The Law Firm Pyramid Rollover

Artificial intelligence, pricing, and transience of the legal service sector’s workforce will cause the traditional law firm pyramid structure to rollover like an upending iceberg. The result? By 2030, global legal services will operate much differently than they do now.

Twin juggernauts – AI and Pricing – compounded by continuing transience of the legal service sector’s workforce will take a major toll on law firms unprepared for their impact. This reckoning will upend the traditional pyramid structure with the result being that by 2030, the global legal services sector will operate much differently than it does now.

The countdown clock is ticking more loudly by the minute, and yet those in the legal services sector that has a historic penchant for entering races to finish second is, as usual, waiting for someone else to make the first move.

What are you waiting for?

I don’t know about you, but I have had it with the hurry-up-and-wait babble, lip-flap, and word salad of throw-away terms such as “disruption”, “innovation”, and “best practices” that tend to be tossed around like confetti at a wedding by those who prefer to hear themselves pontificate in an endless future-focused echo chamber rather than take a resolute stand and act right now with the ruthlessness of clear-sighted goal orientation that empowers the achievement of crystal-clear objectives.

Actions always speak louder than words, and decisive swift action pertaining to restructuring how law firms conduct legal service business – not practice law – is the key to survival of the fittest now and over the next five years.

Artificial Intelligence vs. Business Survival

The Internet changed the world. AI is flattening it.

Task-based AI-enabled work is well-suited to be volume-produced and commodity-priced at a law firm’s lowest operating levels. This includes both legal and administrative work. Clients, who have also adopted AI and continue to do so, know how this tool works and are pressuring external counsel to reflect faster speed and lower cost in transactional pieces of their outsourced legal work. And rightly so.

The upshot of AI replacing junior legal talent most often tasked with rote work – for which clients often refuse to pay – will result in the lowest tiers being lopped off the bottom of traditionally-structured law firms. Juniors that remain are likely to experience higher than ever stress levels, which are apt to result in increased health care claims and departures.

We’re not blameless and, in fact, have been party to this demise.

For example, a number of years ago a General Counsel friend searching for an eighth Canadian firm to handle a portion of his company’s legal portfolio was approached by a major national law firm offering to conduct the company’s rote work at the firm’s paralegal level and at a deep discount provided that the GC consider the firm when litigation files were up for grabs. Apparently, the firm was either daring or willing to have its sophisticated litigation expertise judged and possibly awarded on the quality of commoditized rote work.

Regardless of the firm making a peculiar bet on the quality of its work product, the GC accepted the offer of a bargain price on rote work. As for what happened to litigation files, who knows but it’s a sure thing as with any unpredictable situation that all bets were off.  

Even though this event occurred years ago, the acceleration of commoditized rote work has increased steadily to the point where it can now be handled by AI at a much lower-than-human cost and turned around in a heartbeat. 

The Pricing Component

The flip side of the AI coin is pricing. Because these two factors go hand-in-hand, both must be considered simultaneously and executed in tandem. The added wrinkle is that this double conundrum is a core business component, which means that specialized and accredited talents of experts, such as CFOs, COOs, pricing specialists, and data analysts – not lawyers – are critical to the ability to shift to various pricing models that are crucial to a firm’s survival.

This is when lawyers must step aside and let money-oriented businesspeople do their jobs. It’s not that lawyers don’t add value to the pricing process; it’s that lawyers by the nature of their work and orientation to legal practice often confuse practice with business when, in actuality, the two concepts are as different as a zebra and an umbrella.

As an illustration, for a client who is the buyer of legal services and products, cost is a major component in evaluating both the process and outcome as a way to measure value for money. For this cost-conscious client, providing pricing certainty for budgetary purposes enables an avoidance of unpleasant and unwelcome surprises.

This means that the hourly rate will no longer continue to be the standard pricing method. Instead, it will remain on trial for its life and will survive to be used only in select situations and as warranted.

The demarcation between legal service providers who employ AI and modern pricing components and those who don’t is already stark and in the months of come, the gulf between the two will widen.

As for the billable hour, it will continue in a languishing state with and for those who can’t imagine anything else. However, the billable hour will die very shortly or has already died with and for those who can imagine everything else.

Where the Back Stops

Value-based pricing, flat fees, fixed fees, and subscription models are go-to methods for law firms determined to be viable and solvent.

Instituting these models is not a wholesale, all-or nothing transition from hourly rates to modern pricing schemes. Instead, the transition is best accomplished by the deft scoping of every mandate.

This means more work on the front end of a file due to the requirement of having in-depth, clarifying conversations with a client to understand the full end-to-end scope of the matter and its value to the client personally as well as professionally.

The next step is to scope the matter into its composite parts. Once all the matter’s parts are scoped, an assignment of both a pricing model – there can and probably should be different models for different pieces of work – and cost based on experience, expertise, and talent required to produce that particular component, can be assessed and client approved with none of these component parts and costs having any bearing on time.

Flat fees, fixed fees, and subscription models are fairly simple to understand and apply. However, in my experience, very few lawyers fully understand and grasp what Value-Based Pricing (VBP) is and confuse it with discount schemes pertaining to hourly rates.

VBP is not a discount scheme in any way, shape, or form. In a nutshell, value is a measurement of worth. Worth is determined by how much more value a client receives from you than you receive from a client in payment. Therefore, value-based pricing is determined by how what you provide to a client benefits them now and over the years to come.

