TLOMA Today

With every spring comes changes. Days get longer. Trees start budding. Snowbirds return home. CRA deadlines still remain, and some new requirements and remittances are added for good measure. There are also changes coming in TLOMA as new board members are welcomed and we say goodbye to others.

I want to take this opportunity to thank Dawn Millar (Past President), Bridgette Mulder (President), Louise McNeely (Treasurer), Rand Bilal (Communications Coordinator), Ava Isaacson, Education Coordinator and Sarah Dovaston (Conference Chair) for devoting so much time and dedication to serving on our board and allowing us as members to enjoy the experience and knowledge of what TLOMA offers.

I would also like to welcome Louise McNeely (incoming Vice President), Farzad Boreyri (incoming Treasurer), Simone Knott (incoming Communications Coordinator) and Samantha Scimmi (Conference Chair) in joining me on the board for 2024. We endeavour to provide you with the continued benefits of being a member. 

2024 is shaping up to be another exceptional year at TLOMA. There are many educational SIG’s planned and fantastic social events already scheduled. I look forward to meeting many of you at some of the events.

If you haven’t already done so, please register to attend the TLOMA Golf Tournament scheduled on June 12th, 2024 at Royal Woodbine Golf Club and our annual TLOMA 2024 Conference & Tradeshow on September 25th-28th, 2024 at the Niagara Falls Convention Centre in Niagara Falls!

Amidst a landscape dominated by data breaches and a constantly evolving legal environment, organizations find themselves at a crucial crossroads characterized by significant risks and opportunities. Information governance (IG), once a background concern, has now become a frontline necessity in strategic planning.

For professionals tasked with spearheading initiatives in this field, the ability to craft a compelling and clear business case is paramount. In the first part to this article, Chris Hockey served as a seasoned guide, leading you through the intricacies of building a business case that not only resonates, but also secures essential support and resources from key stakeholders. In this follow up piece, Chris Giles will offer a detailed exploitation of the methodology and art of persuasively presenting the importance of IG, which will be crucial for gaining endorsement of you IG plans.  

Key elements of a business case

“Storytelling plays a critical role in constructing a persuasive business case”, says Chris Giles. Recognizing that effective storytelling can transform complex concepts into relatable and compelling narratives, he advocates for a methodical approach, delineating the business case into a series of key steps designed to maximize impact and resonance:

Identifying the business problem

Begin by spotlighting the main issue, presenting it as a critical challenge that needs immediate attention. For example, imagine your case management software is so outdated it's almost useless. In this case, the story should be framed as more than slow performance; it's a serious risk to client data security. Your job is to describe these problems clearly, showing how they really affect your organization's day-to-day operations.

Conducting assessments

After identifying the core issue, the next step is like detective work. In the context of legal information governance, for example, you might compare your current data practices with regulations such as GDPR or CCPA. The aim here is to pinpoint the differences between your current state and the required standards. You want to find and expose these gaps clearly enough that the need for action becomes undeniable.

Identifying alternative solutions

Knowing the challenge, it's time to strategize your approach. You want more than a quick fix, you want to be considering various options, weighing their pros and cons, and showing that you’ve thought things through. The ultimate objective is to suggest a solution that’s not only practical but also the most strategically sound choice for your organization.

Narrative cost/benefit analysis

This step is where you blend numbers with storytelling. You must go beyond figures on spreadsheets though; this is where you want to be crafting a story that shows the broader impact of your initiative. Remember, this analysis can’t be just an accounting exercise; you want to illustrate how your proposal will make operations more efficient, reduce risks, and create new opportunities for revenue and client engagement.

Recommending the preferred solution

In this phase, you highlight your proposed solution – the standout option. This is your chance to convince decision-makers of its value, showing how it efficiently balances costs and benefits, aligns with the organization's larger goals, and fits their risk appetite. This is where you really want to put your storyteller hat on and focus on presenting a vision for the future.

Describing the implementation approach

Chris Giles likens the implementation approach to the finale of a good story. “It's the part of your business case that looks into the future, outlining the steps to turn your plan into reality.” Think of this as a clear action plan, a set of specific steps that show how to achieve your goals. Move beyond just the ideas and demonstrate how this needs to be a practical roadmap saying, "Here's how we turn our vision into action."

