Inverting the Pyramid: Reimagining Legal Economics

June 02, 2026 (5 min read)

By Erica Frisby | Marketing Manager, LexisNexis® Legal & Professional

AI is not just changing how legal work gets done. It is changing the market around legal work: who can do it, how clients assess value, how firms staff matters, how lawyers develop judgment, and how value is measured.

For decades, the law firm model has relied on a familiar pyramid: a broad base of junior lawyer hours, a narrower group of senior lawyers, and a business model built largely around time. AI is now testing that structure.

At the 2026 AI Symposium, Ari Kaplan of Ari Kaplan Advisors LLC moderated a panel on “Inverting the Pyramid: Reimagining Legal Economics.” He was joined by Lorie Almon of Seyfarth Shaw LLP, Lacey Bundy of PetSmart®, and Anton Levchik of Seward & Kissel LLP.

The conversation centered on a practical question with major consequences: when AI changes the amount and type of work required, how should law firms and clients rethink pricing, staffing, profitability, and career development? Just as important, what happens when clients can build or buy capabilities that used to require outside counsel?

Clients are not waiting for law firms to solve the model

From the client perspective, the pressure is direct. Lacey Bundy, executive vice president and chief legal officer at PetSmart, described a market in which in-house teams are no longer only asking whether work should be outsourced or insourced. They are asking whether they can build new legal capabilities themselves, partner with AI-native law firms or alternative providers, or providers or create captive law firm models that deliver business value at a lower cost.

That shift matters because corporate legal departments are not designed to maximize profits per partner. They are designed to serve the business. If AI makes certain work easier to scale internally, the economic question changes quickly.

For some categories of work, law firms may no longer be competing only with other firms, alternative legal service providers, or accounting firms. They may also be competing with the clients they serve.

That does not mean the law firm relationship is losing relevance. It means firms need a clearer answer to why their work is worth the price. Clients are looking for judgment, strategic insight, risk reduction, and outcomes, not simply a faster version of the hourly model.

Pricing innovation requires more than good intentions

Anton Levchik, chief financial officer at Seward & Kissel, emphasized that firms cannot move toward better pricing models without better data. Fixed fees, subscriptions, collars, caps, success fees, technology charges, and value-based arrangements all require firms to understand their cost of delivery, matter history, staffing patterns, write-offs, profitability, and risk.

That is where many firms may struggle. A firm cannot price creatively if it lacks clean data, consistent narratives, strong scoping tools, and a disciplined view of matter economics.

AI may increase attorney productivity, but productivity alone does not guarantee profitability. If efficiency frees capacity and the firm cannot replace that work with new demand, the business model may feel pressure from both sides.

Clients are also looking for more predictability. Bundy pointed to accounting firms as one useful comparison: clients may understand that each matter is different, but they still want clearer pricing and a fairer allocation of risk. For law firms, pricing innovation is not only about charging differently. It is about giving clients more confidence in what they are buying and why it is worth the cost.

The firms best positioned for this environment will be able to tell a credible value story. They will explain how AI is being used, where human expertise remains essential, what risks are being managed, and how the client benefits.

“If you can’t explain to your clients what you’re doing in AI space, your clients will assume that you are overpriced…”

Anton Levchik, Chief Financial Officer, Seward & Kissel LLP

Without that transparency, clients may assume that AI-enabled work should simply cost less.

The pyramid is changing, but firms still need a pipeline

Lorie Almon, chair and managing partner of Seyfarth Shaw LLP, framed one of the central challenges for firms: the traditional pyramid may not survive in its current form, but firms cannot simply remove junior lawyers from the model and expect experienced lawyers to emerge later.

Senior judgment still has to be developed. Lawyers still need training, feedback, client exposure, and the human skills that build trust with judges, colleagues, and clients.

That creates real tension. If AI reduces the need for some junior-level tasks, firms must rethink how early-career lawyers learn. The answer is not to turn associates into “a set of hands for AI,” but to use AI as part of a better learning environment.

Done well, AI can be an “incredible teacher,” helping accelerate feedback, expose lawyers to stronger examples, and help them recognize patterns faster. Done poorly, it can weaken the apprenticeship model firms still need.

“We can’t really just borrow from the future and say, ‘We don’t need junior associates anymore…’”

Lorie Almon, Chair and Managing Partner, Seyfarth Shaw LLP

The future law firm may look less like a pyramid and more like a diamond, a barrel, or something else entirely. It will likely include more allied professionals, technologists, analysts, project managers, pricing professionals, and business specialists whose work directly shapes legal service delivery.

The talent implications go beyond training. A model that values contributions more broadly than hours worked may help firms retain talented lawyers who want sustainable careers and meaningful work.

The real shift is from hours to value

A recurring theme across the panel was the need to move away from measuring legal work primarily by inputs. Hours still matter internally. They help firms understand effort, staffing, and profitability.

But clients increasingly want to understand outputs: What problem was solved? What risk was reduced? What decision became clearer? What cost was avoided?

AI also creates the possibility of delivering value that was previously impractical. A firm may be able to analyze thousands of settlements, surface litigation patterns, or provide predictive insight that would not have been feasible through a traditional manual process. In that case, fewer hours is not the only measure of value. Better answers may matter more.

For law firm leaders, the challenge is to build pricing, staffing, compensation, and training systems that reflect this reality. If billable hours become a less complete way to understand performance, firms will need better ways to evaluate value, adoption, profitability, client outcomes, and talent development.

For legal professionals, the opportunity is to work at a higher level of contribution, with AI handling some repetitive tasks while lawyers focus more deeply on judgment, strategy, communication, and client service.

The firms that succeed will not be the ones that simply adopt AI tools. They will be the ones that understand how AI changes the economics of trust.

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