Big Law’s AI Race Is Ripping Up Its Follow-the-Leader Culture

Welcome back to the Big Law Business column. I’m Roy Strom, and today we look at how the AI race is changing the job for managing partners. Sign up for Business & Practice, a free morning newsletter from Bloomberg Law.

Faced with a daunting dilemma over how to adapt to the generative artificial intelligence age, Big Law leaders may long for the good old days.

Remember when they debated over simple things? Like: “What should we do about Milbank’s decision to raise associate salaries?”

I’m only kidding. That’s the debate this week!

In perspective, though, the question is not that difficult, right? We know what the law firms will do: match Milbank.

Still, it perfectly demonstrates Big Law’s follow-the-leader culture. These are cautious businesses that don’t risk decisions that set new, bad precedents. Other examples include firms’ nearly uniform addition of nonequity partners and their rush into the same markets, such as Miami or Texas.

Even the earlier stages of the AI race featured this dynamic. Harvey chief executive Winston Weinberg this week said nobody responded to his LinkedIn messages until A&O Shearman agreed to use the company’s tool in 2022. “Then everyone did,” he wrote in a Reddit thread.

Who can blame these leaders for the follow-the-herd strategy? It has worked well.

The race to deploy generative artificial intelligence is ripping up that playbook. And it’s in large part because law firm leaders are now facing a novel question. The one luxury they have? Everybody knows that nobody knows the right answer. It’s a recipe for experimentation.

Law firm leaders are beginning to chart their own course, developing unique strategies. It is true strategic competition, something rarely so visible in Big Law outside of the lateral hiring horse race.

This development carries significant risk for law firm leaders. They are making decisions that will cost their partners money; could alter their place in the legal market; may reduce the number of lawyers’ jobs; and can easily be judged by outsiders.

Kirkland & Ellis announced the most audaciously unique approach last week, saying it will spend $500 million over the next few years to build its own AI platform. The firm intends to install the chips that power AI, graphics processing units, at its own facilities.

It’s looking to hire more than three dozen people in its innovation department, with titles such as “Innovation AI Developer” and “Associate Director, Responsible AI.” The highest-paying job, an associate director of innovation & solutions management in New York, will earn between $233,000 and $321,000 a year.

All told, those job openings will pay salaries totaling between $6.2 million and $7.8 million a year.

If Kirkland leader Jon Ballis wanted to design a strategy that no competitor could follow, it would probably look something like this.

Already, I am hearing more whispers about law firms partnering with private equity or other investors to afford similar build-outs.

Other firms have staked out different strategies.

We learned last week about Fried Frank using a long history of well-structured data to build client-specific tools that will generate more efficient work for its private funds clients. Hogan Lovells in 2023 launched its own legal technology subsidiary, Eltemate. Bloomberg News profiled the work Freshfields Labs does building products to solve big client problems.

It’s part of a broader evolution. As lawyers’ stature in corporate America has risen, the stakes of leading the largest law firms have grown. If law firms are dramatically altered by AI—for instance, if fewer lawyers are required—law firm leaders will be asked to explain that. They will be seen as stewards of the profession through a profound change. It is a real responsibility, and one that will open firm leaders to new types of critiques.

I have mentioned the LinkedIn sniping before, but it was out in full effect in the wake of the Kirkland news. (To the LinkedIn experts: A little humility would go a long way. We’re all new here.)

Such public criticism is a new phenomenon for law firms. Excluding the deals with the Trump administration, you don’t see people so vocal about other types of law firm business decisions. People aren’t lashing out at law firms for hiring the wrong lateral partner or opening an office in the wrong city.

I’ve been thinking about why.

Maybe the Trump deals changed the dynamic. But I doubt it. The more likely explanation is it would just sound crazy to openly chastise a law firm for whom they had hired. It’s just not polite. It’s too personal.

But that is arguably the most public major decision law firm leaders are making: Who to hire, where, and when.

Big Law has been predominately a talent business. It still is. But as technology disrupts that business, law firm leaders may long for the days when they answered simpler questions.

Worth Your Time

On Weil: I wrote this week on how Weil Gotshal fell behind its New York peers and what it’s doing to catch up.

On White & Case: White & Case is bringing on five new partners as the firm looks to execute its ambitious growth strategy, Meghan Tribe reports. The hires include Anirudh Bansal, former chair of Cahill Gordon & Reindel’s white collar defense and investigations group, and Dario De Martino, former co-chair of A&O Shearman’s global fintech and blockchain group.

On Insider Trading: A former M&A lawyer at top firms pleaded not guilty to charges that he led a massive insider trading ring that made tens of millions of dollars in illegal profits. Meanwhile, a trio of my colleagues report that the schemers’ use of confidential client data for alleged insider trading shows how Big Law document management systems can be a vulnerability for those intent on exploiting them.

That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.