A&O Shearman will invest $1.1 billion in its artificial intelligence strategy over the next five years as law firms compete in an AI arms race. Partners committed to the investment this autumn, with the majority coming from each practice spending at least 3 percent of billable time on building AI tools. David Wakeling, global head of AI at the firm, stated the initiative is about redesigning legal services completely rather than simply encouraging more AI use. The firm also introduced AI usage as a bonus and performance metric for associates and partners this summer.
A&O Shearman was an early adopter of AI among big law firms, becoming the first customer of Harvey, the legal AI startup now valued at $15.5 billion, in 2022. Most large firms now use either Harvey or its European rival Legora, alongside general-purpose tools like ChatGPT. The firm developed Contract Matrix with Harvey and Microsoft, a contract drafting tool recently winning a multiyear mandate from a global financial institution in a blind evaluation, beating internal data science teams and specialist AI systems. Revenues from Contract Matrix are in the tens of millions of US dollars and have increased ninefold in the past year. The firm, formed from the combination of Allen & Overy and Shearman & Sterling in 2024, notes fixed-fee income increased 15 percent in two years partly due to AI, though the majority of fees remain billable hour-based.
Source: Financial Times Companies · Summarized by HeadlinesBriefing