Transcription
Hey Steve, nice to see you.
Hey Ben, good to be here.
Fantastic. Where have you come from?
Uh Minnesota.
Good stuff. Well, we're filming in London, so hopefully the jet lag is uh is doing you well.
I'm working through it.
Good man, good man. Right, so for the purpose of everyone watching and listening, um I'd love to get a chance for you to introduce yourself and tell the tell the viewers what what what do you do at TR?
Yeah, happy to do so. I I'm Steve Petry, serve as vice president of transformation services for Thomson Reuters. Um I have the privilege of leading a team of consultants who help law firms navigate this journey from AI investment to AI impact. Actually, I joined TR at the start of 2025 after spending over 20 years in law firm management in a variety of roles from strategic finance, practice management, strategic planning. Um and I think it's indicative of what we're trying to build at Thomson Reuters, a consulting team that's looking more broadly than just the technology implementation, but the true fundamental business model transformation that needs to occur in the industry.
That like a whole shift in mindset now about the tech. The tech's the easiest thing to buy, right? Deploying it's the hardest challenge and getting it up and running. So, you know, with that in mind, you know, one thing that the the internet is very good at right now is law firms and in-house uh tell the world of all their success. Everyone likes to tell everyone how great they're doing. But but from uh from your experience and you know, maybe the work you've been doing, um you know, what are the common mistakes that create failure in this sort of subject at the moment that you guys are seeing on the ground?
Yeah, I think generally speaking we perceive a persistent gap between AI investment, adoption, experimentation on one side, and then true impact and return on investment on the other side of that crevasse.
Right.
And what we're trying to figure out is how how can we help clients bridge that divide? And really what we're seeing is it's about getting out of this cycle of perpetual experimentation. So many firms are are stuck with individual lawyers experimenting with very isolated AI skills. Um and really to get to that other side to achieve that desired impact, we believe that the answer is having entire practice areas coalesce around new ways of working.
Nice. So, deploying through groups almost, not the individual level.
Exactly. Getting out of that cycle of testing and really changing the underlying business model, changing the way legal services are delivered.
Yeah, I understand that. You mentioned something a second ago, return on investment. The obsession in that space is getting bigger and bigger and bigger because obviously it's expensive investment, right? Law firms are putting a lot of money into this space. Highly competitive. The demands from their clients is around the AI investments. How do you define ROI today when you're talking about it to to a client? And how do you get them focused on getting the ROI?
Yeah, I think there's very few firms that today are measuring ROI. We've seen that come through in some of the the data from the Thomson Reuters Institute. I think it's only 15% of firms today are affirmatively and actively measuring return on investment. And of that small percentage, most of them are looking at very rudimentary statistics like employee satisfaction, employee usage, internally focused metrics. Where we really need to get as an industry is looking externally around revenue generation, new business opportunities, right? The financial metrics that they can drive through the AI adoption. And I think that's the pivot that that we need to see.
Yeah, I think there's going to be a shift soon hopefully around law firms building self-service experiences and that industrial repeat rinse go again kind of experience which is which I think is going to be the next big thing in this subject area. So, if someone um if we take the ROI piece around away in that that the financial metrics, what what other metrics should a firm be thinking about when gauging that return? Let's just call it return for now. But what other metrics should a law firm, and maybe you help advise on this, is what are they looking at?
Yeah, well I think one of the really unique dynamics of artificial intelligence is that it breaks the mold of the traditional trade-off between quality and speed, right? You can pursue efficiency and accuracy at the same time. And that requires new ways, kind of like new multifaceted approaches to measurement. So a few things that we're seeing is client satisfaction as opposed to just internal satisfaction. Client satisfaction is a really attractive way to measure ROI. And that actually may be time based to some extent to turnaround time. Something that used to take me 7 to 10 days to hand my client, the purchaser of legal services, now may take two days, right? So I can drive client satisfaction through those type of measurements. Um you know, I think we we talked about the ability to enhance realization margin under especially under fixed fee type pricing. I think that's always there as well. But it it's shifting to more of that approach where you can look at qualitative and quantitative aspects of how you are driving, you know, both efficiency but also accuracy.
Yeah, it's funny. The law firms, you know, when I get to speak to clients, you know, we are obviously it's it's outward facing. They're trying to generate revenue, attract new clients. But but one thing that I've started to talk about and see with our with our UK and Europe clients is we've kind of spun it a little bit from ROI to return on in um return on experience. Because if you can get a lawyer's experience better, guess what? Their their productivity increases. They they are they're willing to do more work. They their utilization gets better. And I you know, I had a guy quote to me, he says, "I'm enjoying being a lawyer again."
Yeah.
I mean that's a wild statement in the pressure of a lawyer uh or an attorney um in today's world. And so maybe it's also those experience things that law firms should also think about.
I think that's right. And just to build on uh that productivity concept, I I think that's the next frontier as well of how can we start to measure the lawyers who are using the AI tools, are they actually more productive? And And we've been exploring this already, but it has to be that intersection of the technology that can capture the utilization of the tools, and then your internal legal billing system that's capturing the time. But we've seen early indications that, you know, contrary to some of the concern that AI technology will erode billable hours, that it's actually allowing the lawyers who make good use of it to record more billable hours.
