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๐‘๐ž๐Ÿ๐ฅ๐ž๐œ๐ญ๐ข๐จ๐ง ๐จ๐ง ๐€๐ˆ'๐ฌ ๐ˆ๐ฆ๐ฉ๐š๐œ๐ญ ๐จ๐ง ๐‹๐š๐ฐ ๐…๐ข๐ซ๐ฆ๐ฌ ๐š๐ง๐ ๐‹๐ž๐ ๐š๐ฅ ๐ƒ๐ž๐ฉ๐š๐ซ๐ญ๐ฆ๐ž๐ง๐ญ๐ฌ

It's about ๐…๐ˆ๐—๐„๐ƒ ๐…๐„๐„ ๐‘๐„๐€๐ƒ๐ˆ๐๐„๐’๐’ (Festpreisfähigkeit)

๐Ž๐ฏ๐ž๐ซ๐ฏ๐ข๐ž๐ฐ:
Recent workshops with law firms (LF) and legal departments (LD) revealed interesting insights into AI's impact on the commercial relationships in the legal sector. The focus on AI has largely been on service delivery, use cases, risks, and opportunities. However, discussions on its impact on legal fees are just beginning.

๐ƒ๐ข๐ฏ๐ž๐ซ๐ ๐ž๐ง๐ญ ๐•๐ข๐ž๐ฐ๐ฌ ๐จ๐ง ๐€๐ˆ'๐ฌ ๐‚๐จ๐ฆ๐ฆ๐ž๐ซ๐œ๐ข๐š๐ฅ ๐ˆ๐ฆ๐ฉ๐š๐œ๐ญ:

โœ… ๐‹๐ž๐ ๐š๐ฅ ๐ƒ๐ž๐ฉ๐š๐ซ๐ญ๐ฆ๐ž๐ง๐ญ๐ฌ:
- Some anticipate significant reductions in external legal spend, with expectations for double-digit cost reductions in specific work types.
- Others prioritize quality and fair pricing, believing market dynamics will address cost concerns.

โœ… ๐‹๐š๐ฐ ๐…๐ข๐ซ๐ฆ๐ฌ:
- Some foresee a negative impact on profits.
- Others see AI as a vehicle to increase market share, revenue, and profits.

What they have in common? LF and LD familiar with AI and its practical applications are better informed and more optimistic.

๐Š๐ž๐ฒ ๐‹๐ž๐š๐ซ๐ง๐ข๐ง๐ ๐ฌ ๐Ÿ๐ซ๐จ๐ฆ ๐๐ฎ๐ฒ-๐’๐ข๐๐ž ๐š๐ง๐ ๐’๐ž๐ฅ๐ฅ-๐’๐ข๐๐ž:

๐ˆ๐ง๐ฏ๐ž๐ฌ๐ญ๐ฆ๐ž๐ง๐ญ: Both sides need to invest in AI, with law firms incorporating investments into their pricing.
๐„๐Ÿ๐Ÿ๐ข๐œ๐ข๐ž๐ง๐œ๐ฒ: AI will reduce billable hours on the sell-side but may not necessarily translate to client savings.
๐ˆ๐ง๐ฌ๐จ๐ฎ๐ซ๐œ๐ข๐ง๐ : Increased efficiency will lead to more insourcing by legal departments, reducing external spend and offering more engaging work.
๐Ž๐ฎ๐ญ๐ฉ๐ฎ๐ญ ๐ฏ๐ฌ. ๐ˆ๐ง๐ฉ๐ฎ๐ญ: AI-supported legal service delivery's output does not align with the traditional input-based model.
๐•๐š๐ฅ๐ฎ๐ž ๐Œ๐ž๐š๐ฌ๐ฎ๐ซ๐ž๐ฆ๐ž๐ง๐ญ: The output is either a work package or measured by value, raising complex questions about the ๐ฏ๐š๐ฅ๐ฎ๐ž of professional services.
๐‚๐จ๐ฆ๐ฆ๐ž๐ซ๐œ๐ข๐š๐ฅ ๐Œ๐จ๐๐ž๐ฅ๐ฌ: Law firms will need to shift from input-based to output-based commercial models.
๐’๐ก๐ข๐Ÿ๐ญ ๐ญ๐จ ๐…๐ข๐ฑ๐ž๐ ๐…๐ž๐ž๐ฌ: Like other professional services, the legal industry will move from time-and-materials to fixed fees, a development I observed in my previous career in IT and consulting. And no, the billable hour is not dead!

๐…๐…๐‘ involves:
๐’๐ญ๐š๐ญ๐ž๐ฆ๐ž๐ง๐ญ๐ฌ ๐จ๐Ÿ ๐–๐จ๐ซ๐ค: Legal departments must clearly define the scope of work.
๐’๐ญ๐š๐ง๐๐š๐ซ๐๐ข๐ณ๐š๐ญ๐ข๐จ๐ง ๐š๐ง๐ ๐€๐ฎ๐ญ๐จ๐ฆ๐š๐ญ๐ข๐จ๐ง: Maximizing efficiency through standard practices.
๐‘๐ž๐ฎ๐ฌ๐š๐›๐ข๐ฅ๐ข๐ญ๐ฒ: Utilizing project management, frameworks, and templates.
๐Ž๐ฎ๐ญ๐ฉ๐ฎ๐ญ-๐…๐จ๐œ๐ฎ๐ฌ๐ž๐ ๐Œ๐ข๐ง๐๐ฌ๐ž๐ญ: Shifting focus from input to output with appropriate KPIs.

๐€๐œ๐ญ๐ข๐จ๐ง ๐๐ฅ๐š๐ง: We have analyzed time sheets and developed a project structure plan for law firms and legal departments to tackle these challenges. For more information, please reach out.

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