Hi there,
You’ve undoubtedly heard about OpenAI’s new AI agents – automated systems capable of independently performing tasks – that can cost upwards of $20,000 a month.
Most of the initial reaction to this announcement was around that hefty price tag (and a healthy dollop of skepticism about these agents’ true capabilities). But as the news settles in, people are starting to understand the bigger point: GenAI tools, and now GenAI agents, are on the cusp of revolutionizing the business models around knowledge workers.
Will legal be exempt? Unlikely. My call is that the legal services business model is not just up for a makeover, but more like a complete overhaul. And I’m willing to wager that your legal team is not fully prepared.
I launched PERSUIT nine years ago because I believed that outcomes were more valuable than time. I wanted to change the fundamental relationship between in-house legal teams and outside counsel to better align interests — and save corporations money.
Change moves slowly, until it doesn’t.
What I didn’t see coming (to be fair, that was nearly a decade ago) was how AI would ascend so quickly and hasten the billable hour’s demise. Time is no longer a credible currency to manage any client and knowledge-worker relationship. Legal is no exception.
OpenAI piqued my curiosity with Chat GPT, it now has my undivided attention with its specialized agents.
To state the obvious, AI won’t replace your legal team entirely, especially in the short term. Humans will continue to be important to provide context and creativity and the ability to say “Yes, and…” when solving your issues.
But time, as a unit of value, becomes meaningless when PhD level agents are running around the clock, churning out knowledge work instantly.
Read a law firm bill narrative lately?
Research…drafting...reviewing…preparing…summarizing…analysis……
Everything that the knowledge machine and its AI agent offspring can do, and more.
What, then, will you pay for?
And it’s not just what you pay for, but also how you buy. You need to think of AI in a broader context beyond just doing the actual legal work (research, writing, etc.). AI is also a mechanism for procuring legal advice for your business. From finding the right firm for a matter to price negotiation to engagement, AI agents will assist you through every step of the buyer’s journey.
How should I divide the work between top-tier, mid-tier, ALSPs and GenAI Agents? Who is the best-placed firm in my panel to handle this piece of work? Is there a firm outside my panel that is better placed and cheaper? What fee arrangement is best suited to this type of work, given I have these goals and outcomes in mind?
With all this to consider, what should you do now?
- Get familiar with AI. Sounds basic but how many of you actually do it? Really devote time to understand what AI is capable of and what is on the horizon. And not just you! Make sure your team is empowered with their own AI tools.
- Talk with your external firms. Overcommunicating is a good thing. Find out how your firms are using AI, ask them how they are charging for it and where they are headed with it.
- Make a plan. When AI gobbles up the billable hour, are you clear about what you will pay for and how? Decide now and wrap that into your discussions with outside counsel. Conduct pilots and tests to see where and how AI can boost your decision-making and outcomes.
The legacy in-house and firm relationship, clinging to billable hours, is inefficient, especially as more in-house legal teams are facing cost-cutting mandates. Inefficient marketplaces get disrupted, which is what we are watching in real-time with AI.
Now is the perfect time to figure out how AI can disrupt – and improve – your external spend. If you don’t, the management consultants are more than happy to come in and do it for you. And then that $20,000 agent will suddenly seem like a bargain.
Cheers,
-Jim
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