AI adoption gap widens between large & small UK law firms

A new Thomson Reuters report reveals a significant disparity in the adoption of artificial intelligence (AI) technologies among larger and smaller UK law firms.

According to the findings, 75% of the UK's top 20 law firms are promoting their use of AI to clients, whereas only 45% of firms ranked 21-40 are doing the same. This indicates a widening gap in technology adoption between larger and smaller law firms in the UK.

The 2024 Future of Professionals report by Thomson Reuters also highlights concerns among legal professionals. "29% of UK lawyers fear their firm is moving far too slowly to adopt AI – and that they now risk losing out to competitors who are adopting the revolutionary technology," the report states.

John Shatwell, Head of Legal Professionals, Europe at Thomson Reuters, emphasised the commitment of larger firms to resources. "How larger law firms are investing greater resources into AI than smaller firms. Will this gap become increasingly hard for smaller firms to close?" he questioned, underscoring the challenges faced by smaller firms in catching up with their larger counterparts.

Client preferences are reportedly also being influenced by AI capabilities. Shatwell noted, "Are clients increasingly discriminating between law firms based on what AI capabilities they promote—further compounding the 'AI gap'?" This suggests potential implications for client-firm relationships based on AI usage.

The report further points out that a substantial number of the largest law firms are both adopting third-party AI solutions and developing their own AI tools. "How the largest UK law firms are not only adopting third-party AI solutions (65%) – but also increasingly developing their own AI tools in-house (35%)," Shatwell remarked.

The report also mentions the creation of specialist roles to manage AI technologies. Shatwell stated, "How the UK's largest law firms are creating many new AI-specialist roles to oversee development and use of these new tools – 35% of top 20 firms now have a Head of AI, compared to just 20% for the next 20 firms." This points to a trend of law firms prioritising AI leadership positions.

Furthermore, the distribution of dedicated teams focusing on digital transformation is more prevalent among top-tier firms. "How UK law firms are engaged in an 'AI arms race' by resourcing dedicated internal facing teams – 60% of top 20 UK law firms have digital transformation teams focused on using AI to upgrade their offering to clients (compared to just 30% UK law firms ranked 21-40)," Shatwell observed.

The findings underscore the competitive edge that larger law firms are gaining through enhanced AI capabilities and strategic resource allocation, highlighting concerns about the technological gap between law firms of different sizes.