How strongly and quickly should law firms invest in artificial intelligence and other next generation technologies? Heavily and now, say the technology providers; lightly and later say the principles of strategy.
In strategy, we think of firms’ offers to clients having two distinct elements: hygiene and differentiators. Hygiene are those elements that clients simply expect all firms to provide to the required level. Hence, these don’t distinguish one potential provider from another. The term comes from how diners view hygiene in a restaurant. In law today, the term encapsulates things like billing systems, knowledge of the law, and smart associates—they’re just table stakes.
Differentiators are, well, different. They are the elements of a firm’s offer that clients perceive as being different across law firms and where such differences are of value to a client so that they incline a client to choose a particular firm or pay a higher price. As an aside, lawyers sometimes forget about the “and” in the forgoing definition. Having a unique culture, a single-tier partnership, and offices around the globe are all ways in which a firm may be different from others but they’re not differentiators because they don’t typically resolve the client’s issue in a better way and thus are not perceived as of particular value. Differentiators also need to be sustainable. A differentiator that can be replicated by a rival tomorrow isn’t much of a differentiator.
From a strategy perspective, the question about AI investment centers on whether or not AI can create sustainable differentiation for a law firm. I don’t see how it can. The AI systems will be provided by third-party vendors selling to all firms. Anything special one law firm can offer clients today will be offered by all firms tomorrow. The window for being differentiated, if any, is short.
But what about ‘first-mover advantage’? Well, lawyers should understand that when strategists talk of first-mover advantage they’re typically being ironic (or worse). More specifically, in a context where the underlying technology is being provided by a third-party, open-to-all provider, there’s no such advantage to be had because being first doesn’t allow one to build up anything sustainable in the way of distinctiveness.
So, the approach for law firms should be to invest in AI at the same intensity and pace as they would invest in any other hygiene aspect of their offer. It’s not nil, and it’s not never, but there’s little to be gained from leading the pack. Rather, stay with the pack and invest as much, as quickly (or as little, as slowly) as everyone else.
Hugh A. Simons, Ph.D. is formerly a senior partner at The Boston Consulting Group and former chief operating officer at Ropes & Gray. He welcomes readers’ reactions at HASimons@Gmail.com.