Posted by Legal Futures Associate SearchFlow
Commercial property: Firms adapting to AI
Rewind to mid-autumn 2022, when the Paris Agreement’s Rulebook was signed and completed at COP26 in Glasgow and the world saw a monumental shift forwards in the commitment to reducing our emissions.
As such, it would be fair to assume that, if someone asked you back then for two words dominating discourse in the legal sphere and society at large, you would probably not hesitate to respond ‘climate change’. But since November 2022 and the release of ChatGPT turbo 3.5, another paradigm shift has also got everyone talking.
Yet, while the use of AI has grown significantly in almost every industry, lawyers have been asking themselves, ‘how can it help in the legal industry?’, ‘how reliable is it?’ and ‘what are the risks?’.
Then, April 2023 saw another significant event. The Law Society issued its long-awaited guidance highlighting the wide-ranging effects of climate-related risks on legal practice.
How are commercial real estate lawyers responding?
As the market continues to rapidly evolve, and along with it the scope of considerations for lawyers, it’s essential to step back and take stock of the progress.
To help us benchmark how the industry is reacting to these far-reaching developments, in our latest commercial market research, we interviewed 40 senior commercial real estate lawyers across the UK to understand their priorities and concerns.
Navigating the artificial landscape
It was no surprise to learn that firms are expecting to invest an average of 13.5% of their revenue in digitisation this year, as the industry is continuing to reap the benefits of digitisation.
A significant 70% of respondents shared with us that they believe digitisation and technology have helped them improve client experience. The same proportion voiced that they have seen significant or some benefits when it comes to implementing technology to help them better manage risk and compliance.
But where’s AI’s place in this? Our figures show some real momentum behind its implementation in commercial law firms. Just under two-thirds (61%) of this year’s respondents say they have already been using AI to assist fee-earners with their work.
A further 28% started using AI to help their fee-earners at some point during the last year, but as many as one in three (33%) have been using AI to provide assistance to their fee-earners for more than 12 months.
What’s more, nearly a quarter (23%) of respondents say they are currently reviewing AI solutions with a view to integrating AI to assist fee-earners within the next 12 months.
A difficult climate?
There is no doubt climate change poses one of the most complex challenges for the legal industry; nonetheless, our research shows firms are adapting.
When we asked in our 2022 market research whether firms had a net-zero strategy, only 37% did. Jump to 2023, and a further 10% are on this green journey.
But whilst lawyers are making progress in-house, it’s a different picture for their clients. On average only 15% of our respondents’ clients have asked them for advice on future climate change risks.
The low appetite from clientele is reflected in the number of our interviewees who report on future climate change risks as standard. Compared to the results from our market research in 2022, 20% fewer interviewees said their firms report on future climate change risks than 2023 (85% in 2023, 65% in 2022).
But the intent is certainly there: one-third of the commercial real estate lawyers we spoke to said they intended to include future climate risk search reports as standard best practice.
It’s evident that the legal industry is at a crucial juncture, facing the dual priorities of integrating AI into their practices and addressing the impact of climate change.
The findings from the research indicate a growing acceptance and utilisation of AI among commercial real estate lawyers, with a significant focus on digitisation and technology to enhance client experience and manage risk.
Additionally, there is a noticeable shift towards addressing climate change within law firms, although there remains a gap in client demand for advice on future climate change risks.
Read our latest market research for more insights into how commercial real estate lawyers are reacting to the latest advancements.
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