Law firms have shown they are very bullish on AI. Rightly so, when it comes to the core elements of the legal workflow – researching case law, pouring over documents to find the needles in the haystack, and drafting standardized documents like contracts, policies, and discovery requests – the agentic and generative AI (GenAI) solutions available today are helping firms cover more ground faster and more comprehensively than ever before possible.
Nearly half (47%) of law firm respondents from the Future of Professionals Report say their firms are already experiencing at least one type of benefit from AI adoption and 80% expect AI to fundamentally alter the course of their business over the next five years. Chief among those is time savings. On average, law firm professionals expect to free up 190 hours per year by using AI. At current average hourly rates, that works out to approximately $18,000 in savings per professional, per year – or a total of $20 billion for the U.S. legal industry.
Perception vs. Reality
For all the enthusiasm that exists for AI’s potential, however, there is a large gap emerging between law firms’ AI aspirations and their real-world AI strategies. Even though the majority of law firms expect AI to drive transformational change in the future and nearly half are experiencing some benefits now, far fewer (29%) expect to see high or transformational levels of change this year. When pressed further on what their firms are doing today to leverage AI, nearly one-third (32%) of law firm respondents say they feel their firms are moving too slowly on AI adoption, and just 22% say their firms have a visible AI strategy in place.
This gap between future ideals and current realities is a phenomenon McKinsey recently dubbed “the GenAI paradox,” which occurs when businesses race to invest in AI pilot projects and buy new solutions, but struggle when it comes to implementing them and integrating them into everyday workflows. Versions of this struggle are playing out in virtually every industry right now as professionals come to grips with the fact that true transformation is not as simple as plugging in an off-the-shelf AI tool. It requires a clear strategy, a carefully planned roadmap, targeted integration of professional-grade AI solutions, and a commitment at all levels for the long haul. A firm cannot afford to sit on the sidelines any longer – it is imperative to have an AI strategy.
Key Steps to True AI Transformation
Over the course of our partnerships helping some of the world’s largest law firms not only access new AI capabilities, but implement firm-wide AI strategies, we’ve found four levers that all firms need to engage to ensure the success of their AI initiatives.
- AI Tools Without an AI Strategy will Never Reach Their Potential: Among the 22% of law firms that currently have a visible AI strategy in place, 71% are already experiencing a clear return on investment from AI. By contrast, for those firms that do not have a clear AI strategy in place, just 18% are experiencing a return on investment. That means law firms with a visible AI strategy are almost four times more likely to experience benefits compared to firms without any significant plans for AI adoption.
- AI Leadership Comes from the Top: Law firms helmed by leaders who lead by example when introducing change, firms that have added new governance roles, and those that are actively investing in AI are consistently seeing more benefits than those that don’t. For AI to truly add value, it needs to be implemented firm-wide, and that kind of sweeping change can only come with leadership support, clear goals and objectives, and widespread adoption.
- Operations is Where the Hard Work Happens: Firm-wide AI integration is impossible without first understanding the need to change and reimagining workflows. To extract maximum value, AI-powered tools must be built directly into existing systems and processes. That requires making transformative changes to underlying business models, including how firms price, staff, and deliver legal work, and how they adapt related workflows and processes, while adding new roles and skills to support their operations.
- End-User Adoption: The best AI technology and most well-thought-out strategy in the world will not mean anything if no one uses it. When users within law firms understand AI and feel empowerment, ownership, and accountability for its use, their law firms see results not only in terms of higher levels of AI adoption but in the additional benefits and ROI that they gain as well. Firms need to make sure they are educating staff, making tools readily available, and allowing time for a learning curve to take root.
While the detailed strategies and specific paths to AI implementation will vary from firm to firm, there are a handful of universal truths that apply to all. Foremost is the commitment to address the AI revolution for what it really is – a monumental transformation in the way legal work is conducted on par with the introduction of the personal computer, the internet, and the smartphone. It is not enough just to buy the latest greatest widget. Firms that want to extract real value from AI need to think hard about how it will affect everything they do and start addressing those changes now to unlock the full potential of the technology to transform their firm.
