Share This Article
Traditional law firms might be forced to change their model of business in 2024 as otherwise they might see the end of their success quickly approaching.
Don’t get me wrong, I don’t believe we will see law firms guided by robots, at least not in 2024.
However, I do believe that 2024 will be a turning point for ‘traditional law firms’ that might lose traction if they fail to see legal tech as more than just a marketing tool, but rather as a driver of their future.
Let’s start with what I see as a ‘traditional’ law firm.
To me, this is a law firm where clients pay based on our billable hours or fixed-fee arrangements. Clients seek services provided by professionals, and the competition centers around the human skills of these professionals.
Every law firm uses legal databases, Word, Excel, and Outlook, but very few venture beyond these tools. There are precedents that can save time, but they are manually created. ‘Traditional’ lawyers are sometimes so proud of their argumentative skills that they insist their contracts, briefs, and memoranda must always be unique. As a result, they start from scratch on every project, almost offended by the suggestion that technology could make their work more efficient and improve client service.
These traditional lawyers and law firms launch legal tech projects, but in reality, these initiatives are often just marketing efforts. They lack a supporting business plan, are not expected to generate significant profit for the firm, and are undertaken to prevent the firm from appearing ‘old-fashioned.’
These legal tech projects are now extensively driven by generative AI. If you’re not in the Gen AI space, you’re not considered ‘cool,’ even though sometimes the same product could be offered via a simpler Excel sheet or an HTML file at a much lower cost to both the law firm and its clients, as for instance my law firm DLA Piper did with Transfer.
Moreover, these projects sometimes don’t require a legal advice component (Transfer instead does require it!). It seems like law firms believe they can compete with the Big Four or pure technology providers, who have deeper pockets and technical expertise, without leveraging the top-ranked legal skills that differentiate law firms from technology providers.
A few clients really appreciate this approach, but the question is, for how long?
The approach described above has been followed for at least the last five years with no major negative impact on law firms. But can the advent of generative AI mark a turning point?
We are seeing an increasing number of clients seeking support in legal tech and legal design projects. Clients understand that the world is changing, and they need to adapt their in-house legal departments accordingly and are no longer willing to pay for some services (e.g., translations but even due diligences) that a machine can either fully perform or make more efficient.
However, clients are unsure of the right partner for this transition.
Technology providers often cannot fully understand the needs of an in-house legal department and offer off-the-shelf products that are basically useless. At the same time, law firms are often too slow, unprepared to meet client needs, and worried that technological innovation will cut into their highly profitable billable hours.
So, what’s the solution? My view is that law firms need to change their mindset. They should start operating as a company, rather than as a collection of partners, with business plans and sales targets to be met. They need to stop trying to compete with technology suppliers and instead partner with them, as lawyers are still seen as the most trusted legal advisors for clients. But all these activities need to be done now since otherwise technology suppliers will hire lawyers and fill the gap. The lack of pace in any change is one of the main issues for law firms that however cannot afford it anymore.
These are just a few initial thoughts to start the year. What’s your view?
The image in this article was generated in a few minutes with DALL-E, and I asked ChatGPT to check whether the article was grammatically correct.