AI Implications on Cost Structure of Existing Legal Services
Technology can disrupt cost structures of existing businesses and legal services. According to Moore’s law, technological growth is not linear, but it is exponential. There is another law, now dubbed Flatley’s Law, based on how the cost of sequencing a human genome has decreased from $10 million dollars to only $1000 dollars in the past 13 years. These laws show that technology can hugely decrease costs over time, and this will likely apply in the case of legal services as well.
However, there is also data to argue otherwise, that legal professionals will still have a hefty margin to gain in the future. Why don’t people trust chat-bots as much as human counterparts? If one can earn a CFA, why bother get a degree in finance? Additionally, in admission consulting, you can use data to help you select schools, but so many people chose a school because of the “people.” Ultimately, the cost implications of new technology on legal services depends on the type of service. Some services can be commoditized in the sense that fees for that particular service will be near homogenous. Services like registering companies, filing basic paperwork, shutting down a business, etc. However, legal services are beautiful because they require a human touch which is irreplaceable, at least in the immediate future.