BT and More: Headcount Becomes Liability in Era of Generative AI

 Recently law firms Kirkland & Ellis added more than 300 lawyers and Paul Weiss lost nine litigation partners. 

But those additions and reductions in headcount may become an irrelevant metric in sizing up where a business is at. Actually, a growing manpower number could become a downright liability. More on point will be revenue, profits, productivity, geographical footprint, ranking in innovation and, for public companies, the stock price.

Without apology or sugarcoating Brit telecommunications player BT's CEO Allison Kirby discussed massive cuts in headcount by 2030. What's driving that is not only generative AI itself. But also as Kirby puts it: what the company can be learning from AI during the rest of the decade. The Reductions in Force could exceed 40,000. Kirby adds that such an estimate "does not reflect the full potential of AI."

Just look at how Big Law operates. The fewer the partners the higher the Profits Per Equity Partner, the greater the opportunity to only fill in slots with mega stars in their categories. 

Now look specifically at Paul Weiss and Kirkland & Ellis. The exits of litigation partners at Paul Weiss provide the wiggle room to focus more resources, including compensation, on the brandnames in transactional practices. Here the Pareto Rule applies: 80% of revenue comes from 20% of clients. The real money is in transactional. Like giant Kirkland & Ellis, Paul Weiss could come to provide litigation as a quality convenience service for its clients transacting deals. 

Meanwhile, the legal sector, like much of knowledge work, will need less grunt work by human junior lawyers. Already Gen AI can take over research, document review and simple contracts. That output only requires oversight by a limited number of experienced lawyers. In tech, a handful of human star coders supervise the AI ones. At McKinsey, creating slide decks and proposals is being done by AI. 

In my coaching I warn clients to retrieve their own data points about how Gen AI could impact their ability to earn a good living. Although more businesses such as BT are becoming transparent about the impact of that technology on jobs many more are not.

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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