Real world business case scenarios in information governance

Let's look at some real common scenarios that IG professionals are often trying to make a mark:

Business case for new service offerings and/or staffing

Consider this scenario: A progressive law firm realizes the potential in their Information Governance (IG) department. In our digital era, compliance is critical, but so is mastering data strategically. The challenge? They lack the specialized staff for data regulation and analytics.

Imagine the proposal: Hiring a team that turns the firm into a stronghold of data security. This move is about seeding future growth that blossoms into new revenue streams. It positions the firm as a leader in data protection and governance, paving the way in the legal industry's digital landscape.

Business case for replacing existing technology

Picture this: Your technology is so outdated, it's practically a relic. It's cumbersome, poses security risks, and frankly, it's an embarrassment.

The argument here focuses on the urgent need for technological upgrades. The business case emphasizes how updating technology is critical for staying competitive and safe. You can’t JUST keep pace; you have to ensure client information is secure and keeping your firm out of negative headlines. This upgrade is a dual benefit: it protects the firm's reputation and equips the team with the tools needed for excellence.

Business case for changing direction on a technology purchase decision

Envision this scenario: You're on the verge of investing in new software for managing your firm's information, but then you discover a superior alternative, upending your initial decision.

Here's the strategy: You need to weave a narrative of decision-making and adaptability. Compare the initially chosen software with the newly discovered option, highlighting the advantages of making the switch. This is your chance to prove that choosing the new option is not only a good move, but a strategically brilliant one. You’re aiming to persuade the team that, despite some initial backtracking, the result is a software solution that perfectly aligns with the firm's needs, ensuring smoother and more efficient future operations.

Business case for new technology purchase

Context: Our law firm is at a critical juncture, needing to adopt new technology to stay ahead. The existing system is inadequate for our advanced data management needs. We urgently require a sophisticated Records Management System (RMS) to enhance how we handle, organize, retrieve, and analyze our extensive information.

Business case emphasis: The new RMS is central to our firm’s strategic growth. It’s an investment in technology that will improve current operations and pave the way for future development. This RMS will elevate our service offerings, boost productivity, and ensure compliance with stringent data governance standards. It's a forward-thinking investment expected to significantly enhance efficiency and client satisfaction.

Tailoring each information governance business case

Every IG business case is uniquely crafted to address a firm's specific challenges and goals. Despite their differences, all share a common objective: To clearly and convincingly outline the benefits. These advantages should be in line with the firm's financial objectives and risk management plans. Effectively present your business case, and you'll not only secure approval for your project, but also contribute substantial value to the firm.

Final steps: Crafting your IG action plan

After thoroughly exploring the business case process, you now have a strategic checklist to navigate the complexities of building an information governance business case:

Identify the specific problem: Clearly define the issue, relate it to overarching goals, and demonstrate its impact.

Conduct a thorough gap analysis: Precisely measure the distance between current state and desired outcomes.

Showcase multiple solutions: Present well-thought-out strategies, each backed by legal and technical expertise.

Blend storytelling with data: Create a compelling narrative in your cost/benefit analysis that projects into the firm's future benefits.

Advocate for the best solution: Argue for your chosen approach, aligning it with the firm's vision and detailing the risks and rewards.

Create a detailed implementation plan: Map out a clear path from concept to execution, anticipating challenges and objections.

Conclusion: The art and science of building a business case

Chris Giles emphasizes that “creating a business case, especially in the legal field, is a blend of creativity and analytical precision. Effective information governance is key to upholding a firm's reputation for trust, confidentiality, and intellectual sharpness.” Giles adds that “by adhering to a structured approach and following a comprehensive checklist, you can develop business cases that not only improve day-to-day operations but also strategically enhance the firm's information governance in the long run.”

To find out more watch our ILTA Masterclass: Developing an IG business case and strategic plan. During this session Leigh Isaacs, Senior Director, Information Governance at DLA Piper, Kandace Donovan, Vice President Operations, North America at LegalRM and Chris Hockey focused on the key elements to consider when developing both and effective methods to communicate them to stakeholders. To view the recording, click here.   

