Law firms are rapidly adopting AI to stay competitive, as a recent Forum showed, but their real challenges lie in data management, pricing, performance measurement, and adapting business models that can deliver clear value to clients
3 key takeaways
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Law firms are adopting AI to stay competitive — While AI adoption remains robust, law firms’ biggest challenges are around data, metrics, pricing, and client management.
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AI investment may be driven by fear — Law firms fear being outpaced by clients’ in-house legal teams, which are often ahead in AI adoption, and this is prompting law firms to invest more in AI tools and solutions.
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Many priorities are vying for attention — Key priorities for successful AI integration include training lawyers to use new technology, creating pricing teams to set profitable rates, and focusing on metrics that demonstrate clear value.
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WASHINGTON, DC — One of the most impactful issues in the legal industry today — to hear many of the law firm leaders attending the Thomson Reuters Institute’s 24th Annual Law Firm COO & CFO Forum tell it — isn’t AI. Rather, it’s locating and cleansing proprietary data so the firm can properly use AI, identifying what the firm can do with AI, developing the AI metrics to measure performance, and then determining how to price AI-driven legal work in a way that shows clients real value.
Those, to hear attendees, panelists, and speakers tell it, are the real issues.
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The 24th Annual Law Firm COO & CFO Forum Executive Summary
“AI isn’t the hard part,” one panelist said. “Law firms just have to understand what they’ve done in the past, then see what needs to change in order to give clients what they say they want.”
Sounds easy, right?
Others at the annual event weren’t so sure. “My greatest fear is that somewhere there’s a lawyer right now typing into ChatGPT: ‘Please show me how to price you for clients’ — and that’s concerning because lawyers need to be looking to firm leadership for how to price legal work differently in this environment.”
Still in the early years of AI
Fears aside, the debate at the annual Forum around whether AI — and more specifically generative AI (GenAI) and agentic AI — will have an impact on law firm operations is pretty much over, and most lawyers know that. Now, the debate has morphed into questions about the level of impact, how to use AI to stay ahead of the competition (and that includes clients’ in-house legal teams), and how law firms are going to remain profitable as charging by the hour continues to move slowly off the table.
In one of the many Forum panels that discussed AI and its impact on law firm operations, several panelists suggested that some law firms may have been scared into using AI before they were ready and before they actually knew what problems they wanted AI to solve. “We are in the early times of this technology, even though it seems to be moving very fast,” one panelist said. “Everyone is just trying to figure out what AI can do for them.”
And while process automation seems like a no-brainer, it’s important to give thought to that also. Ryan Alshak, CEO of Laurel, an automation specialist company, explained that law firms need to automate those tasks that will allow lawyers to be more effective. “AI should automate the laundry and the dishes, not the science and the arts,” Alshak said. “For lawyers that means automating the business of law, not the practice of law.”
Indeed, several panelists said they remembered that it wasn’t that long ago that more than a few clients didn’t want their outside legal providers using AI. Now, in many cases, corporate legal teams are already running ahead of law firms in AI use — a fact that is not going unnoticed by law firm leaders. Indeed, one law firm executive related how the firm developed a use case for AI around proactively analyzing markets and their clients’ positions in them after one lawyer came back from a meeting with a client in which the clients’ in-house legal team had already used AI to better understand its own market position. “The lawyer was worried,” the executive said. “He knew if things didn’t change, the firm was going to lose the work.”
Questions begetting questions
In fact, several panelists said it was this fear of being eclipsed by their own clients that is pushing more law firms to expand their investment in AI-driven tools and solutions. Of course, as they said, that is the easy part.
As many panels at the Forum discussed, the decision to even dip a toe into the AI pool leads to a plethora of ensuing questions, from best ways of training lawyers to use the new tools to figuring out exactly what problems you want AI to help you solve. Then, there are also the inevitable questions of how to price legal work that takes your team much less time to do, how to measure your performance in a demonstrable way, and how to manage heightened and often-changing client expectations around speed, execution, and value.
“Every client wants to talk about AI, but only in the sense of how their outside law firms are going to use it to the client’s benefit,” noted another panelist.
Not surprisingly, there often seemed to be as many different tech-driven priorities as there were attendees at the event. One firm executive contended that AI-guided metrics were the key — that a firm’s ability to deliver on measurements that can demonstrate clear value was critical to future success. Another said it was pricing, because that was the area that GenAI was primarily going to up-end. To address that, he explained, more firms will need to create pricing teams that leverage AI and data to determine how to set rates and create profitable business models for firms. Yet another said training lawyers to properly use this new technology was the factor upon which all else depended.
Overall, it became clear that the final brew was a heady mix of all of it — and much of it depended on a firm’s lawyers themselves. “There’s a technological aspect to all of this, certainly,” one law firm leader noted. “But there’s also a human psychology aspect as well.”
In short, legal professionals have to be ready for the change that’s coming. However, that also means understanding that for law firms to move successfully into the future, they will need a business model that works both for their clients and for them.
“Law firms aren’t asking themselves, ‘What’s in it for us? What’s best for the firm?’” noted Laurel’s Alshak. And that may be where the next big questions lie for the legal industry.
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