Law firms will need to align their practices with what their clients most desire: efficiency and cost-savings. There are still ways, however, that firms can promote their trusted relationships in an AI world
Even in an increasingly technology-enabled world, trust remains paramount for law firms and their clients. While automation and DIY services have begun to disrupt the typical firm-client relationship, corporate clients have continually stated that trusted expertise among their outside counsel is what they value above all else.
For instance, Thomson Reuters Market Insights data gathered from more than 1,000 in-house attorneys who identify as strong advocates of a firm reveals that, for 70%, expertise is a key factor that drives them to recommend the firm to colleagues and peers.
However, trusted expertise is not the only factor. Client service attributes — including responsiveness, customer service quality, and meeting deadlines — were mentioned as a recommendation factor by 44% of client advocates. Furthermore, client service ranked higher than expertise among factors that clients wanted their firms to improve upon, behind only pricing/cost on the list.
As a result, law firms may find themselves between a rock and a hard place. Clients want them to work faster while maintaining quality, and new technologies such as generative artificial intelligence (Gen AI) promise a tantalizing way to achieve those goals. However, law firms need to figure out how to utilize these technologies in a way that ensures their own expertise remains paramount, and trust is not diminished through AI’s use.
Where firms fit in
According to Thomson Reuters’ recent Future of Professionals report, there is one key trend that will drive the future of professional services: artificial intelligence. The report found that 70% of legal professionals believe AI will have a transformative or high impact on the profession, a higher predicted impact than the economy, regulation or environmental, social & governance (ESG) issues, among other trends.
In recent years, law firms have found themselves in a tough position due to the rise of AI technology. Indeed, expert commentators canvassed as part of Thomson Reuters’ Future of Professionals research said they believed that the main entities that will exert influence on the future direction of professional services are corporations and technology providers — indeed, not a single member of those consulted mentioned law firms.
For example, one participant noted that the biggest trend she’s anticipating is “different types of artificial intelligence, especially how generative AI (beyond GPT-4) will become as good as what professionals do in the business of giving advice.”
That isn’t to say, however, that law firms do not have the capability to exert influence in the AI world. In fact, although law firms in many cases will not be developing AI themselves, some argue that law firms have a unique ability to make sure AI is implemented in a trusted way given their current relationships with their corporate clients.
83% of legal professionals have risk-aversion as one of their top three barriers to potential change, with 47% saying it is their top barrier, according to the “Future of Professionals” survey
“ALSPs [alternative legal service providers] have never grown as fast as was anticipated by their promoters over the last decade or so. I can see some growth in that area. However, I think smaller, nimbler law firms also have great potential given the much lower barriers to entry and the huge, fixed costs carried by larger firms,” said another participant. “A mix of these two plus tech and economic downturn seems likely to put pressure on existing medium and large law firms to respond. The latter still have major client bases, so I anticipate change as likely to be incremental rather than quite disrupti[ve], but probably more rapid over the next 5 to 10 years than over the last.”
Indeed, according to Future of Professionals data, 83% of legal professionals cite risk-aversion as one of the top three barriers to potential change, with 47% saying it is the top barrier. Similarly, concerns around accuracy ranked as the biggest fear surrounding AI in the legal profession.
Any law firm adoption of AI, therefore, will need to take place while controlling for those risk and accuracy variables. That will be the way law firms can set themselves apart from other entrants to the market — although not all firms will do so successfully.
“Strong relationships will continue to be a source of lower risk, higher revenues, and higher margin. But the number of firms able to maintain this will reduce, assuming that clients do indeed look around more,” the latter participant added. “Clients taking more control of their know-how rather than outsourcing it to PSFs [professional service firms] could have a major impact.”
Trust at the fore
Ultimately, law firms will need to align their practices with what their clients desire. And according to Future of Professionals data, those clients are looking for more cost-conscious providers: 48% of corporate legal respondents named improving internal efficiency as one of their top 5 strategic priorities, while 39% of clients cited reducing external spend as a top 5 strategic priority.
As a result, law firms will need to figure out how to marry their own core competencies — trusted expertise — with client needs. The way to do that, of course, is to approach AI not as a replacement for attorney work product, but rather as a base that lawyers can then build upon with their own expertise. Firms exploring AI should be doing so with the goal of providing value on top of what an AI tool can give, rather than simply repeating answers that their clients could find by using AI themselves.
Some firms are already beginning to take this calculus into account because they see that some of the low-level work that they once relied upon could soon be replaced. One leader of a large law firm in the United Kingdom noted that the firm is already reexamining how it trains attorneys and prioritizes high-level expertise within the organization. While there are a lot of questions still to be answered around how firms should use AI for external purposes, the firm leader explained, the technology is “likely to lead to a complete rethink of strategies, skillset requirements, processes, and risk control.
“In the shorter term we will require significant retraining to help preserve the swathe of our workforce impacted by AI. For many, this won’t work, and some businesses retraining won’t be viable. Expertise and the ability to analyze at a sophisticated level will still be prized,” the firm leader said. “The expectation is that the base-heavy, triangle-shaped workforce is replaced by a more rocket-shaped structure, supported by AI. There will be a price to pay for expertise, but how to monetize advice that has been AI generated will be the challenge.”
For some firms, AI will represent an opportunity rather than a burden. After all, 40% of legal respondents in the Future of Professionals report say their top goal for AI is that it will free them to focus on higher-level tasks by taking away the more mundane elements. So, while trusted expertise should and will remain a core competency, focusing AI on lower-level, repeatable tasks could have the effect of letting attorneys focus more on providing that expertise, rather than take away work they’re already doing.