Doing nothing is not an option. What do law firm leaders need to ask themselves?
The impact of AI on legal services and the immediate leadership challenges were discussed during Lexington’s most recent #LeadershipCircle in London.
The future is still unclear but legal services has reached a definite inflexion point. There are no simple answers and each firm has to work out their own way forward. Doing nothing is not an option. A group of 41 especially invited law firm leaders discussed the immediate actions they are taking on Gen-AI era at the Law Society of England and Wales.
So, what do law firm leaders need to ask themselves?
Leadership
Who is driving change at the law firm? AI is necessitating change across every aspect of a firm – it can ́t simply be delegated to a special committee. Traditional partnership structures, remuneration models or silos can all be obstacles. While risks are at the top of the leadership agenda (risks of both using and not using AI), young lawyers are already using AI in their daily tasks (such as document reviews etc) - in many cases as a personal and informal support.
Is your firm a “fast follower” or a “first adopter”? We heard that the speed of change and advancement is tripping up some of the first movers. Rather than taking a “leading edge” approach to the creation of entirely new technologies, firms should start experimenting with one of the “plug and play” providers. 40% of the firm ́s participating at the Leadership Circle are already trialling GenAI across different practice areas, but implementation is not wide enough yet to demonstrate time-saving, better work-flows or improved service delivery.
Clients
Are you taking clients into consideration? If you want to go quickly, go alone, if you’re going to go far, go together. It is surprising how many firms are addressing AI alone instead of working in collaboration with clients – then sharing the financial investment and benefits. Talking to clients and understanding where they wish to see improvement is key to identifying the areas where AI can assist firms to enhance their legal service delivery. Internal conversations will help identify where firm systems and processes can be augmented or enhanced.
What is your law firm pricing approach? The short-to mid-term investment is substantial but clients are expecting efficiencies and lower prices. New pricing structures are being adopted - the time spent by lawyers on any specific task is irrelevant to the benefit to a client.
People
Moving from pyramids to rocket ships? The traditional law firm pyramid continues to come under pressure - with or without rocket wings - incorporating professionals with different set of skills. Junior hiring is already reducing in some firms, although they will move up the ladder faster. At the senior end adoption is slower, but those using AI as a strategic legal tool in specific areas such as litigation are using it extensively.
Are you training your people to learn and adapt to the new times? Only 29% of the firms present are investing in AI training and education - agreeing that in times of cultural transformation and adaptation this needs to increase. For some, they are not yet ready to commit to the additional investment required.
New technology investment versus training? Both are required. The new intakes of lawyers will enter law firms already more equipped in AI than their older colleagues (2nd and 3rd year associates), perhaps speeding their development over their older colleagues-accessing partnership before them.
Strategy
Are you clear about your strategy and how Gen-AI can enhance it? It is crucial to work the firm strategy, what type of firm you want to be and what type of service do you want to provide. This will define the investment required in order to provide value to the organisation and to your clients.
Business Model
What are the key success factors for your firm? Each firm’s business model needs to be built on an understanding of where and how it can best utilize GenAI tools. Underlying systems and centralised data – including financial and client information, market and legal subject matter knowledge and expertise, etc. must be in place to enable the benefits of AI to be achieved.
Business professionals will soon outnumber lawyers. With law firms already struggling to attract the best technologists, traditional approaches to ownership, governance and profit distribution will need to change.
Conclusions
As Lexington ́s Paul Browne said in conclusion: “If you take expensive AI into an old organisation, the only thing that you will get is an expensive old organisation.”
More Lexington Insights HERE