The prevailing narrative is that AI is an extinction event for law firms. The assumption is that as models get smarter, billable hours will vanish.
But there’s a compelling counter-argument: When AI explodes the economy, legal work explodes with it.
The logic isn’t about automation; it’s about volume and complexity.
The “GDP Multiplier” Effect
The professional services market is historically pegged to GDP. If AI delivers on its promise to supercharge economic growth, the legal sector inevitably drafts behind it.
Here is the flywheel effect:
- More Output: An explosion in new products requires an explosion in product counsel and IP work.
- Faster Globalization: Rapid international expansion triggers complex regulatory hurdles.
- Deal Flow: A booming economy leads to larger M&A deals, necessitating heavy transactional billing.
As private equity firms understand, their best years always correlate with their highest legal bills. It is a cyclical tax on success.
The Takeaway
In the near to medium term, this thesis holds water. An increasingly complex, fast-moving economy creates a surplus of legal problems that only firms can solve.
However, the long-term dynamic remains to be seen. As AI capabilities plateau and democratize, in-house legal teams may eventually wield these tools to bring that work inside, fundamentally shifting the balance of power.