Artificial Intelligence is Changing Everything, Except the Things that Matter

Fractionally Legal Vol. 50(!) looks at the artificial intelligence of the law, and the law of artificial intelligence.

First, Happy Holiday season. I think the key to happiness is gratitude for what you have, and the holiday season is a time to be thankful, no matter how stressful the world is. It’s no coincidence that we Americans start the holiday season with “a day of Thanksgiving,” and that day was declared by Abraham Lincoln in 1863, the same year that 51,000 Americans had died at Gettysburg. The idea seems very timely: in spite of the world’s insanity, we can still be grateful.

The Artificial Intelligence of the Law

The political prosecutions that the Trump administration are undertaking are like the artificial intelligence of the law: they seem like the real thing, but there is no actual intelligence involved. The indictment of James Comey and Letitia James (New York’s Attorney General) were dismissed. I’ve commented before on the overall sloppiness and shoddy legal work by Trump’s Department of Justice – for example the mess they made of what should have been a simple process to drop the production of New York City Mayor Eric Adams.

This is par the course. When it comes to central Department of Justice in Washington – where political prosecutions emanate from – the good lawyers are leaving in droves or being pushed out. They are being replaced by true believers or those willing to fake it, most of whom are middling or incompetent. I pity the very good early and mid-career lawyers who can’t leave for whatever good reason. Once this madness ends they will need to justify to future government employers and, more importantly themselves, following dubious orders by Trump sycophants. Lets hope everyone is being ethical and resisting where they can.

As for Comey, the DOJ probably needs to appeal because the statute of limitations has run. As for James, they can probably refile the charges – if they can find a U.S. Attorney (the local federal prosecutor) who can both get confirmed by the Senate or be otherwise properly appointed and wants to bring the clearly loser political charges against a Trump enemy. My bet, however, is they drop the matter and you never hear about it again.The whole thing was probably caused by Trump’s Adderall and solved by his Prozac.

As I wrote before, the goal of these prosecutions was not justice, but retribution and harassment.

I deal with lots of frivolous civil lawsuits filed against my clients, which are often filed to achieve a business, not a legal, goal. Want out of a deal? Threaten litigation. That does not work? File a frivolous suit (I’m dealing with one now). Criminal defense lawyers rarely dealt with that – when someone is prosecuted by the government and an indictment is secured, its because a grand jury found there was “probable cause” of criminality. As I’ve noted before, no cause is needed for a civil suit and the allegations in the complaint are actually taken to be true.

There are always political motives behind prosecutions. But because of the probable cause standard, prosecutors typically work hard to build a case that they can win. When, as here, the political motive is the start and end of the process, we’re seeing the birth of harassment by indictment. It’s a waste of everyone’s time. It also undermines the rule of law. When the government does not distinguish actual wrongdoing from political retribution, real crime becomes much harder to prosecute.

The Law of Artificial Intelligence

To understand what’s happening when artificial intelligence reshapes my clients’ industries (and my own legal industry), I’m studying the last big technological shift – the development of the consumer internet and how industries adapted – or failed to adapt — to the new technology. The internet changed quite a few industries, but really only broke three: retail, media, and the music industry. It was not immediate, but it was profound.

With respect to the media, assuming we put the rise of the internet at like 1995, the 30-year growth of the internet basically drained all the revenue from media and put it in tech, and we actually passed laws – the Digital Millennium Copyright Act – that allowed this to happen by creating a new set of rules that shielded tech companies from any liability from the content they published. That’s very different from the standards that govern traditional media, who can’t violate copyright or spread misinformation (defamation) without legal liability. And now most Americans get their news from social media. Oops.

The internet’s effect on retail is a lesson that tech moves fast, the law moves slow. It took us until 2008 to finally figure out that states could collect sales tax on internet sales, which had the effect of subsidizing e-commerce at the expense of brick and mortar stores (yes, there was a Supreme Court case on this). If you head to your local mall today versus what you remember from the 1990s, you will see the difference. The retail industry is buttressing AI by investing heavily in experiences and e-commerce. I don’t think there is much more that AI can do to retail now that e-commerce is so well established – AI will probably disrupt e-commerce more than it will brick and mortar.