The interest in profitability has increased exponentially. There are many different reasons for this increased focus, including (in no particular order):

• An increase in costs exceeding the increase in rates;
• An actual drop in partners' incomes in 2023 over 2022 and 2021;
• An increased pace by which clients are changing lawyers and law firms (not just cost but also service);
• The serious enhancement of legal technology tools and platforms available to both clients and law firms; and
• The steady decline in the average collected realization percentage over the past couple of years (estimated to be down at least an entire percentage point).
  
  

There are a number of practical steps that firms can take to address the decrease in profitability, albeit they are all short-term and will not guarantee long-term profitability. These short-term steps can include:

• Leveraging technology
• Effective pricing strategies
• Investing in focused business development and client relationship management
• Efficient time management
• Investing in professional development
• Enhancing staff training and development
• Controlling costs
  
  

However, the long-term solution of continued growth in profitability sounds simple but is the most poorly executed value in most firms.

Courage!

Courage is the strength and resilience to stay focused on the firm's goals and their execution and persevere through challenging times.

Courage in a law firm setting is composed of three elements.

1.  The courage to have challenging discussions with the Partners and others on such topics as (in no particular order):

• Underperforming lawyers - Partners and Associates
• Adherence to firm policies
• Definitive remote working arrangements
• Standards of client service
• A Focus on practice areas that have a high demand and where the firm can provide specialized expertise.
• Size of complement, staff, and lawyers
• Leverage between Partners and Associates
• Organizational structure (including two-tier structures) and governance
• Making business-like decisions
  
  

2.  The courage to make tough decisions after having had discussions with the appropriate parties. Knowing the right thing to do and doing the right thing has historically been a juxtaposition in law firms. This situation is the result of so many firms embracing consensus decision-making, which generally results in a solution that is acceptable at the lowest common denominator, not the best solution.

3.  The courage to execute the decisions made. Nothing drives home this lack of courage demonstrated by many firms when it comes to their strategic plans. The dominant reason why firms fail to achieve the strategic plans they have agreed to is a failure to execute.

An adaptation of an old quote is that for law firms to be successful in the long run, "they must have the courage to accept all the challenges that come their way. Firms can't just accept the ones they like or can achieve consensus on".  

At CTI Working Environments we know office decommissioning is critical for businesses to streamline operations, save costs, and minimize environmental footprints. But further, as governments shift their views on outcome reporting, viewing tracking outcomes in compliance with government standards as mandatory, the adoption of best environmental practices not only is the right thing to do but is also essential in claiming any due tax benefits.

While many decommissioning programs may exist, this article will provide an informative guide on the ins and outs of a successful office furniture decommissioning project managing the true end-of-life. We will also explore what to look for in a decommissioning partner and outline the seven essential steps to ensure your project's success.

The Importance of Office Decommissioning

Before diving into the details of decommissioning, let us understand why it is essential. Office decommissioning involves responsibly disposing of or repurposing office furniture and other assets when they are no longer needed. It contributes to several significant benefits, including:

1. Cost Savings: Decommissioning allows businesses to recover trapped value from their assets, reduce disposal expenses, and avoid unnecessary storage costs.

2. Environmental Responsibility: Proper decommissioning minimizes waste and promotes sustainability by recycling, repurposing, or donating furniture.

3. Space Optimization: Clearing obsolete furniture creates room for new arrangements or facilitates workspace reconfiguration.

4. Compliance: Compliance with local regulations and environmental standards ensures that furniture disposal is conducted legally and responsibly and meets Scope 3 requirements.

Choosing the Right Decommissioning Partner

Selecting the right decommissioning partner is crucial to the success of your project. Here are vital factors to consider:

1. Experience: Look for a partner with a proven history in office decommissioning.  Experience equates to knowledge and reliability.

2. Sustainability Commitment: Partner with a company prioritizing sustainability and environmentally friendly practices. They should recycle and repurpose furniture whenever possible.

