away from this year and it was always going to be talked about a heck of a lot is agentic ai and so that leads nicely on to you know clio work again who have just launched you've just launched your agentic uh capabilities you know the ability to basically take a single goal orientated prompt and execute complex you know super complex you know multi-step legal tasks autonomously you know again that's a real net positive 10 years ago people would think, what the heck does that even sentence even mean?

14:45For the skeptical practitioner out there in the UK and Ireland, what's the most persuasive single use case you'd point to?

14:52Joshua Lenon:Anything where you're charging a fixed fee. To be perfectly honest, agentic AI lends itself really well. So will writing, conveyancing, actually, we're seeing a large rise in fixed fee for certain types of family law matters, right? And so if you're charging a fixed fee, agentic AI is what turns that fixed fee from a repetitive source of revenue to a repetitive source of profit. And here's how I really describe what it does is all of these firms have a checklist of things that they need to do for these fixed fee matters, right? What the agentic AI does is it looks at that checklist and figures out how much it can do for you and then what needs your input along the way.

15:42Joshua Lenon:And then it just starts working its way through. So if you're doing conveyancing, right, it's going to look at what documents are available, what disclosures we need from the client, what steps need to be communicated back to the client, right? What's the timeline for the final purchase and when we close the commands, right, all of these things that are on your checklist, it's going to look through and be like, I can do this, this, this. I'll have to pause while you give me some feedback or take this step. Maybe it's a public communication. Maybe it's double checking the forms and figures. Maybe it's unfortunately struggling to upload it to the right website with the government, right?

16:24Joshua Lenon:Because they still haven't figured that out. And then once you tell you've hit that stage, then it moves on. And so it is that goal oriented, finish this checklist. What's I think good for legal practitioners about how we're doing agentic AI is it's a fully documented system. It's not a black box where you tell it a goal and something spits out. Instead, it's telling you the steps that it's taking along the way, the information that it's accessing in order to get the context that it needs, right? And that becomes a documented part of your case file such that you can confirm that it took the right steps, right?

17:11Joshua Lenon:It's protective evidence that you are applying your professional judgment at the right points of time, right? And it allows you to adjust, right? If the agentic AI has done something that is right by the data, but not right by maybe a client's new request, right? You can add that new context in. And so it becomes documented, transparent, and adjustable. I really like that about it. I like that. And it's a clear differentiator, isn't it, in terms of Clio's agentic approach right there because like you say you've got the real-time thinking tracing but also can interrupt and also redirect mid-task so i think that's super you know beneficial robust because another thing that we should probably talk about is the importance of that transparency layer again going back to the report's findings because 67 percent of ai users are already raising internal data security concerns so how important is this that clio is really doubling down on this particular approach?

18:16Joshua Lenon:I think it's incredibly important. I think it's important for all AI tools, to be perfectly honest. Not to jump outside the borders of the UK, but the EU AI Act, right, finds legal work to be especially sensitive and has a higher risk profile, right? And so this is international recognition that when it comes to using AI, there are benefits, but there's also, I think, a heightened responsibility. And I really was actually encouraged to see that 67 % of UK legal professionals have internal data security concerns because they should, right? This is not something that you should just, I want to use the phrase loosey-goosey, but I really feel like that's a North American idiom.

19:06Joshua Lenon:You can't be loosey-goosey about it. But instead, it's got to be something that you are on top of and you're mindful the whole time. And so 67 % having concerns, that's, I think, too low a number. Now, are they seeing actual risk? That's, I think, much less, right? It's that concern keeps you using tools that are appropriate, that make you mindful of things like professional secrecy obligations. And how does that apply in choosing tools to handle confidential client information? And so, yeah, we need this transparency. Clio is committed to it. We're showing you not just the back end that we're building, which we'd be very transparent about.

19:56Joshua Lenon:Where is your data stored? Where is it processed? What types of information is available in generative AI, which not every tool does, right? You can see our library that we're pulling against. We're also very transparent about the fact that we're not training on our customers' data. And so anything that Clio Work and Vincent is accessing from your law firm stays with your law firm. We don't train off of it. We don't retain it. Contractually and technically, that's just separate. And then when we get to that data itself, making sure that the lawyer has a record, a defensible record of how they've used AI is just another part of concern for internal data security.

20:43Joshua Lenon:That is a part of, I think, table stakes for vendors of legal AI like Clio. Yeah. And it just shows, I mean, for the many years that we've partnered with Clio on the League's Bean podcast, the level of sort of thought and due diligence and putting clients first and putting the people using the technology first and just the real depth of thinking, not just to produce something, but like you say, has so much thought behind it to ensure that you're bringing the absolute best to your clients. And hence, you know, this huge success and surges you've had in recent years with adoption, and of course now moving up market as well with Clio Operate.

21:19Back to the report, though, because we love some stats and facts. 84 % of the AI queries are already being submitted, it said, as freeform, goal-based requests. So does that tell you the profession was always ready for agentic AI? They just didn't have the infrastructure to support it or something else? Yeah, I think, honestly, legal industry has been just so ready for legal AI.

