TLH Ep. 26 Navigating Client Funds, Data Protection, and AI with Ed Boal
Welcome, legal enthusiasts, to an insightful episode of The Legal Helm. Today, Bim navigates the intricate landscape of legal tech, focusing on the pivotal challenges encountered by law firms in handling client funds, managing transaction payments on behalf of their clients, deciphering return on investment nuances, ensuring data protection and privacy, and delving into the revolutionary world of artificial intelligence software applications for legal technology.
Get ready to explore the forefront of legal technology as we tackle these crucial topics. Stay tuned for a deep dive into the challenges and advancements shaping the legal industry today.
Your host
Bim Dave is Helm360’s CEO. With 15+ years in the legal industry, his keen understanding of how law firms and lawyers use technology has propelled Helm360 to the industry’s forefront. A technical expert with a penchant for developing solutions that improve business systems and user experience, Bim has a knack for bringing high quality IT architects and developers together to create innovative, useable solutions to the legal arena.
Our Guest
Ed Boal is Head of Legal at Shieldpay. Prior to joining Shieldpay, Ed was a corporate technology lawyer for 13 years mainly advising fast-growth tech companies on corporate transactions, commercial agreements and data protection matters.
Bim: Hello, Legal Helm listeners. Today I’m delighted to be speaking with Ed Boal head of Legal at ShieldPay, the trusted leader in Secure Digi B two B payments. to joining ShieldPay, Ed was a corporate technology lawyer for over a decade. Mainly advising fast growth tech companies on corporate transactions, commercial agreements, and data protection matters. In this podcast, I’m going to be talking to Ed about the risks and time costs associated with holding client funds. Ed, hello and welcome to the show.
Bim: Hi.
Bim: So I thought it would be great for our audience to learn a little bit about you to begin with. So obviously you’ve been a practicing tech lawyer for over a decade, and that’s actually where you and I crossed paths when you were at Greg Laches, as we were talking about earlier. It would be great to kind of educate us on your journey that led you to ShieldPay.
Ed Boal: Sure, sure. First of all, thank you for having me on the podcast. Yeah. So a as as you alluded to before, I spent over a decade best part of 13 years in private practice as a corporate technology lawyer where I suppose I made the active decision to work with fast growth tech companies.
Well, I’m a bit of a nerd when it comes to technology. So it sort of made sense to me that what I would find a way to combine my interest in technology with my, my passion for law. And also because there’s just something really interesting about working with companies in this space in, in terms of the challenges that they face but also just in terms of the ambition that these companies have, which very often.
You know, necessitates looking at the law in a different way or trying to fit something new within a, a fairly rigid legal framework. So I worked within private practice for best part of 13 years. And I always sort of had this, itch, I guess you could say. When it came to working as an in-house lawyer having spent some time on secondment to various companies from a FTSE two 50 global engineering company to a university legal team, to a publishing house and there’s sort of just came a time where I thought, you know what?
It’s, it’s now or never. You know, why, why? Wonder, let’s just, let’s just do it. And so the opportunity with ShieldPay was timely. I really never saw myself as my, you know, having my first in-house legal gig as head of legal at a FinTech company. But, you know, I, I, I feel like I hit it off with with the people that I interviewed with.
And, and also it wasn’t a role that required me to be an expert in financial services regulation. I’m not going to go as far as to say I’m an expert yet, but I think I’m getting the grips, getting the grips with it. So yeah, that’s, that’s really been the journey. And have been here at, she pay for seven months.
Bim: Fantastic. Thank you for that. I, I speak to a lot of law firms in, in what we do at Helm360 and lawyers in particular, and it’s kind of funny. Really interesting for me to speak to somebody that has that kind of geek element to it or nerd element to it as, as you mentioned to it. I’d love to, I’d love to know kind of at what stage in your career or your journey. What, what kind of attracted you to that area of law? Right. Versus going down, you know, the criminal route or other areas.
Ed Boal: To, to corporate technology. Yeah, I mean, corporate technology is actually just a term that I’ve come up with there. There’s sort of two separate things. I mean. I never sort of characterized myself as being a corporate lawyer, but I really enjoy the cut and thrust of doing a deal. You know, taking, taking parties from a sort of term shape, fuzzy stage through to executing the transaction.
And I would say if I miss anything of private practice, it’s that it’s the cut, the cut and thrust of getting the deal done. The technology side for me was more about being able to bring . I guess more of a technical mindset to, to some of the challenges that clients had. I’m a self-confessed contracts nerd.