3. Full-Service Capabilities: "From Ceiling Tile to Floor Tile" - Choose a partner capable of managing the entire process, from assessment and inventory to removal, placement and end-of-life disposal, and the ability to manage all materials. As noted above, a partner that can decommission every part of your office including but not limited to carpeting, electronics, kitchen equipment and of course furniture will make this process easy and efficient.

4. Compliance Expertise: Ensure your partner is well-versed in local regulations, can provide the necessary documentation for legal compliance and can provide you with the essential reporting and gift-in-kind tax receipts.

5. References and Reviews: Research their reputation by checking client references and online reviews to gauge their reliability and service quality.

The 7 Steps to a Successful Decommissioning Project

Now, let us outline the seven essential steps to ensure your office furniture decommissioning project's success:

1. Assessment and Planning: Begin with "The End in Mind." What outcomes are you looking for, and what outcomes are most important? Is this merely a marketing exercise, or does the firm genuinely want to deliver on its stated or implied social and environmental statements? When you know how you want the project to end… Begin with a comprehensive evaluation of your furniture assets. Determine what can be reused, recycled, upcycled, or donated. Create a detailed project plan, including timelines and budgets.

2. Inventory Management: Develop a detailed inventory list of all furniture items, specifying their condition, location, and potential disposition.

3. Removal and Transportation: Safely dismantle and disassemble furniture, ensuring it is adequately protected during transportation to minimize damage if a charity or refurbisher receives these items.

4. Donation or Sale: Consider donating usable furniture to charitable organizations or selling items to recover some of your costs. Donations have an immediate positive impact on the surrounding communities in which you operate. Liquidators will assist in bringing down the overall project costs and give new life to items traditionally positioned for recycling. Recycling itself can be a positive financial contributor to project outcomes. Cost recovery can also be achieved via multiple other channels, but it will require a seasoned, sustainable decommissioning partner to capture it all while navigating the intricacies of recycling and local and federal regulations and tax codes.

5. Recycling and Repurposing: Maximize sustainability by recycling materials like metal, wood, and plastics. Explore opportunities to repurpose furniture within your organization.

6. Legal Compliance: Ensure compliance with local regulations for waste disposal, recycling, and hazardous materials handling. Maintain records for audit purposes.

7. Documentation and Reporting: Keep thorough records of the decommissioning process, output streams, disposal certificates, recycling reports, and  donation receipts.

Office decommissioning is a strategic move for organizations looking to optimize their workspace, reduce costs, and demonstrate environmental responsibility. When choosing decommissioning partner, prioritize experience, sustainability practices, and a comprehensive service offering. Following the seven essential steps outlined in this guide, you can navigate your decommissioning project successfully while reaping the benefits of a well-executed process.

Please reach out to me for more information on these key steps and a full discussion of opportunities we offer to make your decommissioning project efficient, environmentally, and socially responsible as well getting the best return on your no longer needed assets.

Introducing a monthly recurring article featuring our collaboration with Mitesh Velani, CFO of WeirFoulds LLP based in Toronto. Stemming from our successful working relationship, we aim to showcase Mitesh's insights on why law firms should consider an FP&A platform implementation partner. Each installment will feature a Q&A with Mitesh, offering new perspectives on financial data analytics and emphasizing the value and accelerated ROI achieved by leveraging an external consultancy partner. Stay tuned for monthly insights from the CFO’s perspective! 

Q: What should a firm consider when making that shift from regular standard reporting to enhanced analysis to guide organization direction?

A: When considering the specific needs of small firms in financial analysis or Financial Planning and Analysis (FP&A), one crucial aspect to focus on is the accuracy of how information is entered by various departments and sections.

In many instances, small firms may face resource constraints and prioritize getting data into the system efficiently. However, the emphasis should be on ensuring that this data is accurately placed in the proper General Ledger (GL) categories. Efficient budgeting and planning for the future heavily rely on having data organized in the right buckets.

Upon joining this firm, one of the immediate challenges identified was the scattered placement of information across multiple GLs. Marketing expenses, for instance, were distributed across three different buckets. Recognizing the need for consolidation and cleanup in the upcoming year, the emphasis is on streamlining and consolidating this information for more effective financial analysis.