21:45Joshua Lenon:They just didn't know it because it wasn't available. way back when chat gpt first came out all of four years ago which is unfortunately like a century in ai time we surveyed legal professionals and only eight percent said generative ai was too hard to use and this is from a profession that struggles with email and texting right yeah but they looked at ai and they're like oh i can use that that's simple and so this goal-based communication right Find me the best legal argument or look for clauses in this contract library of a company we're thinking to acquire that might disrupt this deal. Those are goal based ask.

22:33Joshua Lenon:Right. And it's something that we would have turned to like junior lawyers and junior solicitors and been like, here's a room full of banker boxes. Go through and find it. Right. It's the exact same guidance or well, not even guidance, just demand that we would give those those armies of junior professionals. And instead now we're shifting that same type of workflow approach to generative AI. I think there are some long-term industry issues with shifting from like training contracts to AI that we really need to wrestle with, both as vendors and as legal professionals. But yeah, I think it's just something that's always been baked into how legal professionals work.

23:20Joshua Lenon:And now we have the technology to support it. yeah absolutely and and you mentioned there four years ago seems like a lifetime ago in the ai world when it comes to chat gbt i'm going to close our conversation today on you looking forward probably in sort of a few years time because you've made the argument that the best legal ai is one that already knows your matter so looking out sort of three to five years out which is a lifetime particularly in the ai world things can change what does a law firm that has fully embraced that principle look like and what does one that hasn't looked like So I think, first of all, we're going to see a huge shift in how legal professionals work.

23:59Joshua Lenon:They're going to come to work with most of the drudgery just already done for them, right? We received this email. We received this notice from the government. We've seen this filing at court, right? And so here are the steps that I've already taken to prepare what we normally do next, right? The AI is going to ask, did I get it right? Do you want me to take further steps? Is there something additional that I should be doing? But you come to work with a day's work already done. And from there, it now becomes exercising your judgment, providing that guidance and counseling to clients, which is something that we know they value.

24:44Joshua Lenon:They really want a legal professional to be there as a partner in whatever pursuit they're taking. And this frees you up to actually be that counselor at law rather than being a paper pusher. But firms that embrace this are going to dramatically shift how they work. We're also, I think, going to see a further increase in fixed fees. We know already that something like 54 % of matters in the United Kingdom and Ireland are using fixed fees. It's incredibly high compared to the rest of the world. And I think part of that's just the innovation when it comes to the regulation of legal services within these areas.

25:27Joshua Lenon:But I also think it's a willingness to adopt what's best for both the firm and their clients. And fixed fees provide price certainty, price transparency. The legal ombudsman is very much a favor of them, right? So I think we're going to see maybe even like an 80 % of legal services start to switch to fixed fees. Hourly is always going to exist. I don't think it's going away. That's where Jack and I disagree. but I think it will be less applied with much higher hourly rates in the future, which will be very interesting to see how it transforms. And the firm that doesn't adopt this is actually going to find themselves losing opportunities because they're not going to be able to keep up with the speed of competitors that are using AI.

26:19Joshua Lenon:They're not going to be able to also compete with the quality of services that are coming out of firms that have AI. Firms that are using AI in our Legal Insights report, one of the biggest benefits is that they're more responsive to clients. Right. And so that's going to shift the marketplace towards these firms that are providing individual attention, sound professional judgment and speed and quality all at the same time. And those firms that don't do that are going to find themselves, unfortunately, with a dwindling book of business and trying to figure out what happened. yeah absolutely because the time is is now isn't it to to take action i think just one final final question because i think people still still sort of need to have this hammered home i know cleo's view with all of this happening is this is going to increase demand for legal services this this revolution and there's talk of you know obviously loss of jobs you know people are just going to go to these tools and the lawyer is going to be removed where actually you know this is a real opportunity for increased demand.

27:26And you gave that a good example, also about saving a day's work from myself putting my careers hat on helping build legal careers. That's that weekend that maybe you have always had to work because you haven't been able to get it done that you get that time back with your family that is precious, that is important to you. But I'd just love for you to say a word on terms in terms of Clio's view that you believe with this AI revolution, that this is actually going to increase demand for legal services. And there is lots of opportunity for those who really choose to embrace.

27:50Joshua Lenon:Yeah, I think there are several stats from the insight report that actually support this. So I don't think it's just Clio. I think it's our customers and legal professionals who are using Clio's tools that are clientless. 78 % tell us that AI actually enables them to handle a higher volume of clients. And 71 % actually tell us that it increases the profitability per case per client. Because again, fixed fee, but they're able to produce the outcome faster. So that means that they're having a lot more flexibility in terms of what they charge. I might be able to charge less, but still make more profit.

28:33Joshua Lenon:It's taking me less time to do quality work so I can have more cases and more clients. And it's the combination of those two that I think is going to increase access to legal services. And studies globally show that when the public has access to sound legal advice, there is a huge net benefit, not just for the individual who's getting legal advice, but for the legal system, for the public at large, that actually ends up saving tax dollars. One study in the United States found that for every dollar invested in legal aid, so direct access to legal advice, actually netted a sevenfold increase in the surrounding community.