A&O Shearman, a prominent player in the legal industry, has taken a significant step forward by developing an innovative artificial intelligence tool aimed at enhancing the productivity of more senior lawyers. This initiative reflects the firm’s strategic focus on navigating the evolving landscape of legal services, characterized by the increasing incorporation of technology and AI to streamline operations and potentially boost revenue.

The newly developed tool, the result of a collaboration between A&O Shearman and AI start-up Harvey, specifically targets time-consuming, low-billing tasks that often require the expertise of senior associates or partners. These tasks are prevalent in complex fields like antitrust law and fund formation, where meticulous oversight is essential to ensure compliance and accuracy.

At the heart of the tool is a sophisticated antitrust model that A&O Shearman plans to utilize internally and offer to other law firms for a fee. This model is designed to analyze a company's financial data in order to determine which of the over 130 jurisdictions may necessitate regulatory filings for mergers. Moreover, it identifies any gaps in the required data and generates tailored information requests for the involved parties, significantly reducing the time traditionally spent on these tasks, which can consume hours of legal expertise.

The introduction of this AI tool comes at a time when law firms face pressure to maintain competitive pricing while delivering high-quality legal services. A&O Shearman anticipates that leveraging this technology will enhance its profit margins on such complex work, allowing the firm to remain competitive in a challenging environment. The firm emphasized that the new AI capability would not result in job losses; instead, it would enable senior lawyers to redirect their efforts toward more strategic responsibilities.

David Wakeling, the global head of AI advisory and the markets innovation group at A&O Shearman, shared insights with the Financial Times, stating, “This technology is targeting a more sophisticated type of legal work that requires the time and attention of senior lawyers.” He expressed confidence in the transformative potential of AI for the firm, highlighting that it could open new revenue streams as the industry adapts to these advancements.

While many top law firms have begun integrating generative AI into their workflows to enhance efficiency, they have struggled to employ it for more intricate tasks that require nuanced legal analysis. AI language models, although adept at generating text, have historically been limited in their ability to perform complex reasoning akin to that of seasoned legal professionals.

Winston Weinberg, the co-founder and CEO of Harvey, elaborated on the technology, noting that the latest generation of OpenAI’s reasoning models enables the AI to answer questions by logically analyzing and breaking down information. This model was meticulously trained by senior lawyers at A&O Shearman to replicate their problem-solving techniques. Following this training, engineers directed the AI to mirror these processes, with lawyers evaluating the AI's outputs to ensure their reliability.

Weinberg commented, “The training is teaching [the AI model] how to think and how to reason” like a partner, underscoring the collaborative effort between technology and traditional legal wisdom.

Despite the advancements, the legal industry has faced challenges in the rapid adoption of AI due to concerns surrounding data privacy and client confidentiality. This month, UK firm Shoosmiths announced an initiative linking a firm-wide bonus to AI usage, aiming to incentivize staff to engage with technology more actively. The firm has set a target of reaching 1 million Microsoft Copilot prompts, with a shared £1 million payout for staff if they achieve this goal.

A&O Shearman’s AI endeavors are not new; in 2023, the firm launched ContractMatrix, a contract negotiation tool that has been well-received and is already in use by over 40 large organizations, including notable names like investment group Prosus, which owns JustEat, Japanese energy firm Jera, and the Dutch wind turbine manufacturer Sif-group. The firm has set an ambitious target to attract hundreds of subscribers to ContractMatrix by the end of 2024.

The new AI tool, currently in development, is expected to be available for purchase later this year and will focus on four key areas: antitrust, cybersecurity, loan review, and fund formation. A&O Shearman has a history of collaboration with Harvey, having been the first law firm to partner with the startup when it was established three years ago, and Harvey has since become a leading legal tech provider, serving around 250 law firms worldwide.