{"id":115192,"date":"2025-04-16T14:38:09","date_gmt":"2025-04-16T22:38:09","guid":{"rendered":"https:\/\/xira.com\/p\/2025\/04\/16\/nobodys-bothering-to-figure-out-what-ai-is-worth\/"},"modified":"2025-04-16T14:38:09","modified_gmt":"2025-04-16T22:38:09","slug":"nobodys-bothering-to-figure-out-what-ai-is-worth","status":"publish","type":"post","link":"https:\/\/xira.com\/p\/2025\/04\/16\/nobodys-bothering-to-figure-out-what-ai-is-worth\/","title":{"rendered":"Nobody\u2019s Bothering To Figure Out What AI Is Worth"},"content":{"rendered":"
\"\"
<\/figcaption><\/figure>\n

Everyone agrees that generative AI is valuable. Everyone believes it\u2019s going to be indispensable to the legal workflow. No one seems to know what it\u2019s worth.<\/p>\n

That tension sits at the heart of the 2025 Generative AI in Professional Services Report<\/a><\/em> from Thomson Reuters. While it\u2019s easy to blame the hype cycle for mucking up the distinction between \u201cpowerful tool for accelerating discrete legal tasks\u201d and \u201cMAGIC ROBOT BEANS!\u201d the confusion over AI\u2019s value proposition appears to run deeper. Firms are investing in GenAI tools. Clients want firms using GenAI tools. But barely anyone is bothering to keep track of what GenAI is actually doing<\/em>.<\/p>\n

As the immortal Lyle Lanley might observe, the legal industry armed with generative AI is a little like the mule with a spinning wheel. No one knows how he got it and danged if he knows how to use it.<\/p>\n

Organizations reporting that they actively use generative AI tools nearly doubled since last year\u2019s report. But the trend continues decidedly upward, with 79 percent of firms surveyed expect significant GenAI integration by 2027 and 95 percent of professionals anticipating that GenAI will be central to their workflow within five years. <\/p>\n

Meanwhile, the profession seems to be preparing for this eventuality with all the strategic vigor of a chicken playing Tic-Tac-Toe:<\/p>\n

\"\"
<\/figcaption><\/figure>\n

Only 20 percent of respondents are tracking the ROI on the technology that they\u2019re simultaneously clamoring for lawyers to adopt. On the other hand, part of the problem might be that clients seem a tad oblivious about what their firms are even doing, with 57 percent of clients replied that they want their firms using GenAI right now, but 71 percent replying that they \u201cdid not know whether their outside firms were doing so or not.\u201d<\/p>\n

Get it together, people! Vive le ROI!<\/p>\n

Because the day will arrive sooner than later when law firms start changing their prices because of AI. At the moment, 46 percent of firm respondents still say GenAI will not have an impact on their rates. But the report notes that this amounts to a 7 percentage point drop from 2024 and that\u2019s going to keep dropping like morale at Willkie Farr<\/a> as firms recognize that they need to recover money for the billable time lost to AI. Or, perhaps more to the point, the leverage lost when firms hire fewer juniors because of AI. Ethical constraints prevent lawyers from penciling in fake hours saved by technology, leaving them three options when AI-enabled workflows start taking a bite out of cumulative hours.<\/p>\n

One, accept that the same matter just makes them significantly less money now. Which\u2026 LOL.<\/p>\n

Two, jack up hourly rates to seize more cash for the tasks that human lawyers will still perform to cover the lost revenue from automated tasks. This is the $10,000\/hr option<\/a> floated at Legalweek. It\u2019s certainly an option, but clients already complain about $1000\/hr associates on matters where they\u2019re more than comfortable spending hundreds of thousands, reflecting a psychological resistance to the idea that one person is worth such a big number even when they don\u2019t quarrel about the overall figure.<\/p>\n

The days of billing time to \u201cFurther work\u201d passed a long time ago and notching three hours to \u201cAI-enhanced strategic insight\u201d isn\u2019t going to cut it. <\/p>\n

