Artificial intelligence has entered law firms promising greater speed, lower costs and automated processes. Yet the question truly occupying managing partners is a different one: which aspects of legal work will clients continue to pay for, what becomes of the talent traditionally developed through carrying out precisely those tasks that are now beginning to be automated, and what type of leadership does a law firm require in order to compete through this transformation rather than merely survive it.

Artificial intelligence for lawyers has ceased to be a conversation about tools. Over recent months, the debate has entered a much deeper phase, encompassing which elements of legal work will remain distinctive, which services may be automated, how billing models will need to evolve, and what type of leadership firms will require in order to compete in an increasingly demanding market.

The question of whether artificial intelligence will impact the legal profession has already been answered. What matters today is which firms will be capable of transforming that impact into a genuine strategic advantage.

The first GLTH Breakfast, held in Madrid, brought together professionals from the legal and technology ecosystems to discuss one of the key questions currently facing the legal industry: is the traditional business model of large law firms genuinely at risk? Organised by the Global LegalTech Hub, the event featured Marc Gericó, Global Managing Partner of Gericó Associates; Carlos García-Egocheaga, Chief Executive Officer of Lexsoft Systems; Paloma Luciáñez, Head of Legal Solutions at DiliTrust; and Santiago de la Osa, Commercial Director at Lexsoft Systems.

The discussion focused on some of the principal challenges currently affecting the sector, including pressure on traditional service delivery models, evolving client expectations, the role of in-house legal departments, the transformation of legal talent and the need to rethink leadership within law firms.

The illusion of technology as a solution

For years, part of the legal sector has understood innovation primarily as a matter of technological adoption: implementing a tool, automating a process, reducing turnaround times and improving efficiency. All of this is important, although it has clear limitations.

Artificial intelligence for lawyers only creates genuine value when it is integrated into a broader reflection on strategy, positioning and business model. A firm may adopt technology and continue competing in exactly the same way as before, gaining speed without gaining relevance, or reducing costs without strengthening its value proposition.

The real transformation lies in deciding how artificial intelligence is to be used, what type of work it is intended to reshape and how it alters the relationship between lawyer, client and firm.

Which aspects of legal work will clients continue to pay for?

One of the most significant consequences of artificial intelligence for lawyers is that it compels firms to revisit a question many have avoided for years: which elements of legal work are genuinely perceived by clients as adding value.

During the event, Marc Gericó shared an observation conveyed to him only weeks earlier by the General Counsel of a multinational industrial company. The message was unequivocal: “Review this contract for me: ten hours of senior associate time, four hours of junior associate time and one hour of partner time. I can now do it myself and I will pay you twice as much for that one hour. The other fourteen hours, I will not.”

The client was reallocating value within the invoice, excluding precisely those elements that, for thirty years, had financed the law firm’s structure. This process is already taking place in negotiations with more sophisticated clients and is undermining the traditional Cravath pyramid model.

Where certain tasks can be completed more rapidly, more systematically or with less human intervention, the market increasingly distinguishes between execution, technical expertise and strategic advice. That distinction makes it more apparent where the lawyer’s real value lies.

Most firms still believe they sell teams, capacity and track record. Sophisticated clients increasingly purchase only the judgement of the senior partner and protection vis-à-vis third parties. Everything else they are beginning to produce themselves using tools that cost only a fraction of a junior associate’s hourly rate.

Clients will continue to value professional judgement, the ability to interpret complex contexts, commercial insight, risk anticipation and trusted advice at critical decision-making moments, perhaps more than ever before. Repetitive tasks, by contrast, already have more efficient mechanisms available, and the price clients are willing to pay for them is falling accordingly.

Understanding this shift in time is critical, because the decision that determines who survives this realignment concerns pricing and structure: which services will cease to be sold, and which clients will be billed by the hour as opposed to being charged for judgement and expertise.

The centre of gravity of legal work is shifting

The debate surrounding artificial intelligence is too often framed in terms of substitution: what machines will do, what lawyers will cease to do, and which tasks will disappear. Yet the real debate is far more sophisticated.

Artificial intelligence for lawyers shifts the value of legal talent towards areas where judgement, experience and decision-making capabilities matter more than the mere production of documents or procedural work.

In this environment, lawyers whose role is confined to carrying out tasks that are easily automated will have less scope for differentiation. Lawyers capable of connecting law, business, risk, reputation and strategy will become more indispensable than ever.

Technology can accelerate processes. However, deep understanding of the client, the political dimension of negotiations, the management of sensitive relationships and the ability to advise in uncertain circumstances remain what sophisticated clients continue to purchase.

The impact on in-house legal departments

The evolution of artificial intelligence for lawyers is also reshaping relationships between law firms and corporate legal departments. In-house legal teams now have access to more tools, more information and greater capacity to internalise certain tasks or demand enhanced efficiency from external advisers.

This compels firms to ask themselves a fundamental question: what do we provide that clients cannot handle internally, automate or procure more efficiently elsewhere?

Answering this question requires more than technical expertise, experience, reputation or size. Law firms will need to demonstrate a clearer, more specialised value proposition, aligned more closely with their clients’ commercial objectives.

In this context, artificial intelligence acts as an accelerator of a transformation already underway. More sophisticated clients, greater pressure on fees, increased competition and growing demand for advice with tangible business impact were already part of the landscape before the emergence of AI.

The talent and leadership challenge is more organisational than technological

There is a clear risk in discussions surrounding artificial intelligence: assuming that the principal challenge is technological when, in reality, it is organisational.

Artificial intelligence for lawyers will require new competencies, new working methods and a different approach to leading teams. Training lawyers to use technological tools is merely the first step. Firms must redefine which capabilities are rewarded, how talent is developed and which profiles will be prepared to lead the next stage of the profession.

Many firms will need to reconsider how they train junior lawyers if some of the work traditionally serving as an apprenticeship is automated. They will also need to consider how to prepare partners to sell, manage and deliver legal services in an environment where efficiency becomes merely the starting point.

Participants noted that many firms remain dependent upon a small group of partners who concentrate business development, client relationships and internal management, raising questions regarding the future scalability and sustainability of their organisations.

The legal leadership of the future will combine commercial vision, technological understanding, management capabilities, strategic judgement and sensitivity towards a client base that is itself evolving.

Artificial intelligence as a test of strategic maturity

What is truly at stake is the strategic maturity of law firms, far more than the mere adoption of a new technology.

Firms that regard artificial intelligence for lawyers as an isolated tool will probably achieve operational improvements. Those that integrate it into a broader reflection concerning positioning, talent, pricing, service delivery and growth will be able to build an advantage that is significantly harder to replicate.

The difference will lie in which firms have greater clarity regarding the type of organisation they aspire to become.

Three questions every managing partner is asking today

• Which aspects of our work will continue to be perceived by clients as valuable, and which elements will begin to place pressure on our billing model?
• What do we provide that clients cannot perform internally, automate or procure more efficiently elsewhere?
• What type of firm do we wish to become, and what form of leadership do we require to achieve it?

Marc Gericó’s participation in the GLTH Breakfast formed part of precisely this conversation: how law firms should prepare for a legal market in which technology will accelerate processes, raise client expectations and compel firms to redefine the value lawyers provide.

Artificial intelligence opens a new chapter for the legal profession, although its principal effect will be to make the structural challenges facing firms more visible. That is where the real distinction will lie between firms that merely adopt technology and those genuinely capable of transformation.

You can read more about the event in the article published by Abogados.com.ar, here.