I love contracts. I’m never happier than when I’m drafting them, reviewing them, negotiating them. And so they, the technology aspect of the role has given me real opportunity to work on such a wide variety of, of commercial deals and transactions and yeah, in, in many ways, it’s. It’s kind of the role that I made for myself.
And that’s not something too many lawyers I feel, get the opportunity to do. They’re very much kind of traveled into being one type of lawyer in one type of discipline or industry sector that, that I never wanted that for myself. I always wanted to be able to do the things that I enjoyed.
Bim: kind of touched a little bit on, on some of the challenges that, that you are here to solve.
What would you say are some of the biggest challenges facing law firms when it comes to handling client funds?
Ed Boal: Well I think, I think it’s quite interesting that we’re even talking about it in many ways because law firms have handled client money. For Aons. And actually I was doing a little bit of research into this o over the weekend, you know, at what point did law firms become subject to strict rules around how they handled client money?
And it seems that it was around the beginning of the 20th century following the bore war, which ended in 1902, when a lot of. A lot of corporates, including solicitors went bankrupt and it turned out that the client’s money was commingled with the solicitor’s own money. And at that point somebody woke up and and said, well, that doesn’t really make sense, does it?
These are client assets. They’re not your assets and it’s not right that if you’ve gone under the client should lose those assets. And it wasn’t until 1933 that the Law Society first published rules that required. Solicitor’s firms to separate client money from from office money as it’s called.
But a lot has happened since 1933 and the risks of handling client money have increased readably. And [00:06:00] so there is a renewed focus it seems to me around the, the, the, the penalties, if you want to call it that even of, of handling monies for law firms. This was something that ShieldPayrecently undertook some research into.
A couple of months ago we published a report called Time is Money, counting the Cost of Client Money for Law Firms . And we identified that the risks were, well, fairly obvious. So a big one is cyber. I. Threats. 75% of law firms have suffered a cyber crime incident in the past 12 months. 75% percent of which related to client money.
I mean, that is, that is frightening. I mean, that is a very high percentage, and that’s across the top 100. UK law firms, which arguably have the wherewithal to be able to implement the kinds of solutions and checks and balances that would mitigate against those crimes from happening. I would be really interested to know how that picture looks across, [00:07:00] you know, the bottom half of the top 200 and, and even the vast majority of law firms that.
Sort of sit below those turnover thresholds. So cyber crime is certainly a biggie. I think law firms are seen as an easy target. They handle client money, but they’re not a bank. So query well of their security processes, have the same level of robustness. And some of those attacks are very much brute force attacks.
So, let’s just throw something at the fences and see if it, you know, see if it works. The other, the other dimension to this as well is the, the cost of the, the cost of compliance. So, the, the, the rules that apply to law firms regulated by the solicitor’s Regulation authority and by convincers, regulated by the council reliance convincers around client money are complicated.
And time and time again, when you look at the legal press, you see examples of firms that. Sometimes deliberately, but mostly inadvertently full foul of those rules. So as an example of a deliberate breach, you know, the, the, the big one in the press at the moment is the Axiom ins. A case where, you know, 64 million pounds worth of client money was, used by the firm to make various acquisitions. The consequence of that is that the cost of the Solicitor’s Compensation fund for all of the other law firms is going to increase in order to. On that breach, inadvertent breaches. We see, you know recently a firm was penalized for using its client account to receive and pay rental payments and rent deposits on behalf of its clients.
That’s something that the SRA considered to be using from client to client as a banking facility. Something that’s a big no-no through to firms that. Believe that they were holding funds for a legitimate transaction that they were advising on. For an indefinite period of time. And all the while, particularly in this market, they’re making a decent rate of interest in that which they’re not sharing with the client either at all or to the levels that they should be accounting to the client.
And, you know, these aren’t, these aren’t lawyers. These aren’t law firms or managers that are setting out to flagrantly disregard the rules on client monies. These are firms and lawyers that believe that they’re. The right thing by their client without realizing that they’re using their client account for purposes.
The SRA doesn’t agree with it. And then I would say the third big area is AML compliance. There’s, I don’t, I can’t quite put my finger on why law firms seem to struggle so much with AML compliance because certainly throughout my legal career, and which culminated in me being the compliance officer for legal practice and money laundering reporting officer for me.
From my previous firm, you sort of have it hammered into your day in, day out. These are the red flags that you need to watch out for. The one thing that I’ve identified amongst my financial crime colleagues at ShieldPay is that they do seem to have a bit of a sixth sense around when something just doesn’t feel right, or there are circumstances around how we are being instructed as a payment provider.
