As law firms increasingly explore the potential of generative artificial intelligence (AI), a new trend is emerging: the acceleration of mergers and acquisitions within the legal sector. With the significant investments required to harness AI’s capabilities, many firms are reevaluating their strategies, leading to a wave of consolidation driven by the need for enhanced technology and talent.
According to Laura Saklad, vice president of the legal industry vertical at InTapp, “The investments necessary to keep pace with technological advancements are substantial and challenging. Firms are motivated to merge not only to acquire legal talent but also to secure the professional expertise needed to leverage these generative AI innovations.”
This shift is also influencing lateral moves within the industry. Legal recruiter Susan Mendelsohn notes, “I’ve seen partners leave their firms due to a lack of technological efficiency, seeking out more progressive environments that embrace AI.” While the integration of AI is still in its infancy, it is becoming an essential factor in attracting top talent.
Since the onset of the pandemic, interest in law firm mergers has surged. A recent report from Thomson Reuters indicates a reversal in the decline of library and research roles within firms, with costs per lawyer for these positions rising nearly 13%. This uptick is attributed to preparations for increased use of generative AI tools.
Kent Zimmermann, a law firm merger consultant, highlights that many leaders of smaller firms are considering mergers as a means to achieve the scale necessary for substantial investments in technology. “The ability to invest in AI and other tech-driven innovations is becoming increasingly important,” he stated.
While technology investments are a driving force behind merger discussions, other factors also play a role. Firms seek to deepen their practice areas, expand geographic reach, and respond to client demands. Additionally, rising billing rates provide firms with greater financial resources to invest in advanced technologies.
Mark Medice, a principal at LawVision, believes that AI will further accelerate the current cycle of law firm mergers. “As firms face the need for larger capital investments in technology, having a robust platform will provide a competitive edge,” he explained.
Despite optimism about AI’s future impact on productivity within law firms, a recent LawVision report revealed that nearly 100% of respondents reported no significant productivity gains from AI over the past two years. Lorie Almon, chair of Seyfarth Shaw, acknowledged that while productivity has improved at her firm, attributing those gains directly to AI remains uncertain.
Medice remains hopeful about generative AI’s potential in the legal sector. “We’re still working through what’s often referred to as the final-mile problem,” he said. “Achieving critical mass and ensuring that technology meets our industry’s high standards are essential steps toward realizing its full benefits.”
As law firms navigate this evolving landscape, they must adapt their business models and workforce skill sets to fully leverage AI’s capabilities while addressing existing challenges.
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