The turning point occurred when our emphasis, particularly from a cost and expenditure standpoint, was to gain a precise understanding of the gross margin across various departments and practice areas. While we had been accustomed to an annual overview of our overall profitability, we aspired for a more nuanced and insightful analysis.

Our commitment to this initiative became even more evident as we honed-in on discerning the gross margin at the department and practice area levels. This level of granularity proved to be a game-changer. We were now equipped with the ability to pinpoint not only the overall profitability of the firm but also the specific areas contributing to our success.

The impact of this detailed analysis has been transformative as we could identify and celebrate the lucrative areas that were driving our financial success. This knowledge also aids us in making informed decisions about resource allocation, recognizing where increased investment, expansion, and hiring could further propel our growth. Additionally, the insights garnered allowed us to strategically provide additional support where needed, reinforcing our commitment to excellence.

Seeking support from an external FP&A consultancy provides inherent advantages for internal reporting systems within legal finance. External consultants bring specialized knowledge tailored to legal finance practices, offering unique insights and best practices that may not be readily available internally. Their external perspective introduces fresh ideas and industry-specific expertise, enhancing the efficiency and effectiveness of internal reporting systems in the legal finance domain. Focused on aligning reporting processes with legal and financial standards, these consultants contribute to the development of robust and optimized internal reporting systems for legal finance operations.

Part of the practice of law is the application of yesterday’s precedents to today’s problems. Delving into the past and applying it to the present is what lawyers do, how they present arguments, and where they often excel.

However, the business of law requires the application of creativity and imagineering both of which are applicable to client solutions as well as running a legal service enterprise. Creating client solutions are a given for most if not all legal practitioners, and while some lawyers are good at running a business, many are not because – as they will tell you – they didn’t go to law school to run a legal service business.

Creativity and imagineering in the business of law are not as prized as the learning of law and legal practice. In reality, traditional legal education has little if anything to do with the business of law and running a legal service business. Yet, legal service is a business complete with its own industry code: 5411. And the business of law is where strategies of creativity and imagineering apply most readily.

Living in Your Head

Creativity and imagination are both nouns. Activating them means getting ideas out of your head and acting on them, which makes them real. Otherwise, creativity and imagination dwell in the land of overthinking.

Overthinking tends to be a lawyer trait that goes hand-in-hand with admiring a problem. But problem admiration and overthinking get you nowhere. Solutions are required as well as actions to get them done.

The trick to bringing the fruits of creativity and imagination to light is either having the experience of knowing how to execute on them or finding someone who does. Otherwise, creative strategies and imagined ideas become the stuff of magical thinking and fanciful fairy tales that live in your head until they go poof and disappear.

Getting Out of Your Head

Creativity is an often-neglected factor of legal business strategy. Why? Because lawyers rely on evidence and, better yet, proof to support arguments including those related to running their business. This is why the evergreen statement, “We’ve always done it this way” and its pushback cousin, “Who else has done it that way and had success with it?” continues to hobble forward motion within traditional law firms and staid legal management.

It is also why those who may be intimidated by the change management processes that come with creativity and imagineering can panic and turn a deaf ear or worse, plant roadblocks.

A symptom of this is often a barrage of aggressive questions that rain down upon the head of whomever is daring enough to propose any creative change along with a demand to instantly provide data points that prove beyond a shadow of a doubt that whatever is proposed will work effectively and efficiently the first time.

This mulish stance is vexing to people who are working to move the business of legal service onward and who are propelled by innovative business-forward management objectives, strategies, tactics, and most importantly, execution.

These are the same dogged souls who often find themselves in the equivalent position of pushing a pill up a hill with their nose.

I’m one of them. This is my hill. Sometimes I think I’ve been dead up here for years.

Creativity

In 2006, Canada’s Lexpert magazine hatched a one-off issue titled “100 Creative Lawyers”. I can’t recall criteria used to measure the creativity of those featured, but do remember that when this publication appeared I was providing interim management for a national law firm that had a number of lawyers listed in this edition. Unfortunately, two of these lawyers had been misidentified, so a correction and compensation was requested.