Yeah, and again, the data will show this path, right? Over the next sort of 6-12 months. Um all right, so look, we you guys are working with these firms, you're you are advising and guiding, you know, when you when you when you work closely with these firms, like, what does success look like? When you're sat there with a managing partner, really sort of showcasing this project like timeline you're going to take them through, this journey you're going to help drive them along, what is success? Is that Is it 100% utilization? Is it 10x on their billing? You know, how do you how do you describe success?
Well, one of the things we always do at the outset of any project is make sure that we're aligned around objectives. What are we trying to achieve? What does our client, um in the in that case, the large law firm, want to achieve uh through the transformation project? And And we really break the AI journey into three key stages: adoption, integration, and transformation. And as I said at the outset, so many firms get stuck in that adoption phase, right? That perpetual cycle of experimentation, where integration is where we really start to embed the technology in the legal work flows that matter, the legal service offerings that they're delivering to clients. And then you can move on to transformation, where you're really thinking about what are the pricing implications of this work that we've just done. What are the staffing implications of this change? And that's really how we approach it, and I think that is a definition of success.
Yeah.
You know, producing a holistic approach to the change, um and and and being able to change not only the technology that's being utilized, but also the surrounding business elements.
Absolutely. So, you know, if you think about 12 months ago, maybe maybe a bit more, you know, GenAI was in isolation. And now the success that I see will be the the platforms that can the interoperability, right? The ability to talk to multiple platforms within a law firm, data system data sources, other platforms, other systems, and that that will gauge success within the investment that they're building. All talking together at the same time.
I think that's right. And I would say, you know, I laid out those three core stages of what what we've called the AI journey. Preceding that though, I think are two critical steps for law firms to consider as well. And that's first of all, just achieving clarity um in in your current state uh assessment of where you are today. And and we try to help firms with that as well. Um we we offer that clarity through something we call the Thomson Reuters AI Readiness Diagnostic, where we look at the current state of strategic fit, data architecture, tech enablement, risk management, process and culture through firm-wide surveys to to really understand the the current position of the people in the firm, and to identify an actionable road map that can be deployed to move forward. So, it's that that clarity of where you are today.
Think big, but maybe start small, and then grow that.
I think that's right. And then also achieving that vision and direction by saying, you know, what do we want to accomplish with AI? How do we want to be perceived in the market? And then translating that into strategy, right? And and not just that isolated innovation pillar that's in everyone's strategic plan, but how do you integrate that into your entire strategic plan. So, to the extent you have an industry pillar, that AI is supporting that as well. You have a talent pillar, AI is supporting that. So, I think that idea of initial clarity, awareness of where you are today, and then direction, really precedes that entire adoption, integration, and transformation journey.
So, yeah, I mean, just to take on that a little bit further then. So, let's say, hypothetically, there's a very nervous CIO watching this. He's been he's been overwhelmed by vendors and news and briefings and updates and he's under pressure to invest in this space. Where would you ask them to start? You know, that that kind of think big, start small mentality, but how would you give that trust in that maybe that one conversation says, "Hey guys, this is going to be all right. Trust us."
Yeah, I guess I I'd reiterate a few of the points I just made. I I think you start with that vision cuz there's a lot of fear of missing out, right? And a lot of people trying to move quickly because they're looking around the market and saying we don't want to fall behind. Um that's not necessarily a great vision, all right? The vision is what do we want to accomplish with AI organizationally? How quickly do we want to move? How do we want the market to perceive that movement? Um and then the next step is strategy development. That's basically saying how do we want to deploy AI within the firm? Where do we see the opportunity to get the greatest benefit? Um and immediately following that is prioritization. And we actually have an entire approach. We have eight selection criteria that we utilize with clients to identify ripe opportunities for AI-enabled transformation. Um but I always highlight two of those criteria as I think being most critical. Commercial imperative, so identifying those practices that may already be facing an existential threat from a business perspective. Maybe they're already price constrained. They're already working on fixed fees um or other type of value-based billing where the efficiency gains will drop to their bottom line. And then the second attribute being the innovative-mindedness of the lawyers in that practice. And you know, perhaps unsurprisingly, those two attributes often go hand in hand. The practices that are facing that type of commercial imperative, that business pressure, also tend to be more innovative-minded. And so focus your investments in those areas because that's where you'll get a a quick return.
So just on that one just finally then, which of those departments that are going first? Let's call it that, right? The the one department who puts their hands up and says, "We're ready. Let's go." In your your experience so far, where where's that coming from?
Yeah, so a lot of the practices that I think people would imagine fit those criteria we we've seen a lot of interest in labor and employment litigation thinking about areas like single point of claims defense you know taking that entire legal service offering dissecting the current state understanding how we can deploy the technology at multiple steps throughout that process to you know produce a much more efficient legal service offering I think other areas of litigation that have a lot of complexity and repetition toxic tort litigation you know areas like that real estate on the transactional side anything that's document intensive where we need to ingest synthesize distill a lot of information rapidly and then often times repeat that process over and over
You you've seen that reaction on the ground which I have as well where you you you run a use case through through through maybe Thomson Reuters CoCounsel and you see their reaction for the first time where they go hang on a second like you've just done that like that's pretty cool right
It is it is and I think those are those efficiency gains that allow the lawyers to take some of that you know wrote work off their desk and focus on the higher value strategic advice that is more fulfilling for them professionally
Steve that's been fast and furious great fun really good to get in a little bit more insight in terms of what you do with your team out to the industry thanks for taking the time with me this afternoon
Of course great to be here with you