Welcome back to the Big Law Business column. I’m Roy Strom, and today we look at DLA Piper’s multi-front generative AI strategy. Sign up to receive this column in your Inbox on Thursday mornings.
Loren Brown is the rare law firm leader I’ve spoken with who can articulate a business plan around generative artificial intelligence.
The US vice chair of DLA Piper has a strategy to capture new, AI-related work today while investing in people and technologies that could build the future firm that many lawyers find so distressing.
Most law firm leaders fret that AI will wreak havoc on their prevailing business model—charging hefty sums for lawyers’ time.
Brown is not sanguine about that. He sees a future where lawyers are more efficient with the help of new technology, and law firms shift toward a value-based billing system. But he also believes that AI-driven business models will spin up enough legal matters on their own to make up for the work taken away by more efficient machines, something he calls his “net effect theory.”
“If your business model is based on charging more than $1,000 an hour for very routine work that could be automated quite easily, then that’s not a very good business model to begin with,” Brown said in an interview. “We all have to prepare for the likelihood that the more routine aspects of our business will be the most disrupted by technology. And we’re perfectly comfortable with that.”
Brown acknowledged there’s fear in the legal industry around how AI will threaten the law firm business model. He believes the adoption of AI tools will never replace the need for great lawyers. He also says lawyers will soon compete based not just on reputation and relationships, but also their ability to utilize technology to deliver services that humans alone can’t provide.
“If our firm and a competitor firm go to market with equally great lawyers, but we have unique access to AI products that drive insights beyond the reach of the competitor firm,” Brown said, “we think that tilts the market in our favor.”
Hiring the Right Experts
Brown’s first step is for DLA Piper to be the leading defender of AI algorithms in courtrooms and with government regulators.
To accomplish this, he says it is vital the law firm employ data scientists and experts who understand how AI works. The first of those hires came in 2018, when Brown led the effort to recruit Danny Tobey. The Yale-trained lawyer has a medical degree and founded a software startup that was purchased by Wolters Kluwer (he’s also written novels).
Tobey, who’s now chair of the AI and data analytics practice at DLA Piper, had been thinking about the legal consequences of the technology long before ChatGPT was rolled out in late 2022. He authored a 2018 paper that considered whether software companies could lose legal protections from malpractice claims as AI advanced. Tobey warned at the time that the technology was “replacing the very professionals already subject to professional liability.”
DLA Piper in early 2023 hired a team of more than 10 data scientists from Faegre Drinker, led by Bennett Borden, a lawyer and data scientist who’s helped the firm build a business testing AI models for bias.
Law firms are a good venue for that kind of technical work thanks, in part, to attorney-client privilege, which can protect results of efforts to obtain bad outcomes from the algorithms.
“Really understanding how these models work is core to defending the models,” Tobey said in an interview. “You can’t defend them if you don’t understand their true mechanism of action. So being on the forefront of that litigation is the issue of the day.”
Defending AI in Court, Congress
Brown said the firm’s AI-related work is currently generating revenue in the eight figures, noting the group’s growth has been “exponential.” DLA Piper is the third largest law firm in the US by revenue, bringing in $3.8 billion in 2023, according to data from The American Lawyer.
DLA Piper has already racked up appearances in early cases alleging injuries caused by large language models (LLMs).
The firm is defending Microsoft in a lawsuit alleging its Bing search engine defamed an author when an AI-generated blurb mistakenly said he’d been sentenced to 18 years in prison for seditious conspiracy. That sentence had been given to someone with a similar name, according to the complaint.
The firm is also defending OpenAI in a defamation case brought by a conservative radio host in Georgia who claims ChatGPT made false claims that he embezzled money from a gun-rights organization.
DLA Piper appears to have a close relationship with OpenAI, which unleashed the fervor around generative AI when it released ChatGPT in 2022. The firm was hired last November by the Sam Altman-led company to lobby Congress on AI-related legislation, pulling in $180,000 over the past two quarters, according to Senate disclosures.
DLA Piper advised Altman on his testimony before Congress last fall, reported Politico, with a DLA Piper spokeswoman confirming the law firm “provides strategic advice to the company on a variety of topics.”
The firm has also done lobbying work on behalf of PathAI, a medical research company using AI, and Pindrop Security Inc., which develops security products to guard against deepfakes, Senate disclosures show.
Building New Products
Bringing in revenue from that more traditional business today helps Brown convince his fellow firm leaders that investments in building AI-fueled legal work products will pay off.
Brown and Tobey are cautious about where they build such products, noting a law firm can’t invest in the same ways as legal tech companies or large consulting firms.
While technology will make some traditional processes more efficient, they are trying to build products that, paired with human advice, deliver new types of insights. And they’re targeting areas of work that are already amenable to alternative billing structures, such as low-margin practices.
One recent example is a “proactive compliance” tool that sifts through employees’ unstructured communications to flag potential breaches of anti-bribery or other laws. The tool was trained on statutes such as the Foreign Corrupt Practices Act with longtime legal experts in the field involved.
The firm concluded a trial run of the tool with a major client recently, Tobey said, and the company’s head of investigations reported it caught issues that without intervention could have turned into expensive internal investigations.
“That’s an example of an exciting way to use AI that’s not automating something people already do,” Tobey said. “It’s creating new value.”
Tools like that bring law firms into a new business: Preventing legal issues, rather than using human time to solve them. If such tools are adopted more broadly, it could impact firms’ leverage models. Fewer associates might be needed, for example, if more investigations are staved off by proactive tools.
Tobey said the firm is working with its pricing team to develop strategies for selling things like the proactive compliance product. So far, he said the economics are “incredibly valuable to the client and incredibly good for us.”
Worth Your Time
On Lawyer Rankings: Chambers & Partners has long been the gold standard for lawyer rankings. Justin Wise reports on changes to the company’s business model after it was bought by a private equity firm.
On Baker McKenzie: Baker McKenzie is picking up a 17-lawyer corporate group from Munger, Tolles & Olson in Los Angeles, Meghan Tribe reports.
On Burford Capital: The litigation funding company asked a US federal judge to hand it 51% control over Argentine’s state oil company, YPF SA, to help satisfy a $16 billion court judgment against the Latin American country.
That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.
To contact the reporter on this story:
To contact the editors responsible for this story:
Learn more about Bloomberg Law or Log In to keep reading:
See Breaking News in Context
Bloomberg Law provides trusted coverage of current events enhanced with legal analysis.
Already a subscriber?
Log in to keep reading or access research tools and resources.