That suggests that there might be something in it that isn’t quite right. Maybe that’s something that lawyers don’t have that six sense maybe because they’re under pressure to make billing targets and time recording targets. There’s a confirmation bias when it comes to. You know, wanting to do the deal and inadvertently turning a, turning a blind eye to things that maybe aren’t quite right.
I don’t know. But the, the, the, the time and cost involved in complying with AML is considerable for law firms. And in the, in the time is money report that we looked at, it was the top ranking the top ranking, most time intensive aspect. Handling client funds and managing money on behalf of clients.
So, there’s, there’s all kinds of other reasons as well, why I think law firms struggle with the time and cost of managing client money. But I would say that those three things are really key.
Bim: Thank you for that. Yeah. The, the cybersecurity stats that you mentioned are quite, are quite scary.
Ed Boal: Hmm.
Bim: Unfortunately, it seems to be going up year on year. So really, really interesting to hear about that. With regard to transaction payments on behalf of their clients, what options are available to law firms and what kind of things would factor, what, what would you factor in, in terms of choosing one of those particular methods?
Ed Boal: Sure, sure. Well, again, one of the big no-nos from the SRA is using a client account for escrow purposes, so that’s holding money pending the completion of the transaction or holding funds. Because some condition of the transaction requires them to be held before they can be released. That’s a, a big no-no escrow and paying agent providers have been around as long as that problem has existed, really.
And so, you know, banks, for example, some, many of the major banks provide a. An escrow and [00:12:00] paying agent facility. They’re also specialist providers. ShieldPay is one of those specialist providers. The thing really that I suppose distinguishes ShieldPay from other players in the market is the fact, fact that it’s, it provides a tech first solution.
It’s it’s what we refer to as a digital escrow. So that provides clarity and transparency around funds that are being received. We have the technology to be able to ra rapidly verify. The identities or parties to a transaction. And we also have the technology to be able to verify validate rather the bank details of recipients, all of which is designed to ensure that the right money, that the right amount of money gets to the right person at the right time.
And. One of the I, I’ve actually been on the opposite end as a customer, as a corporate lawyer. I have used escrow solutions in the past that have involved opening a separate bank account jointly opening a bank account with another law firm to handle escrow monies on a deal. And it was a complete nightmare.
It was, it was a nightmare to get the account opened. It was a nightmare to, get the funds released from the account because there were always additional checks that needed to be completed at that point. And frustratingly it was also really difficult to close those accounts down. With ShieldPay, there’s no need to do that because what we are providing is a, is a service facilitated by technology.
That enables us to rapidly respond to customer requests for advising on those transactions and, and I think really that’s the expectation amongst the law firms that we work with, that we will as a payment service provider, move at the same speed as they’re expected to move As a professional service provider, I.
Bim: Fantastic. So you, you touched on a little bit about shield ShieldPay. It would be great to dive a little bit deeper in terms of a, as, as a law firm, considering an option like ShieldPay, [00:14:00] what’s actually involved and how integrated is it with. My financial management system that I might be using in-house, like how, how does it all fit together from that perspective?
Ed Boal: Sure. So I suppose we, so our, our platform generally is built around three core pillars. Verify, which is about AML verification. Hold, which is in the context of an escrow holding monies for a period of time, subject to pre-agreed conditions being met and disperse, which is the the transfer of funds from our safeguarded account through to the accounts of the payees and.
We can, we can we can sort of adapt to fit different transaction needs based around those three pillars. But our, our three core service offerings are an escrow agent and trust offering where we will hold monies in a separate safeguarded escrow account. We receive details of who all the payees are.
We verify their bank bank details. We run sanctions checks to ensure that funds aren’t being paid to anybody that’s on a sanctions list. And then we make the payments to them once the conditions are met. The second core offering is a paying agent. So, with a paying agent, typically you’re not required to hold the money for any real period of time.
The funds come in and they need to be paid out. And when it comes to that, we are able to pay any value, any volume in pretty much any currency. So on a recent deal, we handled over 300 million pounds. To about 400 payees in eight different currencies. And we are able to do that because of the partnership that we have with our banking partners and our FX providers.
And the third offering is what’s called managed account, or TPMA third party managed account. And since 2017, the SRA has permitted law firms. To effectively, I hesitate to use the word outsource because it can be quite a loaded term from a, a risk management perspective.[00:16:00] But let’s say do away with the need to maintain a client account in-house by using a third party provider that is authorized and regulated by the FCA so that funds can be held.
An account that’s ring fenced for that specific law firm. And that really, that that service is where our platform really comes into its own, because the law firm can log onto our system, go do a dashboard, create payment lines in, create payment lines out, and they’ve got full transparency of all of the transactions that happen on their managed account as they would with their own client account ledger.
