Generative AI: a legal revolution is coming — eventually
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
It is hard to convince a room full of millionaires that their business model is wrong. That was how Richard Susskind, a writer on the legal industry, summed up law firms’ resistance to change more than a quarter century ago. And most commercial law firm partners did indeed remain sceptical that technology will bring about the end of lawyers.
But the release of ChatGPT-4, Open AI’s generative artificial intelligence software, which caught the headlines this year, has moved the sceptics much closer to the converts.
“For the first time, we have serious disruptive technology,” explains Alastair Morrison, partner at Pinsent Masons, which has won the 2023 FT innovative law firm award for Europe.
Lee Ranson, co-chief executive of Eversheds, agrees. Generative AI “is not just a tool, it is a game-changer”.
Research by consultancy RSGI for the FT Innovative Lawyers Europe 2023 report included asking 379 lawyers and other legal professionals about ChatGPT. More than 90 per cent had used it, and more than 90 per cent of those said generative AI would significantly affect how they deliver legal advice.
Chris De Pury, head of real estate work at BCLP, estimates that 60 per cent to 70 per cent of the current work in his department will eventually disappear.
Similarly, managing partners are reviewing the number of trainees they will hire in 2026. “The composition of our workforce will not change all of a sudden, but generative AI will replace a lot of what lawyers do,” says Paula Gomes Freire, managing partner of Portuguese law firm Vieira de Almeida. “It is pushing us to think of a slightly different model.” For the first time, she notes, “there’s something that produces content and language on its own. That is revolutionary for lawyers — and not just another technological advance.”
However, while law firms accept that generative AI implies significant change, their strategies and spending on it vary.
Some law firms such as Vieira de Almeida, Allen & Overy and Cuatrecasas are racing to get ahead. Allen & Overy was one of the first to sign up to Harvey, an Open AI-backed start-up focused on the legal sector. Spanish law firm Cuatrecasas is keen to develop its own opinion on the new tech. “We don’t want to hear from others because we want to be the first to know,” says Javier Fontcuberta, managing partner. The firm formed an alliance with Chiomenti in Italy, Gide Loyrette Nouel in France and Gleiss Lutz in Germany to share their research into the use of generative AI.
Others are more cautious. They point to AI’s inaccuracies and disturbing mistakes, such as “hallucinations” — fabricated information — all of which need double-checking. Generative AI “will mean fundamental changes to the law firm model”, says Jeremy Hoyland, managing partner of Simmons & Simmons, before adding “eventually”.
Challenges aside, how will generative AI shape the commercial law firm?
At Pinsent Masons, Morrison warns: “The firms who do not embrace the opportunity AI poses now will not see the erosion going around them until it is too late.” He likens generative AI to a giant excavator next to handheld shovels: “Big Law has been a super profitable business, using people to deliver complex legal solutions. [Now], we have a proper tool that enables the delivery of these solutions at scale.”
In the long term, he believes law firms will succeed by: collaborating with big technology firms; billing by value instead of hours; training everyone in the firm to use tech; addressing organisational culture; and rewarding all the business’s professionals — not just lawyers.
De Pury at BCLP says the key to success will lie in the data. “It’s not just a question of volume, it is also what data do you hold.”
For firms with leading practices in a certain area, the benefits of holding extensive and proprietary data are already evident.
The construction practice at Pinsent Masons, for example, created a platform last year where it collects all the data from its private adjudication — out of court — settlements on the UK construction disputes it has advised on since 2017. The result is a valuable resource to help shape legal and strategic advice to clients.
With startling developments in technology, helped by the effects of the pandemic on work practices, all managing partners in Europe are refining their visions for the law firm business model of the future. Ranson at Eversheds predicts widespread consolidation in the UK legal market, partly driven by the need for access to bigger knowledge and data sets.
Most believe the current “pyramid” shape of law firms — many junior lawyers at the bottom and fewer partners at the top — will disappear. They point, instead, to structures such that of management consultancy McKinsey, which has a lower ratio of junior consultants to partners, or the potential for developing subscription businesses around a legal sector AI engine.
Wim Dejonghe, Allen & Overy senior partner, is receiving an FT special achievement award this year for creating a culture of innovation and pulling off the first elite magic circle law firm deal to merge with a big US firm.
His view of the future? Lawyers have been diversifying into related advisory services for some time — “and this will accelerate”, he says.
“The truth is: many partners do not yet know what clients are going to want from them five years hence.”
Research methodology: Europe 2023
FT Innovative Lawyers Europe 2023 is a ranking, report and awards scheme for lawyers based in the region. The FT and its research partner, RSGI, have devised a unique methodology to rank lawyers on innovation. Law firms and in-house legal teams were invited to make submissions.
Featured entries are drawn from those law firm and in-house legal submissions. Each submission is researched and scored out of 10 for originality, leadership and impact, giving a maximum score of 30 for each published entry.
Top-ranked entries in the report are shortlisted for the FT Innovative Lawyers Europe 2023 Awards. Some 551 submissions and nominations were received from 112 law firms and 87 in-house legal teams. RSGI researchers assessed and researched them through interviews with clients, senior lawyers, executives and experts between April and August 2023.
FT Law Firm Index
The Index (table above) provides a ranking and a holistic assessment of law firm success. Firms are ranked based on the following criteria, with a maximum score of 100:
Innovation: The sum of scores for the top three submissions to the FT Innovative Lawyers Report in Europe 2023, including submissions that were not published. (Weighted score out of 60)
Digital: Law firms completed a questionnaire on use of data and technology. Each of six questions was scored and benchmarked against other law firm responses. (Weighted score out of 20)
People: Law firms completed a questionnaire about their human resource policies. Topics covered gender representation, diversity and inclusion, and investment in skills for lawyers and for business services people. Four questions were scored and benchmarked against other law firm responses. (Weighted score out of 10)
Social responsibility: Law firms completed a questionnaire on their approach to social responsibility. Four questions covering commitment to pro bono work, social responsibility and ESG reporting were scored and benchmarked against other law firm responses. (Weighted score out of 10).