Hi PERSUIT,
Just when I think I’ve had enough of the “billable hour has got to go” debate🤺 — and maybe wondered if I’ve gone too far painting firms in a bad light, remembering I used to be one of them after all 🤷♂️ — I read this article brought to my attention by one of our legal advisory team, Will Holman:
"What Does Big Law Stand to Gain From Slow AI Adoption?"
The TL;DR: Firms aren't adopting GenAI because it breaks their profit model. And what should we expect? How can a firm that generates massive profits using billable hours adopt AI? Why have a machine do work that takes hours in seconds — when doing so won't make you more money?
Answer: They can't. Not without ditching the billable hour for at least some of their revenue.
As a former litigator, and with a deep bench of client-facing work in legal tech, Will told me that he’s personally had this conversation with BigLaw firms during the roll-out of CoCounsel (before their acquisition by TR).
Aside from the privacy and confidentiality concerns that we’ve all heard plenty about, this was probably the number one issue raised according to Will, and continues to be top-of-mind for firms as more GenAI use cases continue to emerge and find validation in the legal marketplace.
A lot of the talk from in-house teams right now is about how to leverage GenAI in relation to providing legal advice.
Like providing advice back on policies, using Chat GPT to answer questions coming in from the team, and creating bots that aid in NDAs or contract analysis (you can hear a few more of these interesting use cases from our latest webinar with Moderna CLO Shannon Thyme Klinger.)
But in calculating the total cost of legal, for most in-house teams, around 50% of that is external legal spend.
Which is why it’s important for in-house teams to also be thinking about how they're using GenAI for that half of their spend that lies with outside counsel.
When a firm's business model 💰 is based on the hours your associates work ⏳, what is the incentive to have them work half or a third of that time?
I’ve said it before, but the firms that work out how to deliver services faster, more efficiently, and more accurately to drive better outcomes, they’ll be the winners here.
And speaking of leverage, what a business model! 💰
Reducing my input to a fraction of the time it previously took me — using a process I can scale again and again.
But that move, at least right now, is likely to be taken by only a small number of firms who are courageous, and who can afford to take the risk.
That’s why clients need to lead the push in getting firms to use GenAI in how they deliver their services.
That means in-house teams need to be asking for every piece of legal service that they are buying:
How are our firms using GenAI to drive a more efficient, cost-effective, and outcomes-driven delivery of legal services?
But I’m curious to hear your experience.
What are YOUR firms doing to wow you with AI (if anything)?
And what are you doing to ensure that that other half of your legal spend isn’t getting left behind in this GenAI transformation?
Cheers,
Jim
P.S. ICYMI, our March Survey Report of AI Maturity Across Firms can tell you how your firms stack up against the rest.
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