AI has become a widespread force in the legal field, but its application looks different depending on the size of the practice and resources available. This excerpt from Artificial Intelligence for the Rest of Us, a book written by Nextpoint and Tom O’Connor, dives into the benefits and challenges of AI for small and mid-size law firms.
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What does the adoption of AI and GenAI look like based on the size of your law firm? Are you hampered or helped by the size of your practice? And how can you take advantage of these tools regardless of the resources available to you?
We don’t have a lot of research (yet) on the adoption of AI for small or mid-size law firms vs. large firms. Lawyers from all firm sizes are certainly taking advantage of AI, but it’s unclear if the size of a law firm has a significant impact on their decision to implement the technology and its efficacy in the practice. It commonly comes down to the comfort level of the individual lawyer as well as the allowances from clients.
In a March 2017 story in The New York Times entitled “AI Is Doing Legal Work. But It Won’t Replace Lawyers, Yet,” James Yoon, a partner at the large firm Wilson Sonsini Goodrich & Rosati, stated confidently that clients are definitely willing to pay for his experience. But what they don’t want to pay for, he continued, is any “routine work,” which presumably is the kind of work that modern AI tools are able to streamline instead.
In February 2024, Casetext (now part of CoCounsel by Thomson Reuters) released a short case study on Valdemar “Val” Washington, who runs the small law firm Washington Legal. Mr. Washington exclaimed how the Casetext CoCounsel AI tool has drastically decreased the “amount of time [he] had to bill for legal research,” which his clients have appreciated considerably. The CoCounsel tool is able to point Mr. Washington to relevant case law much quicker than tedious manual searches that would require more time and thus more cost to his clients.
The Advantages of AI Tools for Small and Mid-Size Law Firms
1. Efficiency
While there is no shortage of doom and gloom about AI robots taking over the legal profession and rendering all lawyers useless, those that truly understand how AI works can see effective and profitable efficiencies in their work. AI and GenAI are not replacement technologies – they are enhancement tools that can enable small firm lawyers to do more in the limited number of hours they have. This could also enable smaller firms to craft innovative billing offerings that go beyond the typical hourly billing rates.
2. Competitiveness
Large law firms can afford to throw more people at a problem, but AI tools can help small law firms compete in the same arenas. AI tools can be a force multiplier, just like the cloud gave small law firms democratized access to some of the same software and platforms that were previously only available to larger law firms. Small firm lawyers who can learn to effectively leverage the efficiencies inherent in AI tools could become more appealing to clients and corporations that appreciate innovation and resourcefulness.
3. Potential Practice Expansion
In large law firms, there are enough professionals that when a specific matter comes through the door, they usually have someone with the expertise to take it on. Smaller law firms don’t have that luxury and often have to take the client that walks through the door from a generalist perspective. Ethical rules allow lawyers to become competent in new areas of the law, and GenAI could be a useful channel to help them get up to speed quickly.
AI Challenges for Small and Mid-Size Law Firms
1. Fear
It’s hard to trust something when you’re not sure how it works – and that axiom is strong when it comes to small law firms using AI. This is doubly so when so many of the headlines lament another lawyer getting into trouble after falling prey to AI hallucinations (which could have been avoided with good lawyer supervision). GenAI can appear magical, like a mysterious black box that so many lawyers can’t fathom – nor do they have the time or inclination to learn. But knowledge can become power as long as one takes a calculated approach to learning and understanding.
2. Lack of Resources
Large law firms typically have full-time IT and security personnel on staff who can dedicate their time to researching, testing, implementing, and training GenAI tools. But small firms do not have this luxury. If smaller law firms successfully adopt GenAI tools, it’s often because the lawyers themselves take the time to learn (and spend less time on billable work). This isn’t as simple as watching a few YouTube videos, as there are ethical standards that must be followed when using any technology, ensuring the security of client confidential information.
3. Cost
One of the key issues with GenAI adoption that is too often overlooked is the cost associated with it. Most people know that you can subscribe to the professional versions of ChatGPT or Microsoft Copilot for $20 per month, and this gets you access to the more up-to-date models and training. But that’s mostly a consumer-facing pricing model. For law firms that need enterprise-grade tools for contract drafting, legal research, or ediscovery, the costs today can be astronomical. Fortunately, that price tag will eventually decline just like any other technology over the last several decades, but for now, the cost hurdle will likely keep mid-size and smaller law firms at a distance.
Reasonable Possibilities
A preeminent reminder through all of this is that there is no need or requirement for lawyers and small firms to become experts in AI. In fact, just learning about AI without a focused plan and strategy could even be a waste of time.
You first need to identify your firm’s pain points and challenges. For example, does the firm frequently lose documents and spend excess time trying to find them? Then perhaps investigating an AI-driven document management system would be a worthwhile endeavor and a good return on investment. Or perhaps starting with a tool that could lessen the time it takes to perform effective legal research is more worthwhile.
A clear and focused approach to implementing AI in mid-size and smaller law firms is absolutely necessary to achieve the advantages discussed above. Otherwise, you’re just getting caught up in all the hype.
A solution built for the size of your practice
Nextpoint wrote AI for the Rest of Us with Tom O’Connor because we believe legal practices of all sizes deserve resources and technology built for their unique needs. Our predictable per-user pricing with unlimited data hosting, user-friendly platform, and dedicated support team ensure firms big and small have the tools to succeed.
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