Law and AI: The Most Important Question That Law Firms Need to Answer

The legal sector, famously traditional and often perceived as a tech laggard, is now quite emphatically leapfrogging other verticals into the LLM and GenAI arena. With use cases in abundance, given the natural lean of the lawyer’s workload in AI’s direction, law firms are comprehensively integrating AI into their offerings and operations. However, it’s become clear that this isn’t just a case of plug-and-play, and the real question arising is more centered on how firms believe they both could and should be interacting with AI in the near future. That means that, more succinctly, the question in front of each leadership team remains: for our firm, what is the optimal combination of human expertise and AI we need to stay competitive in 5 years’ time?

The old adage remains that firms need to balance human expertise and technological innovation. In some shape or another, that’s been the case since the Industrial Revolution. However, the advent of GenAI has raised the stakes. Law firms must now decide how their AI adoption levels impact their competitive positioning, reputation, and, ultimately, their clients. By carefully considering the options and implications, firms can make informed decisions about AI integration, leading to enhanced client experiences.

I’ve broken this down into four potential scenarios that law firms can adopt to position themselves for success whilst managing risk in the same breath.

Anti-AI Approach

Amidst the noise of AI, some law firms may instead choose to differentiate themselves by marketing their services as exclusively human-driven. This approach caters to clients who prefer the traditional legal experience and value the personal touch that only human lawyers can provide. By emphasizing their reliance on human expertise and judgment, these firms can position themselves as a safe haven for those who are skeptical or wary of AI's role in legal matters.

However, while this anti-AI stance may appeal to a niche market in the short term, it risks putting these firms at a competitive disadvantage as AI becomes more prevalent and commonplace in the industry. As clients increasingly expect the efficiency and cost-effectiveness that AI can deliver, firms that resist adoption may struggle to keep pace with their more technologically savvy peers. Similarly, by failing to leverage the power of AI to streamline processes and enhance decision-making, these firms may miss out on opportunities to improve the quality and consistency of their services.

Human-led, AI-Assisted: The human asks the AI what to do (i.e. chatbot assistance)

For law firms that recognize the potential of AI but are not yet ready to fully embrace it, the AI assistance scenario offers a compelling middle ground. Under this approach, firms adopt AI tools like Microsoft Copilot to supplement and support the work of their human lawyers, while maintaining a largely business-as-usual approach to service delivery. This enables lawyers to continue doing their normal tasks, but with AI assisting.

Using AI to bring efficiency to tasks that were previously the full domain of a lawyer, such as creating first drafts of documents, allows lawyers to focus their time and energy on higher-value activities or even delegate that work to a trained junior lawyer to interact with the AI. Similarly, by making the most of AI's ability to quickly analyze vast amounts of data prevalent in a legal context, lawyers can use AI to assist them in locating relevant documents and identifying patterns and insights that can give the firm a competitive edge in terms of turnaround time.

However, it is important to note that the AI assistance scenario still relies heavily on human input, review and cognitive load to drive things forward. That means that they need to learn how to communicate what is needed in a way to derive the most output from AI. What can then happen is that lawyers have to learn how to be prompt engineers, and that’s not a great world for them to live in.

The common interface is a chatbot where the lawyer is required to formulate what they want AI to do, vs. a scenario where AI can be doing more and a human lawyer is overseeing it. What's more, as more firms begin to engage with the AI Assistance route, a new plateau will likely return whereby law firms need to find an edge to compete with others who are also using the same technology.

Integrating AI into Workflows (Human initiates reviewable tasks for AI to complete)

For firms that are ready to take their AI adoption to the next level, integrating AI into specific workflows can deliver significant benefits. By identifying use cases where AI can be integrated into existing processes, such as document review, contract analysis, or due diligence, firms can optimize their operations and deliver more value to clients.

One area where AI can have a particularly transformative impact is document processing. Traditionally, reviewing thousands of contracts and providing insight and analysis against them has been a time-consuming and labor-intensive process, requiring lawyers to sift through mountains of documents to find relevant segments related to the matter. However, with the advent of AI-powered legal tooling, lawyers and Legal Ops teams can design workflows that are highly accurate, relevant, and tailored to the desired outcome in a fraction of the time. When a firm can act flexibly, and incorporate these improvements into their competitive bidding, they are more likely to win more projects vs those relying purely on human-led lawyer work.

Many experts believe that AI will likely soon be able to perform not only routine legal tasks but also replicate levels of critical thinking and analysis currently undertaken by more senior lawyers, and therefore designing the firm’s processes around how to manage this, rather than deny/ avoid it, will be a key distinguishing factor.

However, it is important to recognize that integrating AI into workflows is not a one-size-fits-all proposition. Firms must carefully assess their specific needs and requirements and choose AI solutions/ partners that are fit for their way of working and align with their strategic goals. Successful implementation requires not just the right technology but also the right people and processes.

Creating New AI-Powered Service Offerings (AI Transformation)

For the most forward-thinking and innovative law firms, the advent of AI presents an opportunity to create entirely new service offerings that capitalize on the technology's unique capabilities and steer away from previously archaic processes and inefficiencies. By developing AI-powered products and solutions that address unmet client needs or disrupt traditional legal service delivery models, these firms can position themselves as leaders and innovators in the industry, as well as provide a more nimble and lean working framework.

One example of this approach is the development of solutions that allow firms to effectively and efficiently analyze their client’s legal positions in response to a new regulation being implemented. By analyzing vast amounts of client documentation and codifying the stance of senior legal experts at the firm, tools can help lawyers make more thorough and informed decisions about what changes the client may need to take in the face of a new regulatory environment. Via generative AI, they can advise to a greater degree than before and also serve more clients simultaneously.

Another area where AI can enable new service offerings is case settlements. Firms will be able to use AI to review the terms of, e.g., compensation claims from a new case and help accelerate the timeframe and accuracy by which these are processed, resulting in a more efficient output. A more timely and diligent approach ultimately results in a fairer outcome, assuming that it is delivered in a transparent manner.

That being said, we’re far from a world of plug-and-play. Creating new AI-powered services requires investments of time, resources and expertise, either in-house or through strategic partnerships. Firms, therefore, need, directly or indirectly, a deep understanding of both the technology and the legal domain and be willing to experiment and iterate to find the right product market fit. Beyond that, there are complex and evolving ethical and regulatory issues around the use of AI in legal practice, which are full of missing links and ambiguity. Ensuring that offerings comply with professional and legal standards is one thing, but keeping up with them is very different.

Play it forward

As the legal industry begins to adopt AI into offerings and workflows, law firms must carefully consider their strategic positioning and the role that technology will play in their future success. While the AI assistance scenario is likely to become the base case, with firms differentiating themselves through traditional factors like reputation and expertise, those who recognize the growing importance of technology in driving differentiation have a unique opportunity to get ahead.

However, the most important factor to consider is a thoughtful approach to ensure that the integration of AI aligns with the firm’s values, culture, and client expectations. That means striking the right balance between capitalizing on AI’s capabilities and also maintaining the human touch that clients value. Transparency about AI use and integration is also important to make sure that it is used ethically and responsibly.

Ultimately, it’s no shock that successful firms will be those that effectively embed AI into their culture and practices for both today’s level of development and also in mind for infrastructure for future innovation, too. Combining the best of both worlds – the efficiency and insights of AI with the judgment and empathy of human lawyers – will allow them to be well-positioned to deliver exceptional value to their clients and thrive in the years to come. By doing so, they can not only differentiate themselves in a crowded market but also deliver better outcomes for their clients and society as a whole.