Whether we like it or not, AI is definitely here to stay.  So, taking a step further than my last blog about using AI in innovative ways in law schools, I discovered more to make the case for law schools to embrace training students in AI for the sake of making graduates more marketable.  Not just practice ready marketable but AI practice ready marketable.

This week I read that Ropes & Gray has adopted a policy that will allow associates to count up to 100 hours of AI experimentation toward their billable targets.  Yes, 100 hours.  If the target is 2000 billable hours, that means five percent is being lobbed off and ready for the dumpster.  A firm would not sacrifice profits so willingly if it did not consider AI proficiency extremely important.

So, query this.  If a firm is willing to basically reduce associate billables by 100 hours, do you think that same firm would be very interested in law school graduates who already had the skills and did not have to “experiment” with AI — whatever that means?  It seems to be a no-brainer.

And when the following recruiting season rolls around, do you think that same firm might include a question in its interview repertoire about proficiency with AI?  And do you think that same firm might prioritize candidates from law schools that included AI training in the curricula if it would increase firm profits and hold associates to the full measure of the target billables?  Another no-brainer.

Whatever the future is for AI at law firms, one thing we can assume is that there will be some future there.  Maybe AI will be a great fit at law firms or maybe it will be a mediocre investment. Whichever turns out to be the case, either law schools or law firms will need to train young lawyers on the use of AI because young lawyers are not likely to train themselves successfully.  When I think of “experimenting,” my mind wanders to all kinds of things that may or may not have any business in the business of law and likely are not even close to being successful or profitable.

Alas, it seems that the real question is who pays for training young lawyers to use AI?  Which leads us back to the profit pie.  My guess is that law firms will prefer AI practice ready lawyers trained by law schools and preserve the full measure of the target billables hanging over the heads of associates far and wide.  It just makes sense.

So, heads up to law schools.  AI training is headed in your direction.

One of the things that has surprised me in my research is the ways that AI is being used in law schools today to benefit instruction.  Imagine that.

I freely own up to my opinion that paying homage to traditional teaching methods in law schools has short-changed law students for generations by failing to make them practice ready upon graduation.  The tales of law schools committed to the Socratic Method, cold calling, and too little emphasis on clinical experiences are well-known, but the beat goes on — with law students paying more and getting less.

So I am not surprised when I hear that the use of AI in law school is frowned upon and could lead to disciplinary procedures or even expulsion.  However, my research shows that currently there are some really innovative things going on with AI at a few law schools, and it is very interesting stuff.

In an article by Stephen Embry, publisher of TechLaw Crossroads, the author describes the content of a recent RelFest conference that challenged norms about AI and it’s appropriateness in law school education.  The most innovative approaches came from Dan Linna, director of law and technology at Northwestern Pritzer School of Law and April Dawson, law professor and faculty director of the AI Initiative at Howard University.

Linna’s ideas are centered on the use of AI for effective trial skills training, including an AI oral  argument simulator.  This particularly appealed to me based on my experience teaching legal writing and moot court preparation at Georgetown Law.  The idea behind this innovation is to turn out law school graduates who are able to function at the level of third and fourth year associates from the get-go. If we believe that AI will take over many of the functions for entry-level associates at law firms, having new law school graduates with advanced practical skills has the potential for putting their talents to better use earlier rather than later.  This also appealed to me as a former litigation associate, frustrated in the trenches and wishing for more.

Professor Dawson embraces AI in a different way that challenges the very foundation of legal education.  For example, when she assigns a legal decision for reading in her Administrative Law class, she also requires students to use AI tools as companions when trying to decipher the history of the case and the findings of the court while they are reading the case, leading to greater understanding and less wasted time reading and rereading very complicated decisions.

Innovative?  Definitely yes.  Will it catch on throughout legal education?  Perhaps, but not likely very soon.  However, the conversation about bringing legal education into the 21st Century is encouraging and refreshing.

To learn more, check out Tech Law Crossroads.

No, I am going to talk about decency.

I am a Wisconsin girl, and I grew up in a small town in the northern part of the state.   So, when the Army-McCarthy hearings aired in the Spring of 1954, my parents were glued to the TV — my Mom to a small black and white model in the living room of our house, where she had set up the ironing board, and my Dad at his law office.  Joseph McCarthy was a senator from Wisconsin, and they did not want to miss a word — along with the more than 20 million viewers like them.  Dad was especially interested based on his experience practicing before Judge McCarthy in the Wisconsin Circuit Court in the years before McCarthy was elected to the US Senate.  Dad was not a fan.