Bringing us to option three\u2026 developing more fixed fee menu items to keep the firm\u2019s revenue consistent while losing some of the leverage that forms the foundation of the law firm model:<\/p>\n

\n

As a result, while there is some recognition that new technologies may impact the mix of hourly work versus flat fees or other sorts of pricing arrangements \u2014 in fact, 40% of respondents said they expect the use of alternative fee arrangements to increase as a result of GenAI \u2014 many law firm practitioners expect the status quo to continue.<\/p>\n<\/blockquote>\n

But whichever way the industry chooses \u2014 between two and three of course, option one is pure lunacy \u2014 it only works if everyone understands the actual ROI involved. More to the point, everyone needs to understand the client satisfaction component of ROI and even among the small percentage of respondents that measure ROI, only 38 percent are actively measuring client satisfaction. <\/p>\n

Will generative AI really make exponential bounds in the future? Not likely<\/a>. At least not without some sort of accompanying revolution in energy or computing \u2014 endless fusion power or quantum computing at scale can radically change the economics of AI development. But that doesn\u2019t mean the technology that we have now<\/em> won\u2019t substantially alter workflows. Clients and firms both need to get on top of quantifying what those applications actually deliver. <\/p>\n

Because if you haven\u2019t figured out what AI means for pricing your side of the equation, don\u2019t be surprised when the other side does.<\/p>\n

\n

\"Headshot\"Joe Patrice<\/a>\u00a0is a senior editor at Above the Law and co-host of Thinking Like A Lawyer<\/a>. Feel free to\u00a0email<\/a> any tips, questions, or comments. Follow him on\u00a0Twitter<\/a>\u00a0or Bluesky<\/a> if you\u2019re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search<\/a>.<\/em><\/strong><\/p>\n

The post Nobody\u2019s Bothering To Figure Out What AI Is Worth<\/a> appeared first on Above the Law<\/a>.<\/p>\n

\"\"
<\/figcaption><\/figure>\n

Everyone agrees that generative AI is valuable. Everyone believes it\u2019s going to be indispensable to the legal workflow. No one seems to know what it\u2019s worth.<\/p>\n

That tension sits at the heart of the 2025 Generative AI in Professional Services Report<\/a><\/em> from Thomson Reuters. While it\u2019s easy to blame the hype cycle for mucking up the distinction between \u201cpowerful tool for accelerating discrete legal tasks\u201d and \u201cMAGIC ROBOT BEANS!\u201d the confusion over AI\u2019s value proposition appears to run deeper. Firms are investing in GenAI tools. Clients want firms using GenAI tools. But barely anyone is bothering to keep track of what GenAI is actually doing<\/em>.<\/p>\n

As the immortal Lyle Lanley might observe, the legal industry armed with generative AI is a little like the mule with a spinning wheel. No one knows how he got it and danged if he knows how to use it.<\/p>\n

Organizations reporting that they actively use generative AI tools nearly doubled since last year\u2019s report. But the trend continues decidedly upward, with 79 percent of firms surveyed expect significant GenAI integration by 2027 and 95 percent of professionals anticipating that GenAI will be central to their workflow within five years. <\/p>\n

Meanwhile, the profession seems to be preparing for this eventuality with all the strategic vigor of a chicken playing Tic-Tac-Toe:<\/p>\n

\"\"
<\/figcaption><\/figure>\n

Only 20 percent of respondents are tracking the ROI on the technology that they\u2019re simultaneously clamoring for lawyers to adopt. On the other hand, part of the problem might be that clients seem a tad oblivious about what their firms are even doing, with 57 percent of clients replied that they want their firms using GenAI right now, but 71 percent replying that they \u201cdid not know whether their outside firms were doing so or not.\u201d<\/p>\n

