AI in New Zealand Law: Opportunities, Risks, and Future

This is a comprehensive review of the opportunities, risks, ethical considerations, and practical implications of Artificial Intelligence (AI), particularly Generative AI (Gen AI), in the New Zealand legal profession, with insights from international trends.

Executive Summary

Artificial Intelligence is rapidly transforming the legal profession globally, and New Zealand is no exception. While AI offers unprecedented opportunities for efficiency, productivity, and enhanced service delivery, its adoption is accompanied by significant risks and ethical challenges. This briefing synthesises key insights from various sources, highlighting the current state of AI implementation, the specific advantages and disadvantages, critical ethical and regulatory considerations, and strategic recommendations for responsible integration. The consensus points towards AI augmenting, rather than replacing, human legal expertise, with a strong emphasis on human oversight, continuous learning, and robust governance frameworks.

1. The Current State of AI Adoption in the Legal Profession

AI is no longer a futuristic concept but a present reality in the legal sector, with widespread adoption observed globally and increasingly in New Zealand.

Growing Uptake:

Globally, 79% of lawyers have adopted AI in some capacity, and 73% plan to incorporate AI into their daily operations. (Clio, Forbes)

In New Zealand, while uptake shows promise, it lags comparator countries. A 2024 Datacom survey found that 67% of larger New Zealand businesses use some form of AI, up from 48% in 2023. However, 68% of Small and Medium Enterprises (SMEs) have no plans to evaluate or invest in AI. (MBIE)

A 2024 LexisNexis survey of over 1,200 UK legal professionals revealed AI adoption has more than doubled recently, with dedicated budgets for Gen AI. (The Law Society)

A Williams Lea survey indicates that 90% of firms are actively engaging with generative AI, with 75% having established AI governance policies and 88% planning to increase technology investments. (Williams Lea)

A 2025 Thomson Reuters' Future of Professionals Report shows 80% of legal professionals believe AI will have a "high or transformational impact" on their work within the next five years, and 72% view AI as a "force for good." (Thomson Reuters)

Disparities in Adoption: The scale and sophistication of AI integration correlate with firm size, with larger firms demonstrating higher and more advanced usage.

The larger the law firm, the greater, better, and more sophisticated the integration of AI. (IBA )

Solo and small firms use AI for routine work (intake, discovery responses, initial drafts), mid-size firms for legal research, document review, and due diligence, while large firms develop or license custom models for contract analytics, litigation risk assessment, and predictive outcomes. (MyCase)

Primary Use Cases: AI is predominantly used for internal administrative tasks but is increasingly being explored for client-facing legal work.

Common uses include document review (77%), legal research (74%), summarising documents (74%), and drafting briefs or memos (59%).

Other applications include contract analysis, generating templates and drafting documentation, engaging with potential clients via chatbots, and predicting case outcomes. (NZLS)

For most law firms, generative AI remains largely in the testing and development phase, particularly when it comes to legal client work.

2. Advantages and Opportunities of AI in Legal Practice

When used responsibly and with proper oversight, AI can significantly enhance legal services.

Increased Efficiency and Time Savings:

AI can automate high-volume monotonous work, such as document review, freeing up lawyers.

65% of surveyed attorneys using AI reported saving 1 to 5 hours per week, with some saving 11 or more hours.

Generative AI could save the average legal professional up to 240 hours per year, or about $19,000 in billable time annually.

Tasks like correspondence drafting, brainstorming, research, and document creation are accelerated.

Cost Reduction: AI-powered automation can lower labour costs and reduce reliance on external vendors, leading to potential savings that can be reinvested or passed to clients.

Improved Accuracy and Reduced Human Error:

While hallucinations are a risk, properly trained AI systems can flag inconsistencies or omissions that might slip through manual review.

In contract review, an AI robot could identify 94% of risks in NDAs, compared to 85% for human lawyers. (The Law Association)

Enhanced Client Experience:

AI can simplify client onboarding, provide automated updates, and offer 24/7 support through chatbots, leading to faster response times and improved client satisfaction.