And there’s quite a few benefits of being able to. Use a third party managed account. Anecdotally it should lead to a reduction in professional indemnity insurance premiums, which at the moment are only going in one direction. That’s up. Firms that don’t operate a client account don’t have to pay into this solicitor’s compensation fund.
That’s the fund I referred to previously as the one that’s going to have quite a considerable shortfall off the back of the Axiom ins breach. And the risk of cyber-crime and, and falling short of AML compliance is reduced because that those are things that we are responsible for as a service provider.
You know, we have also invested in, because it’s our business, that’s what we do. So to answer your question about, you know, what, I think your question was, you know, what, what should law firms expect when they come to work with a, a provider that with like ShieldPay, it’s that we are going to provide them with a responsive and more secure means of handling client monies, which is enabled by our technology platform.
Bim: Fantastic. And is, is there anything that you would recommend to firms considering, you know, making that change and in investing in a solution like ShieldPay. Anything that they should be thinking about in terms of preparedness, right? Like with any product that typically affirm implements, there’s, there’s a journey you have to go on, right?
And the journey starts with firstly understanding what the return on investment looks like. And you kind of touched on some of those things, which I’d love to, to learn a little bit more about. What you see is the key ROIs, but also like preparedness, right? Because I find with the number of kind of business solutions that a law firm is typ will typically have as part of their footprint. There is some consideration in terms of integration and just getting started and how complex or easy that is. So I’d love to kind of dissect those two a little bit more. So, R the ROI conversation. Like how, how, how do we, how do we help firms prepare for a product like yours? Um, and then the second piece is then from a rollout perspective, is there anything that you would recommend in terms of preparedness that, that a law firm should be doing in advance of, of even taking the jump to save some time and make it more smoother?
Ed Boal: Sure, sure. So, I mean, in, in, in terms of ROI, I mean, absolutely. You know, I would expect I would expect there that there to be a need for a business case to be built around switching from a client account to TPMA. And I think that that business case would have to be built around, first of all, the cost of compliance.
Currently, I. So, you know, in a small firm, it’s going to be a fairly easy question to answer. If you’ve got only one or two partners in the firm, one of which is the LP and one of which is the cfa, that is the compliance officer for financial affairs, how much of their billable time are they spending? In managing client money, that should be a pretty easy thing for them to do.
When it comes to the larger firms that have hold teams dedicated to the management of the client account and, and risk and compliance, then it’s looking more at the overall cost of that overhead to the business and whether the, whether the risks that it mitigates stack up against that cost. ’cause those costs are going up.
So, I would say cost-benefit analysis would be a good place to start with this, but I think also it’s, it’s a case of looking at the reasons why a client account is currently being maintained. What are the perceived benefits of keeping that in-house? It it, because I get the sense that it’s, it’s more to do with that sense of control over having the funds in your own client account than it is necessarily because you believe.
There is anything to be gained by maintaining that client account. Now, in the current market where the interest rates are higher than normal, law firms are likely making a decent amount on funds that they’re holding in their client accounts, particularly the larger firms. And only recently, the SRA sort of raised a flag to say, don’t forget that under the SRA account rules, you have a duty to account to your client for a fair amount of interest.
On the balances that you hold. Now, I know that a lot of the banks are typically providing client accounts with interest rates at around 2%. So, way below where the current Bank of England, the Bank of England base rate sits. It would be interesting to know how many banks are now going out to their law firms, or rather how many law firms are going out to their banks and challenge them on challenging them on the rates of interest that are being paid to them.
So, yeah, I think I think it’s coming back to that question of, you know, why, why do we feel that it is important for us to hold client monies? And so, I think that’s the ROI pieces about counting the cost of compliance based on the current sort of mode of operation, and then evaluating whether they, the savings to be made are worth it.
When it comes to the integration piece. I mean, fundamentally our solution works outta the box. It’s a, it’s a dashboard-based platform where when a payment line is created, the bank details are shared with the person who’s paying the money in. We receive the bank details into our platform, and we verify those, verify those using a variety of methods.
So, we use direct id where banks are signed up to it. We can use confirmation of payee. But there’s also an option for pay that is perhaps a little bit more. Sensitive around the idea of sharing access to their bank account via direct ID to upload.
Ed Boal: a redacted bank statement so that we can verify them that way.
So, it is possible to use our managed account solution out of the box without any integration. We do know that some law firms will use certain platforms for transaction management, where it would be easier for them if there was an integration between. Those platforms and shell pay. We are regularly in discussions with platform providers in the legal services market around potential integrations for us.