Get it together, people! Vive le ROI!<\/p>\n

Because the day will arrive sooner than later when law firms start changing their prices because of AI. At the moment, 46 percent of firm respondents still say GenAI will not have an impact on their rates. But the report notes that this amounts to a 7 percentage point drop from 2024 and that\u2019s going to keep dropping like morale at Willkie Farr<\/a> as firms recognize that they need to recover money for the billable time lost to AI. Or, perhaps more to the point, the leverage lost when firms hire fewer juniors because of AI. Ethical constraints prevent lawyers from penciling in fake hours saved by technology, leaving them three options when AI-enabled workflows start taking a bite out of cumulative hours.<\/p>\n

One, accept that the same matter just makes them significantly less money now. Which\u2026 LOL.<\/p>\n

Two, jack up hourly rates to seize more cash for the tasks that human lawyers will still perform to cover the lost revenue from automated tasks. This is the $10,000\/hr option<\/a> floated at Legalweek. It\u2019s certainly an option, but clients already complain about $1000\/hr associates on matters where they\u2019re more than comfortable spending hundreds of thousands, reflecting a psychological resistance to the idea that one person is worth such a big number even when they don\u2019t quarrel about the overall figure.<\/p>\n

The days of billing time to \u201cFurther work\u201d passed a long time ago and notching three hours to \u201cAI-enhanced strategic insight\u201d isn\u2019t going to cut it. <\/p>\n

Bringing us to option three\u2026 developing more fixed fee menu items to keep the firm\u2019s revenue consistent while losing some of the leverage that forms the foundation of the law firm model:<\/p>\n

\n

As a result, while there is some recognition that new technologies may impact the mix of hourly work versus flat fees or other sorts of pricing arrangements \u2014 in fact, 40% of respondents said they expect the use of alternative fee arrangements to increase as a result of GenAI \u2014 many law firm practitioners expect the status quo to continue.<\/p>\n<\/blockquote>\n

But whichever way the industry chooses \u2014 between two and three of course, option one is pure lunacy \u2014 it only works if everyone understands the actual ROI involved. More to the point, everyone needs to understand the client satisfaction component of ROI and even among the small percentage of respondents that measure ROI, only 38 percent are actively measuring client satisfaction. <\/p>\n

Will generative AI really make exponential bounds in the future? Not likely<\/a>. At least not without some sort of accompanying revolution in energy or computing \u2014 endless fusion power or quantum computing at scale can radically change the economics of AI development. But that doesn\u2019t mean the technology that we have now<\/em> won\u2019t substantially alter workflows. Clients and firms both need to get on top of quantifying what those applications actually deliver. <\/p>\n

Because if you haven\u2019t figured out what AI means for pricing your side of the equation, don\u2019t be surprised when the other side does.<\/p>\n

\n

\"Headshot\"Joe Patrice<\/a>\u00a0is a senior editor at Above the Law and co-host of Thinking Like A Lawyer<\/a>. Feel free to\u00a0email<\/a> any tips, questions, or comments. Follow him on\u00a0Twitter<\/a>\u00a0or Bluesky<\/a> if you\u2019re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search<\/a>.<\/em><\/strong><\/p>\n

The post Nobody\u2019s Bothering To Figure Out What AI Is Worth<\/a> appeared first on Above the Law<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Everyone agrees that generative AI is valuable. Everyone believes it\u2019s going to be indispensable to the legal workflow. No one seems to know what it\u2019s worth. That tension sits at the heart of the 2025 Generative AI in Professional Services Report from Thomson Reuters. While it\u2019s easy to blame the hype cycle for mucking up […]<\/p>\n","protected":false},"author":3,"featured_media":115129,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16],"tags":[],"class_list":["post-115192","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-above_the_law"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/xira.com\/p\/wp-content\/uploads\/2025\/04\/Headshot-300x200-fY6Gw2.jpeg?fit=300%2C200&ssl=1","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/115192","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/comments?post=115192"}],"version-history":[{"count":0,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/posts\/115192\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media\/115129"}],"wp:attachment":[{"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/media?parent=115192"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/categories?post=115192"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/xira.com\/p\/wp-json\/wp\/v2\/tags?post=115192"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}