This past week, law firm leaders and legal-tech builders gathered at a schmoozy, invite-only retreat in Austin to discuss the future of the legal profession.
The key debate was not simply whether lawyers should use AI, but how to buy it, and who pays.
Run by the investment firm The Legal Tech Fund, TLTF Summit is a three-day event and the industry’s spin on the Sun Valley Conference. This year, panels considered staffing models, non-lawyer ownership, “innovation theater,” and unsanctioned tool use, or “shadow IT.”
I attended the summit and spoke with lawyers and legal ethicists about how tech is shaping the industry.
Law firms are notorious tech laggards.
Their structure, one lawyer and legal ethicist said onstage, fights investment for the future. Unlike corporations, she said, most law firms are partnerships that distribute profits each year instead of retaining earnings. That leaves little cash for technology bets that may take years to pay off.
The billable-hour model also blunts incentives.
Software that reduces hours can cut revenue unless the firm moves to fixed fees or share-of-savings deals. Add strict confidentiality rules, client security audits, and a procurement process that’s fragmented across a firm’s practices, and the path to buying new tools is slow by design.
When generative AI first hit law firms, many clients were also wary.
An employment lawyer said that certain clients would tell her firm not to use the technology on their matters.
But soon, those same clients were demanding adoption, the lawyer added. They asked what tools the firm used, how lawyers were trained, and where the savings showed up.
As one retired firm chair put it: In two years, “thou shalt not” became “thou must.”
That shift has created real urgency, lawyers said.
“Law firms are horrible at treading water,” the employment lawyer said onstage. “They either swim forward or they sink.”
At the summit, panelists and attendees said firms were now snapping up software licenses, standing up task forces, and coaching partners on AI talking points for clients.
The question of who foots the bill for all this drew a particularly spicy debate. Some lawyers argued for passing costs through to clients. Others said firms should eat that spend.
Another option that kept popping up was outside capital.
In most states, nonlawyers can’t own law firms. But a workaround designed to help lawyers raise hard cash has recently been making headlines: the MSO, or managed services organization.
Under this dual-entity model, firms keep their partnership structure, and investors own a separate second entity that acts as a vendor to the law firm — essentially the back office — taking care of all non-legal tasks.
Private equity has been actively scouting potential targets. One immigration-lawyer attendee said he’s already fielded two inbound private-equity feelers this year.
However they fund it, the new tech paradigm is remaking the law firm pyramid.
One firm chair said onstage that his office had stopped hiring junior lawyers, largely replacing them with AI.
Another predicted a “law firm diamond” with a slim layer of partners and juniors and a bulge of experienced midlevels doing most of the work. A separate panel floated a rectangular model — one associate per partner.
These discussions kept circling back to one question, however: Where will those midlevel lawyers come from if hiring at the entry level slows down?
At least one executive at a major law firm said its associate class was growing, not shrinking, as it responds to increased client demand.
Eventually, the debate narrowed to a simpler question about the work itself.
In a roundtable discussion, a law school professor asked the room: “What will remain uniquely human in the practice of law?”
Responses came fast. “Happy hour.” “Juries.” “Judgement.” “Nothing.”
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