John Fuggles
It is often quoted that the two industries most likely to be impacted by Artificial Intelligence is journalism and the legal sector. Perhaps the least said about the first of these the better! But what is the impact to law firms and how do we maximise the opportunity, rather than see it as a threat?
First thoughts are how AI can help draft contracts, record and transcribe meetings, produce briefing papers and notes, run credit risk analysis, or simply just file documents better, or retrieve information more easily. Writing closing arguments may be one input less so than the final output. Whatever the views on AI most of this applies not just to law firms but to any business in almost any industry.
At VantagePoint[1] I use an AI note-take for my meetings. Not only does it transcribe a recording, but it produces concise notes, and event extracts a list of actions. All presented in a casual tone (some tuning required by me) and sends a daily update of undone actions – I could choose less often if I wish.
Teams within UK law firms should be undertaking their own revolution. AI should transform how firms manage their money, price their services, and run their day-to-day operations with speed, accuracy, and insight. Done at a level that would require a lot of human effort and would still likely fall short in terms of valuable insight and detailed analysis. AI needs to transform a law firm from the inside as well as making it a billable item to the outside.
Legal tech adoption in the UK has surged more recently, supported by initiatives like LawTechUK[2]. AI is being used to automate much, and while fee-earners and client-facing teams are reaping the initial benefits of increased productivity and accuracy, the finance and operations departments are undergoing a quieter transformation that too is changing how law firms think and work.
Why AI Matters Beyond the client
The finance department has traditionally been viewed as a cost centre, focused on bookkeeping, billing, payroll, and ensuring compliance with SRA (Solicitors Regulation Authority) and HMRC standards. However, with the rise of AI, the finance function has the opportunity to evolve into a strategic hub that informs decision-making, drives profitability, and manages risk.
In short, the finance team should not just track performance, they should be predicting it!
Smarter Billing and Timekeeping
What is, perhaps, one of the biggest discussion points in law firms? Time recording and billing.
Lawyers, typically, don’t like the process and time-consuming nature of logging hours. Clients very often don’t like receiving invoices that are numeric in input not qualitative, or results/output based. Very few industries today work on purely hours-based billing. My local plumber and electrician aside, only law firms and management consultants default to an hourly/daily rate. Even here consulting forms are weighting some of the services to results and performance based.
Time-capture tools now automatically track activity across emails, documents, and calls, creating accurate logs without the manual input, and reduce non-billable time. Some tools even flag when billing doesn’t match client agreements, ensuring compliance with fixed-fee or alternative pricing models.
This may deliver tangible benefits (see list below), but it does not change the process or the notion that hours not performance and results are the Key Performance Indicator (KPI). AI-driven billing platforms can flag inconsistencies, ensure compliance with client-specific billing arrangements, and automatically apply correct rates, caps, or alternative fee arrangements (AFAs). This reduces the risk of client disputes and late payments.
All of this is only scraping the surface of what can be achieved.
Real-Time Financial Forecasting
AI takes forecasting to the next level. Instead of waiting for month-end reports, finance teams can get real-time insights into:
- Predict cash flow with higher accuracy
- Forecast lock-up and its impact to the business
- Model the financial impact of different pricing or staffing scenarios
- Detect anomalies or fraud using pattern recognition
- Provide alternative pricing models to clients wanting performance/results-based
- Provide predictive insights to practice leaders or the executive team
- Have a total view of all costs and the cost-to-serve each client
- What-if scenario planning, such as losing (or winning) a new client
- What-if scenario planning for changes in market conditions
- What is the walk-away threshold for existing clients?
Automating the Mundane
AI is great at repetitive, rules-based tasks. That makes it perfect for things like:
- Transaction matching of invoices and payments
- Chasing overdue invoice
- Demand forecasting and resource allocation
- Automating expenses and approvals
- Consolidation of Accounts
- Lock-up forecasting
- Scenario-based planning: multiple scenarios run in parallel and adjusted daily
- Onboarding clients and running conflict checks
- Run multiple pricing models for each client to determine which is best
- Detecting suspicious behaviour in payments
- AML checks
One of the most valuable uses of AI in operations is matter pricing. AI models can analyse data from previous similar work to recommend fee structures and predict profitability. This ensures law firms can offer competitive pricing while maintaining healthy margins.
