Technology specifically designed for law firm users (commonly known as legaltech) along with technology adjacent and adaptable to law practice has evolved rapidly since the pandemic, and even more so since the advent of ChatGPT in November 2022. Private practice firms are still not quick to adopt technology that will make them more efficient. Exercising some caution is a good thing because jurisdictions require technology competency in their codes of professional conduct. However, the hesitancy of law firms to adopt technology is not due to a lack of competency alone but also to a fear of a reduction in billable hours.
Builders of legaltech tools create products catered to the billable hour and contort their marketing to law firms on how their technology will not impact their bottom line. “Be more efficient so you can take on more clients” is a sales pitch often heard by firm decision-makers who begrudgingly meet with a legaltech vendor at the urging of a newer associate. There’s no question that there are ample opportunities to represent more clients if you complete client work faster, but the latent legal market, potentially valued in the billions if not trillions of dollars, doesn’t want to pay for billable hours. Those clients want pricing certainty and will expect their lawyers to use generative artificial intelligence (GenAI for short).
GenAI’s arrival, and the arrival of the pandemic before that, stimulated some attorney technology adoption out of necessity. Wide adoption of the cloud and remote court appearances only happened because the profession had no other choice than to adopt these modern technologies during the pandemic. Law firms did not adopt legaltech such as e-discovery until clients demanded it and because it became impractical for document review lawyers to analyze thousands, if not millions, of records. GenAI is a little different because there is widespread acknowledgment of the potential benefits to society and all industries, if not a widespread understanding of the right way to use it.
The infamous New York attorneys who unintelligently used ChatGPT, a free GenAI tool created by Open AI (a misnomer because its models are no longer open), to cite to cases that didn’t exist is a lesson in accountability for law practice management. GenAI can revolutionize the practice of law when used correctly. GenAI is like a toddler who has earned a master’s degree in English, has read everything on the Internet, is a Method actor, and has a photographic memory—but who can only access this perfect memory when prompted with questions (and who, after too much prompting, will even forget the previous questions asked earlier in the same conversation). Would you trust this toddler as a source of truth? Of course not! A toddler’s brain is not fully developed even if this toddler has perfect recall and can write in the style of any well-known author.
Like a toddler who can act, GenAI is surprisingly creative and has a great imagination—or at least something that mimics imagination. This GenAI toddler also wants to do anything to make its parents, or prompt engineers, happy, and it will make up facts using its clever imagination-like algorithm to seem really convincing. However, it’s going to be much better at helping you in other aspects of your law practice than providing you with facts or data. Instead, you must be the source of facts and data that you give to the GenAI and restrict its answers to the data you provide. Is it perfect? No. Is any piece of technology or any employee perfect? Of course not.
GenAI and the End of Billable Time
Those of us not billing our time found out quickly that GenAI has the potential to help attorneys scale their practice and serve more clients more effectively and efficiently without the need to hire more lawyers or staff. When understood and used appropriately, whether for solos or associates and staff, leveraging GenAI is like giving everyone a superpowered personal assistant. Everybody at a law firm, from the firm owner to the lowest paid staff person, should be using GenAI every day to help them work better and more efficiently at all times. Everyone gets an AI assistant now, even the human assistants. This technology will not replace anyone’s job as long as the firm uses GenAI to accomplish jobs that used to take several people without AI assistants constantly available. This is not unique to the legal profession but is true for all businesses.
Because they are not billing time, in-house teams and general counsel will likely be early adopters of legaltech tools using GenAI to help them reduce their demand for outside counsel. For this reason, many legaltech companies target in-house legal teams as their initial market. Similarly, solos and small firms, especially those using subscriptions and value-based billing rather than billing time, can be more nimble than larger firms and can sooner adopt GenAI legaltech tools appropriately priced for solo and small firms, allowing them to better serve the latent legal market.
The ability of these powerful tools to accomplish legal work not only creates incentives for law firms to stop billing time, but it also has the potential to completely disrupt the law firm model as we know it, which is largely built on billable hours. In the long term, we may even see the elimination of the BigLaw model for law firms. Associates at these firms are highly compensated because the work is terrible and unbearable—there are high billable hour requirements, horrible office politics favoring white men, no work-life balance, high stress, and a bevy of other things I could spend the rest of this article listing. These BigLaw associates will see that they can use modern and near-future legaltech and non-legaltech to automate their own practice to serve more clients using subscriptions and/or flat fees, earn a very good living, and all the while help more people and businesses than they ever could have done at a large firm.
GenAI’s tendency to incentivize more profitable billing practices will create transparency and fairness in billing arrangements with clients. As GenAI is well known by the masses and even used internally by traditional corporate clients of BigLaw, clients will demand that their lawyers use this ground-breaking technology, and so lawyers must use it to keep those clients. Some lawyers have been writing articles and posting on social media about how billable tasks that used to take them ten hours now take them ten minutes. Sure, lawyers can increase their billable rate by ten times or more to make up the difference, but clients are not going to want to spend $10,000 an hour for legal services, even if they actually end up spending only $1,000 and get the result much sooner. Lawyers must adopt subscription and value-based flat-fee pricing to survive in the world of GenAI. One of the inherent benefits of subscriptions and value-based billing to clients is that the price of legal services is known at the start of the engagement with the attorney, and it is predictable and transparent by design.
Part of the aversion by law firms to any new technology is not only that it will reduce billable hours but also that lawyers generally have a hard time learning the new skills required to use new technology. For law firms that have staff, this generally means the staff will use the new technology, and the attorneys will communicate with the staff. Because GenAI uses natural language, incorporating it into legaltech can render this extra step unnecessary. Lawyers can now “speak” directly to the technology. A non-legaltech example can be seen in how the automated workflow services Zapier and Make have incorporated GenAI into their platforms. Instead of forcing customers to spend hours learning how to use no-code tools and the jargon around them, these platforms have integrated GenAI to allow users to get the automations they want in minutes using natural language.
