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IPOs and the Coming Revolution of AI in Routine Legal Work

If you’ve ever been involved in an IPO, or even read about one, you know it’s a beast of a process. Months (sometimes years) of preparation, stacks of legal paperwork, and hefty legal fees. So, it’s no wonder clients are open to explore new ways to streamline these processes and save time and money.

And the options to do so are growing every day.

The Solomon in question is David Solomon, CEO of Goldman Sachs. According to him, AI could handle 95% of the work on an S-1 filing in minutes. Yes, minutes. If you’re in the legal world, this should grab your attention. IPOs have long been a steady source of profitable work for law firms, with teams dedicating endless hours to drafting, reviewing, and fine-tuning filings. But if AI can take over the heavy lifting, what happens to those billable hours, and the fees that come with them?

The Goldman Sachs Effect

As you know, Goldman Sachs is not just any player in finance; it’s a trendsetter. Announcing that it’s willing to test AI for an IPO filing signals a shift that will have consequences across the legal industry. Companies trust Goldman Sachs to be on the cutting edge. When an organization of that stature places faith in AI over lawyers, it raises hard questions about how much of our traditional legal roles are truly indispensable.

This also highlights a growing truth: AI is not just cutting costs; it’s redefining how high-stakes work gets done. IPO filings, once dominated by legal teams who bill by the hour, are now being reframed as a tech-driven process where efficiency rules. And the implications for a law firm’s pricing models are staggering. It’s no longer about time, it’s about the value delivered, and the expectations from clients moving forward. This will probably prompt some firms to embrace flat fees or value-based pricing, while others may pivot to premium, high-touch services emphasizing judgment, negotiation, and strategic insight, which AI cannot replicate. Yet.

Complacency Is the Real Risk

For that reason, the biggest mistake any law firm can make right now is shrugging this off as a problem that doesn’t apply to them. The reality is that technology doesn’t wait for an industry to catch up; it moves forward regardless of who’s ready. If firms continue to treat AI as a fad, they’ll wake up to a world where their competitors have already mastered tools that can deliver faster, cheaper, and, in some cases, better results. After all, clients (especially corporate ones) won’t hesitate to follow the path of least resistance. Or least expense.

Now, the same clients who once paid top dollar for legal services are seeing companies like Goldman Sachs find ways to do the same work without lawyers. This doesn’t mean they’ll stop needing legal expertise entirely, but it does mean they’ll start questioning where and how that expertise is most valuable. Law firms need to define their place in this new ecosystem, otherwise the market will define it for them.

Lessons From Other Industries

The best thing to do right now is to look at what happened to journalism, retail, or even healthcare. In each case, new technologies didn’t just change the way work was done; they fundamentally altered the business model. While the work of law firms may be in a different category, this doesn’t mean they aren’t immune to this kind of upheaval. The idea that “this is how it’s always been done” is not a shield against change, but rather an anchor dragging firms down.

So, what’s the solution? It’s not just about adopting a few AI tools; it’s about recognizing that AI has the potential to fundamentally reshape the concept of a law firm. Firms need to plan for when this transformation happens, not if. Thriving in this new era won’t come from resisting change but from strategically integrating AI to stay ahead. This means not just using AI for tasks like streamlining back-office operations, improving client communication, or enhancing legal research, but rethinking how the firm operates and delivers value in an AI-driven world.

The message here is simple: complacency isn’t an option. When organizations like Goldman Sachs start experimenting with AI in ways that encroach on traditionally lawyer-dominated territory, it’s a sign that the ground is shifting. The legal industry can either adapt and thrive or cling to outdated models and risk irrelevance. The choice is yours. But the clock is ticking.

The American Bar Association First Ethics Opinions on AI

Artificial intelligence is an increasing concern in the law industry, even if most lawyers do not recognize the true extent of its potential impact yet. To that end, the American Bar Association offered some guidance regarding the ethics of using Generative AI tools, with the publication of Formal Opinion 512, in July. Their restrained approach to the topic is eye-opening, which might not fully capture the profound changes AI will bring to the industry at large.  

The main points of Opinion 512 cover “the growing use of Generative Artificial Intelligence (GAI) in the practice of law, pointing out that model rules related to competency, informed consent, confidentiality, and fees principally apply.” On that last topic, the ABA suggests that lawyers should not charge clients for the time spent learning how to use Generative AI, as maintaining competence is part of their professional responsibility. However, if a client specifically requests a GAI tool that the lawyer is unfamiliar with, the lawyer could bill the time needed to learn it, but only if both parties agree on the new billing terms in advance. 

If we leave it at that, it seems more than a reasonable opinion. However, the ABA is being very conservative in its view of a technology that will fundamentally change how law services work and are billed. On one hand, lawyers might start to simply charge more flat fees instead of hourly billing out of practicality, hoping to avoid the complexities of tracking time spent on learning and implementing AI tools. 

On the other hand, flat fees can also fail to account for different levels of complexity in any given case. As AI continues to evolve and become more integrated into the legal market, the gap between the time saved by AI and the flat fees charged may widen. Lawyers could either overestimate AI’s efficiency and undercharge for their services or underestimate it and overcharge clients, causing potential disputes. 

Moreover, the flat fee approach might discourage lawyers from investing time in mastering Generative AI tools without a direct financial incentive to do so, stifling innovation and slowing down the adoption of AI in mid-sized law firms. And those who do invest the time might find themselves at a competitive disadvantage if they are unable to recoup those costs. 

But that’s just part of the issue. Looking at the big picture, the ABA’s current stance could soon become a relic from a bygone era, not fully addressing the potential for AI to make certain legal services obsolete, changing the way many law firms currently operate. As AI tools become more capable and sophisticated, handling tasks that were previously billable hours for lawyers could disappear across the board, forcing law firms to reconsider their entire structure, from pricing, to staffing, to client dynamics. And there is a lot of work to be done to get there. 

For example, junior associates or paralegals often spend hours sifting through documents to identify relevant information for a case. With Generative AI tools, this process could be completed in a fraction of the time, challenging the existing business models of the law firms that rely heavily on the revenue generated from these time-intensive tasks. 

AI’s impact on legal research also could further disrupt traditional billing practices. AI-powered tools can rapidly analyze case law, statutes, and legal precedents, providing lawyers with precise results in a much shorter timeframe. In the near future, it might even be able to predict case outcomes or even generate legal arguments, further diminishing the need for extensive research hours. This would certainly benefit clients in terms of cost but could pose significant challenges for traditional revenue models. 

All in all, it’s worth reviewing and seeing what regulatory bodies are thinking, and the ABA’s cautious approach doesn’t fully acknowledge the broader implications of this technology. By focusing on competency and billing for AI-related tasks, the transformative potential of AI in reshaping legal services gets overlooked. This may be sufficient for now, but as these technologies evolve, the industry will need more forward-thinking policies that address not just how lawyers bill for their time, but also how they redefine value in a landscape where human expertise may no longer be the sole currency. The challenge moving forward will be to create practices that are as dynamic and adaptable as the technology they are meant to accommodate.