Survey: Just 7.5% of Firms Using AI, But Half Pursuing Other Innovations

Just 7.5 percent of law firms say they are making use of legal artificial-intelligence tools, while another 29 percent are beginning to explore their options for using AI, according to a survey of firms with 50 or more lawyers conducted by the management consulting firm Altman Weil.

However, half of these firms are actively engaging in creating special projects and experiments to test innovate ideas or methods for delivering legal services. Forty-nine percent say they are currently using technology to replace human resources with the aim of improving efficiency — a trend that 84 percent say will be permanent in the legal profession.

This is the ninth year of Altman Weil’s Law Firms in Transition Survey. In addition to technology and innovation, the survey covered a range of management-related topics, including profitability, staffing, pricing and financial performance.

This year’s survey included a “bonus question” about AI, asking, “What is your firm’s stance on the use of legal AI tools?” As noted, 7.5 percent said they are already beginning to make use of AI tools, 28.8 percent said they have begun to explore opportunities, 37.8 percent said they are aware of what other firms are doing but not pursuing it themselves, and 25.9 percent said they are not aware of what is going on in this area.

Position on legal AI tools.

The largest firms are most likely to be using AI, the survey indicated. Among firms of 1,000 or more lawyers, 54.6 percent reported that they are currently using AI tools and 36.4 percent said they are exploring opportunities to use these tools. At firms of 500-999 lawyers, only 9.4 percent are using AI tools but 59.4 percent are exploring them.

Use of AI tools by firm size.

Law Firm Innovation

Also new in this year’s survey were a series of questions about law firm innovation. The survey asked whether firms are actively engaged in creating special projects or experiments to test innovative ideas or methods. Half said they are and half said they are not. This time, it was the smaller firms that were more likely to be pursing innovation, with 60.7 percent of firms of 50-99 lawyers answering yes to this question, while just 18.2 percent of firms of 1,000 or more lawyers answered yes.

For the firms that said they are pursing innovations, the survey asked them to describe what they are doing. I won’t repeat all the responses here, but let me offer a sample:

  • Use of IBM Watson.
  • Developing a strong data analytics team to track client and firm predictive data.
  • Bringing e-discovery in house.
  • Created a training-tool app that the firm sells to clients needing to conduct large-scale legal trainings.
  • Hosting a firm-wide “Innovation Day.”
  • Giving permission to people to take risks and make mistakes to test out alternative fee arrangements.
  • Increased client collaboration and share technology to improve coordination.
  • Moved to non-lawyer management of practice groups to improve lawyer efficiency and better utilize resources.

Interestingly, when the survey asked firms about their overall confidence level that they are prepared to keep pace with the challenges of the new legal marketplace, only 2 percent said they were completely confident. About a quarter of firms scored their confidence level at 7 on a scale of 1-10. The survey grouped these responses to conclude that 8.6 percent of firms have a high confidence level, 67.2 percent have a moderate confidence level, and 24.3 percent have a low confidence level.

Firms were also asked to rate their partners’ awareness of the challenges of the new legal market. This time, 5.1 percent rated partners’ awareness as high, 49.4 percent rated it as moderate, and 45.5 percent rated it low.

Increasing Efficiency

One other technology-related question related to efficiency of legal services delivery and asked whether firms are using technology tools to replace human resources. Forty-nine percent of firms said they are. This was true across firms of all sizes, the survey found.

Firms were asked if using technology to replace human resources had resulted in significant improvement in firm performance. Thirty-nine percent said yes, 51.5 percent said it was too soon to tell, and 9.1 percent said no.

Finally, firms were asked if using technology to replace human resources will be a permanent trend going forward. Here, 84.4 percent said yes.

Methodology

The survey polled managing partners and chairs at 798 U.S. law firms with 50 or more lawyers. Responses were received from 386 firms, including 50 percent of the 350 largest firms and 50 percent of the AmLaw 200.

The full survey can be downloaded from Altman Weil.