Big law firms are all-in on Generative AI (Gen AI), with nearly every large firm planning to ramp up their investments in this technology over the next five years. However, a noticeable divide might be forming between the very largest firms and their slightly smaller counterparts.
The Investment Gap: Am Law 200 Leads the Way
Our 2024 Investing in Legal Innovation Survey: The Rise of Gen AI at Top Firms & Corporations found a clear disparity. Forty-three percent of the 200 largest law firms (Am Law 200) have a dedicated budget for Gen AI tools this year, while only 19% of other large firms (with 50 or more attorneys) do. This survey, conducted by LexisNexis in January 2024, gathered insights from 216 senior leaders at large law firms and 50 executives in corporate legal departments.
A key takeaway from the survey is that the biggest firms are leveraging their extensive resources to make more aggressive, short-term investments in Gen AI. This is evident in several key areas:
- Legal AI Tool Adoption: A striking 53% of Am Law 200 firms have already purchased “Legal AI” tools—Gen AI specifically designed for the legal industry—compared to just 20% of other large firms.
- Active Gen AI Use: Forty-five percent of Am Law 200 firms are currently using Gen AI for legal matters, whereas only 22% of other large firms are.
Beyond Tools: Exploring New Opportunities
The potential gap extends beyond just purchasing tools. The survey also revealed differences in how these firms are exploring the broader impact of Gen AI:
- New Business Avenues: Fifty-four percent of Am Law 200 firms are exploring new lines of business or billable opportunities thanks to Gen AI, significantly more than the 38% of other large firms.
- Increased Investment Forecasts: Thirty-four percent of Am Law 200 firms foresee their Gen AI investment “increasing significantly” in the short term, compared to 20% of leaders at other large firms.
- Hiring Technologists: To support their AI initiatives in 2024, 38% of Am Law 200 firms anticipate increased hiring of technologists, while only 14% of other large firms plan to do the same.
What This Means for the Legal Landscape
The emerging picture suggests that Gen AI is rapidly becoming a fundamental part of operations for large law firms, with the biggest players leading the charge in adopting this transformative technology. This creates a significant potential gap that will be crucial to monitor in the coming years.
However, it’s still early days for Gen AI adoption in the legal market. It’s entirely possible that non-Am Law 200 firms will accelerate their Gen AI investments, recognizing the substantial efficiencies and productivity boosts it can offer. As Law360 Pulse reported, “Mid-law firms are interested in the technology and it’s possible it might provide to be even easier to leverage for smaller firms than for their BigLaw cousins.” This indicates that while the largest firms currently have a head start, Gen AI’s benefits may ultimately be accessible and impactful across the entire spectrum of large law firms.
