A&O Shearman plans $1.1bn investment in AI over five years

In short: A&O Shearman says it will invest $1.1bn in artificial intelligence over five years and will require each practice area to spend at least 3% of billable time building AI tools.

What happened

A&O Shearman, a large international law firm, told the Financial Times it has agreed a $1.1bn investment plan focused on AI, which is software that can help with tasks like drafting text and finding patterns in documents.

The firm said most of this investment will come from how lawyers spend their time. Each practice area, like banking, mergers, or disputes, must put at least 3% of its billable hours into creating AI tools for its work. Leaders can meet the target by assigning a few people full time or spreading the work across many lawyers, and the firm will track the hours.

David Wakeling, the firm’s global head of AI, said the goal is to redesign legal services, not just tell people to use AI more often. A&O Shearman has also added AI usage to performance and bonus measures for associates and partners.

The firm has been using legal AI tools for several years. It was the first customer of Harvey, a legal AI startup, in 2022. It also worked with Harvey and Microsoft to build ContractMatrix, a tool for drafting and negotiating contracts, and said this product brings in “tens of millions of US dollars” in revenue.

Why it matters

Lawyers are often paid by the hour. If AI helps them do some work faster, clients may push for lower bills or fixed prices instead. A&O Shearman says its fixed fee income has risen 15% in the last two years, partly due to AI, which hints at how legal pricing could change.

Source: Financial Times