In Part 1 of this series, I suggested that private-practice lawyers in the post-AI legal world will still help clients achieve important law-related outcomes. But the means by which they fulfill that function will change radically.
Lawyers will no longer perform individual legal tasks and charge clients for the time it took to carry them out (“Sphere 1” work) Instead, they will “safeguard the client’s legal journey” — enabling essential client outcomes by advising and advocating for clients, reducing uncertainty and managing risk, and providing trustworthy support when it’s needed most (“Sphere 2” activities). The lawyer will join the client on the journey towards their goal, intervening at those critical inflection points where the client cannot proceed further without the lawyer’s advice, action, or judgment.
This will require a new business model, one with a different approach to its structure, the kinds of resources it draws upon, how it selects and develops talent, and how it prices its work. These are the points I plan to address here in Part 2.
Structure
When your business generates profit by leveraging the labour of non-equity lawyers to perform legal tasks, then you need many such lawyers churning out many billable hours. But when intelligent machines take over most of that work, and your purpose shifts to catalyzing client outcomes through the timely application of your talent and skills at critical junctures, then your business changes — and so must your structure.
The traditional law firm pyramid — a few owners on top, many leveraged workers beneath — only makes sense if you’re leveraging the workers. If the whole concept of leveraged labour goes out the window with AI, then the labourers go with it. A legal business that facilitates essential outcomes for clients does not require a pyramid structure. Post-AI legal enterprises won’t have one.
To be clear, there will still be good reasons for a business like this to keep junior lawyers around. If you create value by applying skilled lawyers with good judgment to Sphere 2 challenges, then you’ll need a pipeline of highly skilled talent moving up to support and eventually join or replace those lawyers, and you’ll need other lawyers to help train, supervise, and mentor these future stars.
But your business makes money by enabling critical client outcomes. Unlike with traditional legal work, that is not a brute-force task. The role of a lawyer in this enterprise is to contribute value to the business and its clients through the deployment of their legal skills and human attributes. You’re profiting from the value these lawyers provide, not the hours they work. That will change your workforce.
Resources
Obviously, your business will rely heavily on artificial intelligence — possibly to carry out all those Sphere 1 legal tasks (though it’s more likely ALSPs or AI companies will take that work), but certainly to amplify and accelerate the application of your lawyers’ judgment, counsel, and representation in Sphere 2. No one knows exactly how this will play out — your guess is as good as mine when it comes to AI’s capacity in 2036 — but we know every legal business will use AI.
That won’t be a differentiator, though. The resource upon which a future legal business will rely most heavily for a competitive edge will be its business intelligence. We can identify three types:
Legal Sector Intel: Superior knowledge of and deep insights about the law, your clients, their industries and the world, supported by the proprietary data you’ve accumulated and updated with fresh information on a continuous basis.
Human Intel: The unique perspectives and contributions of the people (not just lawyers) you recruit, refine, and grow in the multiple dimensions of capability necessary to provide and support clients’ mission-critical legal journeys.
Systems Intel: How you organize, improve, and deploy the foregoing assets in ways that are markedly better or advantageously different from other businesses, supported by AI and other technology.
Intelligence is more than just data. Law firms tend to over-estimate the singular nature of their own work product — compare the merger documentation of 50 large corporate law firms and you’ll find little real variance. Their data is not the competitive moat many law firms think it is. But good intel can shape and customize data in ways that make the resulting knowledge base uniquely your own.
Talent
As I said above, the people who will contribute real value to your business will not all be lawyers. They won’t even all be law-adjacent professionals, like legal engineers or legal skills developers. They will include trained specialists from a range of industries and domains who can provide key insights to help manage major risks and resolve serious problems on the client journey that may have little to do with the law.
Last year, I wrote about how law firms need a “Situation Room” with which to monitor and forecast political, economic, and global threats and opportunities. That applies even more to post-AI legal businesses, which will be tasked with helping clients with their big-picture challenges. It’s hard to do that if you don’t have dedicated professionals keeping an eye on that picture. Lawyers will remain the central source of legal value, but they’ll need a richer and more diverse professional environment in order to apply that value effectively.
Regarding lawyers, you’ll also need to adjust the profile of the people you seek. Focusing on the straight-A students at the highest-ranked law schools has never been a great approach to talent acquisition (as I first wrote 16 years ago!). But in future, you’ll really need to screen for lawyers with the particular intellectual aptitude best suited for Sphere 2 work, those best equipped with the most human attributes and highest relational skills.
You won’t be looking for billable-hour generators anymore. You won’t need lawyers who can brilliantly parse Court of Appeal rulings and not much else. You’ll need people who can help safeguard the client’s legal journey with advice, advocacy, and accompaniment. Think hard about what those people will look like, and adapt your look recruiting approach accordingly.
