GenAI - a Darkening Mood?

Law firms are increasingly nervous about the impact of GenAI on their business models

One of the trends that stood out to me in PwC's 2025 UK Law Firm Survey is the shift in sentiment illustrated on p16

Now, the step change from net positive to net negative actually happened from 2023 to 2024, where 69% anticipated a positive impact on revenue and margins in 2023, that flipped to 60% anticipating a negative impact in 2024

There's a further darkening of the mood in 2025 (now 66% negative) but it's the nuance beneath that headline I wanted to highlight...

Top 10 firms have indicated the biggest shift - moving from 87% positive to 67% negative in the past 12 months. They have gone from being the most optimistic group in 2024 to the most pessimistic

Given that this group likely have the biggest budgets, and have been experimenting for the longest, this strikes me as a relatively well informed pessimism

The principle cause for this pessimism is an expectation that clients will have the same volume of work, but will expect prices to drop to reflect efficiency gains

Generally, Top 10 firms pay higher salaries than smaller firms. They also run a more senior and leaner leverage model, offset by higher chargeable hour expectations

(Safely) assuming pricing is rooted in the hourly rate - if firms are expecting reduced pricing then this potentially has quite an acute impact on the business model. It's difficult to lower salaries in response and based on current state of the technology I think most assume job losses (if they come) will be at the junior levels, where the Top 10 are relatively underweight

In this scenario - Value Based Pricing may provide some short term relief, but the main lever firms can pull is to win more work volumes from competitors. Expect Pricing and M&BD teams to be sharpening their pencils here

The second trend I note is a distinctive shift within the negative scenarios - from "same work volume, lower price" increasingly towards "less work volume"

This was a relatively niche view 12 months ago, but a few of us (notably Dom Conte and Alex Baker) have been flagging that if all law firms are doing is buying Harvey and Legora and calling it an AI strategy, so too are your clients and it's just not going to cut it

This is a key difference with earlier tech waves where vendors tended to focus on (e.g.) case management for firms and CLM for inhouse teams

Not only is this a failure to differentiate amongst law firms, it's increasingly a capability that clients have themselves

Top 11 - 25 teams seem to be alive to the issue, but I suspect we'll see more firms wake up to this over the next 12 months and respond by either emphasising the work AI can't touch (yet...) or by creating more productised services

The survey emphasises the need to think more broadly than matter level efficiency savings - be that pricing, marketing, service design or the underlying commercial model - and it looks like firms are waking up to that

The impact of GenAI on law firms - A darkening mood?