AI and Law Firms: Asset or Risk for Firm Stability

Leaders from major firms describe a double-edged technology. AI can limit losses when a partner leaves, but it could also help firms reduce their reliance on parts of Big Law's infrastructure. The announced dissolution of Weil Gotshal brings these questions to the forefront, without AI being held responsible.

AI Can Reduce Mutual Dependence, According to Cleary Gottlieb

Michael Gerstenzang, a senior partner at Cleary Gottlieb, believes that artificial intelligence could both make firms less dependent on their lawyers and allow those lawyers to more easily break away from their structure. He points out that an M&A partner, even if they bring in the biggest contracts, relies on tax, antitrust, and labor law specialists to successfully execute deals, calling it a "team sport." A major advantage of large firms is their ability to bring together all these areas of expertise, but Gerstenzang doubts that this advantage will persist in the future. He envisions an M&A partner using AI to perform some of the specialized tasks that were previously assigned to colleagues, which would make the infrastructure of a large firm less essential.

Capturing Expertise: A Buffer... and Lines to Rewrite

Avi Gesser, a partner at Debevoise & Plimpton and head of the AI practice, believes that technology can act as a tourniquet: it doesn't necessarily retain a lawyer, but it can limit the resources lost when a departure occurs. Debevoise is developing tools to capture the expertise of its litigators to turn it into an asset for the firm. However, Gesser emphasizes that partners are not always rewarded for the time spent feeding these systems, and compensation policies will need to evolve. Oz Benamram, the AI director at Pillsbury, believes that partner agreements may also need to be renegotiated: departing partners might want to take the manuals derived from their knowledge, and clients might claim ownership of them. Eric Greenberg questions the impact of these systems on client loyalty, while Sharon Crane from the Practising Law Institute doubts that a lawyer would willingly give up what makes them valuable.

Profitable Structures but Sensitive to Departures

Large firms are described as extremely profitable and battle-hardened, having weathered wars, recessions, and technological upheavals. However, they remain vulnerable: a few departures can trigger a chain reaction within weeks or months that threatens the entire firm. Eric Greenberg, general counsel of Cox Media Group, believes that the booming lateral market exacerbates this fragility. David Wang, the innovation director at Cooley, sees Weil's situation as a reminder that, despite discussions about technology, Big Law remains a relationship business. Star partners wield disproportionate influence due to the clients they attract and retain, so their departure exposes the firm to revenue loss and years of accumulated knowledge on shared cases.

Weil Gotshal: Announced Dissolution and Nuanced Responsibilities

Weil Gotshal, a 95-year-old firm known for handling some of the largest bankruptcies in the U.S., has announced plans for dissolution following an exodus of top partners. This news, described as the "elephant" with a price tag of $2.1 billion, reignites scrutiny of the structural vulnerabilities of large firms. However, participants assert that AI did not cause Weil's downfall. Instead, this situation raises a broader question: does AI exacerbate the weaknesses of firms, or can it help make them less fragile, as the year is marked by both the rise of AI, intensified lateral hiring, and a redefinition of client relationships?