Almost every industry has undergone huge technological transformation in recent years, to the extent that some even say investment banks are now tech companies. In a similar vein, the law firm of the future will be an AI company—one that doesn’t just use AI for efficiency but employs AI to entirely transform legal service delivery and implement radical business model changes.
The implications for law firms are profound. The legal industry, often resistant to change, must adapt to this technological revolution or risk obsolescence. Generative AI (GenAI) is already demonstrating its potential to draft contracts, analyse case law, and even predict litigation outcomes with remarkable accuracy. However, the adoption of AI is not merely about incorporating tools to increase efficiency. It requires a rethinking of how legal services are structured, priced, and delivered.
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Large law firms, in particular, face significant challenges in adapting to these changes. Historically, they have struggled to procure legal technology effectively for several reasons. These include a lack of incentives for senior partners to embrace transformative technology; the billable hour model which disincentives efficiency; cumbersome hierarchical structures becoming a barrier to change; cultural conservatism; and the data security and integration burden too heavy for technology suppliers.
Given these hurdles, my advice to large firms is to think beyond procurement. Instead of purchasing legal AI solutions piecemeal, they should consider leveraging their balance sheets to acquire legal AI companies outright. By establishing these entities as separate departments or even standalone subsidiaries, firms can foster environments conducive to innovation. These AI-driven entities would benefit from access to top legal talent, trusted brand reputations, and long-standing knowledge bases, while also maintaining the agility needed to disrupt traditional business models.
AI opportunities for small law firms
For small law firms, the path to AI adoption is more straightforward. These firms are typically more nimble and often operate with flexible business models, such as fixed fees, that align well with the efficiencies AI can bring. Many lawyers in these firms have left larger organisations precisely because they sought opportunities to innovate. As a result, they are often more open to experimenting with new technologies.
Small firms stand to gain significantly from rapidly procuring and deploying legal AI. By adopting these tools, they can expand capacity to serve more clients simultaneously without compromising on quality; reduce costs by automating routine tasks, freeing up time for higher-value work; and enhance client offerings using AI to provide faster, more accurate legal advice, differentiating themselves from competitors.
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By GlobalDataHowever, even small firms must approach AI adoption strategically. This means being flexible with procurement requirements and investing in training to ensure their teams can effectively leverage the technology. Firms that take a proactive approach will not only survive but thrive in the age of AI.
A new business model for legal services
The integration of AI into law firms is not just a technological shift but a catalyst for reimagining the entire business model of legal services. Traditional billing methods, such as the billable hour, are ill-suited to the efficiencies AI enables. Instead, we are likely to see a shift toward value-based pricing, where firms charge based on outcomes rather than time spent. This model aligns incentives between lawyers and clients, fostering trust and long-term partnerships.
Moreover, AI can facilitate new ways of delivering legal services. For example, subscription-based models could allow clients to access ongoing legal support at a predictable cost. Alternatively, firms might offer tiered services, with AI handling routine matters and human lawyers focusing on complex or high-stakes issues. These innovations can democratise access to legal support, making high-quality services more affordable and accessible.
While the potential of AI in law is immense, the window for firms to act is narrowing. Early adopters will gain a competitive edge, while laggards risk falling behind. The technology is advancing rapidly, and client expectations are evolving just as quickly. Firms that fail to adapt will find themselves outpaced by more innovative competitors.
The law firm of the future will not merely use AI as a tool—it will embody the principles of an AI company. By embracing this transformation, firms can redefine what it means to deliver legal services in the 21st century. The time to act is now.
