A year ago, generative AI was being touted as the great disruptor for law firms. Goldman Sachs issued a report in March 2023 estimating that nearly half of current legal work could be handled by artificial intelligence, and some technologists were predicting chatbot-driven electronic lawyers would replace humans with JDs.

Cut to a year later, and living, breathing lawyers remain firmly in place. While generative AI continues to develop as a tool, law firms and corporate clients appear to be
proceeding with significant caution—especially in light of highly publicized errors and ethical issues involving lawyers who have used AI.

“Law firm leaders and technology experts in the legal space, like amped-up investors, are adjusting their near-term expectations,” Bloomberg Law wrote in August. “More are acknowledging that today’s AI tools are better at boosting back-office efficiency rather than redesigning how client work is handled. That takes the steam out of predicting a future without associates.”

Uncertainty Over an AI Approach

The Daily Business Review in Atlanta recently asked midsize law firm leaders about how they were deploying AI. The newspaper found that while many firms are testing AI products, they also remain uncertain about which approach to fully embrace. Many remain skeptical about the reliability and transparency of general AI tools like ChatGPT, which some see as quotation marks with unknown sources for information.

As a result, a few firms have developed their own proprietary AI systems, trained exclusively on their internal data, to ensure greater control and trustworthiness. “CIOs and COOs at law firms are trying to evaluate right now, ‘Do we use one of the platforms that have been developed for law firms or do we develop our own?’” one midsize partner told the newspaper.

The caution is well-founded. For this post, for example, I asked ChatGPT to provide an estimate of the current number of AI legal technology companies in the United States
along with the sources of its information.

The results were less than encouraging. First, ChatGPT neglected to conduct a web search for potential answers. After I prompted it to do so, it faked a result that cited an imaginary report from a marketing research company. Initially, the result looked legitimate. The marketing research company it cited is real. The problem was that the report ChatGPT cited did not exist. I was able to detect the problem only because I asked for a specific URL for the report. ChatGPT provided a broken link. After I pressed again for a specific citation, the chatbot apologized and said the report did not exist.

Having encountered this kind of hallucination before, I was prepared to push ChatGPT to verify its sources. One can easily imagine someone unfamiliar with the technology
accepting such a result—and being embarrassed when it turns out not to be true.

High Expectations Remain

Problems aside, expectations around the future of AI and professional services remain high. Earlier this year, Thomson Reuters asked more than 2,220 professionals across sectors like legal, tax, accounting, risk, fraud, and compliance, as well as corporate C-Suite executives about how artificial intelligence is expected to reshape the business landscape.

Some 77 percent of respondents said they believe AI will have a “high” or “transformational” impact on their work during the next five years—a 10 percent increase from 2023. On average, professionals surveyed predicted that within five years, 56 percent of their work will involve AI-powered technologies. And four-fifths of respondents said they believe new roles, such as AI specialists, will emerge, highlighting a shift rather than a reduction in required skills.

There are limits, however. Ninety-six percent of legal professionals said they believe that allowing AI to represent clients in court would be a step too far. Data security is also a critical issue, with nearly two-thirds of respondents citing it as vital for responsible AI use.

Thinking Strategically About AI

If anything, the survey results underscore the necessity for professionals and organizations to adapt to the rapidly evolving AI landscape. Those who embrace AI responsibly and strategically are likely to gain a competitive advantage. Those who resist will struggle to keep up.

As midsize law firms navigate the evolving generative AI landscape, here are four steps leaders can take to guide their strategies:

1. Evaluate AI Tools with Caution: Leaders should critically assess AI tools before implementation, particularly regarding reliability and transparency. Given the risks
of misinformation and ethical concerns, it’s crucial to thoroughly test AI platforms and understand their limitations. This will help avoid potentially embarrassing or harmful situations, like relying on inaccurate or fabricated information.

2. Consider Developing Proprietary AI Systems: For greater control and trustworthiness, firms might explore creating their own AI systems tailored to their specific needs. By training AI on internal, vetted data, firms can ensure that the tools they use align more closely with their standards and reduce reliance on opaque, third-party AI solutions.

3. Invest in AI Literacy and Expertise: To avoid pitfalls and maximize the benefits of AI, law firm leaders should prioritize educating their teams on AI technology. This includes understanding how AI works, its limitations, and how to verify its outputs. Additionally, hiring or developing AI specialists within the firm could help navigate the complex AI landscape more effectively.

4. Balance Innovation with Ethical Considerations: As firms integrate AI into their practices, they must ensure that their use of AI aligns with ethical standards, particularly around client representation and data security. Leaders should establish clear guidelines and policies for AI use, ensuring that it enhances rather than compromises the firm’s integrity and client trust.

The future of AI in the legal profession is both promising and uncertain. While the technology offers significant opportunities for increased efficiency and innovation, it also
comes with risks that require careful management. Midsize law firms that take a strategic, cautious approach—balancing the adoption of AI with a firm commitment to ethics and accuracy—will be better positioned to thrive in this rapidly changing environment. By staying informed and proactive, these firms can leverage AI to enhance their services while safeguarding the trust and integrity that are the foundation of their practice.

Do you have questions, feedback, or topics you would like The Edge to cover? Send a note to david@good2bsocial.com.