Law firms are encountering a new challenge to their established growth and revenue models, as corporate clients are increasingly undertaking legal work themselves using internal legal teams and AI tools. This trend is highlighted in new research from HSBC's yearly UK Law Firm Strategy and Investment Survey.
The survey, which included 100 law firms, found that almost three-quarters of respondents identified the increased use of technology in legal service delivery as a source of disruption. Additionally, 60 per cent of firms noted that clients are bringing more work in-house.
Helen Drayton, chief executive of Pennington Manches Cooper, stated that clients are increasingly attempting to do more themselves, utilising their own AI tools. David Beech, chief executive of Knights, observed that many clients' General Counsels may even be using AI solutions recommended or developed by partner firms.
Victoria Ritchie, head of professional and business services at HSBC, commented that AI is already challenging the traditional law firm operating model, accelerating changes in how legal services are delivered, priced, and resourced. Effective AI integration was cited as the most frequent organisational challenge by 73 per cent of firms surveyed.
While almost every firm surveyed has a generative AI strategy in place, senior leaders are now concentrating on securely and effectively embedding the technology across their businesses. However, barriers such as time to explore the AI market, legacy systems, data involved in implementation, cost, and uncertainty over return on investment were cited.