Large law firms express concern over GenAI, fearing financial impact.
- PwC’s survey reveals mixed views on GenAI’s effect on business models.
- A majority of law firms anticipate automation of chargeable work.
- Investment in GenAI tools is significant but yet to yield returns.
- External investment in law firms is expected to rise with technological shifts.
The survey conducted by PwC reveals that the majority of large law firms, particularly those outside the top 10, are expressing anxiety over the impact of generative artificial intelligence, known as GenAI, on their financial operations. These concerns stem from the technology’s potential to alter existing business models by reducing client demand and increasing pricing pressures.
Despite apprehensions, there has been a notable financial performance across the sector, with nearly all of the top 100 firms experiencing fee income growth in 2024. Noteworthy, however, is the widespread belief that a significant proportion of existing fee-earning work could become automated due to AI tools. According to the survey, 80% of these firms estimate that at least 6% of such work can be automated.
The top 10 firms stand as exceptions to the prevailing sentiment, perceiving GenAI as beneficial. They expect to harness increased productivity to expand work for existing clients. However, among the remainder of the top 100, more than half foresee no change in work volume but anticipate a reduction in pricing, while one-fifth predict diminished demand due to client adoption of AI.
Investment in GenAI is substantial, with almost nine-tenths of the surveyed firms having implemented or trialed such tools. Microsoft’s Copilot is the most popular, with adoption by 30% of firms already. Although new GenAI solutions like Harvey and CaseText are less prevalent, investment in these areas is growing.
Moreover, this technological shift is accompanied by increased external investment, as alternative business models attract private equity. As these investors bring financial support, management expertise, and operational improvements, law firms are experiencing enhanced efficiency and profitability.
Adaptability and innovation in leveraging GenAI will be crucial for law firms navigating these impactful changes.
