After ChatGPT’s public launch in late 2022, we heard breathless predictions about the transformative impact of generative AI on the legal industry. When the actual pace of progress proved to be more incremental, it was inevitable that some disillusionment set in. It’s called a hype cycle for a reason.
But let’s put this into perspective: Think about your smartphone. It receives incremental upgrades every year. Viewed in isolation, they may not seem to add much — but if you compare your phone today to the one you had 10 years ago, the changes have been revolutionary.
In the face of skepticism around AI, it’s a good time to recall Amara’s Law: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
It’s also a good time to appreciate what AI is making possible today. The changes are happening so fast — and across so many different areas of a law firm’s operations — that it’s sometimes hard to appreciate them. Just in the last two years, a range of tools have emerged to offer law firms opportunities to improve productivity and offer better client service — from more efficient client intake to automated billing processes.
To be clear, each of these AI applications, viewed in isolation, won’t blow your mind. But, when viewed in aggregate, these tools add up to something that looks transformative. Inside the cohort of early adopters, you can see AI’s impact at every stage of a client engagement.
It may not be a revolution yet, but the outlines of one are beginning to take shape.
Getting the work
To win new engagements, law firms must do a few things very well: nurture key relationships, move efficiently on RFPs, and streamline their intake process. On all three fronts, AI is helping in meaningful ways.
Take the management of relationships, which are the foundation of a law firm’s business. At many law firms, tracking who knows who and leveraging those relationships on an enterprise level has been challenging. AI makes it easier, ensuring accurate and up-to-date information about client networks. By scraping emails and calendar appointments of lawyers, AI-powered applications can automatically capture, surface, and evaluate critical business relationships. The improved visibility into those relationships has made it easier for law firms to collaborate internally on business development efforts, including assembling expert teams to serve clients across subject matters.
Law firms have told us they are increasingly using AI to make the RFP process more efficient. Producing first drafts of responses, attorney bios, practice descriptions, and relevant work experience have all been made easier with AI.
AI technology is also augmenting much of the onboarding process, including gathering client data, ensuring compliance, conducting conflict checks, and drafting engagement letters. Assessing compliance and potential risk, for example, has traditionally required extensive human input. Associates or compliance teams have had to scour public records, court documents, news sources, and financial data to identify potential red flags. With advanced AI-powered systems, firms can now automate much of this search process, scanning data sources and even flagging risks for closer review. This doesn’t eliminate the role of human lawyers; instead, it enables them to parse nuanced data and make assessments for the close calls more efficiently.
One firm we’ve worked with had to follow an intake sequence that relied on a cumbersome process that often meant sending paper across the country for approval. Now, with the help of AI-powered technology, it has an intake system that autogenerates conflict searches of internal systems and third-party data providers, and surfaces potential issues quickly. A process that could take weeks before can now be measured in minutes, allowing the firm to take on new matters quickly and massively enhance client service.
Doing the work
Perhaps the biggest decision a law firm must make now is where it wants to engage AI around the practice of law. It’s not an easy one. On the one hand, client expectations around the efficiency and cost-saving potential of AI are rising rapidly, putting pressure on law firms to exploit its potential. On the other hand, the risks of using AI for legal work are real, as lawyers who have relied on it in legal briefs can attest.
Still, the money into legal tech is flowing. The global legal AI software market — covering applications like document review, legal research, contract analysis, and predictive assessments — is expected to grow to $19.3 billion by 2033, from $1.5 billion last year.
So far, we’ve seen little evidence of a transformative application of AI in generating work product. Given the risks and complexities involved, that was to be expected. But we’ve seen areas where the upsides appear to outweigh potential downsides. And we know from our conversations with clients that lawyers and professional staff are working together to find ways that AI can help them gain a competitive advantage.
One of the most adopted uses of AI is contract analysis. AI-driven tools can extract key data points from contracts — such as entities, runtimes, and non-billable items — and turn them into structured tables that can be used throughout the engagement by all parts of the firm. These features can also quickly analyze complex contracts, flagging issues like ambiguous wording, hidden risks, unfavorable terms, and loopholes. This speeds up the review process, allowing lawyers to focus on substantive negotiation points rather than technical ones.
Whether applied to the practice or business of law firms, AI will free lawyers from many administrative or lower-order legal tasks, allowing them to spend more time applying their judgment to complex issues.
Getting paid for the work
Few tasks create more stress for lawyers than timekeeping. It requires lawyers to re-create their time from either memory or a review of their records. It’s a process vulnerable to errors that can result in frustrated clients or lost revenue for the firm.
AI-powered timekeeping tools can now capture a lawyer’s digital “footprint” throughout the day — categorizing emails, meetings, time spent drafting documents, and conducting research. By presenting this data in organized clusters, these tools simplify the process of filling out timesheets, making billing more accurate and efficient. With these tools, lawyers can better focus on billable work rather than administrative upkeep, enhancing client satisfaction and firm profitability.
Billing compliance is another area where AI has made significant strides. Outside counsel guidelines, which outline what a client will and won’t pay for (see above), can be intricate and lengthy. In some firms, managing compliance has been the responsibility of individual lawyers, leading to frequent errors and billing rejections.
Now, AI tools can scan billing entries against these guidelines, flagging potential issues before they reach the client. By automating this oversight, firms have reported a significant reduction in post-billing write-offs, resulting in higher realization rates and better client relations.
From steps to leaps
Our perspective is one of sensible automation and augmentation. Firms that focus their analysis on crucial, high-frequency existing processes — and then carefully choose steps within these processes to amplify with AI — will win. It’s not hard to see how these incremental but significant gains in productivity, efficiency, and enhanced insights — all made possible by AI — could become leaps.
Now is the time for law firms to begin making small AI-assisted changes. They’ll start adding up.
Learn more about AI for the legal profession here.