There’s a lot of talk of artificial intelligence “disrupting” the legal industry. What exactly does that mean? And what shape should firms expect this disruption journey to take?
Recent history is rife with examples of industries that were disrupted by new technology. Just think of ecommerce’s effect on retail, electronic trading’s effect on the brokerage industry, or the impact of mobile on banking. Each disruption has its own unique twists and turns, but it’s not hard to extrapolate—at least in broad outline—the forced march that AI is going to impose on law firms.
Stage 0: Wild, Wild West
Your firm is everywhere and nowhere in its use of AI. Employees are using ChatGPT and other LLMs in unmanaged ways to review documents, write emails, draft web copy, etc. You’re running significant risks from both a data privacy and quality control standpoint.
Stage 1: Policy
Your firm has a policy in place about what colleagues may and may not do with AI. Your policy prohibits employees from putting proprietary information into ChatGPT and other 3rd party tools, and perhaps bans their use entirely. You try not to think about what employees might be doing on their personal devices. Your Risk team sleeps better at night, but from a business standpoint not much has changed.
Stage 2: Experimentation
Your firm is starting to play with IT-approved “private” large language models (LLMs) that shield your firm’s inputs from the outside world (e.g., Azure OpenAI, Harvey, Writer). Colleagues are discovering new use cases every day—summarizing documents, reviewing contracts, writing memos, drafting emails, and many, many more. Results exceed expectations, but still require human review and correction. Some colleagues set out to learn prompt engineering, while others have existential doubts about AI’s usefulness for “real work.”
Stage 3: Integration
Your firm starts to focus its AI efforts on a small number of high-value use cases where AI is exceptionally effective. You start moving beyond all-purpose platforms to purpose-built solutions with specific, defined use cases. You securely integrate these systems with the firm data they require (matter repositories, CRM, Finance systems, virtual team rooms, document management systems, etc.) Your firm’s use of AI becomes much more routinized and standardized.
Stage 4: Re-engineering
Low-cost AI startups are chipping away at pieces of your traditional business. You start re-engineering core business processes around your AI-powered capabilities. You launch tech-enabled “centers of excellence” that scalably serve the needs of multiple practice and industry groups. You rebalance work assignments from junior attorneys to AI-assisted paralegals. You evaluate which activities could be migrated from high-cost urban offices to lower-cost (potentially even off-shore) locations. You re-draw the org chart.
Stage 5: Transformation
You re-think every aspect of your operating model. You offer your clients new services made possible by AI-powered solutions. You refactor your billing from hourly to dynamic models that capture the value you create for clients. You seriously consider introducing new services that cannibalize your own offerings. As the relative profitability of your traditional practices shifts, you actively entertain mergers, acquisitions, and divestitures. You reshape your talent pyramid and rethink the skills required to advance from associate to partner. You expand your talent models, creating new career paths for experts in data science and other non-legal disciplines that are now critical to the firm’s success.
So that’s the roadmap. Now a few observations about how to think about the journey from here to there:
- This is about both the practice and the business of law. AI may deliver as much value to recruiting and business development as it does to M&A, patents, or litigation.
- Different parts of the firm will move at different speeds. It all depends on where AI proves delivers the most value with the least cost and risk.
- Different geographies will move at different speeds. Local business culture and regulations will make some regions and countries more amenable than others.
- This is a lot bigger than just your IT department. Technology is an enabler of much larger changes that go all the way to the managing partner.
- You can’t skip steps. Each step prepares the firm for the next one.
- The incremental value increases with each step. AI’s value creation will be exponential, not linear.
- You’re probably at Stage 2 today. If you’re at Stage 3, you’re ahead of the game. If you’re at Stage 0 or 1, you need to step on the gas.
- This will take a while. From start to finish, it’s a 10+ year journey.
- You need to get on it now. Firms who fall behind will find themselves facing acquisition—or worse.
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Formerly with leadership positions at PeopleLinx, McKinsey, and Socialtext, Michael Idinopulos is the Co-Founder of MyMai. Connect with him on LinkedIn. Follow his latest writings on JD Supra.
