The Brief:
A&O Shearman is spending US$1.1bn on AI over the next five years.
Every practice must put at least 3% of billable time into building its own AI tools.
Forget “use AI more”. A&O Shearman wants its lawyers building it.
The plan
The Magic Circle firm will invest US$1.1bn in its AI strategy over the next five years. Most of that will come from each practice spending at least 3% of billable time building AI tools for its own area of law, plus funding for the tech.
Practice heads decide how to hit the target. They can put people on it full-time, or spread it across associates and partners.
Global head of AI David Wakeling said it’s not about telling everyone to “use AI more”. It’s about “redesigning the service completely”.
“We think it is a mistake to chase the latest AI model constantly or to get a thousand AI models . . . it’s all about leveraging teams of lawyers’ expertise into specific AI systems that team uses,” said Wakeling. “We’ve been accelerating our AI strategy with much more clarity as to what’s going to make the difference in the business.”
AI use now counts toward bonuses too. Associates, partners and business functions are all assessed on it. But not all AI use scores the same. Using it to boost your own productivity is weighted differently to building contract precedents and prompts the whole team can use.
And it’s already changing how the firm charges. A&O Shearman’s fixed-fee income is up 15% over the last two years, partly thanks to AI.
The bigger picture
A&O Shearman was Harvey’s first customer back in 2022. Harvey is now worth US$15.5bn.
The firm teamed up with Harvey and Microsoft to build ContractMatrix, a contract drafting and negotiation tool it sells to clients. Wakeling wouldn’t share numbers, citing commercial sensitivity. But he said ContractMatrix revenue sits in the “tens of millions of US dollars”, up ninefold in a year.
Most large firms run Harvey or its European rival Legora, alongside general-purpose AI tools like ChatGPT and their own bespoke software. But some firms are going further.
Kirkland & Ellis is pouring US$500m into its own proprietary platform. Ropes & Gray now lets its 1,000-plus associates and counsel count up to 100 hours of AI experimenting and training toward their billing targets.
Buy, build or sell? A&O Shearman is doing all three.
Source: Financial Times
