The Law Firm of the Future – Part 2 – April 2025
Recently we released part 1 of the article The Law Firm of the Future – March 2025 – Hyperscale Group Limited. The following part 2 continues to discuss the key themes we will see in successful law firms of the future:
1. SaaS Consumption Management – We have written about some of the challenges with SaaS contracts before - The Silver Lining of Cloud Software? — Hyperscale Group Limited. In short, unlike commercial real estate leases, often after the initial period of a SaaS contract a customer has no control over financials and little access to data. Many struggle with the year-on-year price increases being imposed. We need suppliers to be profitable but unless price rises are more proportionate/in line with inflation, some contracts will become unsustainable. I think this will alter and we will see more balance in SaaS contracts. OneSaaS as well as www.litig.org, are doing some great work in this area. We are also going to see strengthened procurement departments and consumption management as tighter controls in this area will become vital.
2. Capital Profits – We have already seen examples of law firms creating and spinning off technology driven entities but again we will see more of this. AOSphere being sold to Inflexion - Inflexion and Allen & Overy partner to drive growth of aosphere business | Inflexion is one of a growing number of examples. You only have to look at OpenAI, which is worth $300billion in the space of 10 years, making $30billion capital profit per year. We will start to see law firms specialising in building products of this nature, backed by private equity. Tied in with this we will see the growth of recurring revenue service lines and products, as well as an increase in internal and external corporate venturing with partners being held accountable for achieving returns on new products.
3. Specialist LLMs – It is interesting that some large tech companies seem to believe that law firms have a large number of unique data sets. I am not saying they do not, but in reality, a large proportion of work that law firms do could perhaps be done by other firms meaning not much data is really unique. The use of the unique data they do have is client specific and is often constrained by professional obligations of confidentiality. That being said we are going to see examples where law firms try to develop products or specialist LLMs focused on particular data sets where they enjoy a unique or relatively unique market position. Many others will opt out of having their content consumed by LLMs under incoming copyright legislation.
4. Alternative Legal Service Providers – Many laws firms have either contracted with Alternative Legal Service Providers or have developed their own e.g. Vario and Konexo. I think we will see this trend continuing. Increasingly traditional law and alternative legal provision will become intermingled as the market need for efficient legal delivery grows. Law firms are going to find themselves contracting to deliver a range of different mandates. Many of these will be data or technology driven and outside their traditional comfort zones.
5. Just in Time Technology - As can be seen from the PwC report - Annual Law Firms’ Survey 2024 - PwC UK, technology spend is increasing as a proportion of overhead. Technology is not free and so this should be expected with increased digitisation. The mission for law firms is to use this investment and to drive benefits realisation i.e., to use this additional technology spend to improve efficiencies, drive top line and/or launch new products as opposed to it just adding to overhead. Firms are going to have to be better at managing these technologies but increasingly may need to consume technology on a “just in time” basis, i.e., setting themselves up with a menu of pricing and depending on projects will contract accordingly. We already work with organisations who do this, and we will see more of it.
6. RegTech – We have all read about the growth of RegTech. We will see systems that monitor behaviours (as well as AI activity) and some of these are going to become essential to law firm’s supervision and P & I cover. The large document management providers already have tech of this nature, and we are seeing the growth of tools such as this in deep fake protection, copyright scanning and behavioural protection. Given increased volumes and velocity of legal work these tools will be vital. Historical methods of supervision alone will not be enough.
7. Education – This is a constant theme of our recent articles. In short, we are currently going through more change than I have seen in the last 25 to 30 years. The technologies we are now seeing are going to affect how work is delivered, risk management, pricing and the specific skill sets which are needed such as knowledge of Microsoft 365, use of prompts etc. Many firms are already making inroads to invest more in learning and education, and it is vital that Learning and Development and HR departments have a credible plan to equip people to deal with these changes. There are a range of tools available including The Professional Alternative but any solution is probably multi-faceted given people learn in a variety of ways. It is important that Boards agree who exactly will drive this area and that it is treated as a business priority as people will need help.
8. People and Recruitment – For the last few years firms have been grappling with how to incentivise lawyers to become involved in innovation and transformation projects. There are a range of ways, but this is a tough area as lawyers are busy and focused on their clients. They are very much judged by metrics such as billings, deals completed, and hours worked. We need to think about the skills we will need people to have both within practice areas and business services teams. We then need to think about how they are going to acquire these and the extent to which firms can justify them as full-time resources or whether or not they need them “on call”. We are also going to see a growth in fractional services (which Hyperscale Group and others provide). Recruitment processes too will be revisited. Will traditional form filling and interviews work in the future or do firms need to go further? What core skills does everybody need to have and to what extent are we happy for people to be using AI or not both when applying for jobs and when working in them? There are answers but in short, this whole area needs revisiting. Lawyers will increasingly need to be trained on the tech tools of their trades like in other industries, see A Conversation with a Builder — Hyperscale Group Limited.
9. Partners – I am not going to repeat what I said in The Lawyer of the Future, but the nature of future partners will need to change and will partners in their current state even exist? As a minimum future partners will need to be digitally literate and have the skills to price and deliver work accordingly. Methods of winning work will be different too as will the skills in their team. Will existing leverage models exist or will we see smaller more senior teams with deep AI and technology skills? Let’s also not forget that AI and Microsoft 365 are the “great levellers” with small niche firms being able to access the same capabilities as much larger firms. For more on the opportunity for smaller firms please see: 10 Reasons Why Smaller Law Firms Have Never Had It So Good? — Hyperscale Group Limited
10. Premises – To an extent Covid turned real estate on its head. Notwithstanding anyone’s views, real estate forms a material proportion of law firm overhead. There are an increasing number of firms who exist on an almost virtual basis, with offices becoming meeting points supplemented by strong networking programmes. I am not saying one way is right or wrong, but we do need to be clear there is more than one model and the model a firm chooses will effect the culture of a firm, the way it communicates and the systems and support it needs to have in place. It will also impact on the type of people wishing to join a firm.
11. Cyber – It is no secret that cyber threats of all kinds are increasing. Firms have invested heavily in this area in recent years. What we are beginning to see in the latest trends are the differing behaviours of cyber actors, the increased use of AI and Gen AI (including voice avatars and deep fakes) and the emergence of supercomputing as well as increased global unrest. We are going to start to see the need to develop a new level of cyber readiness. This might include having established core practices and tools, specific on call arrangements as well as a new layer of external experts who can intervene and trouble shoot depending on the nature of the issue. Sadly, this area is only going to get worse and there will be a “cyber resource” increase in the cost of doing business. For more on the risks of Gen AI please see - Generative AI: A New World of Risk — Hyperscale Group Limited
Hopefully, this represents some key themes to think about and the principal areas where we are going to see change. No one has all of the answers, but it is important that we start thinking about these areas and gearing ourselves up as we currently do not know the speed at which changes will happen.
Hyperscale Group are an Independent Digital, Innovation, Operational Advisory, and Implementation Business with over 25 years plus deep market experience. We work for In-House Legal teams and Professional Services Firms all around the world and support them developing and implementing their strategies. We help our clients to make the right things happen.
Our Experience: Click here - Our Services: Click here - Client Testimonials: Click here
How We Work: Click here
For more information, please contact Dereksouthall@hyperscalegroup.com
