Keep your finger on the legal world's pulse
20th November 2023
Don't fear AI - shape it, lawyers are advised
Generative AI has raised concerns about its ability to meet client expectations and the potential replacement of lawyers. However, these concerns are often exaggerated, and lawyers should focus on shaping AI and its applications. Generative AI has the potential to improve its quality through advanced algorithms and curated datasets. Lawyers have the opportunity to contribute to the development of Generative AI by providing expertise and practical knowledge. While some traditional legal tasks may be performed more efficiently by AI, lawyers should not wait for flawless AI tools and must take ownership of their work. AI will not eliminate the need for lawyers but will allow them to approach their work differently, emphasizing judgment and creativity. Law firms that combine technology with empathy and insight will serve their clients best. Lawyers who possess qualities such as curiosity and empathy will be successful in this new dynamic. Michael Gerstenzang, Managing Partner of Cleary Gottlieb, and David Stiepleman, Co-President and Co-Founder of Sixth Street, provide insights on the future of law and the role of lawyers in the AI era.

Clients embrace AI but firms cautious on adoption
Law firms are grappling with the adoption of AI and its potential impact on their businesses. While some firms are working on innovative solutions, they are cautious about using generative AI tools for client-facing work. Clients, on the other hand, are more open to using AI tools before approaching law firms for legal opinions. The dynamic of how clients may require firms to adjust their pricing to reflect the use of AI tools will be interesting to monitor. Law firms are experimenting with AI, but risks and skepticism remain. Concerns include the misuse of sensitive data, the potential for errors, and the fear of deskillling lawyers. Copyright infringement cases have already emerged, highlighting the risks of scraping copyrighted content without permission. Building AI models confined to internal content may also limit their effectiveness. Law firms are cautiously exploring AI implementation, considering both the capabilities and risks involved.
Foreign influence on U.S. litigation overblown, says head of lawsuit funders' trade group
Concerns that foreign entities are exerting influence on U.S. litigation via third-party financing are entirely overblown, according to Gary Barnett, the head of the International Legal Finance Association. The $13.5bn litigation finance industry has faced increasing scrutiny, with a bipartisan bill introduced in Congress to require disclosure of foreign entities investing in litigation in federal courts. Barnett, executive director of ILFA, dismissed the idea that foreign adversaries can manipulate the legal system through legal finance providers. He argued that the push for increased scrutiny of outside funding in lawsuits is scaremongering by the U.S. Chamber of Commerce. The industry has seen some tightening, but Barnett believes that litigation finance is an attractive asset class due to its lack of correlation with the market.
GCs concerned about rate hikes after associate pay raises
Some general counsels (GCs) are expressing concerns about potential rate hikes following associate pay raises. However, Milbank's chair has stated that the salary increases will not significantly impact the firm's billing rate decisions in the future. The move by Milbank to raise associate salaries by $10,000 has raised concerns among clients, who fear that it may lead to higher billing rates. Corporate counsel and industry analysts have warned that clients, already fatigued by billing rate increases, may choose to keep more work in-house, shop around between firms, or face the increased costs. The concerns raised by GCs highlight the potential consequences of associate pay raises on law firms' relationships with their clients.