Although I was too young to be aware of the content of the hearings, I did a special study of them in college.  So, on Tuesday morning when I heard Eric Schmitt, the junior Senator from Missouri, call Jack Smith “a dirtball,” I was immediately reminded of a salient moment in the McCarthy hearings that I believe many other Americans remember. And I so wished that one of the members of the Senate Judiciary Committee would have responded with words like this:  “Senator Schmitt, have you no decency?”

Those words and McCarthy’s performance during the hearings destroyed him.  The words were uttered by Army Special Counsel Joseph Welsh, who called out McCarthy for the indecent way that the senator had just publicly characterized a young lawyer on Welsh’s staff, endangering the young man’s reputation and future with no real evidence.  Based on this exchange, McCarthy’s public standing suffered beyond repair, and he was censured  by the US Senate in December of 1954.

“Have you no decency?” is what I wanted to hear on Tuesday morning.  Although there were other effective rebukes from members of the Judiciary Committee, a reference to Welsh’s words from the hearings that exposed McCarthy as a dangerous bully was what I was looking for.

Indecency.  It is so easy for some to demonstrate but so hard for many to forget.

As it turns out, this week there is more to see.  Just days ago, the Governor of California signed a proposed law that came to his desk on the subject.  It seems that the legislature in CA has taken a dim view of the MSO arrangement when it comes to law firms, and so has the Governor.

The new CA law, which covers all contracts entered into on and after January 1, 2027, bars business entities from attempting “to influence the professional judgment of a licensed attorney or litigant regarding any substantive litigation decision.”  It also carries some hefty damages for violation and associated fees and costs, and it joins jurisdictions like Colorado and Illinois in passing such a law.  However, CA is a huge legal market and appears to be the big kahuna in the fight so far.

The salient issue appears to be the definitions of “legal control, and “litigation decisions,” and that could take a while to resolve.  A reasonable interpretation of the CA bill seems to be that PE must have hands off when it comes to determinations about what cases a firm takes, which clients it signs, and if and when and for how much it agrees to settle a case.  Those all look like money issues to little old me, and isn’t PE all about making money?  Isn’t that the motive for the pitch?

Law firm practitioners — especially those who are looking for quick influxes of money to improve bottom lines — should keep a close eye on this.  And there are a few of those firms — very prestigious firms, in fact — that are picking up the phone when PE calls.

There is sure to be more.  Stay tuned!

The law firm, Wood Smith Henning & Berman, has more than 500 lawyers with offices spread across 35 states and London, and its size and revenues position is very close to Biglaw. The firm has founders still active in the business, who are presumably ready to take the cash and retire, a fact that was cited by a merger advisor in the ATL article. That could sweeten the deal for them.

At this point, you are saying, “Wait a minute. There are ethical considerations that prevent this hook-up.” And you would be right. In almost all U.S. jurisdictions, it remains prohibited for non-lawyers, including private equity firms, to directly own law firms, and Rule 5.4 of the ABA Model Rules of Professional Conduct prohibits fee-sharing between lawyers and non-lawyers, creating more than just caveats for law firm participation in conventional acquisition models.

But the sales pitch for this deal is what is known as a management services organization, which allows a non-lawyer investor to own the billing and the software of a law firm at the same time that lawyers continue to control the “lawyering part” of the business. And some jurisdictions like DC, Arizona and Utah allow that arrangement under certain circumstances. On the other hand, the legislatures of California, Illinois and Colorado recently advanced legislation to restrict or regulate PE investment in law firms. So, it is a bit of a toss up, which means that the litigators are standing by.

If this management services organization model sounds to you like hard to pull off, you may be on to something. Like me, you may recall when PE moved into doctor’s offices and other healthcare, and the pros and cons of that are still being debated. Private equity also is behind the demise of neighborhood shopping centers and restaurants that are now vacant properties. The financial model of PE, simply stated, is based on high management fees which can strangle businesses and leave the corpses by the wayside.

So, is this a good idea for law firms? Will it spread to other deals or is it a one off? We don’t know. But keep an eye open because the Financial Times reports that Paul Weiss, Quinn Emanuel and Proskauer are among firms to have had conversations with PE groups or bankers to consider taking outside capital. So, this may only be the beginning of the story.