As I’m sure you’ll appreciate, it’s a case of evaluating the cost benefit. If we’ve got a hundred law firms asking us to integrate with a particular software tool that makes a lot more sense than one law firm asking us to integrate with a, a tool. But you know, we are, we, we are a service provider, and so [00:24:00] as a service provider, we have to think about the best way to provide our service to our clients.
And certainly, in other industry sectors in which we operate, we do have the ability to integrate with their systems.
Bim: Yeah, absolutely. Thank you for that. That’s very, very helpful. So, so on just kind of continuing the theme of a customer, a law firm wanting to, to kind of invest in, in a technical solution like this, that solves a problem. Obviously, data protection and privacy is at the forefront of everybody’s mind. These days. What, what kind of things should we be considering? Because I’m just thinking about, obviously there’s, there’s, there’s a bunch of, sensitive information, right? That lives within a law firm and we’re connecting two systems together. And then obviously there’s the client experience side of things, right?
Bim: Yeah, absolutely. Thank you for that. That’s very, very helpful. So, so on just kind of continuing the theme of a customer, a law firm wanting to, to kind of invest in, in a technical solution like this, that solves a problem. Obviously, data protection and privacy is at the forefront of everybody’s mind. These days. What, what kind of things should we be considering? Because I’m just thinking about, obviously there’s, there’s, there’s a bunch of, sensitive information, right? That lives within a law firm and we’re connecting two systems together. And then obviously there’s the client experience side of things, right?
And the impacts that it could have on that, and what kind of things they need to be prepared to answer, right? When it comes to implementing a third party service like this. So, help us understand the impact from a data protection perspective, um, and, and how we kind of mitigate some of those, those kind of questions that may be arose during the selection process.
Ed Boal: Sure. I, I mean, I think the, the big thing for us is data minimization. It’s a fundamental principle of data protection law. When it comes to complying with the UK’s data protection laws in particular, which are, you know, world renowned for being goal plated and very robust you can, you can tick off so many of the compliance objectives required by legislation through data minimization, which means not asking for more personal data than you need for the purposes for which you require it.
Because we decide. The means by which we technically provide our services and what information we need in order to do that, we consider ourselves to be what’s called the data controller. So that means that even though we are providing a service on behalf of law firms, we don’t consider ourselves to be processing personal data on their behalf.
We are collecting that from payers from pay. Our fin financial crime operations team is deciding what further information they need to be able to properly evaluate the risk of, of proceeding to process those payments. So, data minimization is a pretty key thing for us in the context of our escrow paying agents solutions.
There isn’t a significant volume of data that we need. Even the terms of the underlying transaction document, we don’t need to see those. We just need to know that there is a document that exists between the parties to the transaction. It gets referred to within our agreements, but we don’t need a copy of it.
And when it comes to third party managed account again, we only ask for the information we need to be able to make the payment. In the context of, for example paying monies out as part of a corporate deal or a property deal, then the financial crime operations team may ask for further information to support it because we know that convincing in particular, is an area that presents quite a significant risk for [00:27:00] fraud and for money laundering.
But you know, we fundamentally, we don’t . Sign of personal data in order to effectively provide our service, and it’s not in our interest to to hold more than we really need.
Bim: Fantastic. And just con, continuing the theme of the customer experience, I think you mentioned earlier, There, there’s obviously some, some time savings in terms of you know, the, the kind of solution that, that you guys are offering when it comes to the lawyer’s time, which presumably frees up their time to spend more time with their clients or doing more high value work, um, what are the other benefits that that kind of end up with the customer of, of investing in a solution like this?
Ed Boal: So just on that first point, I mean on the, on the very large deal that we completed recently. The associates at the, the this particular firm were being charged out at 600 pounds an hour, so you can see how quickly monies could rack up if the firm had to take responsibility [00:28:00] for collecting all of the money laundering in bank.
Data from 400 pays quite significant. I mean, it would be interesting to find out how many Rs they believe were saved as a result of us providing that service. But I would suspect that the R saved outweighed the cost to the parties of using us to provide that solution by a factor of maybe two or three.
In terms of the other benefits ag, again, it’s about, you know. If, if you’re not responsible for providing a mechanism by which the funds come in and the funds go out, then the cyber crime risk is reduced readably quite considerably. And and also, you know, there’s an element of assurance to this as well.
So, while law firms of course do undertake a level of due diligence on the transactions that they advise on, because they’d equally have to she’ll pay employees. A team of financial crime professionals whose job it is to identify things that don’t smell right [00:29:00] and to look further into that, to ask questions that.
