The End of Billable Hours? Law Firms Face a 50% Reduction in Just 4 Years
Paul Baier
Executive Fellow for GenAI @HBS and CEO of GAI Insights | We help innovative AI leaders and AI vendors drive value with GenAI/AI
The recent valuation of $2B for AI startup Harvey is one of many indications that the legal profession is squarely "in the crucible" of GenAI disruption
Disruption is coming quickly to the legal industry because of GenAI.
Like dentists and plumbers, lawyers provide a necessary and important service, but after a project is completed, the customer doesn't need to purchase services.
With its ability to generate value from unstructured data (Word, PDF, etc.) and the vast corpus of law, case law, filings, briefs, and contracts, all with well-defined terms, use cases in law are ideal for GenAI. Powerful use cases abound from enhanced discovery, to the creation of draft contracts based on previous versions, to analyzing and ranking risks of existing contracts, to summarizing roles and obligations, to analyzing differences among hundreds of SaaS contracts, and more.
Companies and individuals are already saving hundreds of hours with GenAI DIY.
Using GenAI, many legal projects require significantly less time. If you are not seeing a reduction in time and cost for the same legal project before and after ChatGPT 3.5 was introduced, then you are leaving real money on the table.
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Yes, "human in the loop" is a necessity (don't be like the lawyer who submitted a GenAI-generated brief to the court without reviewing it and was fined $5,000 because the AI generated fake citations).
We’ve spoken with many law firms, and the responses vary widely, in part because law firms never viewed or invested in technology as a competitive differentiator.
New demand for additional legal work related to AI IP, data use etc., will be created but this won’t be enough to offset the trend.
We estimate that 50% of billable hours will go away. Law firms need to learn and adjust more quickly. The change tsunami is coming.
[Image created with ChatGPT. Prompt: create a picture of a robot working in a law library working on a contract in front of a computer. The atmosphere is positive and professional.]
Principal Data Scientist - Creating Business Value using ML and GenAI | AWS Certified Solutions Architect-Associate
5 个月Just as spreadsheets did not cause less financial trickiness and fewer accountants, LLMs will not cause fewer billable hours and simpler legal documents. If legaleze was complex before, LLMs will enable a whole new level. Spreadsheets and computing likely enabled our Byzantine tax code. LLMs might have an analogous effect.
AI is changing the world - I am here to supercharge that change | Connecting HR and Tech | 12+ Years Leading People & Product Initiatives | opinions expressed are my own
5 个月Agree with your analysis, Paul Baier. Couple of weeks ago at London Tech Week, I came across the presentation from Legistai, who is also trying to disrupt that space in the US.