And the music industry was broken by “peer-to-peer” file sharing where you could, basically, get your music for free from a “friend.”. We finally decided that this was copyright infringement in 2005 (yes, this also went to the Supreme Court). The music industry rebuilt itself around the streaming model, so that story actually has a happy ending, unless you happen to have worked in the music industry 20 years ago. As a side note, the music business is still on a tear on this issue. The Supreme Court will hear a case this term on whether internet service providers are liable for copyright infringement if they don’t take action against users posting infringing content.

The music industry and media, having been caught off guard by the last shift, are actively protecting their intellectual property now. The New York Times (and seemingly every other publisher and media company) are suing the big AI companies for copyright infringement. The big music labels – Sony Music, Universal, and Warner – are suing or have reached settlements with the AI companies that create synthetic (machine-produced) music. We don’t know how these cases will turn out, but the media companies are defending their turf against AI companies. We’re also seeing lawsuits trying to get AI companies to pay for the damage they do. We will see how that goes. I think in the next three years, we will have some pretty good ground rules on what the AI companies can do with other people’s property for free and where they need to pay the piper. That’s less than half the time it took during the internet revolution. Tech still moves faster than the law, but we’re closing the gap.

In terms of our ability to actually regulate AI, we’re basically in 1998. The federal government is actually toying with both a moratorium on new regulation and punishing states that push their own. But they really have nothing to worry about. The regulations on the state level are small-bore — New York just passed a “disclosure” statute that requires companies to tell users that AI is being used and that chatbots have a “protocol to take reasonable efforts for detecting and addressing suicidal ideation or expressions of self-harm expressed by a user.” I suppose something is better than nothing, but from the point of view of a lawyer who needs to advise clients on the impact of these laws on their businesses… it’s nothing. We see this type of lazy lawmaking when the tech is moving so much faster than the law and the regulators don’t yet have the technical ability to make good regulations.

There is lots of speculation about which industries are going to be caught pants-down this time. Management consulting? Legal? The tech industry itself? We’ve seen some evidence of layoffs in these industries as AI adoption spreads, although it’s too early to tell. From the perspective of the legal industry, as I’ve written before, the biggest barrier to AI is not technology but regulation, because only human lawyers can provide legal services to human clients.

A Lawyer in Your Pocket

I have no doubt that there will be productivity tools that use AI to make jobs easier – there already are – and they will cost money. I’ll spend money on that rather than human associates if it’s cheaper. That is interesting, but it’s not a profound change in how legal services are delivered. The more interesting issue is whether outside companies can own law firms in the U.S., which would mean there is much more money available to shift from humans providing legal services to humans, to computers providing legal services to humans — with the revenue going to tech companies, not lawyers. Sound familiar? That’s exactly what happened to the media over the last 30 years.

Perhaps the biggest similarity between this wave of tech-induced changes and the last is the speculation. When you hear the dire predictions of how we’re all going to lose our jobs or worse, you’re hearing people taking the bullish side of AI — investing long-term and hoping for a huge return. When you hear that this AI stuff does not really work and, even if it does, it’s only a small productivity gain, you’re hearing the bearish side of the argument — folks betting this is all a bubble. And that’s something that never changes, despite how profound the change in technology. The lesson? Technology moves faster than the law, but money moves faster than technology.

Keep thinking, keep building,

Jesse

Hi, and welcome to my newsletter! I’m Jesse Strauss, Your Fractional General Counsel. I’m a lawyer with a private practice based in New York City, helping clients in the United States and globally with their U.S. legal needs. My expertise spans various areas, including raising funding rounds, employment issues, negotiating master service agreements, intellectual property, compliance, legal process management, and dispute resolution. My focus is on founding and nurturing great companies from seed to exit. Discover more at Your Fractional GC and book a complimentary 30-minute consultation. You can also follow me on Threads @lawyerjesse1977, on BlueSky @lawyerjesse.bsky.social, subscribe to my Substack here (follow me on notes), and follow me on LinkedIn here.