For one reason or another may not have been asked by law firms. And, and therefore, I and you know, we, we act in many ways as a shield to law firms when it comes to advising on these transactions because new law firm wants to be wants to have attention drawn to their name in the context of a fraud or a scam.
Or a money laundering scheme that could have been avoided through more robust financial crime processes. So, I would say that that’s also a fundamental benefit, which of course is also cost saving as well.
Bim: Fantastic. Thank you. So, none of my conversations these days are complete without mentioning artificial.
Ed Boal: Hmm.
Bim: Now, obviously there’s a lot of stuff in the news about a AI’s impact on some of the cybersecurity stuff that you talked about earlier, which only increases the risk, I guess, from from the perspective of a law firm as well as pretty much anyone on the planet. [00:30:00] Um, what are you seeing in terms of AI in the space that you are operating in at the moment and any other kind of legal technology trends that you are seeing from your perspective?
Ed Boal: Yeah. So in terms of our market in particular and you know, of course AI has become popularized and huge attention has been drawn to it. Off chat, GPT. In the past 12 months, but AI has been pretty prevalent in the in the ID and v space, identity, identity and verification space for some time.
So, quite a lot of the providers out there. Offer artificial intelligence of a, as a means of reducing the risk of false negatives. For example, in running ID and v checks in the context of sanctions checks where, you know, you really have to know what you’re looking for in terms of spotting well, or something is just a name match or a, or an identical name match or whether it specifically refers to somebody that is on a sanctions list.
That’s something that artificial intelligence is very capable of doing. At a level which is more scalable than employing teams of people to do that. So I think, I think when deployed in the right way, artificial intelligence has huge potential in that particular sphere around identification and biometric identification too.
They, in, in terms of the wider, wider legal tech sector, I mean, I’m a huge fan of legal tech. Before I joined Shale Pay, I worked for several legal tech vendors negotiating contracts with their customers and. It’s, it’s been really interesting for me to observe how legal tech has adopted ai and there is a certain degree of fear of missing out.
It has to be said. I was at Legal Geek a few weeks ago wondering around the vendor hole, and there was, there was, there was barely a stand. At Legal Geek that didn’t refer to some kind of, you know, supercharged with AI or, you know, use our conversational chatbot to extract information about your contracts much quicker.
And that kind of a thing. It’s sort of phase at the moment. We’re very much at the top of the, the, the Gartner Hype Cycle. When it comes to ai, but what we’re really talking about here is narrow ai. You know, we’re not talking about general artificial intelligence. We’re not talking about artificial super intelligence.
We’re talking about artificially intelligence software appliances that are designed to do a very particular task and to do to within a, a degree of accuracy that is deemed tolerable and more efficient than. How long it would take humans to do something or the outcome you get from humans doing it? So I am I’m a, I’m a big cynic generally , so I’m not, I’m not really one to be swayed one way or another when it comes to evaluating a product just because it has some kind of AI embedded in it.
In the past three years, I’ve used several AI solutions for anything from . Extracting data from huge volumes of agreements to produce due diligence reports to creating contract databases from hundreds of PDFs with no real consistency between them in terms of format or language. And what I’ve found with those tools is that as point solutions, they are generally quite good at what they do, but the thing that makes it.
The thing that makes a difference between them being good solutions and being excellent solutions is the ability to train and improve the data model in which artificial intelligence works through human review. So and for me, you know, the idea of using a fully automatic artificial intelligence solution for anything is quite scary.
Because ultimately if it all goes wrong and somebody places reliance on a data point that isn’t the right data point to place reliance on, then you know, it’s me as the lawyer that’s going to get it in the neck. So, I’m more persuaded by solutions that are what I would call semi-automatic than those that are fully automatic.
And with the exception of one product I’ve seen, and I’m not sure if I’m allowed to name specific products on this call, with the exception of one product I’ve seen where my jaw did genuinely drop to the floor, when I saw what it was capable of I haven’t seen anything on the market yet, which I see is something that’s going to ultimately put people out of a job.
Bim: Hm. Yeah, I think it’s, it’s interesting you say that because I think I think people are starting to realize, right? And it’s been a slow, slow realization process probably because of some, so much hype around what the AI can do that ultimately until, until, you’ve got it to a point where you can train it, not just once, but consistently over, over time, um, you’re not really gonna realize the benefits that you are sold in the beginning.
Right. So, it’s really, it’s, it’s, it’s, it’s a really interesting point.
