Ground your legal AI strategy in the basics

Midsize law firms: the succession crisis we need to talk about

Succession planning remains a critical weakness for midsize law firms. Many have not secured partner portability, making them easy targets for Am Law 50 – 100 firms looking to acquire top talent. With limited ability to invest in technology and training compared to larger competitors, these firms are losing ground rapidly.

This creates a pressing need to not simply use AI but to deploy it strategically and reap the benefits of doing so. 

Meanwhile, private equity is reshaping the midsize accounting sector, setting a precedent that could soon impact law firms. As accounting firms become more competitive, midsize law firms must prepare for similar disruptions — or risk falling behind.

Big Law’s structural shifts: fewer associates, more AI

Big Law is also undergoing fundamental changes, starting with a significant reduction in lower-level associates — down 11 percent — as global law firms shift work to AI, paralegals, and alternative legal service providers (ALSPs). As a result, summer associate programs are becoming more strategic, exposing young lawyers to client interactions rather than just legal research and document review.

The growing pay gap between top and bottom earners (now a staggering 1-in-10 ratio) is fueling lateral movement among partners. Compensation structures must evolve to retain top talent and prevent costly departures.

AI: the industry’s biggest disruptor

AI’s impact on the legal profession is both exciting and unsettling. It is poised to replace certain labor-intensive tasks, accelerate learning (allowing a two-year associate to function like a five-year associate), and improve efficiency. However, firms must tread carefully; ethical concerns like the ABA’s Opinion 512 on informed consent for training AI models must be addressed.

Corporate legal departments are already reaching out to law firms, eager to integrate AI into their operations. In response, it will not be enough to simply offer AI-driven solutions. The winners will be those that work proactively to establish a data foundation that maximizes the impact of those AI solutions. Strategic deployment tied to real use cases is how firms can gain a competitive edge and can share the benefits with their client.

AI could also play a crucial role in addressing the justice gap, where 89 – 90 percent of individuals cannot afford legal representation. By automating routine tasks and increasing efficiency, AI can help firms allocate resources more effectively, making legal services more accessible.

Turning data into action: the opportunity to leverage knowledge

One of the biggest gaps in law firms today is their failure to provide clients with actionable intelligence. Clients don’t just need data — they need insights delivered at the right time. They want to hear from their legal representatives between invoices, and as a result, demonstrating value is becoming crucial.

Too often, law firms show up to client meetings with multiple partners who don’t fully understand the problem. Instead of bringing seven lawyers to the table, firms should focus on delivering strategic solutions tailored to business needs. Shifting firm culture and priorities toward knowledge-sharing and strategic insights could transform client interactions, strengthen relationships, and drive long-term success.

Shifting business models: a wake-up call

The traditional law firm model prioritizes firm profits over efficiency. But this outdated approach is losing its relevance. Today’s economy demands innovation, client-centric strategies, and investment in technology.

AI and alternative legal providers (ALSPs, the “Big 4,” in-house legal teams) are poised to challenge traditional firms. 

Clients are becoming more confident with AI, using it to predict legal costs, and tools are emerging that provide transparency into what a legal matter should cost. If firms fail to deploy AI strategically and use it to reevaluate their business models, they risk being replaced by more efficient and cost-effective alternatives.

The talent crisis: a million-dollar mistake

Talent retention is another pressing issue. Firms must focus on skill development, succession planning, and equitable work distribution. This is particularly vital when it comes to AI and technical skills. The firms that are not proactively improving their employees’ confidence with AI are forgoing a serious business and talent advantage. 

Ultimately, without a clear path for advancement, talent will walk out the door — at a cost of up to $1 million per departure.

Meanwhile, business professionals within firms struggle to gain time and attention from lawyers, as knowledge is often hoarded instead of shared. Firms need systems that promote collaboration, ensure equitable workloads, and support professional development.

The path forward: build confidence in AI or fall behind

The legal industry is changing rapidly, and firms must decide whether they will lead the charge or be left behind.

AI is here to stay. Clients expect better service. Knowledge management must evolve. Talent must be nurtured. Above all, law firms must rethink their business models to remain competitive.

Firms that embrace AI, invest in technology, prioritize client needs, and develop sustainable talent strategies will not only survive, but thrive in the new legal landscape. The time for change is now!