Law firm leaders may hope they have time to ease their firms into an AI-driven future—experimenting and cautiously investing in new artificial intelligence tools.
Their clients may be looking for a far faster makeover.
A flurry of news and research on artificial intelligence in the legal profession reveals that clients are more than ready for firms to trim costs and speed up performance with generative and agentic AI, natural language processing, predictive analytics, robotics process automation, and machine learning. Those tools, AI experts say, can help lawyers analyze large data sets, automate routine tasks, conduct e-discovery, case analysis, and risk assessment, and give lawyers more time to focus on higher-value strategic work.
“We are done waiting,” one chief legal officer of a major corporation told Bloomberg. The methods companies use to buy legal services are changing in the wake of AI, the CLO said, as they seek technology-driven services that are more efficient and deliver “measurable cost savings.”
A Moment of Transition
An increasing number of clients are asking firms, as part of the request-for-proposal process, about how they are using AI to reduce legal costs, Bloomberg reports. Such questions are a “nascent trend," and it’s still unclear how many companies are basing their hiring decisions on whether firms are using AI.
That said, the writing may be on the wall. With law firm billing rates continuing to climb, clients may be shedding some of their hesitancy about using AI, particularly for routine legal matters.
Clients have started asking how firms deploy artificial intelligence in work and whether it can help implement AI in corporate business and legal operations, another chief innovation officer at a global firm told Bloomberg.
While the CIO cautioned that “we are in the early days of this transition,” some clients have already started requiring the use of artificial intelligence “in certain situations.” He likened AI’s fast progress to the rise of predictive coding in the e-discovery process. That technology, he said, “was initially suspect, but then it became expected.”
Hybrid Model
How far will AI go in disrupting the traditional law firm business model?
At a legal technology conference in Singapore earlier this month, in-house counsel participating in a panel discussion on billing issues said they are seeking more law firms to innovate with AI. This includes developing new pricing models and offering more billing transparency and control for clients, reported Law.com. An in-house counsel from Microsoft told the panel she would like to see “Netflix-type” billing “like a subscription for cheap and commoditized [work], but I can add on special flavors.”
The trick, the in-house counsel said, will be for law firms to decide where they can deploy AI safely, efficiently, and ethically and which client work will “require judgment calls,” Law.com reported.
The co-founder of a legal AI company said clients are still paying for lawyers’ expertise and judgment—which suggests that the billable hour may increasingly become the province of “extremely specialized partners” who are able to charge premium rates per hour “because of the fact that they’re bringing their expertise." Tasks that require less judgment, like document review, will be done with AI.
In this hybrid model, clients may pay less than they currently do for such tasks and more for a “flexible hourly rate” because it “becomes so much more valuable to provide that judgment,” the AI company executive said.
Venture Investment
In some cases, law firms may also attempt to supplement their billable-hour business model with investments in legal technology solutions that they, in turn, can offer to clients.
Venture funding for legal technology companies is booming—up 44% year-over-year to nearly $3.56 billion during the first half of 2025, Law 360 reported. As of July, 134 legal technology companies had completed funding deals.
Thus far, legal vendors are leading the way. Harvey, the AI legal assistant, raised $300 million in February and another $300 million in June. The company’s valuation has soared to $5 billion, making it “one of the most valuable private legal tech companies today,” Law 360 reported.
While much of the investment has been in companies targeting law firms, a few law firms are also jumping into the fray.
In March, for instance, Cleary Gottlieb Steen & Hamilton acquired Springbok AI, a move designed to help the firm integrate AI and data analytics into its workflows “as a means to elevate our delivery of services to our clients,” the firm said in a news release. “The acquisition of Springbok immediately enables us to create custom AI-powered solutions – something that sets us apart from many of our competitors.”
And in July, Wilson Sonsini Goodrich & Rosati sold SixFifty Technologies, its six-year-old legal technology subsidiary, for a reported $70 million to $85 million. The Utah-based company, which focuses primarily on automating employment law compliance, was bought by human resources and payroll provider Paychex.
Not all investments end with a win, however. Norton Rose is currently engaged a legal battle with NMBL Technologies, a company developing a legal workflow management tool that the firm had hoped to sell to clients. Norton Rose’s plan was to “sell tech-enabled legal products rather than traditional billable hours,” Bloomberg reported.
