Despite The Whale, You Can See Legal AI ROI

A survey for Legora by Ari Kaplan has sought to address the legal AI ROI visibility problem experienced by law firms. It found that despite the elephant…er, no, the giant blue whale in the room, you could indeed still find ways to show meaningful ROI within such a time-based business.

The key findings, based on 31 law firm interviews, were that:

• ‘42% of participating firms said that referencing their use of AI has helped them win new work.
• 45% report that it has helped them expand existing client relationships.
• AI also gives increased capacity so firms can take on work they would previously have had to decline. E.g. 55% of respondents say AI has enabled them to take on briefs they would previously have struggled to scope and resource – expanding the addressable opportunity without increasing headcount.
• Over half (52%) of firms also reported a redeployment of capacity to client interaction and responsiveness.
• 77% cited their AI capability when explaining pricing, value, and turnaround time to prospects or clients – a figure that reflects how rapidly AI has shifted from an internal operational tool to a front-facing part of how firms sell themselves.
• 39% of participating firms say AI makes it easier to price and deliver fixed-fee arrangements.’

Commenting on the research, survey lead Kaplan said: ‘What struck me most in conducting this research was how quickly the conversation among firm leaders had shifted. A year ago, the question was whether AI delivered real value. Today, the firms in this study have moved well past that – they’re asking how to use it to change their competitive position, their pricing, and the quality of what they deliver to clients.’

And Kyle Poe, VP of Legal Innovation at Legora, added: ‘One of the most persistent mistakes in how people talk about AI in law is defaulting to efficiency and cost savings. At the top of the market, that’s the wrong frame. The firms serving the most demanding clients aren’t looking to do the same work cheaper – they’re looking to deliver higher quality, faster, with greater certainty. That’s where AI is already changing the competitive equation.’

AL Conclusion

Overall, this is a valiant effort, so kudos to Ari as always!

And all of the positive points above are great to see – well, many of them. But, the unusually large blue whale in the law firm conference room remains and it’s hard to believe that it’s going to pop open a window and swim away soon down the Hudson River.

One other challenge is that aside from the immense baleen issue, many of the above measures are quite amorphous and are difficult to consistently show within a table of financial metrics.

That said, there is another factor here. Let’s assume that all major law firms are going to buy at least one legal AI platform, whichever flavour it is. Next, assume that every fee-earner will get it.

So, if that’s the base cost level, and you’re going to do that anyway, then do ROI calculations really matter? I.e. does looking at the cost of the software – which now seems standard – and then saying ‘But, did we make as much at this law firm in extra revenue this year as the AI thingy we bought cost us?’ really make sense?

Do you do that for the carpets? The lighting? The air con? Isn’t a legal AI platform today what we call in the management consulting trade just a ‘hygiene issue’? This is especially so when you have a law firm that makes $100 millions or even $billions per annum, yet is quibbling the cost of installing some of the most advanced technology ever known to homo sapiens…..which, also, as noted, is now regarded by most as ‘normal’. (And in some cases the vendor is now giving it away at a knock-down price…?)

Isn’t the real issue what you can do with it – and all your other AI tools (whether a legal tech one, or via a general LLM provider)? How can you leverage it to change your service delivery? How does it open up new possibilities to work in new ways? And even, how does it – or will it – allow you to compete with the growing challenge of the NewMods, which are eager to eat your lunch? And perhaps even…..yes….how to use it to reduce the cost of work for your clients….! ?

Aren’t Big Law firms looking at this whole thing the wrong way? Their profit margins are massive – even when 20% or more of the work is written off by the client because they think the fee is too inflated. They bill by time in ways that no other sector of the economy would ever permit. Pay rates and PEP are going through the roof……and yet the question is: did this utility software’s cost get covered by an increase in our total revenue?

Any road. Despite the blue whale, Ari has done sterling work and shown plenty of factoids to make law firm CFOs happy.

More about Legora here.

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A Legal Tech Conference For All of Europe

Legal Innovators Europe – Paris – June 24 and 25.

There will be more news about the conference and key speakers as we get closer to June.

Look forward to seeing you there!

Richard Tromans, Founder, Artificial Lawyer and Legal Innovators conference Chair.

Note: the conferences are organised by Cosmonauts – please contact them with any queries. 

If you would like to be a speaker at Legal Innovators Europe, especially if you are at a law firm or inhouse legal team in Europe – whether based in France, Belgium, Spain or Germany, or beyond…..then please contact Phoebe at Cosmonauts:  phoebe@cosmonauts.biz

Note: if you are a legal tech company, please contact Robins: robins@cosmonauts.biz or Anjana anjana@cosmonauts.biz

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And if you’re in the US and looking for the next major event to join after Legal Week, then see you in California this June!

Legal Innovators California, the landmark West Coast legal tech event, will take place on June 10 and 11, in the heart of the Bay Area, the home to many of the world’s leading AI businesses – and plenty of legal tech pioneers as well! More information and tickets here.