Since the issue was about creativity, I wrote to the publisher about the error and my expectations for a make-good arrangement using two stanzas of poetry set in iambic pentameter. The publisher – a non-practising lawyer – responded with an offer also in iambic pentameter. I confirmed our agreement in limerick.

That’s the thing about creativity: it helps reframe a situation in a unique fashion. And it’s imaginative and fun.

We need more creativity in the legal service market. The advantage of creativity is that it enables a mind-wide-open world of possibilities that launch as a result of answering a question asked in first year university Philosophy class. That question is: Why? The answer is not: Because. The answer is: Why not?

Imagineering

While imagineering has been around since the middle of the last century, the first time I heard about it was during my broadcast management years in the mid 1980s. At that time, imagineering was a creative process applied to broadcast engineering and production.

Since 1990, the word “Imagineering” has been registered as a trademark of Disney Enterprises, Inc. that employs imagineering to “make the impossible possible.” Disney describes it as “the creative engine that designs and builds all Disney theme parks, resorts, attractions, and cruise ships worldwide, and oversees the creative aspects of Disney games, merchandise product development, and publishing businesses.”

Even though the word is trademarked, making the impossible possible is not. Impossibilities are made possible all the time in various industries and fields of endeavour, and miracles happen every day.

Devising and implementing a new or imaginative concept is entirely within our reach. So why not legal service and the management of it?

Creativity and Imagineering: Putting Them Together

Creativity and imagineering go together like salt-and-pepper. It’s hard not to think of one without the other.

Still, individually both creativity and imagineering have a plethora of applicability to the legal service industry. They run the gamut from education and training, to onboarding and mentoring talent, business development and client work, pricing, billing and collection, and tailoring infrastructures and management structures that enable profitability while also providing flexibility.

But by pairing the two together, creativity and imagineering are a powerhouse combination.

Creativity and imagineering elevate the business of legal service into another stratosphere: one that realizes what can happen when old and tired ways of doing things are jettisoned so that what is new and better-applicable to today’s expectations for getting things done can take off and accelerate unimpeded.

The results are real, self-fulfilling, and exhilarating. They are also market differentiating and business-defining. And as Disney well knows, there’s nothing Mickey Mouse about that.

In the legal profession, managing finances is especially crucial. Not only does the business rely on prudent financial management to maintain operations, but your clients also need you to be a good steward of their money. Understanding various statements is vital to ensure this. In this article, we break down some fundamental statements, the information they provide, and how the information benefits your firm.

Financial Statements

The first three reports are financial statements.

1. Income Statement (a.k.a. The P&L / Profit and Loss Statement)

Focus: This statement is the most common report and is the one you likely know best. It shows the firm's revenues, expenses, and profits (or losses) over a defined period.

Usefulness: The P&L is crucial for tracking profitability and identifying income and expense trends; good for making informed decisions on cost management or revenue generation.

Review: Monthly or quarterly, to keep a close eye on profitability and operational efficiency.

2. Balance Sheet

Focus: The next most common financial statement is “The balance sheet”. It lists assets, liabilities, and equity which, together, show a snapshot of a firm's financial condition at a specific point in time.

Usefulness: The balance sheet helps law firms understand their net worth and financial stability. It can guide decisions on investments, expansion, or debt management.

Review:  Quarterly or annually, to track financial health and support strategic planning.

3. Cash Flow Statement

Focus: The least known financial statement is The Cash Flow Statement. Your practice management software does not typically feature The Cash Flow Statement, but your bookkeeper can produce one. This statement provides information about the firm's cash in and out of the firm over a specific period.

Usefulness: Understanding cash flow is essential for managing liquidity. It helps law firms ensure they have enough cash to cover obligations and identifies when additional cash might be needed.

Review: Monthly (or even weekly!) to maintain a healthy cash balance and avoid liquidity issues.

Non-Financial Reports

The last two are not financial statements, but they are also very important for the law firm owner or stakeholder to be aware of on a scheduled, regular basis.

4. Client Trust Listing

Focus: A trust listing report details the funds held in trust for clients. It includes information on each client's trust balance and transactions affecting those balances.