These systems also empower Business Development teams to win better business more effectively and provide clients with transparent, data-backed proposals.
Barriers to Adoption
The first issue with how most forms look at AI is they are blinkered into an ROI assessment. Accepted there does need to be financial gain but very often the benefits are wider that just a financial gain.
In a recent article by Diego Socolinsky – Leader at the Generative AI Center for AWS, he identified three key values that AI brings to any organisation[3]:
- Financial outcomes: Direct, quantifiable results like cost savings, revenue growth and efficiency gains that resonate with finance teams.
- Operational improvements: Enhanced efficiencies, faster time-to-market, improved decision accuracy and reduced risk exposure that transform day-to-day business operations.
- Strategic advantages: Long-term benefits such as competitive differentiation, innovation acceleration, and organizational capability building that position the company for future success.
For the finance function within a law firm, let’s think just finance for a moment.
In a Raconteur[4] article last year it was recognised that finance departments are facing a challenging time. Understanding the time it takes to qualify for such roles means the problem will not be solved quickly: “Almost three quarters (71%) of financial professionals in the UK are looking for a new job outside of the profession”
To counter this, all businesses need to ensure the finance function moves away from the mundanity and make the finance function a value-add part of the business. Directing strategy, being consulted on key decisions and to some extent influencing policy perhaps. Allowing the finance team to do more can only be achieved through adoption of technology. Not just AI but other technologies as well.
Despite clear benefits that technology can bring to the law firm, adoption in finance and operations is not without challenges:
- Resistance to Change: Teams are often used to established processes. Shifting to automation, AI, or analytics tools can feel threatening or unnecessary.
- Skills Gap: Staff may lack the technical skills required to leverage advanced tools
- Cultural Mindset: Law firms can be risk-averse and compliance-driven. This can make it difficult to adopt innovative, agile, or experimental approaches.
- Siloed Functions: Finance often operates separately from IT, operations, or sales. Poor collaboration between departments slows adoption.
- Data Quality Issues: Accurate data is key. Data silos and legacy systems make this complex. If master data governance is weak, this may impact the success of the project
- Cybersecurity & Compliance Risks: Law firm data is highly sensitive. Any perceived risk of breaches or regulatory non-compliance should be factored in at the start.
- Lack of Leadership Buy-In: Without executive sponsorship, technology and transformation projects will lack the attention required to be fully successful.
- Unclear Vision: If the organisation doesn’t articulate how technology will support broader finance objectives (e.g., faster close, predictive insights), adoption slows.
- Short-Term Focus: Finance functions often prioritise quarterly reporting deadlines over long-term transformation. These needs to be factored into the additional workload any transformation project will undertake.
Conclusion
Finance professionals in law firms are becoming data analysts and strategic advisors. Operations teams are moving from firefighting to forward planning. The best law firms are becoming faster, leaner, and more responsive to clients.
Law firms that leverage AI in their finance and operations are better equipped to:
- Offer flexible, data-informed pricing
- Operate with leaner overheads
- React faster to client needs and market shifts
- Make more informed strategic decisions
- Lead with insight
AI is reshaping finance and operations of law firms. From automating routine processes and improving billing accuracy to enabling real-time forecasting and intelligent resource allocation, the impact is profound and accelerating. While legal professionals often focus on AI’s effects on practice areas, its influence behind the scenes, in finance and operations, will ultimately prove just as transformative.
[1] https://www.vantagepoint.consulting/
[3] https://www.theguardian.com/business-briefs/ng-interactive/2025/aug/20/measuring-ai-true-business-value-beyond-roi-paradox
[4] https://www.raconteur.net/finance/finance-existential-talent-crisis#:~:text=While%20many%20industries%20are%20struggling,accountants%2C%20auditors%20and%20financial%20analysts.