Dean Whalen, Chief Legal Officer of Readback, a new AI-assisted deposition court reporting platform, explains how AI-assisted court reporting addresses the stenographer talent crunch — with added benefits.
For over a decade, Blockbuster was the undisputed leader in video rentals. By 2010, however, the video rental giant would accrue over $1 billion in losses and file for bankruptcy. The reason? Late fees.
Netflix, launched in 1997, introduced a VHS and DVD subscription service that provided users content straight to their doorstep — while eliminating late fees. As internet bandwidth improved, Netflix transitioned to an online streaming service, allowing its subscribers access to hundreds of pieces of content for a flat monthly fee.
Blockbuster had the chance to acquire Netflix for $50 million but famously declined and chose to continue with its model of late fees, unchanged. We all know how the story ends. Today, the “innovator’s dilemma” continues as Netflix’s position is challenged and the company must find new ways to keep its market share.
In the legal industry, we have stenography, clearly the market leader in delivering a key service in litigation: court and deposition reporting. Stenography, in fact, has been the market leader since it hit the market as a transformative innovation — invented around 1879 — and has not changed its business model much since.
Fast-forward to today and the stenography industry is facing several of the market shortcomings that Blockbuster faced: ease of use, customer experience, and fees, fees, fees.
What Happened to Stenography?
The era of increased fees in stenography stems from, in many ways, a well-documented shortage that is the result of some well-known negative trends: fewer graduates and an increasing number of retirees. The Speech to Text Institute estimates that 1,120 stenographers retire each year. And with the number of new stenographers at only about 200, there are simply not enough new bodies to fill the empty positions. The shortage is forecast to worsen, triggering significant delays to proceedings and a sharp increase in costs by the laws of supply and demand.
Will stenography suffer the fate of Blockbuster?
What Is AI-Assisted Court Reporting?
The challenges of increasing costs, customer service and scalability are a textbook use case for technology — especially AI. AI can scale without limit and creates a key advantage over manually managed environments where scale is limited by headcount. And it is a boom market. AI services are among the top tools law firms are investigating to deliver greater client value and efficiency in one fell swoop, which is why we see the AI software market in the legal industry projected to register a growth of over 28% by 2026.
That’s because AI is about client experience.
AI-assisted court reporting is a hybrid model of AI and humans.
AI-assisted court reporting replaces the steno machine to provide quicker, more accurate transcripts of depositions — a 98.5% accuracy rate, to be exact, compared to the NCRA training standard accuracy for stenographers of 95%.
But in situations that involve real-world knowledge, humans may have an advantage when it comes to recognizing speech. Therefore, the answer may lie in a hybrid model of AI-assisted human transcription that combines the strengths of both artificial and human intelligence for optimal results.
This can be done by assigning the AI the most difficult “heavy lifting” part of the task: the initial transcription of the proceeding. AI can tackle this with unmatched speed and cost. Then, add human transcriptionists to review the AI-generated text. With only a slight delay, trained transcriptionists can provide extremely accurate, human-reviewed transcripts during the proceeding to benefit the delivery of legal services.
How Does AI-Assisted Reporting Improve the Client Experience?
By leveraging AI-assisted reporting, client experience can be improved in three ways: better client outcomes, fewer delays — and halting those troublesome and never-ending fees, fees, fees. Here’s how.
1. Improved Client Outcomes
In the courtroom and during depositions, improving the client outcomes is a must. The hybrid model of AI alongside human transcriptionists, called “active reporting,” provides extremely accurate, human-reviewed transcripts during the proceeding. This is an invaluable asset that tangibly improves client outcomes and enables attorneys to provide better legal service to their clients.
2. An Improved Pace of Justice
With stenographic reporting, shortages added up to delays in receiving transcripts, which often takes weeks. In contrast, the speed and accuracy of an AI tool would enable rough text availability during live proceedings and certified transcripts in one day. This is a revolution of time.
A lawyer has a duty to improve the pace of justice whenever possible. The American Bar Association makes this clear with Rule 3.2 of the Model Rules of Professional Conduct: “A lawyer shall make reasonable efforts to expedite litigation consistent with the interests of the client.” With the introduction of AI-assisted court reporting, this becomes easier than before.
3. Eliminating Fees, Fees, Fees
While stenography may offer a similar real-time reporting feature, this is a highly specialized skill that only an even smaller subset of stenographers can deliver. Therefore, real-time court reporting comes with an even higher set of fees.
Where appropriate, AI-assisted active reporting eliminates the additional real-time court reporting fees by providing real-time transcription at a lower rate or a flat fee. This can be a game-changer in a market where client service is a differentiator.
Will Stenography Suffer Blockbuster’s Fate?
Not necessarily. Court reporting is approximately a $2.6 billion industry with a potential customer base of roughly 1.3 million lawyers, of which 80% identify as litigators. That is approximately 1,040,000 lawyers. With declining output from stenography, there’s room in the market for new, technology-based entrants to provide a new service to a wider audience — and bring down costs for all.
The shortage of stenography services and the increase in fees should not affect legal services for any client.
The argument for AI-assisted court reporting brings to the surface a larger point: If better technology exists and improves client outcomes, are these differentiators strong enough that it should become the duty of litigators to use it? ABA Model Rules 1.1 and 1.3 say “a lawyer shall provide competent representation to a client” and “act with reasonable diligence and promptness in representing a client.” If court and deposition reporting is restricted to the steno machine, we may be butting up against these ABA Model Rules.
If the market expands to include AI-assisted court reporting, this should sufficiently regulate the shortage so that both technology and tradition may co-exist.
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