AI is quickly hitting its stride in the legal space, and 2025 will likely be a year for lawyers to define the changes they want to see or if not, those changes will be defined for them
New questions about how advances in AI and generative AI (GenAI) will impact the legal profession arise almost as quickly as changes in the technologies themselves. Questions regarding the technologies’ impact on legal service delivery and how legal services will be priced are so plentiful that the Thomson Reuters Institute actually has a running body of work examining potential answers to those questions.
Through our examination of these issues, one thing is becoming increasingly clear: 2025 is likely to be a year in which lawyers need to start making decisions around AI and define the changes they want to see — or those changes will be defined for them.
Moving from awareness to action
Through any process of change management, there is a necessary period of learning and discovery in which we build awareness. This awareness-building period cannot be of unlimited duration, however. If it was, we’d never get to the actual change. At some point, we must move from awareness to action. And while we are definitely not done learning about AI, the impetus to move toward action is growing.
Many law firms and corporate law departments are well down the road toward implementation of advanced AI technologies. According to Thomson Reuters 2024 Future of Professionals report, 70% of corporate legal professionals have used AI as a starting point for their work; and there is growing evidence that in-house attorneys are recognizing AI’s potential to improve productivity, increase the amount of work that can be handled by the in-house team, and find new efficiencies. They are also looking for increased feedback from their outside counsel about how they are using AI to benefit the department.
Nearly half of law firm lawyers have said they are waiting before moving too far with AI until the tech becomes more mainstream.
On the other hand, this excited embrace of AI isn’t universal. The report also showed that nearly half of law firm lawyers are waiting before moving too far with AI until the tech becomes more mainstream. They are engaging in lawyers’ favorite sport — the race to be second.
That race isn’t operating by its normal rules when it comes to AI, however. A classic race to be second involves law firms actually watching each other to see what their peers are doing and then following the precedents. In this race, however, clients are playing a much more influential role, both as bystanders and as competitors. In fact, they are changing the rules mid-race by establishing new mandates and setting higher expectations.
In May 2024, I participated in a roundtable discussion with a group of about 40 managing partners from midsize law firms around the country. One shared a story of a client that had recently let it be known that it was aware of the capabilities of GenAI — or at least it thought it was — and wanted to implement new requirements that GenAI be used to replace all work currently being done by their outside firm’s paralegals. The client further stated that it would no longer be paying for paralegal time.
As the managing partner explored the practical impact of this change, a few things became apparent. First, the new policy of not paying for paralegal time would have a massive impact on the firm’s ability to generate revenue, which would far outweigh any potential saving realized by downsizing paralegal staff. Second, by not being willing to pay for paralegal time, the client had unwittingly forced work to be pushed up to more expensive timekeepers. Third, the client was wrong about the capabilities of the technology.
Today’s GenAI is not ready to completely displace paralegals, and it likely never will be. Effective AI technology lives at the intersection of tech, data, and expertise, with expertise being an indispensable factor in the equation.
Managing expectations
This managing partner was in a quandary. How does she respond to the client? My advice was to go back to the client with an honest, factual explanation of how they are mistaken, and then shifting the conversation in a proactive direction. She should say: “We can’t do that, but we can do this instead.”
Reliable and effective AI requires the touch of human expertise, and if a client’s expectations don’t reflect that reality, guide them.
Clearly, law firm leaders can’t simply refuse to go along with the client’s expectations. However, just because they are expectations doesn’t mean they are realistic. Rather than trying to make the impossible happen or jeopardizing the client relationship by refusing, a more pragmatic approach is to help the client see a different path. To accomplish this, do not lead with the financial concerns, even if they are prominent. Revenue generation problems for the law firm will not sway the client. What will potentially change their outlook, however, is a reframing of reality.
As mentioned, reliable and effective AI requires the touch of human expertise. If a client’s expectations don’t reflect that reality, guide them. And then remind them that such expertise doesn’t necessarily have to come from partners, and that it may be more cost effective coming from associates or paralegals. Indeed, this is why law firm exist in a pyramid already.
Firm leaders should also see this as an opportunity to expand the conversation with clients around how legal work could be delivered and priced in a way that meets goals for both sides.
The importance of setting whose terms will control
The situation described above is not uncommon and will likely become more commonplace as these new technologies become more widely adopted. However, that is not to say that such situations are inevitable. The guiding principle, instead, should be the old cliché, the best defense is a good offense.
There is no reason law firms need to wait to see what mandates clients will try to push upon them. Clients are moving into an action phase themselves, but the actions they will decide to pursue are still very much open to influence.
Rather than racing to be second in AI adoption, law firms should be looking to take the first step. Here I draw another analogy, this time to a discipline familiar to nearly every lawyer — negotiations. Most lawyers would rather be negotiating off of their own common terms and conditions rather than the opposing parties’ set of terms. Better to be reviewing redlines than be in the position of constantly having to propose the redlines.
To put this into an AI context, smart law firms will take what they know about AI already, put together a few suggested use cases and starting points, then ask clients for their help and collaboration in building out those use cases. In that way, the changes the law firm experiences will be ones in which they’ve played an active role, and they know the client is on board because the client has been involved.
That’s not to say that all AI-driven changes will require that process, but it’s a wise path to take as a starting point. Just as a process of discovery is needed to learn AI, such a process is also needed to learn how the client would like to see AI used. Once some of those guidelines are set, the firm will be in a much better position to drive new change initiatives on the client’s behalf going forward.
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Likewise, law firms won’t need to engage in this process with every client. Pick a few key clients and start with them. Perhaps those are participants in the firm’s key account program, or maybe certain clients have expressed a greater desire to begin using AI on their matters. Regardless of the selection criteria, the work done with these first few clients will help build a repository of use cases and best practices that the firm can then look to implement more broadly.
Waiting is not the best option
The idea of proactively approaching clients to ask them to participate in what is essentially a joint experiment may feel uncomfortable and a bit daunting. The key consideration, however, is not whether that exercise feels more uncomfortable than standing still. Law firm leaders have to consider whether they will feel more pain from asking the client to learn together, or from having to go back to clients to try to manage expectations, working off the back foot to push them to change decisions the client has already made — the position of the managing partner describe above.
The time for a wait-and-see approach to how AI will change the legal market is rapidly expiring. Law firms and their clients have an opportunity to work together to shape what the future will look like — and the burden to start that conversation most likely rests on law firms’ shoulders.
If law firms wait too long, favoring their chances in the race to be second, clients will justifiably move on without them. The result will not be a marketplace that goes largely uninfluenced by AI; instead, it will be one in which clients have decided what changes suit them best.
For both law firms and corporate legal departments, 2025 will most likely be a year to lead, follow, or move along together. Getting out of the way will not likely be a choice.
You can find more about the impact of GenAI in the legal industry here
