AI Will Ramp Up Intense Big Law Battle for Talent, Client Share

Law firm profit margins will decrease because "AI disproportionately impacts non-partner hours," the hours yielding the highest margins, noted a Law.com Pro Fellows report.

April 30, 2024 at 05:00 AM

5 minute read

Law Firm Profitability

By Andrew Maloney
Editorial

The original version of this story was published on The American Lawyer

What You Need to Know

According to a Law.com Pro Fellows report this week, there will likely be less work for non-business-generating partners and less demand for entry-level and junior associates with the introduction of AI in firms.
Although many, perhaps most Big Law firms are at least exploring AI, those without a clear strategy for it in the next two or three years 'risk being pretty much marginalized.'
The proliferation of AI could put more pressure on firms to rethink pricing and revenue models and bill more on outcomes than inputs.

Law firms are still trying to grasp the implications that artificial intelligence will have on their business. But a new report this week helps paint a picture: decreasing revenue per engagement and declining profit margins, leading to even more intense competition for work and talent.

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