Pricing
When most legal tasks have been mechanized, it makes no sense to charge for task performance time. In a post-AI world, how will you charge for your services? If you can’t bill your efforts by the hour, upon what basis should you ask clients to pay you, and in what amounts?
Start at the financial foundation of your enterprise, your costs of doing business. Unless you’re an entirely virtual operation (which I’d advise against), you’ll need a physical headquarters. People, AI, intel, and systems all cost money. Add in expenses related to the continuous improvement of all those assets. That’s your cost base, and whatever you want to charge, you’ll need to cover that.
As to the pricing method? Well, let’s deal with the exception before proceeding to the rule. There’s no Commandment declaring, “Thou shalt not bill by the hour.” If that’s what you really want to do, go right ahead. In some situations — the exploratory stages of a new client relationship, a novel matter in need of original scoping, the genuinely unpredictable elements of a litigation — an hourly rate likely is the best approach.
But in most cases, for the type of business you’re in, the billable hour is a poor metric. The value you generate for clients will almost never be captured by the time required to deliver it. A great advocate can develop a million-dollar trial strategy in ten hours. Good luck selling the client on a $100,000-per-hour billable rate.
You facilitate the accomplishment of essential client outcomes by the pinpoint application of judgment, counsel, advocacy, and assurance. Without your interventions and contributions, the client’s legal journey will not be completed. That role, that indispensable catalyst of client agency, has immense value. You should charge for that value. It’s not as hard as you might think:
For outcomes where the monetary value is known in advance, choose a specific amount or a percentage that reflects the importance of the service you provided.
For outcomes without a number attached, choose (a) a fixed fee, or (b) a base fee onto which you can add success factors, optional features, and bonus incentives.
For ongoing strategic guidance or continuing access to judgment and counsel, fix a monthly or quarterly subscription or retainer that’s reviewed twice a year.
For novel or highly complex matters, triage an hourly rate or charge a fixed fee for a diagnostic scoping phase that illuminates a path to one of these other categories.
“Sure, but what about the amount?” I hear you asking. “How do you choose the number that follows the dollar sign? How much do I charge?”
Here’s the difficult truth: Your services are worth whatever a client is willing to pay you for them. That willingness becomes more robust the more important the situation facing the client, the more essential the outcome you’re enabling, and the stronger your reputation when compared to your competitors. (I’m obviously not advocating shakedowns of clients in distress, and the Rules of Professional Conduct have plenty to say about lawyers who do.)
Future legal pricing will be based on a combination of business economics, client value, market conditions, and professional fairness. (Joel Barolsky’s 57 price-setting criteria are a great place to start.) Consider all these factors, and then choose an amount that make sense to you economically and that the client sees as good value for securing their important journey. There’s no secret formula; there’s no one “correct price” for anything a lawyer does for a client. You have agency in deciding what to charge. You have agency in all of this.
That’s really the point I’m trying to make in this two-part series. Your future legal business will not be a law firm: It won’t serve the same purpose, it won’t follow the same economic rules, and it (thankfully) won’t have all the cultural baggage. So don’t use the old blueprints to build a new structure; don’t pour this sparkling new wine into ragged old wineskins. Use your business acumen and professional imagination to create an enterprise for this legal century, not the previous ones.
Above all, don’t build your new business around the people performing the work — as law firms did, making the lawyer the foundational unit in which everything important is measured. Instead, build your business around the people for whom the work is being performed. Gear your activities towards the clients who need your help, and design the most appropriate business for helping safeguard and complete their legal journeys.
If the profession handles this transition wisely and well, then tomorrow’s lawyers will be able to spend their days connecting with and focused on their clients — overcoming their toughest obstacles, taming their greatest risks, and providing the wisest counsel and bravest advocacy necessary for them to achieve their goals. That’s already the business in which today’s most accomplished and successful lawyers are engaged. Imagine a future in which that statement could be true for every lawyer.
For the legal profession, AI is both a mandate for change and an opportunity for evolution at a moment of truly unprecedented disruption. It remains for lawyers to accept that mandate and seize that opportunity. The map before you is blank; the pen is in your hand. Chart your course.
Couldn’t wait to read this. Thoughtful.
First thought. Isn’t t Sphere 2 really a consulting model? Maybe I’m oversimplifying the work that will be done here.
Regardless, looking at the consulting model will help for pricing.
Likely, more questions to come.
Id say that the descriptor of Trusted Advisor actually makes sense for this emerging role, if it wasn’t already so associated with a past model.
Do you think the method of training and learning through a traditional apprenticeship model would make more sense in this world? I can see how could be more easily be priced and ensure continuity of talent.