The 31-page report released Thursday by Citi Global Wealth at Work and Hildebrandt Consulting LLC detailed changes in the law firm market for 2025 and offered predictions for next year based on survey data gathered by Citi and through conversations with law firms leaders. Sources include an annual survey interviewing 195 U.S. and U.K. firms, as well as a report on 55 large firms headquartered in the U.S., U.K., China, and India.
Regarding associates, the report found that 86% of large law firms plan to increase the size of their associate ranks through 2027, though only 35% plan to increase the size of their first-year associate classes.
"This gap suggests that firms will adjust their associate populations to a more senior demographic over the next two years, likely driven by the adoption of generative AI," the report said, noting that repetitive and low-value work will be handled by technology. It also predicted that the industry would lean toward fewer junior associates and more senior lawyers doing more strategic work.
In last year's report, most firms (91%) did not expect to make changes to their lawyer leverage models due to AI by 2026, and less than half (43%) believed the tech would have an effect within a decade. Lawyer leverage is the ratio of equity partners to all other lawyers in a firm.
This year, a quarter of law firms expect changes to come by 2027, along with 63% that expect lawyer leverages to change by 2035, according to Thursday's report. Similarly, the number of large firms that expect AI to affect their professional staffing models in the following two years doubled from last year's survey to 36%.
"While the rise of generative AI will likely result in firms adding certain roles, including data scientists [and] technologists, as well as an increased focus on strengthening the equity partnership, this is only part of the story. The real question is how firms will restructure to deliver more value with these new capabilities," David Maurer, executive director of Major Lindsey & Africa's partner practice group, told Law360 Pulse on Friday.
Maurer said firms will need to rethink what qualities they look for in recruiting, how they train new lawyers and how they develop seasoned partners.
Jared Coseglia, founder and chief executive of TruLegal, said Friday that firms are investing in data scientists and technologies, and said other roles that are becoming more prominent include product managers, pricing experts, project managers, AI governance practitioners and other legal operations professionals.
All large firms surveyed in the report said they expect to increase their investment in generative AI over the next two years. Additionally, 35% of firms expect to make changes to their billable hour models in the same period.
"In order to absorb this investment cost, we believe that firms will need scale. While some will achieve this growth organically, we believe that the need to fund Gen AI investments will place pressure on the expense base of law firms and drive further industry consolidation," the report said.
Coseglia noted that while firms may be broadly trying to stem the rise of top-line billings to corporate clients, they are already increasing hourly rates for any lawyer with AI expertise.
"The margins will increase dramatically for law firms as AI-savvy talent populates their ecosystem, whether through training or hiring externally," Coseglia said.
--Editing by Rich Mills.
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