AI Could Transform Law Firm ESG Goals

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Law firms are under pressure from clients to follow standards for environmental sustainability, social issues and governance. Several have launched ESG practices in recent years and a few have created internal ESG training programs.

In tandem with embracing ESG, firms are turning to artificial intelligence to help with other areas of their work.

An August 2023 survey from Law360's parent company LexisNexis Legal & Professional found that 77% of lawyers who are aware of generative AI said it will boost efficiency. Another survey from Everlaw in August reported that half of legal professionals say that the technology will help them deliver greater client value.

"I don't think law firms are frequently enough thinking about it or talking about it," Thomas Barce, a managing director for FTI Consulting, told Law360 Pulse. "What they are realizing expressly is that in order to better leverage AI for consumption across the board, ESG included, they need better information governance themselves."

For example, if a law firm wants to show clients that it cares about sustainability, AI can be used to analyze a law firm's carbon footprint. But that requires collecting and centralizing data about the firm's travel, real estate and energy consumption.

Barce says that the firms he has spoken to are still trying to modernize their data sources before integrating AI. This includes figuring out where the data sits, cleaning the data and organizing it.

Rather than focusing on ESG, firms that modernize data sources are more frequently targeting AI goals on attorney efficiency and helping clients.

"I think it's a long leap before law firms are pointing an AI engine at their own information to generate ESG disclosures," Barce said.

Law360 reached out to several large and midsize firms, as well as legal industry consultants, about this issue. All either did not respond or declined to comment.

One firm that has developed its own internal plan for ESG is ESG Legal Solutions LLC, which provides professional law and nonlaw advice to businesses and law firms.

Two of the three partners are women — attorney Nancy Hudes and a silent partner — making ESG Legal Solutions a majority women-owned legal consulting firm. The silent partner is not active in day-to-day operations, and she prefers not to be involved in the firm's public relations, according to the firm's leadership. The two female leaders, however, have driven many of the firm's social policies.

The third partner, Stuart Kaplow, told Law360 Pulse the firm focuses on its own greenhouse gas emissions and that it is carbon-negative because it offsets more carbon than it emits. Kaplow said that ethical decision-making is part of the firm's approach to upholding ESG standards, ensuring any supplies used by the firm are from ethically sourced supply chains.

While this firm is farther along than many in applying ESG standards internally, the partners still see the usefulness of AI as a distant tool.

"I think that we're very, very early in the actual application of artificial intelligence," Kaplow said.

The technology has yet to be developed to a point where it can be fully trusted. Generative AI platforms are sometimes known to hallucinate, meaning the platform confidently produces false or misleading responses.

"That makes me nervous as a lawyer," Kaplow said. "I'm very concerned about the accuracy of things that my clients represent and certainly that we represent to clients."

But once the pitfalls of generative AI are resolved, it could help firms to implement ESG.

For example, Kaplow said that AI could be used to automate the process of entering data into the Environmental Protection Agency's Energy Star Portfolio Manager, which is an online tool for tracking energy consumption and emissions. Firms now manually enter data into the tool.

"It's a way to control costs," Kaplow said, referring to automating the manual entry of data. "It's also a way to be responsible in terms of greenhouse gas emissions."

Kaplow said that he could see a future where AI helps law firms crunch large amounts of ESG reporting data. Examples include tracking data around carbon utilization, such as from air travel, and using internal employee surveys to track data around diversity, retention and satisfaction.

Barce said that this is the time for law firms to think about what experiments involving AI and ESG might look like in the future.

Law firms are probably years away from using the power of AI to reach internal ESG goals, but at the rate that the technology is evolving, it could arrive sooner.

"This is so fast-moving," Kaplow said. "I tell people all the time, call me tomorrow, I may have a different opinion."

--Editing by Pamela Wilkinson and John Campbell.

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