Top leaders are leaving law firms at an unprecedented rate
Leaders at the nation’s top 100 grossing law firms are increasingly announcing plans to step down. At least 25 Am Law 100 firms have seen top leaders leave or announce their departure in 2023-2024, compared to an average of 10 firms per year in 2006-2022. Legal consultant Kent Zimmermann of the Zeughauser Group has heard from more than 10 managing partners or chairs of Big Law firms who intend to retire in the coming months. The average tenure of departing leaders is 12.8 years, with an average age of 66. Two reasons for leaders staying longer are increased labor market participation by people ages 55 to 64 and the desire to see their firms through the transformative changes driven by COVID. The aging partner population and the decline of mandatory retirement policies are creating urgency around succession planning in law firms.
California moves closer to allowing law graduates to skip bar exam
California is considering allowing law graduates to become licensed attorneys without taking the bar exam. The State Bar of California's board of trustees has voted in favor of testing the Portfolio Bar Exam, which would require aspiring lawyers to work under the supervision of an experienced attorney and submit a portfolio of legal work for evaluation. If approved by the California Supreme Court, this alternative pathway to licensure would reduce the burden of studying for the bar exam and provide a more practical assessment of a law graduate's capabilities. However, the proposal has faced opposition from critics who argue that it would lower the requirements to become a lawyer and compromise public protections. The pilot program would initially be limited to law graduates in California's provisional licensing program.
California gun buyers challenge state's delay of background checks
California gun buyers are challenging the state's decision to delay background checks beyond the statutory limit due to Covid-19. The gun buyers argue that California exceeded its legal authority by using an interpretation of the allowed application turnaround time to delay over 220,000 purchases. The case, which questions the state's intentions for future interpretations, will be heard by the California Court of Appeal. The state contends that the case is moot as the backlog of background checks has been dealt with. This lawsuit is separate from a federal case challenging the 10-day waiting period and is one of many seeking to invalidate California's gun laws. Gun advocates argue that these laws infringe on their constitutional rights, while the state argues that they are necessary for public safety. The case is Campos v. Bonta.
SCOTUS upholds Google's win in patent verdict
The U.S. Supreme Court has declined to review a decision that overturned a $20m patent verdict against Google. The court's decision ends a decade-long court battle between Google and inventors Alfonso Cioffi and Allen Rozman. The inventors had sued Google in 2013, alleging that the anti-malware functions in Google's Chrome web browser infringed their patents. A jury initially ruled in favor of the inventors in 2017, awarding them $20m in damages. However, the U.S. Court of Appeals for the Federal Circuit later invalidated the patents, nullifying the verdict. The inventors argued that the decision sets a precedent that weakens patent rights. Google did not respond to the inventors' petition. The case is Cioffi v. Google LLC, U.S. Supreme Court, No. 23-421.
Bankrupt Rite Aid sues U.S. Justice Dept to stop opioid lawsuit
Bankrupt pharmacy chain Rite Aid has sued the U.S. Department of Justice (DOJ) as it moves to block a lawsuit alleging that it ignored red flags and illegally filled hundreds of thousands of prescriptions for addictive opioid medication. The DOJ, which sued Rite Aid earlier this year, agreed only to a "brief pause" of its lawsuit after the company went bankrupt last month, a position that threatens to undermine restructuring efforts, Rite Aid said in a complaint filed in New Jersey bankruptcy court. Rite Aid called on U.S. Bankruptcy Judge Michael Kaplan to rule that the lawsuit cannot proceed while Rite Aid is bankrupt, which would put the government on equal footing with other opioid plaintiffs whose lawsuits were automatically stopped by Rite Aid's bankruptcy filing. The DOJ has argued that U.S. bankruptcy law does not prevent it from exercising its "police powers" through its lawsuit. Rite Aid would not concede on that point, and said Kaplan, who is overseeing the company's Chapter 11 proceedings, should rule on that dispute rather than the judge overseeing the DOJ's lawsuit in Cleveland federal court.
Boston settles discrimination lawsuit with black police officers for $2.6m
The city of Boston has settled a longstanding federal discrimination lawsuit with several Black police officers for $2.6m. The lawsuit centered on a hair test used to identify drug use, which the officers claimed was discriminatory. The city eliminated the test in 2021 and has now paid damages to three Black officers and a cadet who lost their jobs or were disciplined as a result of the test. The settlement puts an end to a long and ugly chapter in Boston's history, according to Oren Sellstrom of Lawyers for Civil Rights. The Massachusetts Association of Minority Law Enforcement Officers was also a plaintiff in the case.
Pennsylvania school district settles lawsuit with The Satanic Temple
An eastern Pennsylvania school district has settled a lawsuit with The Satanic Temple, agreeing to pay $200,000 in attorney's fees and provide the group's After School Satan Club the same access to school facilities as other organizations. The district had initially approved the club's use of the building but rescinded it following criticism. The settlement resolves the discrimination allegations made by the club. The Satanic Temple aims to provide an alternative to religious after-school clubs, focusing on science, critical thinking, creative arts, and community service. The group does not seek to convert children to Satanism but views Satan as a metaphorical figure. The club may not reopen soon, depending on the status of a Christian club that was also operating in the district. June Everett, director of The Satanic Temple's After School Satan Club program, expressed satisfaction with the resolution of the dispute.
Judge pares down Warner Bros' 'South Park' streaming suit
A New York trial judge has narrowed Warner Bros Discovery's lawsuit against Paramount Global over the rights to stream "South Park." The judge dismissed a claim that Paramount's alleged deceptive practices violated a state consumer protection law. The litigation stemmed from Warner's 2019 agreement to pay over $500m to Paramount and "South Park" creators for the exclusive streaming rights. Warner sued in February, claiming that Paramount breached the agreement. The judge agreed with Paramount that the lawsuit concerned a private contract dispute, not deceptive consumer-oriented conduct. Warner's remaining claims include breach of contract, tortious interference with contract, and unjust enrichment.
Shakira to stand trial for tax fraud in Barcelona
Shakira is set to stand trial in Barcelona for allegedly failing to pay €14.5m in Spanish income tax between 2012 and 2014. The Colombian megastar, who denies the charges, claims to have already paid what was owed before the lawsuit was filed. Shakira rejected a settlement offer and is expected to testify during the trial. The prosecutor's office is seeking an up to eight-year prison term and aims to recover the unpaid taxes. The trial will consist of 12 hearings and is scheduled to last until December 14. Shakira's tax evasion case is one of several pursued by Spanish authorities, including those involving Cristiano Ronaldo, Lionel Messi, and Diego Costa. However, Xabi Alonso recently won a tax case at trial after refusing to settle.


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