KPMG Law chief: GenAI will reshape conversations about billing

Fuller: We need to change the approach to training

Generative AI will move lawyers further away from hourly billing and into discussions with clients about the need for a commercial return on their investment in the technology, the global head of legal services at KPMG has predicted.

Stuart Fuller also said junior lawyers would need to be trained to handle more complex work earlier on as the technology took over some of their traditional tasks.

Speaking to Legal Futures about AI, Mr Fuller said a new approach to billing would be “one of the major challenges” for traditional law firms.

He recounted a recent discussion with three general counsel. “I said to them, you know how to control and oversee our pricing at the moment. If we’ve got to do a due diligence, we have five lawyers doing it for five days, for 10 hours a day at X dollars an hour.

“We can easily give you a price for that and you can manage that. Generally AI can do that due diligence in 30 minutes. So what will you pay me for that?

“And their response was, ‘I’ll pay you for 30 minutes’. I said, well, no. You need to understand I’ve probably had to invest $5m in the technology and the development of that, so I need a return on my investment. So how would you look at that?

“The response was, we’ve never had that conversation with any of our legal firms. They’ve never had the conversation that there’s actually a commercial return that the industry needs to make here.”

Mr Fuller added: “We should not underestimate the impact of that change management, the level of disruption that’ll cause in the industry with people having to think differently, communicate differently and engage differently with their clients around their value. The value that they provide will be totally different.”

His prediction that technology would allow for 40% of the work being done “more efficiently and more accurately than throwing junior lawyers at it”. But with law and regulation becoming ever more complex, this did not mean fewer lawyers; rather, the other big challenge was to train junior lawyers on more complex work.

He said the idea that they needed to start off on grunt work, though it taught a degree of resilience, was out of date.

“We get a whole group of bright-eyed, bushy tailed young lawyers who’ve done five years of university more often than not, and we bring them in and for their first two years they do mind numbing, boring work. So what better way to demotivate and de-incentivise good young people to come into the profession?”

Going back a step, legal education needed to change too. “Why would you not have some kind of prompt engineering course or data or base coding course at university? I don’t think you’ll have lawyers doing reams of coding, but they need to understand how the technology works, how the algorithms work and how the data set needs to be. That will become a core skillset for lawyers, and it should start at the universities.”

Mr Fuller was in no doubt that GenAI would have a “transformational” impact on the legal profession, and said it was the duty of senior people like him “to guide the profession through this change”.

He said KPMG Law was busy embedding AI within its own processes – including “a global upskilling programme” for its 3,850 lawyers, in partnership with Microsoft and its Copilot product – as well as helping corporate legal departments not only adopt GenAI themselves but also advise their businesses about it from a legal and regulatory perspective.

One of the biggest GenAI use cases KPMG has identified so far is in helping companies manage their regulatory obligations and compliance, much of which is currently a manual task.

The Australian lawyer, who is based in Sydney, said that in the same way that you would not have a junior lawyer draft a merger agreement and send it to the client without checking, “equally, if you have GenAI do something and you don’t review it, then the risk is it does have errors and hallucinations”.

This meant that knowledge management would be a “core asset of the legal industry”, because GenAI was only as good as the data set it used.

Concerns over accuracy remained: “But again, I don’t think anything replaces having somebody qualified human with experience and the judgment to say, does that kind of look and sound right?

“If we’re honest, a lot of partners and senior lawyers in law firms often don’t have a much more detailed understanding of the law than the junior who has done the research, but they’ve got a gut-feel judgement about whether something sounds right or not.”

Mr Fuller suggested that firms underestimated the cultural and mindset changes that were needed. “How do you actually get lawyers who have not generally been tech savvy or tech engaged to see this as just a critical part of their job? I have four adult children and they scream with laughter about how much time I spend on technology. They think I’m a technophobe compared to them.

“But when I started out, I would never have thought that we would be spending so much time talking about technology. So again, that’s the transformative effect.

“We also think that it’s going to totally change the structure of corporate legal departments. So there’ll be as many non-lawyers as lawyers in corporate departments.

“We already know that there’s chief operating officers of legal departments and chief transformation officers, but we think there’ll be chief data and chief technology officers too.”

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