Are We Approaching Peak Big Law? – Artificial Lawyer

As AI tools and hybrid law firms promise to perform complex legal work at a fraction of the usual cost, one question resounds: are we approaching peak Big Law, i.e. has the half-century old model finally entered its final days?

What is Big Law?

First, what is Big Law? Simply put, it’s not just that large firms do complex commercial legal work, it’s a business model based on:

High leverage (i.e. a relatively small group of equity partner owners, and everyone else – the other fee earners), which has steadily grown since the 1980s when the model really came of age.

Time-based billing – operating on the idea that the best way to measure value in legal work is to count the time it takes an individual to do that task. This is then – sometimes entirely arbitrarily – turned into a ladder of charge out rates, with older lawyers charging more up to a plateau level.

Up or out model – where around 80%, or more in some firms, of all junior lawyers will leave the firm because the pyramid model cannot function otherwise, which in turn underlines the reliance on high volumes of ‘legal labour’ at the base of the model to make Big Law ‘work’ in both senses of the word.

What’s Happening?

Covenant – (see AL article + interview) – promises to do tranches of legal work for private investors at huge reductions in cost, e.g. 80% less, using AI and experienced lawyers. And so do others using this model – and no doubt more will arrive.

Legal AI tools already in the market, if with appropriate supervision, can do work for a fraction of the time that was needed before. That in turn totally changes the cost / sale price model as well.  

Then we have a rise in more sophisticated ALSPs combining the use of AI, e.g. Eudia, which has bought Johnson Hana and started its own law firm in Arizona to serve large corporates.

And we also have the clients themselves realising that with AI tools there is a lot more work that they can do internally, if they wish to, especially if they can access their own data in a meaningful way.

Plus we are also seeing the steady increase in ‘distributed law firms’, which are platforms created out of many, many individuals who work on their own account, but are part of a network that connects them to the clients.

In short, alternatives to the status quo are coming from all angles now.

Enough To Change The World…?

The above looks like a lot, perhaps enough to change the course of legal market history, but here are some countervailing aspects to consider:

Clients still rely on the Big Law model just as it is. Many GCs like the billable hour system and do not mind paying huge amounts for work that could be done in other ways. A reason for this is that we assume clients want to save money on legal costs, but clients also respond to both strategic and socio-economic pecking order impacts, i.e. sometimes people buy the luxury services they’re expected to because of where they are in the socio-economic pyramid; and out-spending your opponent on very expensive legal services is viewed as a necessary cost of enforcing your business strategy in a competitive market. In short, the clients are not screaming for change, not yet.

Triage is hard to do. While it’s easy to decide to send life and death work to Big Law, the old habits of sending loads of other matters to be dealt with in the same way as has been done for decades, is also a hard habit to break. It’s also hard to unpack and pull apart sections of work and say: ‘A’ work goes to ABC Big Law firm in New York, ‘B’ work goes to a progressive ALSP, ‘C’ work goes to an AI hybrid law firm, and ‘D’ work we do internally with the new AI tools we have had built. It’s far easier just to send the whole thing to Big Law, pay loads, and be done with it – plus have the peace of mind that the firm has a great reputation so your position is safe as GC if it all goes wrong.  

While ‘progressive’ ALSPs and hybrid AI law firms are very innovative, they remain very small in terms of total market scale compared to Big Law’s size and reach. Big Law firms are often global, stacked with experts, and deeply embedded in the legal fabric of their markets. That is hard to dislodge and will take an impact many times larger than what we see today to really provide a realistic alternative at scale….and even then, the challengers may lack the hordes of niche experts that Big Law supports that clients need to rely upon. I.e. the alternatives may one day overturn the need for Big Law leverage, but they may struggle to replace the experts that fill the top ranks of such firms.

That inhouse teams are building out their own AI tools now, or relying on off-the-peg AI tools, but it’s still for lower risk matters, and so cannot really change the need for Big Law input on really key work. The instinct to externalise risk and send that risk to the best-placed brand to absorb it is very hard to change.

So, What Next?

To conclude, the Big Law status quo is strongly held and it’s maintained by both the buyers and sellers.

It’s also enmeshed into the legal fabric of many nations, from how law schools think and operate, to what courts expect from legal services providers. And, most importantly of all, for all its faults Big Law works and makes those who own such firms, (i.e. equity partners) tremendously wealthy.

Meanwhile the clients continue to rely on externalising risk by paying ‘luxury’ rates for well-known Big Law brands. So, on both sides the status quo is maintained, even if the business model is starting to fray around the edges and small cracks are appearing in the foundations of the high leverage pyramid.

Can it change for real…all the way through? I don’t think we can move away from the overall idea of Big Law. Large companies need legal experts, they need global coverage sometimes, they need a legal brand that can absorb the risk. That can’t ever really go away.

So, what can change? As explored before in Artificial Lawyer, the economic model can change. The huge leverage doesn’t have to be that way, the reliance on time spent to make profits can change, the way clients think about what risk needs to be externalised and what can be triaged to go to ALSPs and hybrid law firms, or go to internal AI systems, can also change.

The deciding factor here is primarily one of scale. For now, the ‘alternative’ ways of working represent a small percentage of all commercial legal work that needs to be done. In the future that fraction will grow. AI tools will improve. Clients will evolve and new leadership will eventually take over. Expectations will change. More progressive ALSPs and hybrid law firms will come to market. And law firms eventually will start to evolve their business models as well….because they have to in order to stay competitive.

Will that mean ‘peak Big Law’? In terms of needing such firms, no, probably never. But, once sufficient alternatives have taken up place in the market, then the economic model and ways of working that have ruled for over half a century will come to an end. And Big Law will also then have to share the market with all of these new players, which will grow and grow in the years to come.

Richard Tromans, Founder, Artificial Lawyer, Sept 2025.

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