The Conversation
During a Law.com Pro track session at Legalweek on the ways leaders will have to adapt to a post-pandemic, AI-fueled world, Roger Barton of 40-lawyer Barton LLP described a critical difference between his firm’s potential approach to generative AI and that of co-panelist Ira Coleman, chair of Am Law 25 firm McDermott Will & Emery. The larger firm could afford to spend 1% of revenue on technology-related costs, Barton noted, whereas his smaller firm could not.
But the irony, Barton pointed out, is that it would be much harder for Big Law to adjust to the implications of heavy AI use given the significant structural changes it would force to staffing, hiring and pricing, whereas his smaller firm would be able to benefit from the scale gen AI would offer and could more easily adapt to its impact on the business model.
ALM’s business of law and legal technology teams recently teamed up to canvas the Am Law 100 firms on their AI usage and some interesting data emerged along these lines.
More than half of the respondents said they were testing the tool on reducing attorneys’ time spent on non-billable work, which is an efficiency play, not directed at client savings, that would require adjustments to staffing or pricing.
Only a small percentage of respondents said a concern of using gen AI was figuring out how to price services that were enhanced by the tool. But a majority of respondents said their biggest concern was introducing a new way of working to lawyers. And a lot of the use cases described were on non-legal work, including marketing support, client alerts, and other intelligence gathering.
At Troutman Pepper Hamilton Sanders, some 800 people use internal and third-party gen AI on a daily basis, chief innovation officer William Gaus told The American Lawyer in December. They include lawyers who use it to query documents and marketing professionals who use it to draft social media posts and press releases.
“As of today, it’s an amazing personal productivity tool, and lawyers and administrative folks are discovering where generative AI can sit in their day to day and make themselves more efficient and valuable to the organization,” Gaus said. “We want to leverage that in overall operations of the firm and overall delivery of legal services from the firm.”
As Big Law dives deep into the experimentation phase, the implications on pricing are significant.
Gina Lynch, chief knowledge and innovation officer at Paul, Weiss, Rifkind, Wharton & Garrison, said at a panel at Legalweek: “How do you bill AI-assisted judgment? Some of the potential that we see in [generative] AI is that ideation,” being able to ask a tool, “tell me another way I can answer that complaint. How do you bill that?,” she asked.
“If you think about some of the most profitable law firms in the world, it’s not really about saving the partners like two minutes here, five minutes here. … It’s about getting to the answer faster. It’s about speed to insight; it’s about winning,” co-panelist Jae Um, Baker McKenzie’s former director of pricing strategy and founder and executive director at Six Parsecs, said.
“So [generative AI] is going to be impossible to bill… the shift of value is often about shifting from pricing effort and inputs [to] pricing the business value at stake, the risk profile of the work, the outcomes that we deliver to our clients. That’s value pricing.”
