Law Firms & Flat Fees: Model Makes No Sense for All Those Junior Associates

 With the billable hour, the more associates laboring on a litigation/transactional matter, the more the revenue for the law firm. 

Not so with flat fees. The model is different. The more associates who are looped in, the greater the possibility for reduced revenue per lawyer. That threatens the most important metric in large law firms: Profits Per Equity Partner.

The flat-fee model, documents Bloomberg Law, emerges as a result of what generative AI can already get done. That's the pattern of doing more with less.

At the low-end the more with less human input are the grunt tasks of research, document review and simple contracts. At the level of higher value tasks A&O Shearman's AI app, developed with Harvey, performs partner-type analysis in practices ranging from antitrust to cybersecurity. Cleary, which acquired an AI firm, now integrates AI into all operations. 

Junior lawyers could be on short time. Entry-level ones could encounter decreasing demand. 

It's now hardened into old news that chair of Paul Weiss Brad Karp projected that AI could be eliminating some junior associate jobs. So much of the traditional work product could evolve into a commodity. Meanwhile his firm is beefing up the hiring of technologists and data scientists. They, Karp notes, would be supervised by lawyers. 

However, given the impact of AI on business results, think about this: What professional functions in law firms will have the power? It could shift to those with advanced AI expertise. If partners intend to be respected they'll have to add on that knowledge base and directly use AI tools for both strategies and implementation. 

In my coaching I advise clients to be pro-active in mastering AI products. That positions them for portable marketability. 

Rattled by the uncertainty? Faith-based Career Coaching. Special expertise with transitions, reskilling and aging. Psychic/tarot readings, upon request. Complimentary consultation with Jane Genova (Text 203-468-8579, janegenova374@gmail.com). Yes, test out the chemistry.


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