Artificial intelligence is the only technological development that’s seen the same levels of stratospheric adoption since Big Law bosses could drop their employees an out-of-hours ‘ping’ on Blackberry Messenger.
And it’s only getting bigger, says LexisNexis, which has spoken to many of City’s top 50 managing partners who all want to be fast followers of the generative AI train. Where most firms have adopted AI internally to improve efficiency and solve problems quicker, the impact on client relationships and the value-add from a business development perspective is still up in the air.
Let’s assume that in three years AI can conduct legal research, draft a wide array of legal documents, answer routine client queries and provide preliminary advice on more complex issues, all to the standard of an experienced senior partner. The Lawyer sat down with LexisNexis and managing partners from across the City to predict how the traditional law firm business model will evolve in the next three years and beyond.
Horizon-scanning over problem-solving?
Lawyers around the table agreed that the operational relationship they have with their clients is going to experience a seismic shift. Where clients will typically go to their lawyers with a problem to solve, law firms are evolving to be able to use AI to spot these problems sooner. The roundtable foresaw a future where law firms become far more consultancy-based with the ability to predict future problems and help clients build their business strategies to avoid these problems.
To get to this point, however, lawyers are going to need to have much more detailed conversations with their clients about data privacy and consent. Should a concrete bunker around client data be the default when training AI on matters? Can data from a previous completion for a client be used for a future matter? These questions are yet to be answered.
AI is even seeing the development of new practice areas and industries. Data lawyers were few and far between a few years ago but we’re now seeing pushes into industries that require AI lawyers as well as data specialists – these are new pastures for firms to plough.
The death of the billable hour?
The billable hour grim reaper will inch ever-closer over the next few years, the roundtable predicts. Though it has been a contentious topic for a while now, AI is catalysing the move from a time-spent charging model to a value-of-contribution model. Matters priced on retainer will increase as clients build more of an idea of how much deals should cost.
In the pricing realm, where will the money for firms to develop their AI come from? Clients of course. Firms expect to see software development costs absorbed into the cost of legal service delivery until they can get to a point where they can sell their AI back to the market and make a profit.
Where firms are developing their own AI products, however, the final clincher remains with the lawyers who actually have to use it. The roundtable cited cultural problems within firms where the adoption rate for most technological tools is fairly low.
It’s a two-way street
Through AI tools, clients will be able to pool competitive data on the performance of firms across practice areas, jurisdictions and beyond. Clients will be able to make informed decisions on which jurisdiction to conduct their matter in before firms have even had the chance to pitch.
However, as much as clients are expected to become more picky – so will the firms. Firms can use AI tools to analyse the profitability of firm clients across multiple data points: whether client portfolios have gone up or down in value, and the same for the profitability in multiple jurisdictions. The roundtable saw a future where firms could take a data-based approach to reviewing their client base.
Firms are also going to need to be more strategic on where they want the point of human intersection with clients to be. If AI can successfully run a straight-forward deal with minimal human input, then firms need to do a cost-benefit analysis of absorbing the risk of using their own AI on these deals and how to deal with situations where things go wrong.
Looking beyond how AI can increase profitability with clients, firms around the table also spoke on how they had begun to start using AI tools to better inform the partner promotion and partner review process. If a partner excels at work origination but their clients are slow to pay their bills, then a data-led approach can also be taken to assess human capital at the firm. There’s certainly plenty for managing partners to consider as they weigh up the benefits that genAI brings versus the risks or unexpected outcomes.
