An article in the Law Society website from earlier this year reported that 75% of large law firms are incorporating AI tools into their everyday practice, whereas small law firms have an AI update of around 30%. There could be many reasons for this – a reluctance to tread in unknown territory, an element of overwhelm, the sheer cost of some of the AI products which are on offer. One former colleague I spoke to said that her company was so concerned by the data protection risk that they had strictly forbidden any use of AI in the workplace whatsoever! By burying their heads in the sand, such law firms run the risk of being no longer competitive and relevant. What’s more, a clear strategy to incorporate AI tools into their practice could empower smaller law firms to do the following:

• Faster ramp-up into new areas: When a law firm tries to branch out into a new practice area, one of the barriers is the learning curve. There are numerous AI tools which could help reduce that curve by providing access to precedents, drafting help, risk review, etc.
  
• Efficiency means a lower cost entry: New practice areas often have less predictable workflows, so reducing cost of work by using AI to help with this enables such law firms to price competitively or accept smaller margins initially whilst treading the water and seeking new clients.
  
• Repeatable processes: For a new area to scale, you need templates, document automation and good intake systems which tools like Clio and Spellbook can help build.
  
• Better client service and differentiation: If you can turn around a matter more quickly using AI or offer deeper insights through analytics or contract review tools, it could set your firm apart from other firms, even larger ones.
  
• Risk mitigation: Diving into new areas always brings an element of risk given the lack of specialist knowledge. That risk can be reduced using AI tools that draw from large databases of precedents or applications which extract issues from contracts.

AI is often spoken about as a disruptor, but for small to medium-sized firms, I’d argue it could be a great equaliser. The same technology used by Magic Circle firms is now accessible to smaller practices. The real differentiator will be strategy: which firms embrace AI thoughtfully, and which wait until it’s too late.

With AI, there is the potential for the path to diversification for smaller practices to become a much shorter, smarter one. 

References:

• The Law Society: AI and small law firms: innovation and its impact