The latest PwC UK 100 law firm survey has revealed that the Top 10 largest firms are optimistic about the impact of genAI on their profits and revenue, while about half of smaller firms expect a negative impact. The survey, conducted in 2024, shows a clear contrast between the views of the top ten firms in terms of revenue and those below that group. 83% of the Top 10 firms believe that genAI will increase their productivity and allow them to take on more work from existing clients, leading to higher revenue and profits. On the other hand, 50% or more of firms ranked 11 to 100 anticipate that clients will demand reduced prices due to improved efficiency gains, leading to commoditization of their work. This means that while the top firms will be able to handle more complex matters, the smaller firms may struggle to compete for such work and may have to focus on commoditized work.

In the long term, this could lead to several options for smaller firms. They may need to cut operating costs and use more genAI tools to make commoditized work more profitable. Alternatively, they could increase marketing efforts to gain a larger share of commoditized work, potentially leading to mergers for economies of scale. Another option would be to focus on specialized, high-value work, but this may prove difficult if the majority of their income comes from commoditized matters. In this case, some partners may choose to create a smaller, niche firm while others continue to focus on commoditized work. This could also lead to a shift in business structure, such as a more corporate format, and seeking external investment to grow the business and gain market share.

For the Top 10 firms, the situation is different. They will continue to handle all aspects of a matter, even if some elements are commoditized, as a way to attract and retain the most complex and profitable work. To maintain their position, these firms may need to increase associate salaries to compete in the market and retain key information. Overall, it is expected that the top firms will continue to thrive while smaller firms may need to adapt and evolve in order to remain competitive in the changing legal landscape.