Why Big Firms Never Crack This
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A couple of weeks ago I spent an evening talking through where the legal profession is heading. With Claude, as it happens, which felt fitting given the topic.
I went in thinking about AI. I came out thinking about something much older: where the value in a law firm actually sits, and who owns it.
The expertise part gets bigger
Here’s where I started. As AI gets better, I think the expertise part becomes greater, not smaller.
AI is already handling the generic work. The research, the first draft, the standard clauses. Once every firm’s AI can do that equally well, it stops being a reason a client picks you. What’s left is the stuff the AI can’t get on its own. Knowing which problem is actually worth solving. Knowing what “good” looks like in your area of law. Knowing where the real-world risk sits on this particular deal.
The way I think about it, the lawyer becomes the architect and the council building inspector rolled into one. The AI lays the bricks. The lawyer designs the house and signs off that it won’t fall down.
None of that gets sold as AI, by the way. Every business needs an accountant, but nobody says “I need someone to use Xero.” They hire someone to get them a result. Your clients are the same. They’re buying the outcome and your judgement, not the tool.
Where the value actually sits
That leads to the bit I always think about.
In most firms I see, the most valuable asset isn’t on the balance sheet. It’s the principal’s judgement. The questions you ask on the first call. The clause you always check twice. The instinct that a matter is going to go sideways before anyone else has noticed.
And at the moment, all of it is in one person’s head.
It goes home at 6pm. It goes on holiday when you do. And it leaves for good when you retire or sell. A buyer can’t buy what’s in your head, so judgement that only lives there is worth very little at the point you most need it to be worth something.
So I think the real opportunity for an owner-led firm is to turn the principal’s judgement into operating infrastructure. Workflows, checklists, decision rules, and the instructions the AI works from, all built around how you actually think. Something the firm owns, that keeps working whether or not you’re in the room.
Why it’s harder than it sounds
The hard part is that deep expertise is mostly tacit. You know something is wrong with a deal, but if someone asks you for the rule, you can’t quite say it. You just know.
So writing it down isn’t a weekend job. It means walking through real matters and asking “why did you do that?” until the reasoning comes out. Most attempts capture the easy, stated stuff and miss the part that’s actually valuable. The precedent bank gets updated. The thinking behind it doesn’t.
Why big firms haven’t done it
If this is so valuable, it’s fair to wonder why large firms haven’t cracked it. They’ve been spending on knowledge management for decades.
I don’t think it’s a technology problem. I think it’s an incentive problem.
In a multi-partner practice, the value at the moment belongs in people’s heads, and they can control that. A partner’s bargaining power is precisely the knowledge nobody else has. As soon as you get what’s in their head into a system that someone else owns, you’ve taken away a lot of their value. So they don’t, and you can’t really blame them.
A sole or founding principal doesn’t have that problem. You own the firm and you own the judgement. Putting one into the other doesn’t cost you anything. It makes the firm worth more and less dependent on you at the same time.
The firms that move first
Now picture a firm in New Zealand that has taken all the subject matter knowledge out of a senior principal’s head and built it into how the firm works. It can now deliver expert-level work at a fraction of the old cost structure, and do it at volume. That firm is going to be very hard to compete with in that niche.
But law splits by jurisdiction and practice area. The firm that owns NZ property law doesn’t own employment, or estates, or Australian property. So it plays out niche by niche, and in most niches nobody has done it yet.
That’s why I think it favours owner-led firms. You’re the one who holds the judgement, and you’re the one who can decide to build it into the firm.
Where to start
Pick one matter type you do often and know cold. Walk through the last few files and write down every decision you made and why. That becomes the checklist and the decision rules. Then hand the next matter to someone else, with the AI doing the heavy lifting underneath, and you step into the inspector role instead of doing the work.
Do one matter type properly before you go near the second.
If you’ve found a good way to get what’s in your head written down so someone else can use it, I’d love to hear how you did it. Email me at [email protected] and tell me. With your permission, I’ll share the best ones in a future email, without names.
More next Tuesday,
Gordon