AI can provide more personalised legal information – though not legal advice. (1News)

New Strategic Capabilities:

Predictive analytics allows lawyers to forecast the outcomes of cases, allowing lawyers to assess the likelihood of success and tailor their strategies accordingly.

AI can help smaller firms compete with larger ones by automating routine tasks, levelling the playing field.

AI can assist with legal compliance, cross-referencing documents against changing regulatory landscapes, and alerting teams to new legislative changes.

3. Disadvantages, Risks, and Ethical Considerations

The rapid adoption of AI introduces significant challenges, particularly regarding accuracy, confidentiality, bias, and accountability.

Inaccuracy and "Hallucinations":

Gen AI will fabricate facts and sources where it does not have access to sufficient data, creating seemingly persuasive but nonsensical or false content.

New Zealand lawyers have been tricked by fictitious case notes generated by AI chatbots.

Examples include lawyers submitting court filings citing several fictitious cases that ChatGPT had inserted during the research process, leading to sanctions.

AI tools hallucinate in at least 1 out of 6 legal queries.

AI operates probabilistically, not through understanding and does not know if what it's saying is true. (ALTeR)

Data Privacy and Confidentiality Issues:

Inputting client information into public AI services can lead to that data being reused for model training or accessed in ways that violate ethical rules.

You would be foolish to be putting in company information into something like ChatGPT because then that becomes part of the database and your confidential information — like clients details, personal information — all that stuff is in there.

OpenAI's privacy policy states data can be shared with affiliates, vendors, service providers, law enforcement, and parties involved in transactions.

The New Zealand Law Society (NZLS) strongly advises against inputting personal and client information into external AI tools due to privacy, confidentiality, and privilege risks, especially concerning data transfer overseas (Information Privacy Principle 12).

Bias and Fairness:

AI models trained on biased historical data could reflect past discriminatory practices, leading to unjust outcomes and compromised legal representation. (Clio, Digital Watch Observatory)

Predictive analytics used for recidivism risk scores can perpetuate systemic biases if trained on data from districts with higher racial discrimination.

Professional and Ethical Obligations:

Lawyers are ultimately responsible for the legal services they provide; they are not absolved from responsibility for legal advice or defects in an end-product... because it is derived from Gen AI. (NZLS)

Improper, negligent or incompetent use of Gen AI could lead to a serious breach of the RCCC [Rules of Conduct and Client Care], including r 3 (competence), 10.9 (misleading and deceptive conduct) and 13.1 (duty of fidelity to the Court).

Lawyers must maintain technological competence, supervise staff AI use, and ensure compliance with professional standards.

Lack of Contextual Understanding and Human Judgment:

Even the most advanced AI systems are not capable of interpreting law in the same way that a human attorney does.

AI lacks common sense and understanding, it’s extremely prone to groupthink and bias, contradicts itself and can be tricked.

AI cannot replace the judgment, critical thinking, and reasoning ability of flesh-and-blood attorneys, nor can it replace the human touch so necessary with clients, judges, juries, and opposing counsel.

Intellectual Property (IP) Concerns:

Using Gen AI can give rise to questions about who owns the input and output data.

Some AI tools will engage in 'data scraping' — which is taking data from a range of external sources. This can create risks related to copyright infringement.

Some Terms of Service allow AI providers to reuse input data and retain ownership of output data, potentially breaching professional obligations.

Cybersecurity Risks: Malicious actors can exploit vulnerabilities in AI tools, leading to data corruption, phishing, or cyber-attacks.

Resistance to Change: The legal profession tends to be resistant to change, with 59% of firms citing change management and internal resistance as their biggest AI implementation challenge.

4. Regulatory Framework and Best Practices

New Zealand is developing its approach to AI regulation, aligning with international principles and emphasizing responsible adoption.

New Zealand's Regulatory Landscape:

Currently, there is no over-arching regulation for the use of AI in New Zealand. However, joint interim guidance for the public service and courts has been issued, and the Office of the Privacy Commissioner sets expectations for Gen AI use.

