31% of Law Firms Say AI Improves Profitability

A new pricing survey by BigHand shows that 31% of law firms – which had scrutinised their data – found that AI had ‘improved profitability per matter’.

This is presumably because AI is helping to reduce time spent on non-billable work, allowing more profits to be realised for each client project. Plus, where a matter is on a fixed fee AI acceleration provides a healthy ‘tech dividend’.

Also, 30% of firms saw that AI is helping to drive increased matter throughput – again a notable boost to firms that are able to benefit from more rapidly completed projects.

However, there are several other factors here that paint a more complex financial scenario for some law firms:

• There was also a reduction in billable hours for certain tasks – 27%
• And a reduced reliance on manual tasks – 31%

For firms that are wholly wedded to the traditional billable hour model, then such figures are not that welcome. For those that can navigate the new AI-influenced pricing environment, then the above is also good news.

As AL has said before, the key to law firm success with AI is primarily around getting the business model right for a world where efficiency is now a core element of the end product for the client. You can either work with this new reality and reap the rewards, or stick to the former, primarily time-based approach and struggle to make AI as profitable as it could be.

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One other wrinkle is that even now, 35% of partners were ‘uncomfortable’ discussing AI use with clients. But, one can understand that when clients might be asking for discounts because of AI deployment on their matters – at a time when using such technology across most large firms is now standard. One would also guess that firms using fixed fees and embracing rapid throughput are more open to such discussions.

Overall, the data is good news for law firms that are adapting and also shows that AI is now truly embedded in a meaningful way across much of the market.

You can find the report here.

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