Ed Boal: But there’s also, sorry to, to interrupt. There’s also a sort of conflict of interests as well, because as the party relies on that technology, to some extent, you need to understand how it works. Not in anal, not at an algorithm level, but at a conceptual level, so that you can evaluate whether it’s looking at things in the right way.
From a service provider point of view, you don’t want to let anybody have that information. You know, that’s like handing over the black box recorder. You don’t quite want to do that. And it’s, it’s quite interesting to see that there are now technologies developing to. Provide that level of education to people adopting solutions, like giving them a look inside the black box.
So, using things like counterfactual analysis where you ask the question, what would’ve happened had we not done something, rather than what happens if we do something that’s one, one way. And, and, and there are other, other technologies that use techniques which involve effectively in ingesting volumes of sensitive.
Personal data garbling and obfuscating it in a way where it’s no longer personal data because it’s been completely anonymized, but having the technology capability to extrapolate predictions and, and outcomes based on that data. So, what’s as interesting to me is the development of AI technologies is the development of technologies that are coming around to make people feel more comfortable using AI technologies in the first place.
Bim: Yeah, very, very true. And, and I think it’s quite interesting that we’re seeing more and more investment from law firms themselves, especially the, the kind of big the big players where they will now have, you know, proper innovation teams that are going to evaluate. Evaluate products and sometimes actually building models in-house to validate that they can actually bring really the, the intelligence of, of, of the lawyer and the experience of the lawyer to the technology.
And I think having those two ingredients together is really key to, to success for sure.
Ed Boal: I think so. I mean, where where do I see things ultimately ending up? . I was at another event recently where we were all asked to write, I. On a card. The one question that we would’ve felt very disappointed about if we didn’t have it answered by the end of the day, and my question was, when will AI replace lawyers?
And it wasn’t me being facetious. It, it represents, it reflects a genuine belief that I have, that we as a profession don’t even know or understand what’s coming our way. We really don’t. We, we are looking at everything in terms of . Manual tasks that can be replaced with automated tasks of expertise that can be surfaced using technology and represented to clients in a way beyond a lawyer, writing an email, drafting a memo, whatever it might be.
What we are not preparing for or looking at is the is what the future of the profession looks like. In an age of artificial general intelligence or even artificial super intelligence, what are the rules that will need to exist in, and it could be in less than a decade. What are the rules that will need to exist in order for law firms?
To continue to exist because I don’t see the threat coming within the profession itself. I see the threat coming a bit like the Velociraptors in Jurassic Park at the end of the movie. They’re, they’re sort of gonna swoop in from the sides before anybody realizes, you know, that they were there. Line and wait.
You know, what, where, where is that real disruptive threat coming from and what can the legal profession do to ensure that they’re not going to be blindsided from it? And that’s something that I feel law firms at the moment aren’t equipped to analyze, but also are not equipping themselves to analyze either.
So that for me is a real is a really big kind of thing because I think in as little as 10 years perhaps 20 years, the profession is going to look radically different to the way it does now.
Bim: Yep. Yeah, agreed. It’s not if it’s when.
Ed Boal: Yeah, absolutely.
Bim: Yeah. Yeah. Indeed. Thank you for that, ed. That was very, very insightful. What just a final, final thought on that. What role do you think regulation will have with regard to, um, ai? Obviously there’s a lot of talk with our Prime Minister and others about putting the right, uh, guardrails in, in place around ai. Do you see that as a, as a positive thing or something that actually prevents us from innovating as fast as maybe we need to? Right. As, as a, as a country.
Ed Boal: I’m very much in the camp that that regulation doesn’t prevent innovation. It does what it’s there to do. It’s to set guardrails and and I think that actually you’d be hard pushed to provide an example of an area where regulation has genu. Ge generally genuinely prevented somebody from innovating.
So, I’m, I’m all for regulation. Do I think that it’s futile? Yes, I do to some extent because ultimately, as long as you have hostile states, prior states and individuals with malevolent objectives regulation does very little to get in the way of that. Really what it comes down to is having the means to investigate target.
Enforce those regulations against people. For example, in the UK we have this terrifically robust data protection law that I alluded to before. Is it effectively in enforced? Absolutely not. We, we don’t have time on this, on this webinar for me to give you examples of the ways in which the Information Commissioner’s office has, in my personal view, failed to effectively enforce data protection law.
That is one example of an area of regulation. That is to my mind, you know, pretty capable of dealing with some of the issues that arise out of artificial intelligence. And yet with weak enforcement, it doesn’t really achieve anything. So, I think that we, I think that governments, have to be very clear about what their objective is in creating regulation.
