Amid the excitement over how AI will revolutionise healthcare, advertising, logistics, and everything else, one industry has flown under the radar: the legal profession. In fact, the business of law is a strong contender for achieving the highest return on investment (ROI) from using AI.
Law firms are seen as traditional, not as eager adopters of new technology, but most have used machine learning (ML) for years. Embedded in popular platforms like Westlaw, ML is often incorporated into core operations.
Now, generative AI is spreading through law firms faster than class-action claims over a stock fraud. Individual lawyers have learned to use ChatGPT-like AI models, and entire law practices have harnessed large language models.
Those in the business of law see remarkable gains from AI in efficiency, accuracy, speed and client results in their day-to-day processes. Three points help explain those results.
In legal operations, AI-driven time and cost savings are typically very high. The gains are not incremental.
- AI is applicable to potentially most work processes at law firms.
- Once law firms implement AI, it grows steadily more powerful as they personalize it. This is basically customisation; adapting AI to their preferred work methods takes the return on investment (ROI) higher:
Meet the AI-native law firm
These benefits have led to the emergence of AI-centric (aka AI-native) law firms, a new breed that is significantly more efficient and competitive than its rivals. At AI-native firms, most support staff and attorneys already leverage AI extensively for intake, research, drafting motions, briefs, objections, analysing judges’ opinions, and more.
A law practice becomes AI-native, in part, by personalising the behaviour of AI solutions to mesh with the firm’s existing processes and strategic guidelines. This makes their AI more capable and valuable.
Personalisation takes various forms, like creating case evaluations that follow a firm’s established standards. AI can consider potential claims and create follow-ups according to an attorney’s criteria. It can be taught to follow an existing process, mimic sequences of events, ask or answer key questions along the same pattern, and write in the style of previous case work.
Once trained to emulate an attorney’s approach, an AI model makes life easier for support staff. Even if a paralegal hasn’t worked with specific lawyers, AI will help them with case preparation and client interactions, risk assessment, and even strategy.
AI-native law firms increasingly use generative AI to service clients who require individualised treatment. AI contributes throughout the case lifecycle, from brainstorming pre-litigation case strategy, to handling discovery. Gen AI-based models also help prepare depositions, analyse their results, and plot litigation strategies.
Why is AI extraordinarily useful to law firms?
It’s been said that the legal world is made of six-minute increments. Often, AI can often do in seconds what takes hours or days for a junior associate. Time reductions of up to 99% drive major cost savings, and in the intellect-intensive field of law, they are common.
Every day, lawyers must evaluate, analyse and weigh tradeoffs, draft documents, and make decisions. Paralegals and junior associates need to work fast and accurately, yet never overlook anything important. With volumes of data and minutiae to wade through, the work can exhaust them, leading to mistakes.
Overall, speed, scale, and personalisation contribute to make AI a massive accelerator in the legal field, with productivity gains well beyond the “traditional” 10 to 20 percent.
Costs come down and move around in AI-native law firms
Lawyers are learning first-hand that AI systems can minimise the associate hours it takes to complete a process. By engaging AI across the life cycle of cases, they can reshape individual workloads for greater profitability. Upfront work on cases is sometimes undercompensated, and AI lets the team concentrate billable hours on later, fully-compensated stages.
AI-centric firms can also grow without expanding the headcount of support staff. Instead, existing staff can assist more associates, who bill at higher hourly levels, increasing profitability.
They can also market themselves and drive growth more vigorously. Wherever AI reduces operational costs, it frees up funds for marketing and business development. Generative AI makes marketing communications faster and easier for law firms, as it does for other businesses.
Employee experience: AI happiness
AI often does not get the credit it deserves for its positive impact on employee experience. In practice, lawyers and paralegals can offload most so-called grunt work and repetitive tasks to AI. This boosts job satisfaction and — by implication — retention. Support staff and junior associates become, in effect, supervisors of AI.
They can customise the firm’s AI by teaching procedures to an LLM, and then share them across a team. This means lawyers can operate in familiar ways but at a larger scale, and delegate more comfortably to support staff without lengthy explanations of “Here’s my way of doing this.”
Business models shift for AI-native law firms
AI-native law firms can uplevel their business to increase capacity and support revenue growth. Specifically, they can structure internally to handle more complex cases and lucrative contingency work. AI enables smaller firms to handle larger, tougher cases by whipping through much of the research and analysis.
In contingency litigation, productivity gains stemming from AI can even exceed those seen in other legal categories like contracts, intellectual property, and family law. AI can handle much of the upfront evaluation of contingency cases. Taking on well-researched contingency cases can significantly increase profitability.
Those who get AI versus those who don’t
Given the benefits, are law firms jumping on board and going AI-native in droves? Surprisingly no, according to a 2023 Thomson Reuters survey that found 60% had no plans to use generative AI. That’s good news for the other 40%. Law firms that leverage AI effectively have a marked advantage over competitors that do not.
The legal profession ranks among the industries achieving the best gains from use of AI. Law firms that “get it” will continue to personalise AI systems and push towards their potential, and grow more profitably. As it becomes increasingly obvious that AI-native law firms enjoy greater growth and profitability, other intellect-based professions may well follow their example.
