New Revenue Streams: Time to Start Law Firm Business Innovation

By Geoffrey D. Ivnik, Esq. | Director of Large Markets, LexisNexis

Leaders of America’s largest law firms have decided to move full speed ahead with the adoption of generative artificial intelligence (Gen AI) technology because they see these tools as keys to unlocking greater value for clients and greater revenues for their firms.

More than half of the Am Law 200 (53%) have purchased at least one Gen AI solution and 45% of them are already using it for legal matters, according to the 2024 LexisNexis Investing in Legal Innovation Survey. Moreover, our survey found that three in four (77%) senior lawyers at Am Law 200 firms believe that Gen AI tools will enable them to offer new value-added services to clients, with 54% reporting they are already exploring these potential opportunities.

The pace of Gen AI innovation means that law firms have little time to waste when thinking about how to adopt the technology and — for firms still on the fence — every minute of delay will put them further behind, according to the new report, Gen AI in Law: Unlocking New Revenues.

The risk of analysis paralysis

Unlike previous legal technology developments, where law firms could generally move at their own analytical pace, Gen AI is taking the timeline out of their hands.

“There have not been many points in the last 30 years where a firm would be substantially disadvantaged by a slow adoption,” says Jeff Pfeifer, chief product officer at LexisNexis. “Gen AI adoption is different because there are fundamental advantages that we’re seeing, not only in law but in other vertical industries, that create material differences in the way work is done. And so for a firm that’s slow on this front, they will find themselves in a constant mode of catch-up.”

Industry experts emphasize that the opportunity has not yet passed and there is still time for firms to explore how they can use Gen AI tools — but the clock is ticking and those who get paralyzed by analysis risk lost opportunities to drive revenue growth and being left behind their competitors.

“I do think firms that are on the leading edge are going to see the benefits of it and appreciate the benefits of it more than a firm that is just going to wait another 24 to 36 months to really see how it shapes out before they start to think about implementing,” says James Metzger, chief financial office at Reed Smith.

Start innovation now

The implications for law firms that don’t move fast enough on Gen AI adoption may also become apparent in pricing models for their legal services. Experts warn that these firms won’t be able to compete with firms that can do the same work at a much lower cost thanks to the innovation that comes from Gen AI tools.

“With the billable hour being what it is and not having those efficiencies being created by Gen AI, other firms are going to take two, three, four times as long to do something as firms that have adopted Gen AI can do,” says Krista Ford, director of knowledge, research and information services at Steptoe & Johnson. “Firms that don’t adopt it will not be able to keep up with the volume of work and analysis that firms who are using Gen AI can.”

By taking some of their steps spelled out in the new report, Gen AI in Law: Unlocking New Revenues, and transforming their working practices, law firms of all sizes have the potential to expand into new business areas and thrive in the increasingly competitive world of legal services.

Gen AI tools can help firms innovate and unlock new revenue opportunities, while also improving client service by streamlining workflows and enabling lawyers to dedicate more time to solving their clients’ business problems.

REPORT: Gen AI in Law: Unlocking New Revenues

We interviewed a variety of AI leaders from the legal profession to explore how law firms and corporations that embrace Legal AI can generate new revenues through the use of this technology. In addition to the section of the report we unpacked today, which explores why law firms should start business innovation now to maximize success, other sections of the report include:

• An introduction to your new business development tool;
• How law firms can seize new opportunities with the right skills in place;
• The transformation of unprofitable practices into thriving businesses; and
• How Gen AI is accelerating changes to client mindsets when it comes to assessing the value of legal work.

Read the full report now: Gen AI in Law: Unlocking New Revenues.