But more than that, what their intent is when it comes to the enforcement of that regulation. I. Other dimension to it as well is thinking about in the same way as we have a specialist biosecurity council within the UK government that focuses on the biological threats to the UK, both in terms of biological weapons, but also pandemics like covid.
We need something similar when it comes to artificial intelligence. A sort of last line of defense, as it were to really. Preoccupied itself with how do we deal with a situation where Iran, China, Russia, whoever it might be decides to weaponize ai against us in ways that they’re not currently weaponizing it against us.
So, I think that it’s as much focusing on enforcement and defense as it is in focusing on regulation.
Bim: Fantastic. Really insightful. Thank you for sharing that. So, I like to close out all of my interviews with a few questions. So, if if you don’t mind answering the first one, if you could borrow Dr. Who’s time machine and go back to Ed at 18 years old, what advice would you give him?
Ed Boal: I would say be a little bit more open-minded about what your career can look like. I, you know, I think that when you’re, when you’re 18. If there is, well, there was, at least for me, a lot of pressure put on you to decide what the rest of your life would look like, what the rest of your career would look like, and you set down a particular path.
You listen to the advice that all of the career advisors give you. You go to all of the career’s fairs at university. It sort of feels that you’re not given the opportunity to recline in your chair and think critically about what’s right for you and what you want from your career. So yeah, I would say, I would say it’s that it’s to, to be more open-minded about what a career as a lawyer can look like and to not be afraid to, you know, take a leap when it comes to trying something out that you’ve been thinking about for a while and for whatever reason, haven’t pursued.
Bim: excellent advice. Thank you. And we’re all struggling for time these days. What’s your favorite productivity hack that you’ve proven helps you save time?
I.
Ed Boal: It’s funny I, I, I recently think that I may have been a bit of a troll on LinkedIn because somebody shared a carousel with their top 10 productivity hacks and my comment on it was yawn. And the reason it was yawn is because I’m sort of getting fed up with my LinkedIn feed being filled with productivity hacks.
I think It’s a very personal thing and if you’re able to identify the things that you know cause you to be unproductive, then only you have the power to do something about it. So, for me, it’s recognizing that I’m most productive. I. In the mornings and early afternoon when it gets to sort of three o’clock onwards, I know I begin to slow down a bit.
So, for me it’s about making sure that all of the things that really require my attention are front loaded to the beginning of the day, and perhaps the last mind intensive tasks are pushed back until the end of the I. You don’t get a choice.
Bim: True, true. Yeah. It’s, it’s interesting that you say that. I was just reading an article the other day about it was, it was to do with AI and the impact on the working day of a lawyer. and the fact that if you are working like eight to 12, 14 hours a day or whatever, the advantage that we have now is that you get to do some of that very highly complex, taxing stuff that’s on the brain, um, for a certain element of that day. That usually quantifies to like 40% of, of your day. And then the rest of it is actually like the repetitive stuff that actually you can just do off, off the top of your head. And it’s gonna be interesting to see what impact some of those solutions can actually automate a lot of that stuff. Have to, to the lawyer and, and, just in terms of general fatigue, et cetera.
Ed Boal: Yeah.
Bim: It’s, it’s really from, it’s, it’s gonna be a challenge.
Ed Boal: Yeah, and I think that, you know, there are tools out there. For example, you know, superhuman, [00:45:00] which is a, an an an email inbox. I, you know, I saw a lot of my, the CEOs of my clients using Superhuman. And when I looked into it, I thought, wow, this is brilliant. Why? You know, why are these features not a standard part of Outlook, which is what pretty much every lawyer in the country is using.
So yeah, I think that technology is huge, huge potential to improve productivity. I would love to see some of that functionality coming to the tools that I use.
Bim: Absolutely. Absolutely. And any closing thoughts or advice that you think would benefit the legal professionals in our audience?
Ed Boal: Yeah, so I mean, I guess just to, to sort of bring it back to to ShieldPayand the problem that we solve, which is. You know, we are here to make it easier for firms to do business by taking away the headache of having to handle client money. So I would say to those listening that this call that perhaps hold a compliance role or a finance role or have the ability to influ influence in some way.
How their firm operates and, and handles client money to sort of take the opportunity to think critically about the, the benefits of continuing to do so and whether there are alternatives such as ShieldPaythat could, you know, significantly improve the way these firms operate.
Bim: Fantastic. Ed, it’s been a pleasure speaking with you today.
Ed Boal: You very much.
Bim: Thank you for sharing, sharing all of that insight and look forward to speaking to you again soon.
Ed Boal: Thank you very much.
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