New Zealand has adopted the OECD's AI Principles, committing to innovation, transparency, and human rights.

The Ministry of Business, Innovation & Employment has published Responsible AI Guidance for Businesses to help manage risks and meet regulatory obligations.

International Regulatory Trends:

The EU has enacted the AI Act, the US has an Executive Order, and the Council of Europe has set out the first international treaty for AI.

Stakeholder consultation is considered crucial for AI regulation, with almost half of IBA respondents favouring comprehensive AI regulation that also enables innovation and technology adoption.

Consistency and coherence are top priorities for AI regulation, with emphasis on alignment between AI outputs and human intentions.

Best Practices for Lawyers and Firms:

Human Oversight is Vital: Lawyers must fact-check outputs, verify accuracy, and assess the relevance of case citations.

Protect Confidentiality: Implement firm policies against over-sharing sensitive client information with third-party AI tools. Fictional data should be used for testing AI systems or generating templates.

Ensure Competence: Lawyers must understand AI capabilities and limitations for appropriate deployment and keep abreast of changes in technology relevant to their practice.

Transparency with Clients: Clearly communicate to clients when and how AI tools are used in their matters, where appropriate. Consent may be required.

Establish Internal Policies: Firms need clear policies for all staff on approved AI tools, usage guidelines, monitoring, and quality assurance.

Training and Development: Invest in training to build AI literacy, teach bias awareness, and inform users of digital rights and ethical considerations.

Due Diligence on Vendors: Research reputable providers, evaluate their claims, and review contractual terms regarding data protection, IP, and liability.

Review Billing Practices: Lawyers may need to reassess billing practices as AI automates tasks, considering whether to charge similarly to research tools rather than traditional time-and-attendance models for AI-completed work.

5. Impact on Legal Education and Future Roles

AI will transform job roles and skills within the legal profession, necessitating adaptations in education and professional development.

Shifting Skill Requirements:

The ability to effectively use AI tools will be critical.

Graduates will need proficiency in generative AI tools; simply knowing the law is now not enough.

Increasing demand for ability to adapt to change (71%), problem-solving (56%), creativity (53%), and communication skills (52%).

Law schools need to update curricula to teach analytical thinking, but graduates need technical literacy too. Future lawyers must learn to audit AI outputs, design prompts, and collaborate with engineers.

Transformation of Job Roles:

AI is more likely to transform rather than eliminate jobs.

New roles such as AI-specialist professionals (39%), IT and cybersecurity specialists (37% and 35%), and AI implementation managers (33%) are emerging.

AI will handle routine work in the background, giving lawyers more bandwidth for strategic planning, client interaction, and business development.

Junior legal staff might have more time to engage in meaningful work that adds real value for clients.

Some senior lawyers are very much looking forward to retiring or retiring slightly early because they can see what’s coming.

Changes in Assessment and Hiring:

Universities may need new assessment methods, potentially returning to in-person, handwritten assessments or verbal assessments.

Law firms might reduce reliance on academic transcripts and focus more on students proving themselves as interns or summer clerks.

Firms are now prioritizing the employment of attorneys who are willing to use AI and are open to new forms of technology.

Billing Models: The efficiency gains from AI are prompting a shift away from hourly billing towards flat fees and value-based billing.

Conclusion

The integration of AI into the legal profession in New Zealand, mirroring global trends, is an inevitable and powerful force. While it promises significant advancements in efficiency, cost reduction, and client service, legal professionals must navigate its deployment with caution and strategic foresight. The core message is clear: AI should serve as a sophisticated assistant, augmenting human expertise, not replacing it. This necessitates rigorous human oversight, a commitment to continuous learning and upskilling, and the establishment of robust ethical and governance frameworks to safeguard privacy, ensure accuracy, and prevent bias. By proactively addressing these challenges, the New Zealand legal community can harness AI's transformative potential to enhance justice, improve service delivery, and maintain public trust in an increasingly AI-powered world.