Law Firms Pursuing New Lines of Business Due to Emergence of Gen AI

By Geoffrey D. Ivnik, Esq. | Director of Large Markets, LexisNexis

Nearly one-half of law firms are exploring new billable opportunities and developing potential new lines of business made possible by Generative Artificial Intelligence (Gen AI) technologies, according to our newly released 2024 Investing in Legal Innovation Survey: The Rise of Gen AI at Top Firms & Corporations.

In January of 2024, LexisNexis surveyed 216 managing partners and other senior leaders at large law firms, as well as 50 executives in corporate legal departments at Fortune 1000 companies, to better understand the business impact of Gen AI technology on the legal industry.

We discovered that 47% of law firms with 50 or more attorneys — and a decisive 54% of respondents from Am Law 200 firms — are currently exploring new business opportunities made possible by Gen AI technology. This suggests that a fast-growing number of law firms see the new business potential of Gen AI and are taking a pro-active approach to exploring AI’s power to drive their revenue growth.

Those firms that are exploring new business lines reported that they are evaluating new practice areas and client offerings focused on AI legal issues and implementation. For example, they envision opportunities such as the following:

• Advising clients on AI strategy and compliance;
• Using AI for new services and products;
• Exploring ways that AI can complement the professional work of their lawyers; and
• Transforming their billing models with the assistance of Gen AI tools.

Interestingly, some law firm leaders reported they are looking into using AI to provide new services or pursue work that was previously seen as unprofitable. They are curious if there is a way to innovate their service delivery model by smoothly integrating Gen AI to improve workflows and enhance productivity.

As for law firm business models, survey respondents told us they view AI as a way to automate lower-level tasks, speed up document review and drafting, reduce billing errors and overhead, and generally make firms more efficient. As a result, some firm leaders believe that Gen AI could enable value-based pricing and are considering how they might offer flat fees or alternative fee arrangements that contract legal work based on outputs, rather than hours.

The firms that are not currently exploring new lines of business related to Gen AI cited concerns about the accuracy, reliability and maturity of Gen AI technologies. Many of them expressed a desire for more testing and vetting of Gen AI tools before fully embracing these new technologies, while others expressed caution about client perceptions and potential regulatory restrictions.

The survey results regarding perceived new business opportunities mirror the responses we received from law firms regarding their own projected investments in Gen AI technologies and their perceptions about future revenue growth fueled by the emergence of Gen AI.

Our survey found that 53% of Am Law 200 firms have already purchased “Legal AI” tools (Gen AI tools developed specifically for the legal industry) and that 45% of Am Law 200 firms are using Gen AI now for legal matters. Perhaps this rapid adoption pace explains why seven in 10 (70%) of law firm respondents told us they believe that Gen AI will enable new value-added work for their firms, with about a third (30%) expecting this to result in a direct impact on firm revenue.

Download a free report of our 2024 Investing in Legal Innovation Survey: The Rise of Gen AI at Top Firms and Corporations.