The inquiry is no longer “Are you using AI?” but “How are you using it?”

It was 9:30 AM when the email landed. A hostile takeover proposal - 60 pages long, aggressive and unexpected. The chairman of the listed company, a seasoned executive with deep expertise in AI, barely flinched. He didn't reach for his phone to call his lawyers.

Instead, he went for Anthropic's GenAI tool - Claude.

He wrote precise prompts with the proposal document fed into the AI: "Summarise the key points." "Tell me what to do next." Within seconds, Claude had dissected the takeover bid, drafted a preliminary ASX announcement and advised the chairman to set up an independent board committee. When the bidder issued a release revealing it had increased its shareholding to more than 53%, Claude flagged the implications of the change-of-control clauses - something the chairman hadn't considered. The chairman has a custom version of Claude for every board he sits on; he calls it his 'executive edge.'

Stories like this one (originally featured in the AFR) are everywhere. Even the most established legal firms face a new reality: AI is changing the game.

The new 'non-negotiable'

As recently as six months ago, lawyers would have answered guardedly, "Did you use generative AI?" unsure about the advantages of either confirmation or denial. Fast-forward to today, however, and AI is no longer just an advantage—it's an expectation. Moreover, the question no longer asks, "Are you using AI?" but "How are you using it?"

Clients, especially those in the big tech and corporate sectors, have come to expect AI-driven efficiencies. Law firms that can't demonstrate an AI strategy won't just struggle - they'll lose work. AI is no longer a 'nice-to-have'; it's a fundamental requirement with clients increasingly asking firms how they're integrating AI, and if the answers aren't compelling, they'll take their business elsewhere. 

From 'hours worked' to 'impact created'

The knock-on effect is a shift in what clients are willing to pay for. AI can now recall legal precedents, draft documents, and structure arguments in seconds, so why should clients pay by the hour for tasks that technology can complete near-instantly? (Take contract review, for example. What once took a team of junior lawyers days to comb through can now be analysed by AI in minutes, and key risks and anomalies can be flagged with remarkable accuracy.)

Ironically, returning to a time-based billing model is now under discussion. In contrast, clients have been pushing firms towards value-based billing and alternative fee arrangements for many years, at least partly due to the perceived inefficiencies of the billable hour model. With generative AI now widely available, returning to billable hours (at least for now)could mean clients can see when and how AI is being used. The logic is that they should see reduced hours and fees if it drives efficiencies. That reduction wouldn't necessarily be apparent in typical alternative fee arrangements.

Critically, the shift rewards firms for efficiency, strategic advice, and results and shifts the focus to the impact created. Instead of fearing AI's impact on revenue, forward-thinking firms are integrating it transparently into their delivery, provision, and billing. Instead of fearing AI's impact on revenue, they're using it to redefine their value proposition.

The opportunity for tech-savvy legal firms

Given the opportunity to prove their expertise is worth more than just hours on a timesheet, now is the time for legal teams to lean into what makes lawyers irreplaceable. Clients no longer need lawyers to find answers simply; AI can do that in seconds. They need them to add the type of value which technology can't.

Tapping into our humanity

Clients will expect lawyers to spend less time doing and more time thinking. If AI can generate answers instantly, it needs insight, judgment, and experience from legal professionals. The real value lies in knowing how to apply AI's output strategically. AI is an enabler that augments legal teams. Clients may appreciate AI-driven efficiencies but still expect strategic oversight from experienced professionals.

Trust and transparency in AI are non-negotiable

Clients are wary of 'black box' AI. They want clear explanations of how AI is applied, assurance around compliance and a robust approach to risk management. This is about more than just capability - it's about safely and ethically embedding AI into legal processes to maximise regulatory compliance. This capability lies at the heart of our Risk Advisory and Ashurst Advance teams, which advise a growing number of clients on how to safely and effectively apply emerging capabilities to achieve strategic advantage without the associated risk of compromising compliance. 

Measurable value 

Clients don't want AI for AI's sake; they want solutions that improve speed, cost-effectiveness, and accuracy, delivering measurable impact rather than just tech sophistication. For example, an AI-powered contract review tool should not just cut document analysis time but also maintain accuracy and data privacy. Speed should never compromise the core tenets of the legal profession.

In terms of their operation, legal firms need to ensure their technology adoption aligns with and supports their overarching strategy or even opens up a brand new strategy proposition. This link between technology adoption and strategy is a critical driver of return on investment.

Personalisation matters 

Alongside value lies the need for personalisation. Simply put - one-size-fits-all AI won't cut it. Clients expect AI-enabled legal solutions to be tailored to their specific challenges, industry, and risk profile rather than relying on generic automation that overlooks nuance.

This means law firms must go beyond implementing AI; they must integrate it to align with each client's business objectives, regulatory environment, and strategic priorities. The firms that succeed will use AI as a tool for precision, not just efficiency, delivering insights and solutions that feel as considered and bespoke as traditional legal advice.

Crafting and calibrating an augmented expertise

Lastly, there is a significant risk to their quality of work if lawyers do not have the right skills to work with AI to deliver quality and efficiency.  Whilst this can be left to experimental learning or even trial and error, lawyers who are upskilled in making the most of the power of AI will produce more valuable work more quickly.  This is a double-edged sword – those who don't will be left behind quickly and may never catch up.

AI is no longer an advantage - it's the new baseline, and firms that embrace it strategically, integrate it transparently, and use it to elevate human expertise will be the ones that thrive in the future. Those that don't won't just fall behind - they'll be left out of the conversation entirely.