NMBL’s suit argues that Norton Rose failed to live up to its promises when investing in the company and also hindered sales. The law firm has responded that the tool failed to interest clients. NMBL is seeking $15 million; Norton Rose is asking for as much as $250,000 in a counterclaim, Bloomberg said.
Are Firms Responding?
For most firms, creating an AI subsidiary is unlikely to happen anytime soon. Simply adopting a coherent AI strategy remains a challenge. In a 2025 survey of more than 2,000 in-house and outside legal, risk, compliance, tax, accounting, audit, and trade professionals, researchers from Thomson Reuters found a gap developing between organizations that had adopted an AI strategy and those that had not.
Those with “visible AI strategies” were twice as likely to see revenue growth as a result of AI adoption “compared to those with more informal or ad-hoc adoption approaches,” the survey said. And they were 3.5 times more likely to experience a tangible return on their AI investments, such as increased efficiency.
Eight in 10 professional services providers (most of those responding were in-house and outside counsel) told Thomson they believe AI will have a “high or even transformational impact on their profession within five years” and half said their organizations were already experiencing at least one type of benefit from adopting artificial intelligence tools.
However, the pace of change may be lagging. Just 38% of the professionals Thomson surveyed said they expect to see “transformational or high levels of change” within their organizations this year. And a sizeable number—30%—worry that their businesses are moving too slowly in AI adoption.
That is not to say that firms are eschewing AI altogether. Far from it. According to additional data from Thomson, some 77% of legal professionals are using AI for document review, 74% are deploying it for legal research, 74% summarize documents with AI tools, and 59% employ AI when drafting briefs or memos.
Collaboration and Accuracy
Earlier this year, researchers from Harvard Law School’s Center on the Legal Profession found that all of the Am Law 100 firms they interviewed are now “working collaboratively with their clients on the development and testing of use cases for the infusion of AI into their work.” At the same time, many of those firms are bringing in AI software vendors as “a third partner in projects.” The vendors help firms prove the value of AI projects to clients and modify and optimize software as AI tools are rolled out, Harvard said.
Concerns about the accuracy and quality of AI output remain, however. One Am Law 100 firm leader told Harvard researchers that “clients are now asking us directly what the impact of AI is going to be on their matters, but they still caution us to be careful with confidentiality and accuracy.”
Encouragingly, Harvard’s research found that the “accuracy and general quality of output” increased as lawyers, clients, and vendors progressed through AI pilot projects. Yet firms are also finding that “many potential use cases have not produced the anticipated results after pilot testing, abandoning projects altogether.”
Thomson’s research found that accuracy concerns are “the number one barrier to increased AI investment.” Legal professionals, in particular, set high standards and nine out of 10 professionals surveyed by Thomson said computers should be held to higher accuracy standards than humans. Indeed, 41 percent of them said “AI outputs would need to be 100 percent accurate before they could be used without human review.”
Hiring and Training
Such high standards and human intervention mean lawyer training and proficiency in AI will be critical. If, however, AI is eliminating (or dramatically reducing) work that once served to train junior associates, young lawyers will need to come to law firms with AI skills.
As one lawyer and legal technology consultant recently opined: “The answer lies in reimagining legal education and training…They need to understand AI capabilities and limitations so they can direct AI systems effectively and evaluate AI output critically.”
But law schools appear to be lagging on AI education. A survey by Bloomberg released in early September shows that 80% of lawyers surveyed for the 2024-2025 academic year believe that law students should be learning about artificial intelligence. Yet even as demand for AI skills has risen in the legal industry, law schools have pulled back on overall AI course offerings, Bloomberg found. And more than one-third of the schools surveyed said they offered no coursework on artificial intelligence.
This means, of course, that law firms will be forced to do the heavy lifting when it comes to AI training for new recruits—a fact that doesn’t bode well for the kind of rapid business transformation clients are hoping to see.
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David L. Brown is a legal affairs writer and consultant, who has served as head of editorial at ALM Media, editor-in-chief of The National Law Journal and Legal Times, and executive editor of The American Lawyer. He consults on thought leadership strategy and creates in-depth content for legal industry clients and works closely with Best Law Firms as senior content consultant.
