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Law departments must become more discerning purchasers of legal tech
Modern Lawyer
Vol. 7 - Iss. 4 pp. 16–22
Jan 2024
Prior to the 2008 financial crisis, banks made a lot of bad loans. The public blamed them (and maybe it should have), but as explained by billionaire investor Howard Marks in his book Mastering the Market Cycle, banks were forced to make many of those loans by the politics of big business. The competition profited from bad loans, and any CEO who went against the rest of the industry opened themselves up to charges that they were leaving money on the table. In fact, if a CEO refused to conform in the helter-skelter environment leading up to 2008, he or she would probably have been removed and replaced with somebody willing to go along. The emergence of Large Language Models (LLMs) put the legal technology marketplace in a position analogous to what we saw with mortgages back in 2008. Facebook, Google, Microsoft, IBM, and many other companies are licensing their LLM capabilities to legal tech providers, and providers are building their own like never before. Just like the banks "had" to put out questionable loans, most legal tech providers are now compelled to put out LLM or other AI-based products, regardless of whether they are ready. If leadership refuses, they can be replaced.