Usefulness: For law firms, managing trust accounts accurately is not just good practice; it's a regulatory requirement. Common things to look out for in your trust listing include:

Review: Monthly, to ensure compliance with regulatory requirements and maintain accurate records of client funds.

5. Accounts Receivable (A/R) Report

Focus: This last report lists outstanding invoices and the length of time they have been outstanding. It typically categorizes receivables by 30, 60, 90, and over 90 days due.

Usefulness: The A/R report is crucial for managing cash flow. It helps law firms identify slow-paying clients, assess the effectiveness of their collection processes, and forecast future cash inflows.

Review: Monthly, to stay on top of collections and maintain a steady cash flow.

Tip: Writing off any A/R balance that is deemed to be uncollectable at your yearend will help in decreasing your firm’s tax liability.

For law firms, financial statements are not just about numbers; they're a tool for strategic decision-making. By understanding and regularly reviewing these statements, lawyers and law firm managers can ensure their firm's financial health, compliance, and long-term success. Incorporating trust listings and A/R reports into your review process adds another layer of insight and ensures compliance. This list is not exhaustive, but it is a good starting point.

While artificial intelligence itself is nothing new, ChatGPT made it a phenomenon in November 2022. Its first impression was so positive during these early days that users overlooked its potential flaws, sometimes leading to disastrous results.

Last June, a Manhattan court imposed sanctions on two New York lawyers who submitted a legal brief including six fictitious cases generated by ChatGPT. U.S. District Judge P. Kevin Castel, who ordered the lawyers and their firm Levidow, Levidow & Oberman to pay a $5,000 fine, stated that they had made "acts of conscious avoidance and false and misleading statements to the court."

Now a pending B.C. Supreme Court case could clarify and even set precedents regarding the use of artificial intelligence in Canada's legal system. It involves fake case law generated by ChatGPT and allegedly provided to the court in a high-net-worth family dispute.

The Vancouver lawyer who allegedly submitted the nonexistent cases is currently being investigated by the Law Society of B.C.. The opposing lawyers in the case she was litigating are suing her for special costs, arguing that they should be reimbursed for their work uncovering the bogus cases. Her lawyer argued that she made an "honest mistake" and that special costs have never been awarded in a similar case in Canada.

Regardless of how that case resolves, the question remains. How can Ontario law offices benefit from the advantages of AI programs like ChatGPT without risking their integrity? Here are practical steps and considerations for integrating AI tools responsibly.

Define Clear Use Cases

Identify specific tasks where AI can add value without compromising ethical standards or legal accuracy. This could include drafting routine legal documents, legal research, and providing initial client support.

Ensure Data Privacy

Use AI tools in a way that complies with data protection laws, such as the Personal Information Protection and Electronic Documents Act (PIPEDA). Ensure that client data is handled securely and that AI interactions maintain confidentiality.

Verify Information Accuracy

While AI can provide quick responses and draft documents, it's important for legal professionals to review AI-generated content for accuracy and compliance with current laws and regulations. This step ensures that the advice or documents provided to clients or the court meet the required standards.

Set Ethical Guidelines

Develop a framework for ethical AI use in your office. This includes guidelines on transparency with clients about the use of AI in their cases and ensuring that AI is used to augment, not replace, the professional judgment of qualified staff.

Train Staff

Provide training for your team on the capabilities and limitations of AI tools. Understanding how to best use these tools can prevent overreliance on AI-generated outputs without proper human oversight.

Monitor AI Developments

Stay informed about advancements in AI technology and evolving legal standards regarding AI use. This will help your office adapt and continue to use AI tools effectively and ethically.

What’s the Bottom Line?

The 2023 case in New York and the ongoing investigation in B.C. reflect the potential risks associated with AI-generated content in legal proceedings. They serve as a reminder that while AI can significantly enhance efficiency and support various legal tasks, its output requires careful scrutiny and verification. Ultimately, the goal is to ensure that AI serves as a tool for improving service delivery in the legal profession, not as a source of misleading information or ethical breaches.

If you would like to learn more about generative AI or other IT tools  for law firms, head to our website for short informational videos.