The Conversation
The past few months have seen a flurry of law firm innovation. In addition to developing and offering more advanced technology solutions, some firms are even playing a major part in launching legal tech startups or tools to the broader market.
Of course, much of the focus in the market is still on leveraging tech to empower firm attorneys. At the end of 2024, Davis Wright Tremaine debuted a firm developed, gen AI-powered tool called DWT Prose to help teach its associates legal writing, an innovation that looks to tap into the skills and experience of the firm’s partners.
Yusuf Zakir, the firm’s chief diversity, equity, and inclusion officer, explained that “[DWT Prose is] really trained on the preferences and the writing and the work product of our partners here at [Davis Wright]. And so when anyone at the firm, associate, partner, whoever, is preparing their written work product, they can run it through this application, and they can get instant feedback and guidance on their work.”
Over at Hogan Lovells, the firm’s technology subsidiary, ELTEMATE, which was launched in 2023 to house and develop the firm’s proprietary legal technology, offers a large language model—essentially the engine behind gen AI—to firm attorneys, who already have access to legal technology automating document and template generation, contracting and deal support.
While many firms are focusing on internal innovation, sometimes their efforts impact the broader market. Sullivan & Cromwell looked to get ahead in gen AI development by previously investing in an AI startup called LAER AI that, with the firm's help, created an AI Discovery Assistant and AI Deposition Assistant.
Fast forward to last month, and the AI Discovery Assistant—which speeds up the e-discovery processes by performing first-level document reviews and simultaneously checking for issues, privilege, and responsiveness—was officially launched by legal technology and services company Epiq, who recently acquired Laer AI.
The legal tech tool, now available to the wider market, was based on a vision from the firm’s senior chair Joe Shenker. "My dream is that an AI machine sits with every firm lawyer at deposition or trial, having digested the case already, and listens to the testimony, seeking for truthful or false answers, and then suggests questions for the lawyers,” he said.
Sullivan & Cromwell isn’t the only firm to impact the broader legal tech market. Polsinelli M&A associate Collen Steffen, for instance, recently created a new deal management tool called Project Fortress built on Salesforce for the firm. Steffen spun out his own legal tech company to sell the product to the wider market, with Polsinelli becoming its first adopter.
Meanwhile, Baker McKenzie, which is doubling down on its own AI innovation, spun off its internally developed legal risk platform—which looks to identify and analyze various forms of risks for clients, from cybersecurity and data privacy to ESG—into an independent business named SCOREalytics, in which the firm retains a 35% equity stake.
Baker McKenzie partner Daniel Cullen said the firm realized that the platform would be beneficial to more markets than just legal. “Baker McKenzie's footprint is quite large and quite meaningful, but we came to the conclusion that the relationships that [SCOREalytics] could have, more broadly than just one single law firm, or frankly, a single accounting firm, consulting firm, or one of the massive in-house legal teams as a client, is more appropriate than having it grow solely within the footprint of Baker.”
The Significance
There’s a few reasons why law firm innovation is taking off faster than ever before. Gen AI came onto the scene at a fortuitous moment for firms, many of which had become more tech-savvy by building out their development capabilities over the past few years.
Davis Wright Tremaine’s DWT Prose training tool, for instance, would not have been possible without the technology skills and knowledge the firm started fostering over half a decade ago.
“Six years ago we started a program to start writing our own software as an initiative inside of the firm. And so it just was our core competency to build this,” said Dan Szabo, its director of enterprise products. DWT prose was also supported by more recent firm efforts—specifically its large language model DWT.AI, which is trained on information about the firm.
Many firms also are able to meet the gen AI moment because of the technology subsidiaries, also known as captive ALSPs, they launched in the past, allowing them to tap into a team already dedicated to legal innovation. Some of these outfits are led by those who have sought to transform the industry outside law firms—last month, Eversheds Sutherland turned to a Big Four veteran from EY to lead the firm’s captive ALSP Konexo.
What’s more, sometimes the innovation in a firm isn’t just leadership led, but also happens from individuals taking the initiative.
While the deal management tool Project Fortress was created at Polsinelli, it was developed by M&A associate Collen Steffen, who spun it off into a legal tech startup that the firm has no equity in.
Meanwhile, Husch Blackwell partner Brian Potts partnered with a Harvard Law student and computer scientist to found a new “AI Judge” startup independent of his law firm. The new company looks to automate the entire arbitration process, from filing and discovery to rulings.
It’s no surprise that firms and attorneys are embracing innovation—after all, it's becoming more of a market necessity. Many clients are pressuring their outside counsel to offer more cost-effective legal services, especially as law firm rates have skyrocketed. And one way clients believe their providers can meet that goal is through adopting gen AI and offering more efficient, tech-enabled services.
It’s clear that if law firms don’t meet clients expectations, clients will turn elsewhere. A recent survey by Thomson Reuters found that the ALSP market is growing faster than the law firm market, while many law firms and legal departments expect the use of ALSP services to grow as those companies adopt gen AI and expand their offerings.
Some ALSPs too are looking to blur the current boundaries of legal services and launch their own firms.
KPMG, for instance, recently applied for an alternative business license to operate as a law firm in Arizona—the only U.S. state that loosened its regulations on law firm ownership. While the application is on pause, some believe it could spur other legal services providers to take similar actions.
If ALSPs and the Big Four can start law firms, they’re likely to have an advantage when it comes to technology-enabled services by virtue of their access to outside funding.
In the U.K, where there are less regulations around who can own a law firm, one firm, Avantia, which has attributes of both an ALSP and a traditional law firm, recently launched an agentic AI tool for its attorneys. The tool automates tasks such as first-pass contract reviews, blacklining, and compliance checks. Avantia is currently eyeing an expansion to the U.S. market.