Clearly understanding your client’s business and industry along with how what you provide impacts them professionally and personally is the starting point. This deep level of discovery needs to happen every time for every client on every matter because they, their business and lives change continually, which you won’t know about unless you ask many questions and probe for nuance … Every. Single. Time.

The challenge for law firms is that VBP, in particular, requires a complete alteration of mindset, culture, business structure, and lawyer compensation. This is why AI is the ultimate pricing and restructuring lever.

The Domino Effect

The domino or knock-on effect of the traditionally-structured law firm rollover is that without young associates and students handling rote work – which is often referred to as “training” for some unfathomable reason – mid-level lawyers won’t have the supports they’re used to but will still be expected to self-sustain and bring in new business.

At the top levels, senior lawyers who can retire will do so, leaving those who don’t, won’t or can’t retire holding both the firm’s responsibilities and purse strings in fewer hands.

The end result for many of these firms will be structural cave-ins due to one of two scenarios: 1. Overweighted equity at the top, a compromised centre, and weak support at the bottom – think reverse pyramid, or 2. Lesser equity at the top, a bloated middle, and again, weak support at the bottom – think diamond shape, which is why rollovers will upend traditional law firms like icebergs when their weight distribution changes.

Cave-ins will be considered a “collapse” while, as a rescue mechanism, law firm acquisitions and mergers will happen aplenty.

Redundancy and Rightsizing

What about everybody else who works in law firms? As you’d expect, it’s fair to assume headcount to decrease at all levels and roles throughout traditional law firms due to the bottom being lopped off the pyramid structure.

As most often happens during times of rightsizing, many of those who are released will be professional staff who are not lawyers. This is because lawyers are considered revenue generators while professional staff are perceived as overhead.

However, nothing is further from the truth. Professional staff provide the business structure of a firm, particularly in terms of financial and technology management, as well as data analytics, pricing, marketing, and business development talent who enable targeting of prospective clients as well as expansive cross-servicing to current clients with efforts applied to both classes of clients that convert to sales. This level of infrastructure enables lawyers to do what they say they went to law school for – lawyering.

The problem is that even though this level of infrastructure provides the rebar that supports the business of a law firm, lawyers prefer not to pay for it but instead will often elect to bring in more unsupported but billable legal talent.

And around and around we go.

The Dreaded Deadwood

Worse yet, many firms continue to carry deadwood – non-productive people of all stripes who are freighted like a ship’s ballast. While in shipping terms, ballast enables stability, deadwood impedes forward motion similar to a ship dragging an anchor.

This peculiar phenomenon has been going on in the legal services sector forever and ranges throughout many firms from partners to staff who are carried for a cornucopia of reasons, including: habit, fear, non-transferred or hoarded intellectual capital and production skills along with knowledge of and politics pertaining to where bodies are buried – hopefully, figuratively – along with who put them there.

Deadwood is one of the most pervasive, pernicious, willfully ignored, and systematically unaddressed symptoms of a law firm fated to be a ghost ship or hit the rocks. We know it, talk about it, and yet this problem persists.

This is why law firms determined to survive come AI and Pricing, and hell or high water must make hard and unwavering decisions, have tough and uncomfortable conversations, and restructure themselves ruthlessly to be flatter, non-hierarchical enterprises that are streamlined, sleek, and seriously ultra lean.

A Restructuring Warrior

Having helped law firms restructure practices groups, industry teams, client service departments and firm-wide client-facing systems, I understand the peculiarities and sensitivities of doing so within the legal services sector.

However, having also successfully led two major business turnarounds prior to my life in legal – one company that was privately held and the other that was public, federally-regulated and unionized – by fixating on core business and eliminating all that was ancillary while maximizing profit margins, executing on an exact schedule with short-term goals, mid-term milestones and long-term objectives, and keeping intact a team that embraced the vision, I have first-hand experience and the scars to prove it that heavy restructuring is an unpopular role that, metaphorically, will result in needing to remove knives from your back during the day before resting at night, an act that will continue mercilessly until the job is done.

Restructuring is warrior’s work that demands proven business acumen, deep management experience, and uncompromising rigour along with a calm demeanour as well as flexibility, determination, and grit along with senses of both humour and the ridiculous. 

There’s a dearth of that type of mercenary talent within most traditionally structured law firms – and a fear of contracting it in – which is why heavy restructuring within the legal services sector has yet to happen proactively, and won’t if and until it has to by necessity and only at the last minute.

Gradually, Then Suddenly

The phrase “gradually, then suddenly” originates from the 1926 novel, The Sun Also Rises by Ernest Hemingway when, in response to being asked how he went bankrupt, the character Mike says, “Two ways: gradually and then suddenly.” 

It illustrates that even though change seems sudden, it’s often the compounded result of a process that been in production for a long time.

For many years we’ve been conditioned to hearing, reading and talking about change awaiting us in the future. That’s because this type of messaging is often used to create a frisson of attraction, excitement, and urgency. However, this messaging is false because change happens by increments and in nonlinear fashion every single second of each and every day.

Such is the case of the traditionally structured hierarchical law firm pyramid, which is why and how this structure is in the evolutionary and unstoppable process of gradual destabilization that will cause it to roll over like an iceberg and upend suddenly.

To that end, act now – and fast – or prepare to go under. 

This column first appeared on Slaw, November 2025.